Oz Labor Government Sweetens Auto Industry Aid Offer

The Australian Labor government is promising A$500 million ($451 million) guaranteed by legislation in new funding for the country’s auto industry if its wins re-election Sept. 7.

The money is in addition to a separate A$200 million ($183.7 million) assistance package committed to by the government after it abruptly changed the fringe benefits tax rules for cars used for private and business purposes that saw lease companies immediately begin laying off staff amid a flood of canceled orders.

Government officials say the extra A$500 million will be available for the industry from 2016 to 2020, with A$300 ($271 million) million a year promised on an ongoing basis from 2020. The additional support will be reviewed every five years.

The announcement by Prime Minister Kevin Rudd and Industry Minister Kim Carr comes days after GM Holden Chairman and Managing Director Mike Devereux’s call for a clear, consistent and globally competitive government policy to help secure the industry a long-term future.

The promised funding by the Labor government is seen as securing the future for local production by GM Holden and Toyota Australia. Ford has announced it is ending manufacturing in the country in 2016, although it will retain its research and development and design divisions. The auto maker has committed to import a lineup of its latest vehicles.

GM Holden’s workforce voted by a strong majority to accept changes to its contract that will save the auto maker A$15 million ($13.8 million) a year.

Carr says Australia is entering tougher economic times as China’s demand for much of the country’s natural resources comes to an end. This means manufacturing is more important than ever.

The Labor government’s latest campaign pledges are in addition to its commitment to provide support through a co-investment program for automotive production, plant and equipment, tooling, innovation and design and engineering services, plus a specific legislative objective of integrating the supply chain into local and global non-automotive markets.

The government says with its new plan, the industry will make a vital contribution to the economy and will make 250,000 direct and indirect jobs more secure.

“The New Car Plan for the 2020s will be funded from within the existing funding allocation and no new funds will be required for the program until 2018,” Carr says.

“For this industry to survive and thrive into the future, both federal and state governments must take an active role,” Electrical Trades Union National Secretary Allen Hicks says in a statement.

“(The Labor government’s financial-assistance) announcement is critical, but it is not the end of the story. Ongoing vigilance will be necessary if we are serious about securing a car industry in this country for the long term.”

Melbourne’s The Age newspaper reports Opposition Leader Tony Abbott saying, if elected, his government is prepared to support the auto industry with conditions. “We want the industry to have a future, not just a past, and we are prepared to make a substantial commitment to it, but it must be a sound, rationally based commitment with a realistic prospect of success.”

Opposition treasury spokesman Mathias Cormann tells Sky News the coalition will meet with auto industry executives after the election to discuss the issues “in a sensible fashion.

“We will not be negotiating assistance for the car industry in the middle of an election campaign,” he says. “Kevin Rudd is a desperate man. He's making it up as he goes along.”