Assistance for clean and green cars

The paper, from former Victorian Premier Steve Bracks, comes just days after Finance Minister Lindsay Tanner, a key figure in the Rudd Government, argued that trade tariffs distort economies and harm consumers.

Unions and the left wing of the Labor Party would like to see a freeze on the reduction of automotive tariffs — from 10 per cent to 5 per cent, scheduled for 2010.

The Government, in the wake of Mitsubishi's announcement in February that it intended to close its Adelaide manufacturing plant, appointed Mr Bracks to review the nation's automotive industry.

When he was premier, Mr Bracks opposed the timetable for tariff reductions, introduced by the Howard government, from 15 per cent to 10 per cent in 2005, the 2010 reduction, and then down to 5 per cent in 2015.

His discussion paper is expected to concentrate on ways to build export markets and develop innovation in design such as cleaner energy sources.

The Government has promised $500 million to help develop cars that are environmentally friendly — and the money will not just go to one producer.

Reductions in tariffs are not seen by the industry as the central issue they were a decade ago. The inquiry is expected to hear that restructuring packages such as the 1991 Button plan had boosted the export performance of the car companies beyond the original expectations.

The case for maintaining the tariff reduction schedule was given a boost by Mr Tanner in a speech last week, in which he warned against protection, particularly economic protection geared at boosting the interests of manufacturers and producers.

Mr Tanner argued that many economic inefficiencies and scandals, such as the Australian Wheat Board's corrupt payments to former Iraqi leader Saddam Hussein showed the danger of caving in to special interest groups.

He denounced “producerism” and its chief tools, such as tariffs and monopolies, which favoured or protected producer groups at the expense of society as a whole.

“The electoral success of progressive governments in recent years is in part attributable to the inability of conservative forces to adapt to this new political environment,” Mr Tanner told the New Agenda for Prosperity conference in Melbourne.

“For progressives, industry policy is now about innovation, technology and skills — not tariffs, quotas and monopolies.”

Industry Minister Kim Carr, from the Left of the party, as is Mr Tanner, has talked up the virtues of innovation and collaboration between industry and government — but without the same criticism of tariffs.