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by Brett Davis

All Australian car manufacturers are outraged after Prime Minister Julia Gillard announced the Government would be trimming the green car innovation fund budget by $234 million to aid Queensland flood disaster efforts. The government has already sliced $400 million from the fund, leaving behind a sketchy investment foundation for prospective international investors.

According to recent reports, Ford, Holden and Toyota Australia have all written angry letters to the prime minister accusing her of breaching agreements made by former prime minister, Kevid Rudd. Mr Rudd promised back in 2008, that for every $3 auto companies spent on developing eco-car technology, the government would contribute a further $1.

So far, Toyota has developed – and released onto the market – the Toyota Hybrid Camry through the use of the green car fund. Ford also prepared development for building the Ford Focus here in Australia, as well as made deals with international suppliers for the 2.0-litre EcoBoost four-cylinder engine to power the next Ford Falcon – all thanks, at least in part, to the green car innovation fund.

This agreement also included letters from the companies themselves, outlining their promise to invest into the fund long-term, a ten year commitment in fact. Up to $400 million has already been cut from the green car innovation fund on the government’s part, due to other political pressure. Ms Gillard has announced a further $234 million will be cut to help finance Queensland flood repairs. Industry experts say now that the government has thrown away much of the green car fund agreement, prospective international investors could be scared away.

Federal Chamber of Automotive Industries chief executive, Andrew McKellar, recently told Australian Associated Press,

“That sends a very worrying signal to international investors about the level of certainty that they can expect when they deal with the Australian government. It means … Australia’s sovereign risk rating goes through the roof.”

So with little faith left in the Australian Government, the Australian auto industry has been forced to reassess development plans, projects and Australian auto industry jobs. What faith would international investors have in our industry if the government may, at any time, change its mind after promising such long-term commitment?

Andrew McKellar summed up the move rather well when he told AAP,

“You don’t assist those who’ve been impacted by a natural disaster in Queensland by inflicting a man-made disaster on jobs and investment in Victoria and South Australia.”

What do you think?




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