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Inspired: Industry minister Arthur Sinodinos said his time at the recent Auto Aftermarket Expo in Melbourne reinforced to him that “there is a lot we can do in the future to build on the expertise we have got here”.

THE federal government has allocated a further $100 million in funding for the manufacturing sector, with a portion of it making its way to automotive parts-makers trying to diversify as the car industry they have traditionally supported prepares to shut down.

Industry minister Arthur Sinodinos announced earlier this week that the new funding would be included in this week’s federal budget, split between advanced manufacturing, advanced research and the creation of two “innovation laboratories”.

The announcement was met with mixed reviews in the two states hit hardest by the car manufacturing closure – Victoria and South Australia – as Toyota and Holden prepare to follow Ford’s lead in closing their production facilities. The final cars roll off the lines in October.

South Australian senator Nick Xenophon, who has been agitating in Canberra for more assistance ahead of Holden and Toyota’s factory closures, saw it as a huge win for his state, while the South Australian government described the package as a “dud” given that hundreds of millions of dollars are still locked up in the Automotive Transformation Scheme.

The Victorian government welcomed the new funding, saying it would help communities hit hard by the car industry closure and help companies transition to new products and markets, while Victorian Labor senator Kim Carr – a former industry minister – said the funding was inadequate and late.

Senator Sinodinos said the $100 million would be used to fund a series of efforts. The bulk of the sum, $47.5 million, will be used to resurrect the Advanced Manufacturing Growth Fund (AMGF), which ran out of money in 2016. This will not be of much assistance to the automotive sector as the main part of the AMGF is barred to Tier One parts-makers.

A sum of $24 million will be allocated to Co-operative Research Centre projects, $10 million will go towards establishing ‘innovation labs’ in South Australia and Victoria and $5 million will go towards student research via grants to industrial design courses at technology universities.

There will also be a $13.5 million reduction in import tariffs on imported vehicle prototypes, believed to be those used by GM Holden and Ford in their design and development activities.

Mr Sinodinos said the package was created to help improve the competitiveness, resourcefulness and resilience of the manufacturing sector as the car assembly and car parts industry wind down this year.

“It’s likely a lot of it will still find its way to places which have specialised in the past in the auto sector, but which are now seeking to diversify and do new things. But some of it will also make sure our components suppliers can be part of global supply chains,” Mr Sinodinos said.

“Australia has got a great future in advanced manufacturing, including in the auto sector.

“I opened the Auto Aftermarket Expo in Melbourne a few weeks ago and Australians are rev-heads. We love our cars and we love looking after our cars and there is a lot we can do in the future to build on the expertise we have got here.”

Mr Sinodinos said the funds would help companies wanting to produce high-value products as the automotive sector winds down, with a lot of the cash going to businesses in South Australia and Victoria.

Senator Xenophon welcomed the creation of the new AMGF as “a huge win”.

“Finally, we’re seeing some funds released that will allow small and medium businesses in the automotive sector to be able to transition once Holden closes in October,” he said.

“It will mean these businesses are able to turbocharge diversification plans.”

However, South Australia manufacturing and automotive transformation minister Kyam Maher said the new fund was a “dud”.

He said the federal government had “ripped” $800 million out of the Automotive Transformation Scheme (ATS), money should have been spent to mitigate the effects of the closure of GM Holden’s Elizabeth plant.

He said there was still $785 million left in the ATS.

Former industry minister Kim Carr, the author of the ATS and a long-time champion of car manufacturing, said the $100 million was welcome but was insufficient to make up for the loss of 50,000 full-time jobs and around 200,000 part-time jobs when the car assembly industry shuts down.

“Australia’s manufacturing businesses are only having to transition beyond automotive contracts because the Abbott/Turnbull Liberals drove Australia’s last remaining motor vehicle producers out of the country,” he said.

“The loss of jobs and skills in automotive manufacturing is being compounded under this government’s watch, as all manufacturing firms struggle to remain competitive in the face of skyrocketing energy prices.”

Senator Carr said the closure of the Australian car-making industry was a national crisis.

“A small top-up of funds in South Australia and Victoria for a previously oversubscribed and underfunded program will not address the economic fallout that is unfolding on our doorstep with the closure of the car companies,” he said.

“There are around 150 Tier One automotive suppliers and not all of them are in South Australia and Victoria. Many are based in New South Wales and Queensland.

“It will cost the Commonwealth far more in social security payments than it would ever have cost to retain the industry and maintain legislated government co-investment through the Automotive Transformation Scheme.”

Victorian industry minister Wade Noonan welcomed the extra support for the state’s manufacturers, automotive workers and industries in transition.

“Victoria is the manufacturing state of Australia, and we have been calling for a federal package of assistance for some time,” he said.

“Our manufacturing sector is in a process of transition to an advanced manufacturing state – this means new innovation, more jobs and business opportunities.

“We must assist these businesses during that transition period.”

By Ian Porter

KPMG
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