Australia seeks to leave some funds intact for the auto industry image

The Australian government has opted to partially restore some of the funding – previously scheduled to be axed – destined to the country’s ailing auto industry.

The sector was allowed to keep 500 million Australian dollars even as the global automakers are getting ready to cease numerous production operations there. Prime Minister Tony Abbott’s government initially sought to cut around one billion Australian dollars in planned funding after Ford, Japan’s Toyota and Holden, the local unit of General Motors announced in 2014 they would cease vehicle manufacturing in the country before 2018. Now, the proposals met with discontent from the hostile upper house as the politicians feared the planned cuts would play a role in the planned production closures. Additionally, numerous state politicians have lobbied for the funding to be allowed as elections draw near.

“We don’t want anything to jeopardize the survival of the industry until Holden finally closes,” commented Federal Industry Minister Ian Macfarlane. The funds that were allowed would be divided among automakers and parts suppliers in a proportion of 55 to 45 percent, respectively. Auto companies previously blamed their decision to close the Australian businesses on the previously high Australian dollar, rising costs of manufacturing and slower economies of scale – with government data showing the companies stopped posting a profit since 2003 and instead racked up losses worth 4.4 billion Australian dollars. Indirectly the auto industry in Australia has around 45,000 persons employed, with Toyota, Ford and Holden accounting directly for around 8,000 of them.

Via Reuters