From the AFR today:
General Motors Holden’s decision to leave Australia was made after the federal government baulked at an extra $80 million a year for seven years.
The appeal for the extra subsidies was discussed at a meeting in Adelaide on October 2 with Holden managing director Mike Devereux, federal Industry Minister Ian Macfarlane, South Australian Premier Jay Weatherill and his Manufacturing Minister, Tom Kenyon.
A summary of the meeting seen by The Australian Financial Review reveals that in order to keep making cars in Adelaide from 2016 until the end of 2022, Holden wanted $80 million a year in addition to the $40 million it was set to receive from the Automotive Transformation Fund and $275 million already pledged for seven years by the federal and state governments.
The extra $80 million year would have taken assistance to Holden to a total of about $1.1 billion over seven years, or an average of $160 million a year. If Holden shut before 2023, it would have had to repay the money.
Mr Weatherill and his Victorian counterpart Denis Napthine met Prime Minister Tony Abbott and Treasurer Joe Hockey in Canberra on Thursday and said remedying the economic damage would dwarf the cost of keeping Holden making cars in Australia.
And where will the money go now?
Mr Macfarlane and Mr Napthine both indicated that despite a reluctance to give Holden extra money, it was now likely Toyota would need a boosted subsidy if it were to survive.
Mr Napthine said that was the case “from the Victorian government’s point of view’’ while Mr Macfarlane said money set aside for Holden through the Automotive Transformation Scheme could now go to Toyota.
The industry believes the fall of Holden will kill the component supply industry and bring down Toyota as well, taking out up to 40,000 jobs.
…Mr Weatherill said neither Mr Hockey nor Mr Abbott seemed to appreciate the scale of the problem they had created, as evidenced by a lack of preparedness or a plan.
And that’s the rub for me. MB reckons we should have paid up in the circumstances of the looming capex shock even though we don’t support it in principle. This is an ideological and pragmatic trade off.
The Government has done it in reverse. They’ve let the industry go on principle without a practical transition plan, which is poor public policy-making.
To then toss the remaining cash to the last remaining automaker, thereby halving the efficiency of the subsidy, only deepens the absurdity of it all (although the PM didn’t seem to think it was happening yesterday). Toyota has hit the jackpot even as it goes out of business.
At the same time, we have this story from the SMH:
The top of the line Holden Caprice was recommended by the Attorney-General’s Department last year as the preferred option for a fleet of nine specialised blast-proof VIP vehicles to be used by the prime minister and other dignitaries, according to confidential government documents.
The revelation appears to contradict reported Abbott government sources as saying Holden had not even submitted a bid in the tender because the car maker simply ”was not interested”.
Holden viewed that claim – which appeared in a News Corporation newspaper on Wednesday, just hours before the car maker announced its withdrawal – as part of a deliberate negative backgrounding campaign by Coalition ministers designed to make the company look uncommitted to Australia.
All politics and no policy is the order of the day.
