Budget Review 2014–15 Index

Margaret Lee

The past year has marked an era of change for the automotive industry. All remaining Australian-based automotive manufacturers, Holden, Ford and Toyota, have announced that they intend to cease production in Australia, with the last scheduled to close by the end of 2017.[1] The automotive industry has a long history of government support. As tariff assistance to the automotive industry declined after 1984, a series of industry-specific budgetary measures were implemented to help the industry adjust. In a recent position statement, the Productivity Commission considered that ongoing industry specific assistance to the automotive manufacturing industry is not warranted.[2]

The Automotive Transformation Scheme (ATS) is part of a suite of programs offering assistance to the automotive industry from 2008–09 to 2020–21. Similar to its predecessor, the objective of the ATS was primarily to encourage competitive investment and innovation in the industry and to place it on an economically sustainable footing.[3]

Budget 2014–15 reflects the Government’s decision to terminate the ATS on 1 January 2018, in line with the timing of production ending. Approximately $1.0 billion funding over five years from 2013–14 will remain available under the Scheme to support vehicle manufacturers and supply chain companies.  Terminating the ATS will save $618.5 million over eight years from 2013–14.[4]  The Government will also save $215.0 million over four years from 2013–14 by not proceeding with funding for the General Motors Holden’s next generation vehicles project.[5] A further $4.1 million over three years from 2014–15 will be saved by not proceeding with the Ford Australia – assistance to workers programme.[6] The latter program mainly provided funding for career advice and training to supplement employment support services.[7] These workers will continue to have access to the Automotive Industry Structural Adjustment Programme.

The Government announced a Growth Fund to support new jobs, investment and economic growth in South Australia and Victoria in response to the planned closure of vehicle production facilities.[8] The Budget provides $100.6 million funding for this initiative, with the remainder of the $155 million Growth Fund to be contributed by the South Australian and Victorian Governments, Holden and Toyota.[9]

• The Growth Fund includes: $35.8 million over five years to establish the Next Generation Manufacturing Investment Programme to support investment in high‑value manufacturing in Victoria and South Australia
• $29.8 million over five years to establish the Regional Infrastructure Programme to encourage investment in capital projects outside manufacturing to support new business opportunities
• $20.0 million over five years to establish the Automotive Diversification Programme to assist component suppliers to transition to new products and markets, including redirecting existing uncommitted funding of $16.9 million from the Automotive New Markets Initiative
• $15.0 million over two years from 2016–17 to extend the Automotive Industry Structural Adjustment Programme to assist automotive workers made redundant to find employment and
• the Skills and Training Programme, funded by Holden and Toyota, to transition automotive workers into new jobs through skills recognition and training.

The Budget provides $50.0 million in funding over three years from 2014–15 to establish the Manufacturing Transition Grants Programme. This will assist Australian manufacturers to transition to higher value manufacturing activities and/or niche activities which result in a new end product and improve a firm's competitiveness. This measure also assists diversification away from traditional manufacturing, such as automotive.

Labour market adjustment support elements of the Automotive Industry Structural Adjustment Programme will be delivered through the employment portfolio.[10] This provides intensive employment services to employees made redundant from eligible manufacturing firms in the automotive manufacturing industry (employees made redundant would not normally be entitled to this type of employment service due to income support waiting periods and their recent work experience). Job seekers also receive additional assistance such as employment subsidies, equipment and training through the Employment Pathway Fund.[11] Providing this support for eligible workers in the automotive and several other industries will be a priority in the employment portfolio for 2014–15.[12]  

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