Australia throws ailing auto industry lifeline

[SYDNEY] The Australian government threw the country's ailing auto industry a lifeline Tuesday, reinstating A$500 million US$530 million) in funding to ensure it can continue until it shuts for good in 2017.

All three of Australia's key car manufacturers - Toyota, Ford and Holden - plan to cease production by the end of 2017 at the latest, citing high costs and the small domestic market.

Cuts in taxpayer subsidies to the industry were outlined in last year's federal budget, but Industry Minister Ian Macfarlane said the government was now concerned that withdrawing funding would hurt component manufacturers.

This, he added, could potentially force car makers to shut up shop earlier than expected.

"It's a reflection that we want the car industry to continue until the day Holden close their doors," he told reporters.

"And what Holden was saying to us and what Toyota was saying to us and to a lesser extent Ford, was that they couldn't be sure their components suppliers were going to be in business in 2017.

"So this gives not only certainty to the components suppliers but it gives the car industry manufacturers the opportunity to pass some of this money through to the components suppliers to ensure they're continuing until the end of 2017." Mr Macfarlane added that "we know the car industry is going to close in Australia".

"The reality is, though, that we need to make sure the industry continues right up to the end of 2017." Since coming to power in 2013, the conservative government has adopted a hard line on industry assistance, warning last year that the "age of entitlement" is over when it comes to taxpayer-funded handouts.

Australian Manufacturing Workers Union official Dave Smith said the backflip was a big win for workers in the states of South Australia and Victoria, where the car industry is focused.

"Fifty thousand workers can breath a little easier because their industry should keep going to 2017," he said, while condemning the government for giving the industry "18 months of uncertainty and inaction".

AFP