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Tim O'Brien | Nov, 05 2013 | 22 Comments

Speaking last night on the ABC's Lateline program, the Federal Minister for Finance, Senator Mathias Cormann, spelled out a warning to Australian carmakers.

Exports, the Minister warned, were the key to continued Government assistance.

While skirting specifics, other than "ensuring there is a strong and sustainable (Australian) car industry", the Minister nevertheless made the Abbott Government's policy position clear - essentially a position unchanged from that expressed when in Opposition.

"We flagged (in the lead-up to the election) we would be pursuing a Productivity Commission Inquiry to ensure that Government support is properly targeted (...) to ensure there is a strong and sustainable industry." Senator Cormann said.

"But we do want to see an industry that focusses on being competitive again when it comes to exporting cars manufactured in Australia.

"We want to be satisfied that whatever additional Government support goes to the car industry has a chance to deliver those sorts of outcomes," the Minister said.

There is no code in those last two sentences from the Minister. If it's not sending a chill through Adelaide, it should be.

Perhaps Mike Devereux's imminent departure from Holden is acceptance that the kind of 'co-investment' Australian manufacturers enjoyed under the Rudd/Gillard/Rudd regime is to come to an end.

Devereux had made it clear that Holden needed a commitment before Christmas for Government assistance if it was to commit to continuing manufacturing operations in Australia.

While the Productivity Commission is not due to release interim findings until December, Industry MInister Ian Macfarlane last month told Holden that it needed to double its exports to 30 percent of production if it wished to continue to enjoy Government subsidies.

Holden, predictably, told him he was dreaming.

Holden will pull up stumps if there is not a significant commitment from Government. There is nothing more certain.

Unfortunately, while every car manufacturing country subsidises its industry to one level or another, most, if not all, support industries heavily based on exports. Australia is unique in providing significant Government support to an industry of foreign-owned companies which, in the main, build local cars for the local market.

That latter point might not be lost on the Productivity Commission Inquiry.

The loss of Holden, then followed inevitably by the loss of Toyota, would be a tragedy for the Australian community, for innumerable suppliers and for thousands of Australian workers.

However, add Senator Cormann's comments last night, to Minister Macfarlane's comments of last month, to the Prime Minister's recent visit to Adelaide which passed without a single mention of the car industry, and you'll get the picture: things are not looking good for Holden's future, and ipso facto, though maybe a few more years distant, for Toyota.

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