AN INDEPENDENT audit commissioned by the federal government has recommended scrapping Bass Strait freight and passenger subsidies.
Released in Canberra yesterday, the report suggested the Commonwealth should stop providing industry assistance in areas where there was already a state presence.
It said the state government had primary responsibility for issues of shipping and freight.
The freight scheme was introduced in 1976, and the passenger scheme in 1996.
The report recommended abolishing both programs.
Together, they cost about $130 million a year.
Bass Liberal MHR Andrew Nikolic said despite the recommendations, it remained firm Coalition policy to retain the schemes.
``Let me say this explicitly: these two schemes will not be scrapped,'' Mr Nikolic said.
``The Prime Minister has consistently made it very clear he will look at improving these schemes, not scrapping them altogether.''
Mr Nikolic said the schemes were essential to Tasmania's economic recovery, and sinking them would be totally unacceptable.
State Opposition Leader Bryan Green said it would be impossible for Tasmania to compete with mainland states or the world if the subsidies were taken away.
Mr Green dismissed the idea of replacing the schemes with state-based subsidies.
``The fact is the state government cannot and is not in a position to facilitate the Bass Strait subsidies,'' Mr Green said.
``It's there as part of the National Highway - it has to be maintained . . . nobody would be silly enough to take that subsidy away.''
Tasmanian Exporters Group chairman Bob Gozzi said the recommendations were ``some of the flakiest'' he had ever seen in relation to Bass Strait.
``The National Highway is part of federal government road funding,'' Mr Gozzi said.
``To shift that cost to states is a spurious argument and a proposition that should not be given any dignified response.''
Mr Gozzi urged federal Treasurer Joe Hockey to step up and reassure Tasmanian exporters the schemes would remain intact.
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said scrapping the schemes without putting anything in their place would hurt Tasmanian businesses.
``The expectation is for a level playing field across the entire country,'' Mr Bailey said.
``Bass Strait is our highway, and it should be funded accordingly.''
Mr Bailey said it was important to remember the report contained recommendations, not government policy.
Long-standing Bass Strait campaigner Peter Brohier said removing the subsidies would be ``an absolute, total cop-out''.
``The government needs to improve and apply these equalisation schemes effectively, not slash and burn them altogether,'' Mr Brohier said.