Handouts limited

Australian car makers have been warned by the government that there is no bottomless pit of assistance as they fight to remain competitive.

The warning came as Holden was handed more than $13 million for research and development.

Industry Minister Ian Macfarlane said the government would continue to help the local automotive industry to remain globally competitive.

"We are assisting the industry going through a very difficult transition to remain competitive," he said.

"It's not a bottomless pit, but it is a pit we're prepared to dig into if it means more jobs for Australians, more exports of Australian produced goods."

Holden will get $13.4 million to research and develop safety and fuel management and further reduce greenhouse gas emissions in its Commodore range.

Canberra will provide $6.7 million with a similar total coming from the South Australian and Victorian governments.

Most of the money will be spent at Holden's facilities in Melbourne, but the Adelaide assembly plant will benefit from any increase in production volumes.

Mr Macfarlane said the funding would enhance Holden's technical capabilities and maintain its position within the General Motors world as the centre of rear-wheel-drive vehicle design.

"The work will also have positive flow-through benefits for the supply chain, through increased sales of components to GM Holden from Australian component makers," the minister said.

The cash for Holden follows $105 million from the federal and Victorian governments to Ford in May this year.

That money was to ensure the future of Ford's Australian manufacturing operations, to support the development of the next Falcon and a new light commercial vehicle for world markets.

Mr Macfarlane said the Australian car industry had been under pressure for the past 18 months.

"That's a result of a number of factors but particularly the high dollar and, in the last 12 months, high fuel prices," he said.

Over that time, a number of component suppliers have either closed down or cut jobs.

The federal government recognised the danger to the component sector more than a year ago, calling on local vehicle producers to "hang tough" with the local supply industry.

Mr Macfarlane said there was evidence that car makers now were helping local suppliers break into export markets by showcasing their products to parent groups, particularly those in Detroit.

The government would continue to work with car makers to ensure that Australian components were used in Australian cars, and increasingly in vehicles manufactured overseas, he said.

Source: AAP 2006