Programs to encourage growth and development in Tasmania are being increased and extended as part of the Rudd Government's 2008-09 Budget.

An allocation of $34.4 million has been provided to the Bass Strait Passenger Vehicle Equalisation Scheme, with the subsidy for standard passenger vehicles to increase to $180.

Assistance to other eligible vehicles (including motor homes, buses, motor cycles, vehicles towing caravans and bicycles) has also been increased by 20 per cent.

The subsidies, which will now be indexed to the Consumer Price Index, will benefit all Australians who take their passenger vehicles across Bass Strait.

They will provide a significant stimulus to Tasmanias tourism industry by creating more affordable transport links to the Australian mainland.

The subsidys ongoing indexation also provides tourism operators with the confidence to further invest and grow their businesses.

The Tasmanian Freight Equalisation Scheme (TFES) has also received $2.8 million over four years from the Government to cover intrastate sea freight shipped between King Island and Flinders Island and the main island of Tasmania.

This extension is in addition to the Government assistance currently provided to the communities of King Island and Flinders Island under the existing interstate TFES, which covers eligible sea freight shipped to and from the mainland of Australia. The Commonwealth Government has budgeted to provide a total of $101 million in 2008-09 under the existing interstate TFES arrangements.

The increased funding recognises the additional sea freight costs incurred by local businesses and communities on King and Flinders Islands compared to other Tasmanian communities who benefit from the existing freight scheme.