Treasurer Joe Hockey last night revealed the government would save $618.5 million over eight years by ending the ATS at the end of 2017, after Ford, Holden and Toyota have all ended local production.
The cuts will save the government $100m in the current financial year, another $100m the following year, and $118m in 2014-2015, as well as $176.7m in 2018-2019, $95.2m in 2019-2020 and $28.6m in 2020-2021 after the scheme has be discontinued.
A further $215m promised in a co-investment package to support the development and production of the next-generation Holden Commodore and Cruze will also be saved over the next four years.
The $200m Supporting Automotive Sector jobs program announced by the previous government just before last year’s election will also be axed.
Independent Senator Nick Xenophon believes the government’s decision to cut ATS funding will hurt automotive manufacturing workers looking to transition into new jobs.
“They have simply chopped the scheme off at 2018 without bringing that funding forward to the years in which it could make a real difference to the automotive supply chain,” Xenophon said.
“The consequence of that is that there won't be a chance for the industry to restructure and transition for the 10,000-plus jobs that are involved in the automotive products sector.”
The Federal Chamber of Automotive Industries – the peak body representing the local car industry – says the government has “undermined the job security of tens of thousands of automotive and supply chain workers”.
“If this cut passes Parliament, it will intensify the financial pressure on the supply chain, which has already factored ATS funding into their long-term business and investment decision-making process,” FCAI CEO Tony Weber said.
“The FCAI has repeatedly advised the Government of the serious consequences significant cuts to the ATS could have on the automotive industry in Australia, at what is already a difficult time for manufacturing and supply chain workers.
“I call on the Parliament of Australia to seriously consider the consequences a cut to the ATS will have on automotive workers and I encourage them to oppose this measure.”
The government also announced it will re-index the fuel excise in August in a decision that will raise $2.2 billion in revenue by 2018.
Hockey promised every dollar raised by the fuel excise indexation would be reinvested into building better roads.