Labor to provide new aid package to car industry

The Federal Government will today promise a new aid package to the struggling car manufacturing industry. The assistance is expected to be worth $200 million over the next two years.

The ABC reports that the news was confirmed by Treasurer Chris Bowen.

"It goes to co-investments with state governments to ensure that the industry survives, diversifying manufacturing production," he told ABC radio.

"We think the car industry is important because of its impacts on research and development, it impacts through the supply chain." 

The package will also include a commitment by the federal government to only purchase Australian-made cars for the commonwealth car fleet. This would equate to 18,000 vehicles per year.

According to Prime Minister Kevin Rudd, the automotive industry provides 250,000 Australian jobs either directly or indirectly, and is worth preserving.

As the SMH reports, the government will be hoping the announcement will deflect criticism of its decision to tighten the requirements for fringe benefits  tax (FBT) concessions on company cars.

Innovation Minister Kim Carr Senator Carr has not decided how the $200 million will be spent.

''I will continue my discussions with industry as to how this additional funding can best support growth in sales,'' Carr said.

''We are considering a range of options and will release implementation details following further consultation.''

As the ABC reports, Shadow Treasurer Joe Hockey says the assistance will not be enough to repair the damage done by the FBT change.

"On the one hand, Mr Rudd takes a baseball bat to the car industry by hitting it with an unprecedented $1.8 billion tax, and on the other he gives them back $200 million to try and save them," he said.

The Coalition is expected to decrease assistance to the car industry if elected in September.

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