Oz Auto Industry Fighting Proposed Subsidy Cutbacks

The Australian auto industry renews its campaign against a proposed A$900 million ($837.8 million) funding cut to the Automotive Transformation Scheme, saying the 70% reduction threatens the jobs of more than 100,000 workers.

The Federal Chamber of Automotive Industries and the Federation of Parts Manufacturers reaffirm their support for the program in a joint statement.

The new right-leaning Liberal-National coalition government used its first budget to announce a A$500 million ($465 million) cut to the scheme in 2015-2017 and termination of the program by the end of 2017. That would result in a total cut of A$900 million.

The ATS, in effect since Jan. 1, 2011, provides cash assistance for investment and production to automakers, components manufacturers, machine-tool and automotive-tooling producers and service providers.

“There are 45,000 workers directly employed, and more than 100,000 workers indirectly employed in the automotive sector whose livelihoods are at high risk of going if these cuts go through the Parliament,” FCAI CEO Tony Weber says.

FAPM CEO Richard Reilly says the changes will devastate the automotive supply chain, further putting at risk the jobs of thousands of automotive workers.

“We know that the three domestic car manufacturers (Ford, GM Holden and Toyota) are leaving by the end of 2017, and we are working with them to ensure the supply chain can transition out of the industry and remain intact,” Reilly says. “These cuts will jeopardize that by undermining our ability to plan for an alternative future.”

The two organizations strongly urge the Parliament to reject the government’s proposals.

The FCAI says it has repeatedly advised the government of the serious consequences significant cuts to the ATS could have on the Australian automotive industry at what already is a difficult time for manufacturing and supply-chain workers.

“After only eight months in office, the government has vowed to cut A$900 million of the A$1.3 billion in funding that remains in the ATS from 2015,” Weber says. “If this cut passes Parliament, it will intensify the financial pressure on the supply chain, which has already factored ATS funding into their long-term business and investment decision-making process.”