Plan to save car industry

THE Rudd Government is considering broad criteria for its $500 million green car fund so that it can help component-makers find global markets, as part of a new plan that will use federal assistance to try to restructure the struggling Australian car industry.

The plan will be based on a report from a panel headed by former Victorian premier Steve Bracks, received by the Government yesterday but not publicly released. The Bracks review is understood to recommend an extension of the multi-billion-dollar Automotive Competitiveness and Investment Scheme for both carmakers and component-makers and that the Rudd Government oversee a restructuring package to help struggling component-makers merge or go out of business and still pay entitlements to their workers.

It is likely to recommend that the 10 per cent tariff on imported vehicles be reduced in stages, rather than cut to 5 per cent in 2010, as scheduled.

The review, charged with developing criteria for the green car fund promised by Labor before the election, is also understood to reject the view of Australian carmakers that component-makers only receive assistance for work done in partnership with them, arguing that it is critical the component-makers also find global markets and work with international makers.

But the Federal Chamber of Automotive Industries, which represents the big carmakers, said yesterday that "if component-makers are to get support from the green car fund it should be only for work done in partnership with local car manufacturers".

Industry Minister Kim Carr said yesterday the Government was sympathetic to continued industry assistance, saying the Australian car industry needed to be "on a level playing field" with carmakers in the 12 other carmaking countries around the world, all of which received government help. "The industry wants to be treated on the basis of a level playing field with other countries around the world," he said. "Now every other country of the 12 or so nations that I mentioned spends considerable sums of money working with their industry because those countries understand the importance of the car industry to their particular economies."

But Senator Carr said the Australian industry - often criticised for making larger and less petrol-efficient cars - needed to change in order to survive. "We want to see that the industry is transformed because we can't go on the way we are at the moment and I would expect that these issues of the levels of tariff support, the levels of investment that's required to sustain the industry will be matters that the Government will consider very, very carefully," he said.

"The question that will have to be answered is: does this country want to stay in that company of the 12 or so nations? I firmly believe that we should be, and together with my colleagues we will be assessing this report and determining which is the best way to ensure that this industry reinvents itself, is revitalised and maintains its sustainability."

Senator Carr also revealed that a separate review into industry policy had been delayed for a month because of the huge number of submissions.

source:theaustralian