Australia's peak national motoring organisation says the Federal Government's $200 million assistance package for the local car industry is an admission that its changes to the fringe benefits tax (FBT) rules were a mistake.
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Industry minister Kim Carr announced the support package yesterday aimed to increase sales of locally made cars, reaffirming the government’s belief that the automotive industry is “vital” to Australia’s economic future.

The two-pronged program will see $200 million shared between Holden, Toyota and Ford, and also includes a ‘buy Australian’ policy that mandates a 100 per cent Australian-made target for new passenger vehicles added to the Commonwealth fleet.

But Australian Automobile Association executive director Andrew McKellar says the support package is an inadequate solution to a problem created by the government three weeks ago.

“This announcement is a clear acknowledgement that the FBT changes have been a mistake and the government is now tying itself in knots trying to buy the car industry's silence,” McKellar said.

“No one should be fooled, this is nothing more than a quick fix which throws tax payer's money at a problem that didn't exist until the FBT changes were announced.”


In contrast, Holden welcomed the government’s announcement, but reiterated that it would wait until after the federal election before deciding on its future investment in its local manufacturing operations.

“Holden welcomes any support for Australian manufacturing jobs and we look forward to getting the detail behind the Government’s proposed assistance package,” the company said in a statement.

“Holden has been discussing with both the government and the opposition the need for long-term, globally competitive automotive policy.

“Holden will carefully assess any policies announced before the election but will not make any decision until it has had the opportunity to hold detailed discussions with the next government.”

Reports last month suggested Holden was chasing an extra $265 million in government funding to shore up production of its next-generation Commodore and Cruze models.


Federal Chamber of Automotive Industries CEO Tony Weber said he supported all endeavours to improve the competitive environment for making cars in Australia, but was unprepared to comment specifically on the support package until he had seen the full details.

“While the FCAI looks forward to seeing the details, we will continue to call on the government to reconsider its decision to remove the statutory formula method for salary-sacrificed and employer-provided vehicles,” Weber said.

“This $1.8 billion change is damaging both our local car manufacturers and importers.”

Opposition leader Tony Abbott described the government's $200 million pledge for the local automotive industry as "scandalous" and accused Labor of throwing around cash "like confetti".

"I want to say to the Australian people: I have more respect for your money," Abbott told reporters yesterday.