Tas subsidies questioned by commission

CANBERRA should keep closer tabs on the cost of taking passenger cars on the Spirit of Tasmania ferry, an inquiry has found.

A PRODUCTIVITY Commission report released on Tuesday made a raft of recommendations that would bring changes to federal subsidy schemes aimed at assisting freight and vehicle movements in and out of the island state.

The Bass Strait ferry should be the focus of joint state and federal government discussions ensuring greater transparency around operator TT-Line's pricing, the report reads.It also recommended investigating whether a subsidy offered by the Bass Strait Passenger Vehicle Equalisation Scheme is reaching its intended recipients.Despite the commission's questions, Prime Minister Tony Abbott has committed to retain the scheme.It is one of a range of Tasmanian shipping subsidy programs which have already received $2 billion in federal funding, with the same amount due to be spent over the coming 15 years.But the Productivity Commission has found some of the schemes are not the best means of supporting the state's economic development.As subsidies they have unintended consequences, including perversely increasing the costs of goods for Tasmanians, the commission reported.A small number of companies - largely in the manufacturing sector - are taking advantage of the majority of subsidy payments.It instead suggests the adoption of a volume-based, flat rate subsidy for freight.The main commodities leaving Tasmania and eligible for the subsidy have been frozen and fresh vegetables, newsprint, wood products and beer.Incoming freight has predominantly been beer bottles and cans, wheat and animal feed.Regional Development Minister Warren Truss welcomed the report which also makes reform recommendations to maritime regulation."Keeping prices more affordable for shippers and passengers ... will help put Tasmania on a more level playing field compared with mainland operators," Mr Truss said.

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