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Holden fears Australian government support will end in 2016

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Mark Kenny, Clay Lucas

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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.

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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.

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.

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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.

106 comments

  • Whatever is going on, General Motors is damaging its own brand in Australia, leaving its own staff, dealers and customers with the distinct impression that the company's commitment to Australia is essentially in limbo.

    Who would want to buy a car from a company right now that is clearly considering
    its own exit strategy.

    Commenter
    SteveH.
    Date and time
    December 11, 2013, 7:04AM
    • @Steve H.....If GM is serious they must make a firm commitment that they will continue to manufacture here till 2020 or 2025 before they receive another cent of Taxpayer money. They seem to be attempting to suck the Government into a cat and mouse game, GM makes no commitment till they bank our money.

      Commenter
      Observer
      Date and time
      December 11, 2013, 11:01AM
    • Holden you are responsible for your own business management. If you cannot remain competitive, innovative and decent priced then you have no business here. Stop asking for hand outs and the recent speech from the Holden CEOs saying there is not one country in the world that doesn't subsidize it's car manufacturing is a complete lie! Google searches don't prove that statement.... back it up Holden... where you get that info from???

      Commenter
      The Other Guy1
      Date and time
      December 11, 2013, 11:53AM
    • Steve H, well if Holden goes, your mob will cop a huge recession, with quite possibly 100 000 thrown out of work, how will the taxpayer feel then, with mass unemployment, costing billions in welfare. ?? Why not loan them the money on the understanding they repay it down the track, bring in a few tariffs on imported cars, and get GM to start investing in Australia. Even your mates Mcfarlane and Truss are concerned, and rightly so, they know full well the disaster for our economy if GM goes.

      Commenter
      Piesnchess
      Location
      Mt Evelyn
      Date and time
      December 11, 2013, 12:31PM
    • Mitsubishi did exactly that - took the money from the people of S.A. & then run.

      Commenter
      coolabine
      Location
      Adelaide
      Date and time
      December 11, 2013, 12:43PM
    • I did SteveH and I'm proud of it.

      I bought a large car with all the extra's. Tows a boat, carries a kayake on the roof, carries 5 in comfort and costs the same as a 4 cylinder to run. Thanks Holden for my Sportswagon dedicated LPG.

      Good luck Australia as our new export commodities ramp up and save the economy (soil, baristas, accountants, hairdressers and the like)

      Commenter
      Jimmy
      Location
      Warrandyte
      Date and time
      December 11, 2013, 3:04PM
  • "Australia is open for business" but not from Holden or Qantas and possibly Toyota - Adults are really in charge. It took a genius of Bob Hawke and Paul Keating for best part of a decade to wrest the economy from the grips of the miners and primary producers and seemingly it only takes 85 days of Abbott government to turn it straight back.

    Commenter
    Mais51
    Location
    Sydney
    Date and time
    December 11, 2013, 7:11AM
    • Sadly over the last 6 years the growth in government spending was 50% higher than the growth of the economy. There is no money left. Labor almost ran out of other peoples money so we should be thankful that they are gone and the wasteful spending can slow down a bit. But dont let a little thing like facts get in the way of yur hate for Abbott.

      Commenter
      pragmatic rince
      Date and time
      December 11, 2013, 9:03AM
    • Has it occurred to you for one instant that GM with their massive resources are not prepared themselves, to prop this up? GM will leave anyway, why on earth would this Govt, hence taxpayers be prepared to waste more money on a lemon. There was more than enough spending on lemons over the previous 6 years, the cupboard is bare.

      Commenter
      The Bujoo
      Date and time
      December 11, 2013, 9:39AM
    • Give us a break Pradmatic rince it has been going on since 2001 as per the report. Stop trying to spin the truth. John Howard spent like no ones business, mainly to buy votes every election.

      Commenter
      Jan
      Location
      Sydney
      Date and time
      December 11, 2013, 9:44AM

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