Opposition Labor Party leader Kevin Rudd says the Australian vehicle industry could have a future with locally built hybrid-electric vehicles.

He revives a Labor promise first made last March that, if elected in the Nov. 24 federal vote, a Labor government will provide A$500 million ($458.1 million) for a “green car innovation fund” to back development of HEVs.

“One of the practical things we can do to assist manufacturing is to provide assistance with innovation,” he says.

Under the Labor Party plan, industry will be asked to match a $500 million government contribution on a one-to-three-dollar basis.

“Australia simply can’t afford any more short-term fixes in its car industry,” a party statement says. “The Green Car Innovation Fund is a long-term plan designed to secure jobs and protect the environment.”

The Labor Party says it would set up an industry taskforce to work in partnership to implement the plan that would see the A$500 million fund flow over a 5-year period beginning in 2011.

Meantime, Prime Minister John Howard, commenting on a newspaper report the government has been told up to three of the four domestic car manufacturers are in jeopardy, says the industry has received adequate financial support from the federal government.

“There has to come a point where you can’t just go on giving more and more,” Howard says.

Despite denials from Federal Chamber of Automotive Industries CEO Andrew McKellar, The Australian newspaper is sticking to its story that car makers have written to the government outlining fears about the industry’s viability.

The newspaper says concerns were conveyed verbally by senior car executives, who warned “union trouble or higher wages would be a poison arrow” for local car manufacturing.

The submission from the Department of Prime Minister and Cabinet (DPMC) to Howard warned of possible closure next year of Mitsubishi Motors Australia Ltd.’s car plant in Adelaide, and raised questions over the viability of Ford Motor Co. of Australia Ltd. and GM Holden Ltd. operations.

None of Australia’s four vehicle makers would comment on the political row, something predicted in the DPMC report.

“It is important to note that as the industry is very keen to maintain its relationships, and appears fearful of union retribution, that concerns noted above will not be expressed publicly by the car companies,” it says.

South Australian Treasurer Kevin Foley says it’s all a political ploy by the car industry to leverage more government assistance during an election campaign.

Foley says there is no new “doom and gloom” around the Mitsubishi operation.

“See it for what it is,” he says. “There’s not a greater seeker of assistance than the car industry in this world.”

Industry Minister Ian McFarlane tells The Australian industry representatives had repeatedly made clear to him their concerns about increases in union power leading to problems including higher wages and disruption to production.

“The industry is particularly susceptible to (union-led work stoppages),” he says. “It only takes industrial action against one supplier to bring the whole supply chain to a complete stop.”