The Australian government has pulled back on planned funding cuts to the automotive industry, allowing the sector to keep A$500 million (about GBP254m) as major manufacturers prepare to shut down operations.
The government planned to cut almost A$1bn in funding in response to announcements from Ford, Toyota and General Motors’ Holden unit last year that they would end car manufacturing in the country by the end of 2017. However, the upper house refused to pass the cuts, fearing that the carmakers would bring forward their closure.
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Federal Industry Minister Ian Macfarlane said: “We don’t want anything to jeopardise the survival of the industry until Holden finally closes.” Restored funding will be split 55% to the car manufacturers and 45% percent to component suppliers.
A rising Australian dollar along with high manufacturing costs and low economies of scale have been blamed by the manufacturers for the decisions to pull out of the country. Government figures show that car makers have not made a profit since 2003, and have runn up combined losses of A$4.4bn.
Around 45,000 people are employed in vehicle and parts manufacturing, with Toyota, Holden and Ford accounting for around 8,000 directly, according to official figures.
