For years, there has been a controversial issue whether Australian government should continue subsidizing the local manufacturing car industry. Several years ago some economists doubted the efficiency of the subsidy, while some still advocated for the protection from government (Taylor, 2012). Once the federal opposition planned to cut $500 million from car industry subsidy, but later they considered reversing the plan due to Australian political consensus that taxpayer subsidy is still in need to protect its car industry (Taylor, 2012).
Australian government has been subsidizing the local car industry for a long time in order to protect its domestic industry and secure its people’ jobs. However, it is not all Australian who understand this move. Some argue that the subsidy should be decreased because the market needs to work freely and efficiently without government’s intervention and meanwhile the subsidy policy may bring some issues such as crowding-out effect. On the contrary, there are still some advocating the move. They believe that increasing subsidy can protect the domestic employment and the diversification of industry. In addition, some people will benefit from the subsidy such as the car industry and the local workers while some people suffer from the policy such as the taxpayers, government as well as the foreign car manufacturers. The author suggests in the end that the subsidy should be decreased or even canceled so that the market can develop freely by itself and accord to the market economic theory.