Government 'changes its mind' on funding for car manufacturing

The Abbott government has announced today that it will reinstate nearly $1 billion in funding for the car industry in its latest move to do away with several contentious policies.

The Coalition had planned to cut the funding, following announcements from Holden, Ford and Toyota that they would wind up car manufacturing in Australia in the next few years. But the cut prompted fears that the car makers would bring forward their closure.

Industry Minister Ian Macfarlane told 891 ABC in Adelaide he had been working on the backdown since August.

"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," said Industry Minister Ian Macfarlane in an ABC radio interview this morning.

"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."

It is estimated tens of thousands of people will lose their jobs as the impact of the closures also hits the component sector.

The funding cut was to have been made to the Automotive Transformation Scheme, which is expected to pump nearly $2 billion into the ailing industry. The government slashed the funding in last year's Budget, in accordance with an election commitment, saying the savings would go towards the budget bottom line and "policy priorities".

"The scheme basically there is to support production. Now there have been differences in opinion in terms of whether or not the auto industry needs that," said Macfarlane.

After Holden's announcement in December 2013, Prime Minister Tony Abbott announced $60 million in federal funding for job creation in South Australia and Victoria.

The policy switch is the latest in a series of changes by the government - including a decision to boost the pay rates of defence personnel and to dump the idea of a Medicare co-payment - that came after Mr Abbott survived a move to spill the leadership in early February.

Source: ABC News