Value of Government Subsidies to Australian Auto Makers Revealed

Australia’s three auto makers, GM Holden, Ford and Toyota, have received A$4.5 billion ($4.7 billion) in government funding over the past 12 years, with nearly half going to the General Motors subsidiary, a news report reveals.

The figures were published partly as a result of a dispute between the Australian Financial Review and the federal government over confidential documents inadvertently released to the newspaper that detail industry aid.

The A$2.2 billion ($2.3 billion) in handouts received by GM Holden was 50% more than previous estimates. GM Holden Chairman Mike Devereux tells the newspaper the funds underwrote some A$32 billion ($32.5 billion) in local investment over the 12 years.

“For the A$150 million ($156.8 million) a year, you get A$2.7 billion ($2.8 billion) of economic activity generated by having Holden make things in this country,” he says. “It is 18 times the investment.

“The country just has to decide whether it can afford to, or want to, invest in this individual industry in a distinct way or whether it wants to let the industry not make cars here.

“Without an (auto) industry...you would lose around A$2 billion to A$3 billion ($2.1 billion to $3.1 billion) a year, times whatever Ford and Toyota also do. But I can't speak for what their numbers are.”

News Ltd., owner of the rival The Australian newspaper, reports that Ford received A$1.1 billion ($1.2 billion) in aid, while Toyota got A$1.2 billion ($1.3 billion) in state and federal government assistance.

That equates to Toyota averaging A$95.8 million ($100.1 million) a year and Ford A$87.8 million ($91.8 million) annually.

The newspapers say the new figures likely will spark renewed political and social debate.

Most of the assistance to GM Holden was in forgone import duties under the former automotive-components and investment scheme. The biggest single co-investment received was A$188 million ($196.5 million) under the government’s green-car fund for the GM subsidiary to make the Cruze small car locally.

News Ltd. says GM Holden’s taxpayer support is comparatively high, given Toyota has been the biggest producer and exporter of vehicles over the past decade, and the GM subsidiary in 2012 posted its lowest sales in 19 years.

Ford’s government funding also is disproportionately high, as the auto maker has hit record-low production levels in the past three years.

Using the funding average and last year’s production numbers as a guide, the report says GM Holden received A$2,117 ($2,213) for each locally built veicle in 2012 compared with A$944 ($987) for Toyota and A$2,372 ($2,480) for Ford.

Devereux is quoted as saying the overall subsidies are in line or lower than those paid by the 18 other members of the G20 group of nations that produce automobiles.

“I understand why this attracts the interest it does,” he says. “But without this type of competitive assistance…it is absolutely impossible to make cars in this country.”