Government restores $500 million funding for auto industry

Local car makers Holden, Ford, Toyota and the component makers that supply them will hold on to $500 million of funding after the Australian government scrapped legislation that would have withdrawn it.

The government was forced to back down over proposed culling of the Automotive Transformation Scheme (ATS) after the budget cuts were knocked back by the Senate. The move will effectively reduce the chances of Ford, Holden and Toyota closing local factory doors ahead of schedule.

In May 2014 the (then new) Federal government outlined in its first Budget proposed cuts to the ATS, including $500 million for car makers and suppliers.

The ATS will now be in place until 2017.

"A decision has been made, primarily to ensure that the industry goes the full distance in terms of its already slated closure at the end of 2017," Industry Minister Ian Macfarlane said today on ABC radio.

"Whilst the decision of people like Holden to cease manufacture was a decision they made separate to anything the Government did — and they are their words not ours — we don't want anything to jeopardise the survival of the industry until Holden finally closes."

Macfarlane said he had been working on the policy change since August 2014, with the fund to be split between the car makers and component makers 55 to 45 per cent.

Although touted as a positive move for the automotive industry, it is likely only a small amount of the $500 million will flow on to those intended as the industry winds down.

A press release issued by Industry Minister Macfarlane stated: "Most of the savings from the program will still be realised, based on production volumes as Ford, Holden and Toyota wind down production based on their independent decisions to end domestic car manufacturing."

Ford plans to end local manufacturing in late 2016, while Toyota and Holden will cease in late 2017.