Abbott to deliver $100 million package

TONY Abbott has announced a $100 million “growth fund” to help create jobs and support areas affected by Holden’s decision last week to close its local manufacturing plants in 2017.

In a statement released today, the prime minister acknowledged the “acute pressures” placed on both South Australia and Victoria following Holden’s and Ford’s decision to end its manufacturing presence in the coming years.

The package will deliver targeted support to the areas hardest hit by the closure, most likely Elizabeth in South Australia which is home to Holden’s production line, as well as parts of Melbourne and regional Victoria.

In the statement, Mr Abbott said the automotive sector is not the only manufacturing industry under threat in Australia, and that industry policy must look to the future to ensure it is competitive and better equipped to create investment and employment.

“We will deliver support for the workers and communities impacted by the recent automotive closure announcements but will do so based on state specific economic recommendations so that scarce Budget resources can be deployed to grow the economies in both states,” he said in the statement.

Funding will commence in 2014/2015 and will include support for existing parts makers in both states to help them change their business model to produce non-automotive products or to expand their export capabilities.

It will also cover grants to new or existing businesses that set up or boost manufacturing operations in either South Australia or Victoria, with funding preferences directed to businesses that employ former auto-industry workers.

Other grants will be available to assist in the commercialisation of research and development that leads to future products or processes.

The package is made up of $60 million from the federal government and $12 million from the Victorian government with the South Australian government and General Motors Holden making up the remaining $28 million.

Holden has set aside $100 million for wind-down costs, but it is unclear how much the US-owned car-maker will tip into the combined fund.

Holden workers who lose their job as a result of the closure will be eligible for support with a Job Services Australia provider under the Automotive Industry Structural Adjustment Programme.

The prime minister also announced the immediate commencement of reviews of the Victorian and South Australian economies to be chaired by industry minister Ian Macfarlane and due for release in February 2014 that will include business leaders from both states.

Mr Abbott said the outcomes of the reviews, along with the advice of other review panels and consultation from state governments will determine the final design of the fund.

The reviews will investigate ways to make the Victorian and South Australian economies more competitive by investing in infrastructure, support training and redeployment of affected workers, pushing for the diversification of automotive supply chain companies, encouraging investment and innovation in high growth sectors in the affected areas and relocating government services to the areas, depending on cost.

The prime minister will chair a taskforce to develop a ‘National Industry Investment and Competitiveness Agenda’ which will focus on reducing the cost of doing business in Australia, encouraging innovation through support for research and development, and encouraging growth of small to medium businesses.

Mr Abbott said he wants to help the industry by identifying ways to lower costs, but criticised the former Labor government’s policy of pouring money into the industry to keep it afloat.

“No country has ever taxed its way to prosperity. Similarly, no country has ever subsidised its way to prosperity,” he said.

“We will do what we can to ensure that Holden and Ford workers move from one good job to a better job when they leave those companies in 2016 and 2017. That means ensuring they get the best possible economy in which to move.

“Government’s essential task is to get the fundamentals right: that means low, simple and fair taxes stable and predictable policy settings prudent, frugal and effective administration efficient services and strong infrastructure.”

Holden announced last week that it would close its local manufacturing operations in 2017 after more than 65 years in Australia, leaving 2900 employees jobless and significantly impacting parts suppliers as well as putting further pressure on Toyota’s local production plants.

Ford confirmed in May this year that it will shut its local manufacturing operation in Geelong and Broadmeadows in 2016, impacting 1200 production staff.

The productivity commission inquiry into the automotive industry is expected to hand down its preliminary findings on Friday, before the final report is release in March next year.