Senate may block cut to government assistance to car industry

The Senate looks likely to block the government’s attempt to cut car industry assistance by $900m.

AAP reports that crossbench senators will join Labor and the Greens to block the planned changes to the Automotive Transformation Scheme (ATS) on the grounds that they would damage the ability of auto component manufacturers to diversify.

In addition, they fear cuts in assistance could cause Holden to stop car making before the planned date of 2017.

According to the Australian, the government wants to cut the ATS by $900m between 2013-14 and 2020-21. In addition, the bill would reduce the amount that firms can claim under the ATS and bring forward the end date for the scheme to Decem­ber 31, 2017.

Faced by a budget shortfall and resistance to other budget measures such as the proposed $7 Medicare co-payment and changes to education funding, the government sees the proposed cuts to the ATS as a money saving option.

If the bill is blocked it will reverse $500m in cuts to 2017-18 announced in last year’s Mid-Year Economic and Fiscal Outlook, as well as $400m in savings announced in the May budget.

Labor industry spokesman Kim Carr, who will today seek the Senate's approval of a new inquiry into the auto sector, said that Australians want a sophisticated manufacturing sector to be maintained.

"The automotive industry is one of those key sectors that's able to provide us with the skills and the capabilities we need to secure future investment in manufacturing more broadly," he said.

The Australian Motor Industry Federation (AMIF) supported the proposed inquiry.

"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," AMIF chief Richard Dudley said.

Senator Ricky Muir is expected vote against the bill.

“It is time to develop a whole-of-industry blueprint to enable us to rebuild, and to invest in the innovation, knowledge and skills that Australia is renowned for in order to assure future automotive industry growth and job creation,” he said.

“The automotive aftermarket industry is currently worth $11bn to the economy, and employs 30,000 people. This sector is well placed to contribute to the overall restructuring of the industry. We just need to see sensible, innovative policy to assure this growth.”