Holden reveals billions in subsidies

Updated

Carmaker General Motors Holden has revealed that it has received $2.17 billion in Federal Government assistance in the past 12 years.

The figure, which is much higher than previous estimates, was released by Holden after a dispute with the Australian Financial Review newspaper.

And it is set to reignite debate about the virtues of government handouts for Australia's automotive industry.

GM Holden's director of government affairs Matt Hobbs says some of the $2.17 billion is yet to be cashed in.

And he insists the assistance is good value for taxpayers, because the subsidies underwrite tens of billions of dollars in local investment.

"We've received $1.8 billion worth of incentives - both duty reductions and cash - over the last 12 years, and that's allowed us to undertake automotive manufacturing in Australia and spend over $32.7 billion, and $21 billion of that in the supply of those," Mr Hobbs said.

"It's a lot of money to receive but it's a huge amount to spend in the economy and we're very, very proud of the fact that we've been building cars here and spending a lot of money in the economy."

The amount averages out to $150 million a year for Holden.

Australia's automotive industry The Government's New Car Plan involves $3.4 billion in support for the industry

The Government also provides grants to Ford and Holden to encourage innovation

More than 1 million new vehicles are sold annually

Toyota has the lion's share of the market, selling 18 per cent of new vehicles hitting the road.

Next is Holden with 12.5 per cent, with Ford on 9 per cent.

In the passenger car market, imports outsell locally-produced vehicles by nearly 4 to 1.

Australia's vehicle and components exports are worth $3.25 billion annually.

The Middle East (44 per cent) is Australia's biggest automotive export market. All figures as of 2011. All figures as of 2011. Read more here

University of Wollongong economist Henry Ergas says the figure is about 40 to 50 per cent more than previous estimates, and he believes it is a significant waste of taxpayers' money.

"It doesn't seem to help the industry adjust," Mr Ergas said.

"It just keeps it in existence, and there seems to be no prospect of getting it off life support to being internationally competitive and viable."

'Wealth-generating industry'

Mr Ergas says resources are being spent on an industry that cannot survive without subsidies, and argues those funds would be better spent on viable industries.

But Mr Hobbs says Holden would close its Australian plants if the subsidies were cut.

"It's a great deal for the country ... [and] if the assistance wasn't there, we'd go away. We would just do this somewhere else in the world," he said.

But he denies his position is a form of blackmail.

"No, it's about informing people about what our business can bring to this community and then providing what is necessary to bring the investment to this country," he said.

"Other countries fight viciously for it because it's a wealth-generating industry."

A spokesman for Industry Minister Greg Combet says the Government supports manufacturing because it provides jobs, technologies, investment, and other economic benefits.

Topics: business-economics-and-finance, automotive, federal-government, australia, sa, vic

First posted