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Holden fears Australian government support will end in 2016

Holden remains unconvinced that the federal government intends providing any further assistance to the industry after 2016, in a decision that would virtually guarantee its closure, according to sources close to the embattled car maker.

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Hockey: 'Either you're here, or you're not'

Treasurer Joe Hockey challenges Holden to 'come clean' on its plans for car making in Australia during a fiery question time dominated by the auto maker's future.

The new doubts are fuelling a worsening standoff, with Holden management refusing to reveal whether it plans to stay or go and the government taking the extraordinary step of writing to the company demanding ''immediate clarification'' even before its own Productivity Commission inquiry into the value of industry assistance issues an interim report next week.

Holden's managing director Mike Devereux fronted that very inquiry on Tuesday and, among other things, flatly denied that any decision to withdraw had already been taken in Detroit.

His defiance came as GM Holden continued to make clear it wants to see what the government is prepared to put forward in industry assistance after 2016 before it decides its future.

With tempers fraying in Federal Parliament the opposition depicted the Coalition as callous ideologues for putting 50,000 jobs at risk.


Acting Prime Minister Warren Truss revealed he had written to Holden to demand clarification after intense speculation ''impacting on Holden's workers, their families and the supply chain''.

Acting Labor leader Tanya Plibersek told Parliament that from 2001 to 2012, Holden generated $32.7 billion of economic activity in Australia, and paid $21 billion to other companies while receiving $1.8 billion in subsidies.

She asked if the Treasurer, Joe Hockey, regarded 18 to 1 as an acceptable rate of return on investment. In response, a fired-up Mr Hockey confirmed the government's hardline approach, saying the best return on investment came from companies investing their own money rather than taxpayers'.

''Either you're here, or you're not,'' Mr Hockey said more-or-less directly to the American-owned manufacturer.

''We have put another billion dollars on the table from 2015 … there's a hell of a lot of industries in Australia that would love to get the assistance that the motor vehicle industry is getting.''

The worsening political row also saw the government lash out at both Holden and the opposition for the widespread speculation over the company's future, even as members of the government added to that uncertainty.

Meanwhile the Victorian government has issued its sternest warning to Canberra yet that it wants Holden to keep making cars in Australia. ''We believe that Commonwealth assistance should continue over the next 10 years,'' Victorian Manufacturing Minister David Hodgett said on Tuesday.

Victoria would be hit hard if the car manufacturing industry shuts down in Australia, with an estimated 25,000 jobs lost and a 1.4 per cent fall in gross regional product by 2018. The government has ruled out new money for the Australian car industry, and also committed to a half-billion-dollar cut to funding over the next two years.

In his letter to Mr Devereux, Mr Truss said: ''I note your statement today that 'there's been no decision made at this point'.

''However, your comments failed to provide a commitment that Holden will remain in Australia well into the future. Instead, your comments merely confirmed that a decision to end manufacturing in Australia remains a live option and has not been ruled out.''

It came after Mr Devereux rejected all speculation the company had already decided to leave Australia. ''No decision has been made,'' he told the inquiry.

Over the past 12 years, Holden has averaged $153 million in taxpayer funding each year. It has simultaneously over that period averaged yearly profits of $50 million.

Mr Devereux was asked whether the company could survive without government support. He said he could not ''predict what that future would look like'', but that the car industry generated huge returns for any public investment made.

He also pointed to the mining and property industries, both of which get taxpayer subsidies. ''The $3 billion a year that goes into mining companies … I'm not criticising that,'' he said, ''or $5 billion in subsidies for negative gearing''.

If Holden were to stop manufacturing cars in Australia, it would almost certainly force Toyota to follow suit because the components manufacturers that are vital to the industry would not be able to achieve economies of scale.


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