REDUCING the subsidy on Bass Strait shipping would damage the Tasmanian economy and unfairly increase the disadvantage of being an island state, industry groups have said.
The criticisms followed the release of the Productivity Commission's draft report into the freight inquiry, which said the Tasmanian Freight Equalisation Scheme was ``over-compensating'' exporters and should be reduced, that the Bass Strait Passenger Vehicle Equalisation Scheme should be scrapped entirely and the funds redirected to other tourism-boosting mechanisms, and that Tasmania should consider privatising its freight assets.
Bass Liberal MHR Andrew Nikolic said the federal government supported and would maintain the scheme, despite asking for it to be reviewed.
Mr Nikolic could not say if it would adopt the commission's recommendation to review the rates, which could see a $45 million reduction in total payments, but said he would ``fight hard'' to retain existing rates.
The state Liberal Party joined the state government in saying it would oppose any cut to rates.
``We don't support removing the south-bound subsidy and we don't support the suggestion that the passenger vehicle subsidy could be diverted to alternate uses such as tourism advertising,'' opposition infrastructure spokesman Rene Hidding said.
The state government, opposition, Greens and industry groups all opposed privatising rail, port and freight assets, including TT-Line.
Infrastructure Minister David O'Byrne said the report was ``a betrayal of Tasmania''.
``It is a dangerous report for Tasmania,'' Mr O'Byrne said.
Tasmanian Chamber of Commerce and Industries chief executive Michael Bailey said while a proposal in the report to review cabotage fees and expand the scheme to include freight bound for international export was welcome, it should not be offset by cutting south-bound freight out or reducing payments.
``I don't think we are asking for more compensation (in expanding the scheme), I think we are asking for a level playing field,'' Mr Bailey said.