Grants such as Tony Abbott’s controversial pre-election funding for the Cadbury factory in Tasmania should be abolished, according to the Commission of Audit report.
It says there is “no genuine market failure” in the area and that in such circumstances “the benefits accrue entirely or largely to the firm or industry supported”.
It also suggests cutting the grant to the car manufacturer GM Holden and ending a range of other industry assistance programs, including subsidies for production of the green fuel ethanol.
The tourism industry is also in its sights: funding for the national organisation Tourism Australia could be reduced by 50%. The remaining 50% would be incorporated into a commercial arm of the Department of Foreign Affairs and Trade.
“Most of the benefits of tourism accrue to the tourism operators,” the report says, adding there is “no clear reason” why funding should be provided to tourism instead of other Australian industries.
The commission recommends that “tourism quality” grants, which provide funding for tourism operators and infrastructure, be abolished.
Also on the abolition list are a number of organisations which help Australian exporters, including Austrade, the Australian Trade Commission and the Export Finance and Insurance Corporation. On EFIC, the report says: “There is little evidence of genuine market failure in the provision of export finance.” Austrade, it says, does not represent value for money since its assistance led to just 205 export sales in 2011-12, despite being funded to the tune of $335m.
More broadly, the report complains that industry assistance from the government is “currently provided on an ad hoc basis” and says market competition, not taxpayer support, provides the best incentives for firms.
Assistance, it says, should only be provided in areas of genuine market failure.
It also suggests abolishing or merging all industry assistance with an impact of less than $5m a year.