Australia’s federal government has launched a A$6.2 bn package to help the company’s automotive industry.

Prime minister Kevin Rudd said it would support jobs at a time of a global financial crisis and into the future, according to The Australian newspaper.

The nation needed a ‘green-car’ industry that would create high-paid, high-skilled green jobs for the future, he said as he launched the new car industry plan in Melbourne on Monday.

The plan sets aside A$500m – double the amount recommended by a recent government review – for a green car innovation fund but has also confirmed a reduction in the tariff imposed on imported cars to 5% will still go ahead as planned in 2010.

This had been opposed by the 3 remaining automakers – Toyota, GM’s Holden and Ford (Mitsubishi, which was Chrysler until the early 1980s, stopped local manufacturing last March).

“In the time of global financial crisis the government today has taken further decisive action to support Australian industry, to support Australian jobs, because we believe this industry has a future,” Rudd said.

“We take decisive action to build an international, competitive green economy for the future.

“Australia needs a green car industry that manufactures the fuel efficient, low-emissions vehicles of the future and creates the well paid, high skilled green jobs of the future.”

According to the The Australian, he said the choice was not between having a growing economy in the short-term and a green economy in the medium to long-term.

“We can work effectively to develop both, and that’s what a large part of today’s package is all about.

The automotive industry was part of Australia’s future.

Building a low-emissions economy was the next step in the government’s response to the global financial crisis.

“By implementing a green investment strategy today we can transform our industry and create green jobs for tomorrow,” he said.

“It’s a future in which we should have absolute confidence – fuel-efficient technologies, low-emissions technologies, better designed and safer vehicles.”

Australia could be world leader in green car technology, Rudd said, according to the report.

The automotive industry faced a whole new set of market, economic and environmental changes and challenges.

“The domestic market for cars has become more fragmented. Australian car makers do battle in a very crowded field, with 60 other car brands, Rudd said.

“Consumer preferences have shifted away from sedans, to both smaller vehicles on the one hand and four-wheel drives (SUVs) on the other.”

Higher petrol prices had driven consumer demands for more fuel-efficient vehicles, he said.

Rudd said the automotive industry had a key role to play in climate change and faced a complicated set of industry challenges, the paper reported.

“Some might say it’s not worth trying to have a car industry, that is not my view, it is not the view of the Australian government and it never will be the view of any government which I lead,” he said.

“I don’t believe that car making is yesterday’s business or something better left to the Germans and the Japanese.

“But I also don’t believe that industry policy is about ‘saving’ the automotive industry, it’s about helping to transform the industry to meet the challenges of the future.

“It’s not about passive assistance, it’s about active support for innovation and change.”

Holden immediately welcomed the government’s response to the recent review of the local industry, describing it as the driver for a decade of local innovation.

Chairman and managing director Mark Reuss said the government’s measures encouraged long term innovation and investment by local manufacturers and suppliers.

He said ongoing innovation, particularly in areas which covered energy diversity in the national car fleet, was critical for Australia to have a viable and vibrant car industry for many years to come.

“Australia’s automotive industry has proven its ability over a long period to compete on a world stage,” Reuss said.

“This announcement provides certainty for the industry, its 64,000 employees and hundreds of direct and indirect suppliers.

“Through the government’s commitment to doing what is right, local manufacturers will embark on a decade of innovation.

“The strong belief in our capabilities means we are well placed to transition to new, more environmentally friendly technologies. “We are re-tooling Australia to make motoring more affordable and better for the environment.”

GM Holden – which provides rear-drive platform expertise to GM globally, especially North America, spent more than A$420m on research and development programmes in 2007, the largest single private sector R&D investment in Australia.

Reuss said GM Holden would continue to invest in fuel saving technologies to reduce Australia’s dependence on foreign oil.

“Shifting consumer sentiment and the need to address climate change is driving a fundamental shift in the types of vehicles and technologies Australian car buyers need and want,” Reuss said.

“That’s why we are tapping into Australia’s intellectual base to develop more alternative fuel technologies than any other time in Holden’s history. Using less petrol and saving money shouldn’t be something only for the wealthy.

“It is about better fuel efficiencies today and next generation fuel advances for tomorrow that are better for the environment and affordable for the typical family.

“The Green Car Innovation Fund provides opportunity to turn these plans into reality.”

Holden already offers vehicles that run on alternative fuels such as diesel and LPG, while recent fuel economy improvements to its petrol V6 and V8 engines have been introduced.

Reuss paid tribute to the government’s commitment to the automotive industry following the detailed review process.

“The Rudd government has made a concerted effort to understand the needs and challenges of our industry,” he said.

“In taking responsibility for our industry, minister Carr has consulted widely and taken a long term view of this situation rather than a short term political one.

“The response has the potential to be viewed over time in the same light as the original [1980s] Button plan which sent the industry on its current path of global competitiveness.

In its submission to the review, GM Holden emphasised the importance of energy diversity to achieve long term sustainable transport.

It stated there was no single solution to the complex challenge of reducing Australia’s dependence on foreign oil, and that a range of technologies would be required.

To achieve that goal, GM Holden identified the need to promote local innovation to meet the demands of domestic and export customers.