New Life for Oz Post-Auto Making Transition Fund

In a major policy reversal, the Australian government says it will not proceed with its plan to slash A$500 million ($381.6 million) from a program supporting the automaking and auto components industry.

Industry Minister Ian Macfarlane says the government will maintain the Automotive Transformation Scheme in its original form as legislated.

“The ATS will remain in place and will come to a natural conclusion at the end of 2017 when GM Holden and Toyota end their Australian manufacturing operations, following Ford in 2016,” Macfarlane says in a statement.

The auto industry and its suppliers had been angered by the proposed cut, saying businesses had based their planning on the program as originally set up.

The government still will realize most of the savings it wanted to make from the program, Macfarlane says, based on production volumes as the three automakers wind down operations.

Macfarlane says the government will continue to support components makers in transitioning their businesses to cope with the decline in production.

He announced a A$6.72 million ($4.36 million) investment in a series of projects worth A$16.2 million ($12.3 million) from the first round of a transition program to support new economic and job opportunities in the South Australian and Victorian communities affected by the wind-down in vehicle production.

Twelve auto-industry suppliers will benefit.

“The Australian government is working with industry and components suppliers to identify new opportunities for investment and jobs growth,” Macfarlane says.

“While the global car makers have made their independent decisions to leave Australia by the end of 2017, it’s innovative investment and pursuing global supply chains that will ensure Australia’s extensive automotive skills base is retained and enhanced.”

The Federal Chamber of Automotive Industries says the government decision to maintain the ATS as legislated provides the industry with the certainty it needs to help transition their operations.

“This is particularly important for the small- and medium-sized business in the supply chain, who have already factored ATS funding into their long-term business and investment decision-making processes,” FCAI CEO Tony Weber says in a statement.

 “It also recognizes the 45,000 workers directly employed, and the more than 100,000 workers indirectly employed in the automotive manufacturing sector, around Australia.”

Weber says it’s important Australians recognize the country will continue to play a key role in the global automotive industry after 2017 with GM Holden and Ford committed to continuing their extensive automotive research and product-development operations.

The grassroots Australian Taxpayers’ Alliance is much less enthusiastic, saying the decision means every household in Australia will be paying A$100 ($76) for the program.

It says with 6,600 people directly employed in car manufacturing plants in Australia, it means the program subsidy is equal to more than A$135,000 ($103,000) a job.

Alliance Executive Director Tim Andrews says the federal government is robbing taxpayers to pay for the failed business practices of multinational conglomerates.

“This is a grubby attempt to buy votes we just can’t afford – and every Aussie family will be slugged with the bill,” Andrews says in a statement. “The federal government needs to get serious, repair the budget and stop splashing cash on extravagant corporate welfare.”