The shadow minister for Industry in Canberra says a future government led by the current Opposition would slash the large, and suddenly controversial levels of assistance to Australia’s automotive industry.
According to a report in The Australian Financial Review, General Motors Holden’s recent decision to cut 500 jobs, despite having received large subsidies from state and federal governments, has sparked renewed debate on industry assistance. The Liberal and National parties, which form the Opposition to the country’s current Labour government, want to refer the matter to the Productivity Commission for review, before making pledges beyond 2015.
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The Opposition parties’ Industry spokeswoman, Sophie Mirabella, wants to see cuts to funds which are currently set aside for the car industry.
“We think there is a better way. There needs to be a funding program that looks to the long-term viability of the industry,” she said.
According to the AFR’s report, it is understood that Opposition Leader Tony Abbott has yet to sign off on any cuts and is keen to avoid internal disputes. Opposition MP and ERC member Jamie Briggs has reportedly rejected any suggestions cuts as high as AU$2 billion were being targeted, the business daily says.
While the Coalition has already pledged to reduce funding by $500 million before 2015, he said at this stage it remained committed to the $1.5 billion allocated for the industry beyond 2015.
As relations between South Australian Premier Jay Weatherill and Holden chief executive Mike Devereux worsened on Tuesday (GM Holden’s only vehicle plant is in the suburbs of Adelaide, SA), Treasurer Wayne Swan likened Holden’s challenges to those of the federal government in preparing its budget.
“While the sustained high dollar reflects the international community’s increased confidence in our economy relative to the rest of the developed world, it is also very challenging for many of our industries and our budget revenues,” he said.
The federal government in Canberra was highly critical of Coalition plans to cut assistance.
Under the national New Car Plan, $5.4 billion was allocated for the industry between 2008-09 and 2020-21. Of this, $1.5 billion has been set aside for the period following 2015.
The Lib-Nat federal Coalition has already pledged to reduce by $500 million the $1.5 billion still to be spent by 2015. If it targeted the post-2015 money, it could cut up to $2 billion, booking most of the savings over the four-year forecasts of its first budget if elected on 14 September.
Industry Minister Greg Combet responded to the would-be conservative-led party’s announcement by claiming said such cuts would mean Australia would cease making cars.
“It would throw thousands of workers out of their jobs and put hundreds of thousands more jobs in jeopardy,” he said.
The opposition Coalition has been hardening its line against car industry subsidies since the federal, South Australian and Victorian governments promised Holden another $275 million last March. The federal government promised $215 million, SA $50 million and Victoria $10 million. Holden is based in Victoria – it has an R&D facility plus an engine plant just five kilometres from the centre of Melbourne – while Ford and Toyota, the country’s only other manufacturers, make cars and engines in the same state.
