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Federal Government Abandons Plan To Cut $500 Million Support To Australian Car Industry

The Federal Government has today confirmed it will back down on plans to abandon the Automotive Transformation Scheme (ATS). Plans to cut funding to the ATS were announced around last year’s federal budget but have now fallen by th


The Federal Government has today confirmed it will back down on plans to abandon the Automotive Transformation Scheme (ATS).

Plans to cut funding to the ATS were announced around last year’s federal budget but have now fallen by the wayside; the government backflip prompted by failing polls, a component sector in crisis and a hostile Federal Senate.

Around $500 million was to be cut from the scheme initially, and the scheme was set to be scrapped altogether in 2017 - four years earlier than originally planned, saving another $400 million.

The government has now tweaked the scheme to potentially make all of the $900 million that was originally set for the scrap heap available to the local car industry.

Reversing the plan to cut $500 million to the scheme is designed to ensure there is no early exit by the three remaining mainstream carmakers, who rely heavily on a large component supply sector. Toyota, Ford and Holden are all set to depart by 2017.

Despite the $500 million support now confirmed, the actual contribution is tied to vehicle numbers produced and will likely fall well short of the maximum allocation.

Productivity Commission

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