Budget spells auto sector “devastation”

PROPOSED cuts laid out in last night’s federal budget spell devastation for Australia’s 200,000 automotive industry workers and 150 firms in the components sector, according to former industry minister Kim Carr.

The current government’s first budget handed down last night by federal treasurer Joe Hockey includes a policy to wind-back assistance for the car industry by killing off the main program, the Automotive Transformation Scheme (ATS), on January 1 2018.

Before last night’s Budget, the Abbott Government had only signaled it would cut $500 million from the $1.5 billion in funds to be made available under the ATS out to 2015.

Treasurer Hockey last night claimed killing off the ATS would save $619 million, but Senator Carr – who drew up the ATS when in office – has claimed the cuts are much deeper than that.

“The Government states it will save $618.5 million over eight years by terminating the Automotive Transformation Scheme from 1 January, 2018,” Senator Carr said.

“However, this is misleading as total cuts to this program would total over $900 million and include cuts long before the scheduled closures of manufacturing operations for Ford, Holden and Toyota.” He said the abrupt change in arrangements would raise concerns among international investors around sovereign risk.

“Automotive companies had a right to expect that the (Australian) Government’s commitment, made in the Parliament through legislation, would be honoured.

“This includes nearly 150 companies in the supply chain and raises the question of sovereign risk.”“Instead, having goaded the Australian car manufacturers into shutting down their operations, the Government has now added insult to injury by cutting short or slashing programs designed to help create new jobs and assist companies in the automotive supply chain.” The Federal Chamber of Automotive Industries (FCAI) was also dismayed by the decision, agreeing with Senator Carr that the cuts would amount to $900 million, not $619 million.

“The Government announced, in the Budget, a $500 million cut to the ATS in 2015–17 and the total abolition of the ATS program from the end of 2017. This results in total cut of $900 million,” it said in a statement.

“After only eight months in office, the Government has vowed to cut $900 million of the $1.3 billion in funding that remains in the ATS from 2015,” said FCAI chief executive Tony Weber.

“If this cut passes Parliament, it will intensify the financial pressure on the supply chain, which has already factored ATS funding into their long-term business and investment decision-making process.”“The 70 per cent cut sends a very poor message to the global business community,” he said.

“It tells global firms that Australia will not provide the policy certainty they need to confidently invest in Australia.”

Mr Weber said the chamber had repeatedly warned the government of the serious consequences big cuts to the ATS would have for the car industry, which was already in difficulties.

“I call on the Parliament of Australia to seriously consider the consequences a cut to the ATS will have on automotive workers and I encourage them to oppose this measure,” Mr Weber said.