$275m Holden lifeline “not a handout”: Gillard

The Australian, Victorian and South Australian governments have tipped another $275 million into the world’s biggest car maker, US-based General Motors, which makes Holden cars in Australia.

The federal government will provide $215 million.

“The future of General Motors is secure in this country for the next decade,” Prime Minister Julia Gillard told reporters in Canberra.

“This funding is not a handout – it is a strategic investment that will boost our economy, foster innovation, build new business opportunities and promote adoption of new fuel-saving and safety technologies.

However, Opposition industry spokeswoman Sophie Mirabella said the productivity commission needed to look at car industry funding and provide independent criteria and guidelines.

“We need consistency in this area. We need rules that are transparent,” Mirabella said. “We can’t keep changing the rules to suit an individual company.”

After the announcement Holden said two new types of vehicles would go into production at its Elizabeth plant South Australia. The company had threatened to shut its Australian operations unless the government provided further assistance after 2015.

Holden has agreed to invest more than a billion dollars into car-making in Australia as a result of the new financial assistance. Managing director Mike Devereux said the Australian car industry did not compete on a level playing field.

“I believe it would struggle to compete against other countries, who … fight very aggressively to protect their own industries,” Devereux says.

“This is a very sound investment and we are being very conservative.

General Motors, based in Detroit, was bailed out by the Obama administration during the global financial crisis after years of declining sale in the US. GM has manufacturing plants all over the world including the US, China, Germany, India, South Korea, Brazil, United Kingdom, Thailand, Vietnam and Kenya, selling about 7.5 million cars a year in 120 countries.