Coalition’s big news day on automotive industry ends in a car crash

 In all news, World Automotive Conference in Turkey

The industry minister, Ian Macfarlane, announces $900m in cuts would now not go ahead – but then the good news turned to bad

It’s a curious day in politics when you open proceedings with an apparent $900m bonanza – and end in a finger-pointing muddle.

The Abbott government began barnacle removal on Tuesday by briefing various news outlets that $900m worth of cuts to automotive industry assistance would now not proceed.

Last May the government had announced in the budget that it would terminate one of the car industry programs, the Automotive Transformation Scheme, on 1 January, 2018, “to reflect announcements by vehicle manufacturers that they will cease vehicle manufacturing in Australia by the end of 2017”.

But the Senate begged to differ. Having already lost the major Australian car manufacturers, Labor, the Greens and key crossbenchers were concerned that the withdrawal of taxpayer support would send the Australian components industry to the wall – compounding the job losses associated with the end of local car assembly.

The Coalition is in significant political trouble in the manufacturing states, particularly South Australia, where a row over the future purchase of submarines has added to the car industry woes.

So stuck in the Senate, in a political jam in the manufacturing belt, and with the prime minister, Tony Abbott, due to visit Adelaide on Wednesday, the industry minister, Ian Macfarlane, was the designated bearer of glad tidings.

The planned cuts to the ATS scheme would now not proceed, delivering certainty to the carmakers, who were complaining to the government that they needed a reliable supply of various components until the assembly lines were finally closed in 2017 – and delivering a fillip to the components makers supplying Holden and Toyota.

A bout of generalised hooray-ness was meant to ensue.

Except it became clear from the moment that Macfarlane opened his mouth that the $900m was actually $500m – the money allocated to the ATS scheme between now and 2017. (Another $400m budgeted for the ATS for the period beyond 2017 was entirely theoretical, because there will be no carmakers operating in Australia beyond 2017.)

And closer examination confirmed the $500m was fairly theoretical as well, because the industry is winding down in anticipation of exit in two years. There’s not much activity going on, therefore the draw on the funds on offer is expected to be quite limited.

As Abbott put it on Tuesday: “How much is spent under the scheme will depend entirely upon applications that are made to the scheme, and the ordinary operation of the scheme.”

Macfarlane was asked on Sky News what the actual figure was, and he declined to furnish a specific answer. He thought “hundreds of millions”. Others thought a deal less.

In fact, Macfarlane in a press release issued separately on Tuesday actually seemed to think a great deal less. “Most of the savings from the program will still be realised, based on production volumes as Ford, Holden and Toyota wind down production based on their independent decisions to end domestic car manufacturing,” the statement said.

Then there was a fracas over process. The great shrinking pool of money had been reinstated not by a cabinet decision, which would have been conventional in the circumstances, but by the Expenditure Review Committee subcommittee “originally” (whatever that qualification from the prime minister means).

Tuesday’s about-face had not been flagged with the Coalition party room either. Macfarlane noted with typical candour it would have been a disaster if the announcement had leaked before its intended release, although given the various miscommunications of the day perhaps an unsanctioned leak might have translated the essential facts more effectively.

It became clear almost immediately why the internal consultation was so limited. Economic dries were quick to background various journalists about how bad this all was, given five minutes ago the government had been dead set against chasing businesses down the road with cheque books – not to mention the mild inconvenience of last week’s intergenerational report making the compelling case for why belts needed tightening.

Good government in Canberra rolls on.


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