Australia Senate Vows to Block Auto Industry Aid Cuts

Members of the Australia Senate plan to block government legislation to slash A$900 million ($777 million) of aid to the automotive sector and instead conduct an inquiry into the future of the industry.

With Labor, Greens and independent senators promising to block the government move, Labor Party industry spokesman Kim Carr tells the Australian Broadcasting Corp. an unprecedented alliance is developing in the Senate “in rejection of the government’s proposals to destroy the automotive industry.”

Under the previous Labor government, Carr was a strong supporter of the domestic vehicle manufacturing industry with its 370,000 direct and indirect jobs.

The Coalition government has said because of the decisions by GM Holden, Ford and Toyota to cease manufacturing in Australia by the end of 2017, the government decided it was appropriate to terminate the Automotive Transformation Scheme (ATS) on Jan. 1, 2018.

The ATS provides assistance for the production of motor vehicles and engines, investment in R&D and in plant and equipment.

“The total amount of capped assistance for stage one will be reduced by A$200 million ($172.6 million) to A$1.3 billion ($1.12 billion) for 2011-2015 and stage two by A$700 million ($604 million) to A$300 million ($259 million) for 2016-2018,” Industry Minister Ian Macfarlane told Parliament when he introduced the legislation.

The Senate Economics References Committee will establish a detailed inquiry into the country’s automotive industry, including proposals to minimize the impact of closures and maximize the sector’s opportunities for growth.

Carr, Australian Motoring Enthusiast Party Sen. Ricky Muir; independent Sens. Nick Xenophon and John Madigan; and Australian Greens Sen. Janet Rice are co-sponsors of a Senate motion to establish the inquiry.

Carr and Xenophon say slashing federal aid will scuttle any chance for the industry to diversify.

“It is very important that we keep that scheme because the alternative is that you will have a tsunami of job losses in South Australia and Victoria and the rest of the country,” Xenophon says.

“This sector, the auto-components sector, with 33,000 direct employees, has hundreds of millions, if not billions of dollars invested in plant and equipment. They need to be able to use that plant and equipment to make other things.”

The Australian Motor Industry Federation (AMIF) is congratulating the senators for their “unprecedented alliance, leadership, foresight, and commitment” in calling for the first-ever inquiry into the entire Australian automotive industry.

Federation CEO Richard Dudley says his group, representing the majority of state and territory motor-trades associations, will facilitate a national automotive industry summit to identify common issues, industry sector interrelationships and proposed responses, and provide this input to the Senate inquiry.

“As this is the first time the Parliament will examine the whole automotive industry, it represents a once-in-a-generation opportunity to map out a policy framework including future government investment, support and/or intervention; industry action and policy cohesion,” Dudley says in a statement.

Ad hoc and isolated policy development is not sustainable, he says.

The findings, recommendations and decisions arising from recent reviews and inquiries regarding the end of automobile manufacturing; competition; taxation; motor-vehicle standards and other issues, could work against each other and be wasted unless they are part of a broader, consistent and cohesive future national plan, Dudley says.

“This inquiry is an important catalyst to not only examine current issues, but to identify future policy settings and industry action to restore confidence for future capital investment,” Dudley says. “Job opportunities are identified and created, the nation’s reliance on road transport is assured and the nation’s automotive knowledge skills bank is protected and enhanced.”

The Australian Manufacturing Workers’ Union welcomes the Senate decision to launch a wide-ranging inquiry into the auto industry.

AMWU Vehicle Div. Secretary Dave Smith contends Prime Minister Tony Abbott’s government has continued its assault on the automotive sector and workers with a transition plan providing only A$3 million ($2.6 million) in new funds to aid diversification of supply-chain businesses.

Xenophon adds at least two Australian-based vehicle-manufacturing groups are looking closely at getting the funds to make cars in Australia.

“(They) won’t be as big as Ford or Holden or Toyota, but it could be a star,” the senator says. “And I think that a well-designed, Aussie-made car run by a 100% Australian-made company could do very well in this market.

“We shouldn’t give up on that, because in terms of Australian ingenuity, in terms of Australian know-how, we can do it. But let’s wait and see methodically what the business plans say for that, and if it’s a credible business plan, then they need to get a bit of support.”