The Rudd Government will double its assistance to the ailing car industry to more than $6 billion over the next 13 years in a bid to retain thousands of jobs and valuable exports.
- $6.2b plan to save car industry
- Plan includes $3.4b in fresh funding
- Car tariffs halved to 5% in 2010
- Package urges greener cars
The assistance includes an extra $3.4 billion in funding announced today as part of the Government's strategy to protect jobs and focus the country's car industry on becoming more efficient.
The Government's 'A New Car Plan For A Greener Future' followed a review of the future of car industry assistance headed by former Victorian premier Steve Bracks released earlier in the year.
The added funds bring to $6.2 billion in Federal aid for the industry, a move likely to be welcomed by companies facing reduced demand at home and abroad as the global economic slowdown saps demand.
''In a world now beleaguered by likely recession and financial turmoil, the new policy announcements help provide the proactive influence needed to boost the international competitiveness of our automotive industry," said Zoran Angelkovski, president of the Federation of Automotive Products Manufacturers.
The policy change will also "help us meet the critical challenges of a lower-carbon economy,'' he said.
Less welcomed, though, will be the Government's decision to support recommendation by Bracks to halve car tariffs to 5% from 10% in 2010.
Hundreds of jobs have been axed in the automotive industry, including about 1400 jobs at Ford's Victorian operations to be cut over the next two years.
Demand stalls
In October, sales of locally made cars built by General Motors' Holden, Ford and Toyota fell more than 16% in a market that shrank 11%.
Mr Rudd said Australia's car industry was ''part of the future.''
The industry produced 327,984 vehicles in 2007, 5% fewer than in 2000. The three motor vehicle producers also generated net losses of $449 million last year, the Bracks report said in August.
In total, the industry employed about 64,000 people in 2005-06, or 6% of total manufacturing jobs in Australia, and generated $5.6 billion in value, it said. Exports totalled about $4.7billion in 2007-08.
The new plan is designed to encourage car makers to produce greener cars and for the industry to become self-sufficient by 2020.
The Government's Green Car Innovation Fund has received a $500 million boost to as much as $1.3 billion over 10 years from 2009 to encourage manufacturers, component makers and researchers to produce more environmentally friendly cars.
Other features of the plan include:
-An immediate doubling of the payment to buyers of new cars fitted with LPG;
-An extra $1.5 billion in grants under the Automotive Transformation Scheme to promote greener operations and workforce training between 2011 and 2020;
-The establishment of a new Automotive Industry Innovation Council.
Main game elsewhere
Julie Toth, ANZ bank industrial economist, expressed concern that the government gives "sufficient" attention to the smaller parts makers and suppliers in its package, adding she had not had time to examine the package in detail.
"With regard to the Big Three, no matter how generous the Australian Goverment is to our three remaining local car makers, the main game for them is not in Australia," Ms Toth.
"Huge losses, liabilities, declining sales and other problems in the US and elsewhere will be quite rightly foremost in the attentions of their respective parent companies," she said.
Today's announcement comes in the wake of a call by US President-elect Barack Obama's new chief of staff Rahm Emanuel for support for America's car industry as its once giant companies struggle for survival and thousands of workers face losing their jobs.
GM and Ford burned through cash at the rate of $US1 billion a week in the September quarter, the companies said on Friday.
'New beginning'
The package marks a "new beginning,'' Senator Kim Carr, minister for industry and innovation, told the media briefing.
The plan also includes $116 million to support changes brought about through mergers and consolidation in the components sector.
Another $20 million is targeted to help suppliers integrate into global supply chains.
A $10.5 million expansion of the LPG vehicle scheme will double payments to buyers of new private-use vehicles fitted with LPG technology.
'Broadly positive'
The Rudd plan is broadly positive, however it has a large cost," said Christopher Hire of innovation consultancy Think2Know. "A healthy manufacturing industry is important to Australia's place in Asia."
Rather than focusing solely on aiding car manufacturing, however, Australian state governments could help producers by purchasing locally made trains and trams.
"They could support local firms and local industry without needing to subsidize it," Mr Hire says.
The Australian Industry Group recently announced support for more local content in Victoria's state procurement policy for rolling stock.
"It seems silly not to buy from local suppliers," Mr Hire said.
Such a preference for Australian-made rail cars would also support the defence industry by keeping those heavy-industrial skills sets onshore.
With Chris Zappone, BusinessDay and AAP
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