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Plans to "bail out" the automotive industry are further proof that ANC industrial policy is misconceived and costly to the entire economy. The automotive manufacturing industry already receives massive protection in the form of import tariffs and export subsidies, so the need for further government handouts illustrate the damaging nature of the ANC's approach to industrial policy. This provides a clear signal regarding the result of the ANC industrial policy: protection leads to uncompetitive industries that drain the economy, the cost of which is borne by South African citizen who have to:

Pay more for cars because import tariffs make them more expensive, and
Pay more tax which will be wasted on "bailing out" an uncompetitive industry.

The medium term strategic framework (MTSF) published by the presidency stated that the motor industry, amongst others, needs to form part of "lead sectors" of competitive industries that are supposed to facilitate economic growth. This is patently false, given that the motor manufacturing industry has been protected from overseas competition since the inception of the motor industry development program (MIDP) in 1995 (now called the automotive development programme (ADP), to last until 2013).

While the need to provide bridging finance and short term interventions to save an industry may be necessary, it is certainly not true that this will be the last handout from government to the automobile manufacturers. Claiming that the bailout should prevent further job losses is misleading because it ignores that:

The money spent on the automotive industry can be better utilised on industries that have proven themselves and would therefore not need a second round of bailouts.

The bulk of employees in the automotive industry fall under the servicing and maintenance sector, whose jobs depend on more and therefore cheaper motor vehicles and not greater protection to local manufacturers.

While the need to stimulate demand for motor vehicles in the economy is necessary, the DTI needs to recognise that:

The best way to stimulate demand is to actually lower the price of motor vehicles by reducing the import tariffs.
The motor industry is by nature cyclical and therefore there are limits to stimulating demand during an economic downswing.

The DA is in favour of stimulating economic growth and industrial progress, but not at the cost of continued government bail outs that ultimately overburden the tax payer. In order to identify the wasteful nature of the ANC's industrial policy and the proposed bail outs, the DA will be submitting parliamentary questions to ascertain the following:

How much tax revenue has been made from the tariffs imposed on motor vehicles in the past two years?
How much in export subsidies has been paid to the manufacturers in the same period?
How much of those export subsidies has been used to lower the retail price of vehicles in South Africa?
How many employees are in the service of the companies requesting a bail out?