Holden funding almost secured, but are these bailouts a good idea?

Manufacturing Minister Senator Kim Carr is confident a deal to secure Holden’s future as a car manufacturer in Australia will come to fruition, following news that the opposition treasury wants to cull $500 million of assistance formerly put aside for the automotive industry.

Senator Carr says General Motors’ Australian Holden business is in an “urgent” situation, needing funding as soon as possible.

According to a report from The Australian, the Manufacturing Minister has secured $100 million of assistance for Holden, which will be announced within the next few months. 

“The situation with General Motors is urgent but it requires careful consideration of the various options and we are in the business of ensuring that we get the best deal for Australian workers, the best deal for Australian business, the best deal for the Australian economy by ensuring that we get the highest level of investment from General Motors and to ensure that we will be able to continue to produce the full range of services for the automotive industry in Australia,” Senator Carr said in an interview with ABC News Radio.

Should the government prop-up the car industry?

Blog posts this past week have slammed the government for using taxpayer money to fund the ailing automotive industry.

According to Senator Carr, it is his responsibility to ensure industry thrives into the future.

“The automotive industry provides a pivotal strategic role for manufacturing in this country. The automotive industry has huge – provides huge spillover benefits in iron and steel and in electronics and in plastics and chemicals. In terms of services it provides huge values, it has massive values for export. It has, of course, been a major source for research and development, a major private sector source for research and development investment in this country,” he told ABC News Radio.

“And, of course, it has provided – been provided with support from governments but not as much support as agriculture or mining is able to attract. So I think it is important to see the strategic role in manufacturing and appreciate the benefits that manufacturing brings to the whole economy.

“It requires enormous skills to be able to produce the technologically advanced equipment that people want to use in their daily lives.”

Last week Senator Carr announced he had secured $103 million of assistance and 300 new jobs for Ford, following talks with the local manufacturer’s parent-company in Detroit.

The assistance will reportedly secure production of Ford’s Falcon and Territory SUV at the Broadmeadows manufacturing facility, as well as securing the jobs of the workers who assemble the vehicles, until at least 2016.

“Well we’ve been fortunate to be able to meet with the global leaderships of both the – of Ford and with General Motors who have indicated ongoing commitment to Australia. And we’re now in the process of developing the investment plans that are necessary for – to ensure the new jobs that are needed into the future,” he told ABC News Radio.

“But today, we’re announcing $103 million upgrade for the Ford Falcon and the Territory, and as a consequence of that we are looking to 2016, which is the longest line we’ve seen in regard to Ford about their future investment plans in Australia, and it means it secures the future of Broadmeadows, it secures the future in terms of our R and D centre at Broadmeadows, and we’re acquiring 300 people to be able to want to take that work.”

Ai Group chief executive Heather Ridout said last week the co-investment between the government and Ford represents a renewed commitment by Ford and our government to continue production in Australia.

"It is an approach that will be warmly welcomed by the many local small and medium-sized businesses in the automotive supply chain," Ridout said.  

"The automotive industry plays a very important role in product and process innovation, workforce and management training in the Australian manufacturing sector. These contributions have broad regional and national benefits both in the Australian manufacturing industry and across the broader economy. 

"The commitments announced today will assist in filling the void created by the sudden withdrawal of the Green Car Innovation Fund last January."

Opposition calls labor a ‘car wreck’

Opposition Innovation Minister Sophie Mirabella has slammed Senator Kim Carr for claiming the Coalition doesn’t care about Australia’s automotive industry.

"I notice the debate that’s going on within the Opposition in terms of their approach to the automotive industry. I would give all strength to those elements of the Opposition that are actually genuinely interested in manufacturing. I know there are some of them there," Senator Carr said last week.

He also claimed Opposition Leader Tony Abbott has "made a great play of putting on the fluoro vest" and "going around to factory after factory and expressing sympathy with the struggles that blue collar workers are facing". 

Shadow Minister Mirabella used the opportunity to remind the public about the labor government’s "car wreck" of a track record when it comes to automotive industry funding.

"Cabinet discard Kim Carr’s latest outburst in the media today, calling on the Coalition to save blue collar jobs in the motor vehicle industry, is the height of hypocrisy given Labor’s nearly $2 billion in broken promises to that industry," she said.

"It was only a year ago that Labor made savage cuts to car industry funding by shredding:

  • The Green Car Innovation Fund;
  • Cash for Clunkers; and the
  • LPG Vehicle Scheme.

"To make matters worse, the decision to decimate these programs was a unilateral made in the dark of night by the Prime Minister without any warning to the car industry. 

"And now the sector is also going to be slugged by up to $46 million annually in additional costs due to the carbon tax.

"Labor’s litany of car industry policy failures and unaccountable and unsustainable spending provides no certainty or long term outcomes for the car industry or the Australian public. Its failed approach cannot be continued."

[Image: Holden’s Cruze hatch, manufactured in Australia.]