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Modelling Economy-wide Effects of Future TCF Assistance

Author

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  • Productivity Commission

Abstract

The Productivity Commission’s modelling indicates that there would be economy-wide benefits from further reductions in the relatively high tariffs on TCF imports. Assistance reductions would involve some further contraction of the TCF sector, but this would be outweighed by expansion of other industries resulting from cost reductions. Consumers and taxpayers would benefit from a reduction in the $1.5 billion burden they currently bear. The modelling also suggests that the benefits would be larger under the legislated program of reductions in tariffs to 5 per cent by 2015, than options with lesser reductions. Modelling also confirms that gains accrue even with pessimistic assumptions about employment and price effects. The Commission’s modelling indicates that a significant further appreciation of the Australian dollar, associated with the mining boom, could have a greater impact on TCF activity than assistance reductions. But trying to offset such pressures on the TCF sector through higher assistance would impose costs elsewhere in the economy.

Suggested Citation

  • Productivity Commission, 2008. "Modelling Economy-wide Effects of Future TCF Assistance," Research Reports, Productivity Commission, Government of Australia, number 31.
    • Handle: RePEc:ris:prodcs:31
    Note: 169 pages
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    File URL: http://www.pc.gov.au/__data/assets/pdf_file/0003/81777/tcf-assistance-modelling.pdf
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    File URL: http://www.pc.gov.au/projects/study/textile-clothing-footwear/finalreport
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    Citations

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    Cited by:

    1. Peter B. Dixon, 2009. "Comments on the Productivity Commission’s Modelling of the Economy‐Wide Effects of Future Automotive Assistance," Economic Papers, The Economic Society of Australia, vol. 28(1), pages 11-18, March.
    2. Jonathan Pincus, 2009. "Reflection on Microeconomic Policy Frameworks in Australia, and a Suggestion about Fairness," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(2), pages 121-130, June.

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