The government has handed out $200 million to help the embattled car industry, in its first major campaign commitment, as well as mandating a 100% Australian-made target for the purchase of Commonwealth fleet cars.
The assistance follows the controversial decision to impose new car fringe benefit tax arrangements which will raise $1.8 billion over the budget period. The crackdown has been strongly attacked by the industry, with leasing companies organising an advertising campaign.
Industry Minister Kim Carr said the government hoped the 100% target would be adopted by all levels of government. If this happened “sales of Australian-made vehicles could increase by over 18,000 units per year” - an 8% increase on 2012 production.
Carr, who has been consulting the industry, said he would continue his discussions on how the extra funding could best be used, with details released after these talks.
The money for the car support is already included in the forward estimates released last week, although it was not spelt out.
The car industry is electorally significant in Victoria and South Australia.
The government has been particularly concerned to settle things down after the industry agitation over the FBT change.
Earlier this year the automotive industry was hit by the announcement of Ford’s plan to stop manufacturing in Australia from 2016, with the loss of about 1,200 jobs from the closure of its Broadmeadows and Geelong plants. Ford will continue to have research and development in Australia.
Senator Carr said the industry was vital for Australia’s future “and we are determined to increase sales of locally made cars”. The industry provided thousands of jobs, billions of dollars in export income and investment and benefits in research and development.
Commonwealth regulations will be changed to impose the 100% Australian made level on the commonwealth fleet, and exemption will only be allowed when a special circumstance requires a “fit-for-purpose” vehicle.
Senator Carr also announced Australian automotive suppliers today have been awarded grants totalling $7.3 million through round two of the joint Australian, South Australian and Victorian governments’ automotive new markets program. Applications have today opened for the next round, made possible by an extra $12 million announced earlier this year.
“It is essential that we maintain a strong automotive supply chain in Australia,” Senator Carr said.
The opposition’s policy is to continue to subsidise the car industry but at a lower level than the government currently does.
Carr challenged the opposition to say whether it was committed to the future of automotive manufacturing in Australia “because at the moment the answer is no.”
“They’re saying they will take $500 million out of the automotive industry immediately - and refer the matter to the Productivity Commission - which everyone knows is code for ending assistance.”
This would mean the end of the automotive industry in Australia, he said.
He said the opposition wanted to go back to the John Howard policy which was to end assistance to the industry from 2016.
Shadow assistant treasurer Mathias Cormann said the government’s initiative was an attempt to put a band-aid on the “bullet hole” created by its FBT decision.