Car-makers better off under the Coalition, says Robb

THE Coalition claims the car industry will be $1 billion a year better off under an Abbott government, even after the proposed cut of $500 million from possible assistance available under the Automotive Transformation Scheme.

According to shadow minister for finance Andrew Robb, the Coalition cuts are countered by the impact of the ALP’s proposed changes to salary packaging taxation.

In a wide-ranging interview, Mr Robb also claimed the Global Financial Crisis was not the cause of the local industry’s problems in recent years, and stated the opposition would provide the stability needed to encourage investment.

Mr Robb stressed there would be no changes to the car industry plan until after the government received a report from the Productivity Commission that would be commissioned by an incoming Abbott Government.

“We have said all along that the program John Howard negotiated in 2005 for 10 years, which provided certainty, predictability and stability, that was appropriate,” Mr Robb said after addressing a meeting convened by the Australian Salary Packaging Industry Association.

“How that assistance will be applied will be informed by the Productivity Commission,” Mr Robb said.

Mr Robb said that, although the Coalition intended to strip $500 million out of the potential $1.5 billion available to local car makers as co-investment out to 2015, the car industry would still be $1 billion a year better off than under Labor.

“Our policy is to ensure that $1.8 billion is not cut. If you want to compare apples with apples, we are about $1 billion ahead in terms of assistance that we will provide the industry, and not just the manufacturers, the whole industry. There are many other parts of the industry.”

Mr Robb dismissed the Rudd Government’s promises to make a further $500 million available to help the local car-makers maintain investment in their plants and products.

“Now they are saying they are adding $500 million, but they are adding $500 million with one hand and taking $1.8 billion with the other hand.

“And that’s not just $1.8b now. It happens each year, and the $500 million is in many respects off in the never-never.”“There is no comparison, on any measure the Coalition is demonstrably better for the industry and, as well, we will restore the stability and the certainty so that people can plan for what’s going to happen and not wake up one morning and find some other measure has been introduced which cuts through investment decisions which have been made beforehand.”

Mr Robb said there was no need for immediate assistance beyond what’s available under the program.

“Well, a deal’s a deal. Certainty is certainty. Stability is stability,” he said.

“There’s more money there for less manufacturers.

“The industry keeps telling us, not just this industry, but so many, they can live with the rules as long as the rules don’t change after they have made investment decisions.

“We agree with that and we are going to abide by that. We have established our bona fides by saying we are not going to allow this (FBT) measure to proceed because it will change rules mid-stream.”

Mr Robb dismissed suggestions that the Global Financial Crisis, which erupted in 2008, made the 2005 Howard car industry plan obsolete.

“No it didn’t. In the first quarter of 2009 the dollar dropped to US60c and we saw the biggest trade result in our history.

“At the same time, interest rates dropped and people had a lot of money in their pockets and we had an economy from their (Labor’s) point of view that was the best in the developed world.

“And we had China, the biggest boom in 150 years. All of those things combined meant Australia got through the GFC."Mr Robb said it was Labor policies, specifically the stimulus program, which pushed up inflation and forced the Reserve Bank (RBA) to raise interest rates.

He made no mention of the American decision to deliberately deflate the US dollar.

“Labor started the stimulus spending nine months later. The first $10 billion, we 100 per cent agreed with that.

“But the next tranche, $77 billion, started nine months after the GFC, and you will recall from that point on, the RBA was jacking interest rates up to take heat out of the economy.

“So I do not accept that the GFC trashed the car agreement.”