Budget 2014: Auto industry support slashed

CRITICS have blasted federal government budget cuts to the Automotive Transformation Scheme (ATS), saying the move will hasten the collapse of the car industry and jeopardise chances for parts-makers to restructure.

The government last night announced it would end the ATS from 2018 in line with the planned withdrawal from local manufacturing of Ford, Holden and Toyota, saving $618 million over eight years.

Savings will include $177 million in 2018-19, $95.2 million the next year and $28.6 million in 2020-21, while a further $215 million would be saved by Holden’s decision to pull out and not proceed with the development of two new cars for local manufacture.

The government said $1 billion remain in the ATS to be spent over five years from 2013-14.

As well, it has announced it will not proceed with the $200 million Supporting Automotive Sector jobs program announced by the previous government just before last year’s election.

Independent senators, unions and parts industry executives say the cuts will likely cost even more jobs by failing to support the transition of jobs to new industries.

South Australian independent senator Nick Xenophon told the ABC that cuts to the ATS would leave a bleak outlook for car workers.

He said that on top of $500 million in cuts already announced, an additional $400 million will go from the scheme.

"It means that there will be a manifestly inadequate $400 million left in the scheme from 2015," he said.

"The consequence of that is that there won't be a chance for the industry to restructure and transition for the 10,000-plus jobs that are involved in the automotive products sector."Victorian Democratic Labor Party senator John Madigan echoed the sentiments, saying the budget had pulled the rug from under many automotive businesses and threatened 33,000 jobs.

The Federation of Automotive Products Manufacturers (FAPM) said changes to industry support would affect the job prospects of thousands of automotive workers and their families.

FAPM chief executive Richard Reilly described the budget outcome as a blow for automotive sector research and development.

"The budget announcement means that there's going to be $500 million pulled out of the Automotive Transformation Scheme, a scheme that assists automotive component manufacturers and vehicle manufacturers to undertake research and development projects and undertake investment as well in their businesses," he told the ABC.

The Australian Manufacturing Workers’ Union (AMWU) said the budget provided no relief for embattled auto workers, with further cuts to automotive programs and transition assistance.

AMWU president Andrew Dettmer said none of the $837 million in funding cuts would be redirected to workers or the components sector.

“In addition, cuts over the next two years are likely to see manufacturers close early,” he said.

Mr Dettmer said the money from the ATS should be redirected immediately to parts manufacturers to allow them to transition.

He said the $100 million transition assistance Growth Fund for South Australia and Victoria was woefully inadequate.

“We know from past experience that workers face an uphill battle,” he said.

“When Mitsubishi closed, one in three of those workers never worked again, and most only found unskilled or temporary work.”

According to budget papers released by treasurer Joe Hockey, the growth fund includes $20 million over five years for an Automotive Diversification Program to assist component suppliers to transition to new products and markets.

As well, $15 million will be made available in 2016-17 to extend the Automotive Industry Structural Adjustment Program to help redundant auto workers find new employment.