Cash for cars: government funding for the auto-industry

Both the American and Australian governments are spending a lot of time at the moment talking about spending a lot of money to prop up struggling automobile industries. While I understand that there are tens of thousands of jobs at stake, the longer term future of the industry must also be considered. If the future of petrol is expensive (despite recent drops - don't expect oil to stay low for too long!), then the future of transport will not lie in ever increasing government support for increasingly unpopular gas-guzzlers. Perhaps some of that money could be better spent on developing public transport?

And here is a thought from the Australia Institute's Between the Lines, 13th November 2008:

Government assistance is not coming back into fashion—it never left. The Howard Government gave billions away to the childcare industry, the agriculture industry and the mining industry, to name a select few. The Bush administration was never serious about free markets and small government; it gave hundreds of billions away to its friends in agriculture, oil and defence.

Hopefully, what is coming back into fashion is the creation of a coherent set of criteria for awarding such assistance, along with some transparency about the likely benefits and some evidence on the actual outcomes. The car industry is now required to spend its money on making cars green; similar obligations must be placed on the electricity industry.