Carr introduces Green Car Plan

The federal government has accepted the necessity for change outlined in the Bracks review of the automotive industry. In fact, the government has seen a need to go beyond what the Bracks report proposed (more here), putting $1.3 billion on the table for the Green Car Innovation Fund -- not the $1 billion suggested in the original report.

Other points approved by the government in its new plan released to the media today ('A New Car Plan for a Greener Future') include a change to the LPG rebate system, doubling the rebate for new cars fitted with LPG from the factory.

In addition, the current Automotive Competitiveness and Investment Scheme (ACIS) will be replaced progressively by a "greener" and "better targeted" scheme -- the Automotive Transformation Scheme (ATS) -- which will run from 2011 to 2020.

The fly in the ointment for the industry remains the government's commitment (and proposal carried over from the Bracks review) to reducing the passenger-car import tariff to five per cent.

In total, the new plan represents a $6.2 billion spend by the government with the ultimate aim being to re-establish the industry in a more economically and environmentally sustainable position by 2020.

That figure includes the $1.3 billion sum for the Green Car Innovation Fund -- an amount the government anticipates will be matched by industry in a ratio of $3 for every dollar spent by the government. As per the Bracks report recommendations, the Green Car Innovation Fund will commence from 2009.

The ATS will swallow $3.4 billion of the total sum, with a further $79.6 million allocated to ACIS, in order to "smooth the transition" to ATS. $116.3 million will go towards the OE parts suppliers, providing the necessary funding for "structural adjustment through consolidation" and the consequent workforce changes.

A further $20 million has been set aside for the suppliers to improve their logistics during 2009 and 2010. The government has also budgeted $6.3 million for "an enhanced market access program", which will commit Australia to a free trade agenda with other countries.

Under the Green Car Plan, the government will set up an Automotive Industry Innovation Council, which will specifically draw together industry stakeholders for the purpose of encouraging and promoting "innovation and reform".

The government's press release, from the office of Senator Kim Carr (pictured), Minister for Innovation, Industry, Science and Research, explains that the new plan will protect the Australian economy during the current global financial crisis, as well as strengthening the local automotive industry's competitiveness. As a further bonus, it should fast-track the country's migration to a low-carbon-emission economy -- in the road transport sector, at least.

Over the 13-year life of the plan, the government anticipates it will generate $16 billion in investment locally. Senator Carr's press release -- the announcement was actually made by the Prime Minister, officially -- accepts that this plan is the appropriate measure for an industry that produces sophisticated goods which incorporate technologies as divergent as "microchips" and "light metals".

Furthermore, Australia is one of 15 countries in the world capable of taking a vehicle from concept to production. Without government support, this $7.7 billion industry would gradually lose ground, placing in jeopardy as many as 60,000 jobs locally.

Ultimately, the architects of the plan intend for the industry to boost investment in "sustainable vehicle production" and provide consumers with more fuel-efficient and low-carbon-emitting vehicles.

Of equal importance, the plan aims to ensure the viability of the local parts suppliers and open up new markets for both the local car manufacturers and their parts suppliers.

This plan's announcement is arguably timed nicely. It provides -- hopefully -- some boost for the industry's confidence, but it also ties in the perceived need to help the local industry during these difficult economic times with the longer-term plan for the amelioration of global climate change.

Ford Australia was the first of the local manufacturers to announce its response to the plan.

"The Federal Government's new car plan represents a significant and comprehensive package, with a number of key elements that have the potential to drive a paradigm shift in Australian automotive manufacturing," said Marin Burela, Ford Australia's President and CEO.

"In particular, the expansion of the Green Car Innovation Fund will provide a framework for Ford Australia to investigate a suite of environmentally-oriented product investment initiatives which will increase future competitiveness.

"The stability and assurance provided by the new car plan will allow Ford to move forward with studying these initiatives for Australian application."

In his own speech, delivered ahead of the Prime Minister's at the Automotive Centre of Excellence in Melbourne's Docklands precinct, Senator Carr 'laboured' the point that the plan would be good for both employers and employees operating within the local automotive industry.

"Between 2001 and 2007, the industry received $3.8 billion in assistance under the Automotive Competitiveness and Investment Scheme," he said.

"It spent ten times that amount on plant, equipment, research, development, wages, salaries and taxes.

"That's a great return, but it is only part of the story.

"The automotive industry is the mainstay of families around across Australia.

"It employs 60,000-plus directly, but the total number of workers who owe their jobs to car-making is at least 200,000.

"This is a plan for them."

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