Government ditches automotive industry cuts – throws $500 million lifeline

The federal government yesterday abandoned its proposed $500 million cut to assistance to the automotive industry. 

The Automotive Transformation Scheme Amendment Bill, announced before the 2013 federal election, will now no longer proceed.

Ford announced in 2013 it would stop manufacturing in Australia and since the bill both GM Holden and Toyota also revealed they would quit Australia, leaving Australian component manufacturers high and dry. 

Read more: The death of the Australian car industry – what it means for your business

Richard Reilly, chief executive of the Federation of Automotive Product Manufacturers, told SmartCompany small businesses in the automotive supply chain are breathing a “sigh of relief” at the news.

“FAPM and others have been arguing for 18 months, and to have the government listen to the industry finally, we are very pleased,” he says.   

“Businesses in the supply chain are looking at other avenues and other ways to sustain their business whether it is through automotive supply or non automotive opportunities. There is a whole range of avenues and opportunities that members of the supply chain are trying to avail themselves of now and today.”   

The Australian Industry Group also welcomed the move saying the $500 million in funding is “vital” to enable component suppliers to transition to new opportunities.

“The businesses and the employees in automotive supply chains are a valuable part of Australia’s industrial ecosystem,” Ai Group chief executive Innes Willox said in a statement.

“They have important roles to play in the restructuring of the Australian economy as we build a stronger and more resilient foundation that is less reliant on the investment in mining and energy projects and the high commodity prices that have featured so prominently in the last decade.”

Willox said the government’s decision will help ensure the supply chain across the automotive industry can remain intact.

“Without continued funding, there was a very real risk that all automotive assembly in Australia would have ended well before the final dates announced by Ford Australia, GM Holden and Toyota.”