Government reinstates $900 million car industry assistance fund, but expects only $100 million will be used

Photo: Getty/Ian Waldie

Tony Abbott has announced another major turnaround on the eve of his visit to South Australia tomorrow, with Adelaide newspaper The Advertiser carrying a front page exclusive this morning that Automotive Transformation Scheme was being “spared from the scrapheap” by the Government.

This latest change-of-heart plays to the state’s local politics, with the Federal Government already on the nose over breaking its election promise to build the next generation of submarines in South Australia, but also acknowledges a political reality, with the Coalition having no hope of getting its plan to ditch the scheme through the Senate.

But before everyone starts worrying where a cash-strapped government is getting the money from, the financial reality is nothing like the $900 million headline figure and it seems the budget savings they hoped to make by ditching the scheme will happen anywhere, because the funding is linked to the number of cars made and the Australian industry shuts down soon – Ford in 2016, before Holden and Toyota depart in 2017.

Industry Minister Ian Macfarlane admits as much in a media release today, saying “most of the savings from the programme will still be realised“.

He denies keeping the ATS is a backflip.

The actual likely cost of the Government’s about-face is estimated around $100 million.

Tony Abbott said “how much is spent will depend entirely on the applications made” and the decision to not abolish scheme was approved by the Government’s Expenditure Review Committee rather than Cabinet.

Meanwhile the Industry Minister announced $6.72 million for 12 auto parts supply companies to help with life after locally made cars.

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