The Government Is Offering Car Manufacturing A Reprieve: Here's Why It Won't Help

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We all know that car manufacturing is all but dead in Australia—Holden, Toyota and Ford will be out of the country by 2017—but the government has decided to let it die a more natural death.

Originally, the Federal Government had planned on cutting $900 million from the Automotive Transformation Scheme, claiming it was an effort to encourage innovation within the industry. But the cut met criticism and could not get past the Senate. Now, the Government has decided to ditch the cuts, allowing the industry to use the allotted money—up to $500 million—through 2020.

However, experts are not convinced it will do car manufacturing any good, claiming that as little as $105 million will end up being spent to aid the industry. This is because eligibility for the funds is tied to the number of cars being produced. As production numbers continue to decrease, fewer companies will be able to use the money.

Industry Minister Ian Macfarlane has confirmed that the Government will not change the legislation to open up the funds to more aspects of the industry.

“We want the car industry to continue until the day Holden close their doors,” he said.

Read related articles from Business Review Australia:
Update: 200,000 Jobs and $29bn GDP at Stake in Auto Industry Collapse
Is Australia Better Without Car Manufacturing? General Motors Thinks So.

Although Government leaders were hoping the announcement would be met with agreement, many were confused by how the money would be allocated, as well as the fact the decision didn’t go to the partyroom or Cabinet for discussion. Prime Minister Tony Abbott shared that this was not uncommon.

Car-part manufacturers called it a victory for the industry, while Holden said it increased their ability to stay until the end of 2017.

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