Despite a recommendation by the Productivity Commission, the Government says Australia won’t become a grey imports “dumping ground”.

THE AUSTRALIAN GOVERNMENT has said it has no intention of allowing Australia to become the “dumping ground for other countries’ old second-hand vehicles”, referring to the Productivity Commission’s recommendation to relax restrictions on the importation of second-hand vehicles.

Federal Minister for Industry, Ian MacFarlane said no decision had been made to relax restrictions on the importation of second-hand vehicles into Australia. “We have no intention of allowing Australia to become the dumping ground for other countries’ old second-hand vehicles,” a statement read.

“This issue will be considered in detail as part of the government’s review of the Motor Vehicle Standards Act 1989, mindful of the need to maintain the highest safeguards for consumers and the impact of any changes on the domestic car retail market.”

The Federal Chamber of Automotive Industries (FCAI) has welcomed the Government’s statement, slamming the Productivity Commission’s final report for its Inquiry into Australia’s Automotive Manufacturing Industry which was released today.

The Productivity Commission reports that by relaxing restrictions on the importation of second-hand cars (grey imports), Australian would benefit in the form of lower prices and greater choice for consumers. These imports, the report says, shouldn’t begin before 2018 (after Ford, Holden and Toyota have ceased local manufacturing) and should, initially at least, be limited to vehicles manufactured no earlier than five years prior to the date of application for importation, and should be limited to vehicles from countries that have similar vehicle design standards to those in Australia.

The report also recommends the removal of the $12,000 duty levied on used vehicles as part of the Customs Tariff.

Responding to the Productivity Commission’s report, FCAI Chief Executive Tony Weber said Australia has the most competitive new car market in the world and this competition brings with it the very latest environmental and safety technologies for consumers.

“With the significant year-on-year improvements in vehicle technology, it goes without saying that a newer motor vehicle fleet is better for consumers as newer cars are safer, more environmentally friendly and more reliable.

“The high level of competition is benefiting consumers, with a vast majority of models sold in Australia at a cheaper price than other right-hand drive markets. Further highlighting this, the most recent CommSec Car Affordability index shows that car prices in Australia are at their lowest since the index began in 1976.

But the FCAI and the Productivity Commission do see eye-to-eye over the removal of the Luxury Car Tax. “This poorly designed tax distorts vehicle purchase decisions and adversely impacts safety and environmental outcomes. We welcome the Government’s in principle support for this recommendation and we look forward to further consideration in the Government’s Taxation White Paper.”