Auto assistance backflip driven by threat of “politically inconvenient” election-year job losses

Yesterday’s auto industry funding
announcement has been met by some with skepticism, and there are claims the federal
government is merely trying to avoid tens of thousands of manufacturing industry job losses in an
election year.

As reported by Manufacturers’ Monthly and others, industry minister Ian Macfarlane announced the backflip
yesterday.

The government took its pledge to remove
$500 million from Automotive Transformation Scheme funding to the 2013 election, and planned to save
a further $400 million in ending the scheme in 2018. However, Macfarlane announced yesterday in Adelaide that this decision had been dropped.

“While the global car makers have made
their independent decisions to leave Australia by the end of 2017, it’s
innovative investment and pursuing global supply chains that will ensure
Australia’s extensive automotive skills base is retained and enhanced,” said Macfarlane in a statement.

This was promoted as something that
would create “certainty” in the industry, and was prompted by concerns that
Holden and Toyota may have ended local car assembly in 2016, rather than in
2017, meaning large-scale job losses coinciding with a federal election year.

The Australian Financial Review quotes an unnamed senior source in the government saying that this would have been “politically
inconvenient”.

Toyota and Holden have welcomed the decision. The Australian Manufacturing Workers Union described it as “too little,
too late”.

The $500 million cut would not be passed by
the Senate, in any case.

Macfarlane has said the ATS has been extended to 2021, though
Macfarlane has said only about $100 million of a budgeted $900 million will be
actually spent on it.

The Australian reports that sources in the
government have said that only $105 million of yesterday’s $900 million
announcement would actually be seen by the auto industry.

Free market advocates were scathing of the
reversal, which goes against earlier government rhetoric about ending “the age
of entitlement” and decisions such as the refusal last year to grant assistance to SPC.

“I think this suggests to the electorate
that the Government doesn’t know what it wants out of its political economy,” Chris Berg of the Institute of Public Affairs told ABC’s 730 last night.

“But it also sends a message to rent
seekers across the country that, even if the Government says that they’re
shutting the door to your claims on taxpayer money, you can still barge your
way in.”

The ATS began under the former Labor
government on January 1, 2011. It will run until December 31, 2017, and covers payments to motor vehicle, component and tooling producers, and automotive service providers.

Image: News Corp