Car industry funds could push out to 2021

THE Senate inquiry into the future of the Australian automotive industry has recommended that the government draw up an internationally competitive industry policy to ensure the sector remains a vital part of the domestic economy.

In the inquiry’s interim report, the majority opinion also suggested the definition of companies eligible to draw down funds from the Automotive Transformation Scheme (ATS) be widened, and the funds be made available out to 2021, not 2017.

Victorian senator Ricky Muir rallied cross-bench support for the Labor proposal to hold an inquiry. The Senate Economics References Committee that conducted the inquiry was chaired by Labor senator, Sam Dastyari.

The committee recommended that any new policy approach should start with the Automotive Australia Roadmap 2020 as a guide to which areas and activities should be encouraged.

The committee supported the proposition put forward by the Ai Group, the peak manufacturing body, to use the underspend in the ATS program to promote diversification instead of rolling the allocation back into general revenue.

“However, the challenges within the (automotive) industry mean there is a need for substantial reorientation of the design of the Automotive Transformation Scheme to ensure those businesses who can continue to operate can do so,” the Ai Group submission said.

“Ai Group believes this reorientation of the ATS must be finalised as a matter of urgency especially given the weakening economic conditions in Australia.”

The committee noted that several stakeholders suggested the ATS funds be retargeted once the three local car-makers – Ford, Holden and Toyota – have shut their factories by the end of 2017.

“The committee considers that the object of the ATS Act should be updated to specify that the ATS is designed for the promotion and growth of advanced automotive industries in Australia, including manufacturing components and materials, developing and commercialising new technologies, and engineering and design work for domestic and offshore automotive customers when that work is performed in Australia,” the submission said.

The ATS was drawn up with the production of passenger vehicles in mind, but the committee believes the eligibility criteria should now be widened so that companies can claim for research and development for non-automotive products.

“Clearly, in the new post-2017 industry paradigm, an ability to claim R&D relating to products or services in non-automotive industry sectors will be a key to industry survival,” the committee says.

Another change that should be made would the widening of the R&D definition to allow Australian companies working for offshore clients to claim for the R&D done in Australia.

The committee noted that, while the ATS still had a notional $400 million in grants available, it had been calculated that only around $105 million of that would be drawn down. Companies have to invest at least three dollars for every dollar of assistance.

The Abbott government had proposed ending the ATS in 2017, but the legislation did not gain the necessary support in the Senate.

The Senate committee has recommended that the apparent underspend of $295 million be kept available out to 2021 and be made available to a wider range of companies.

It also wants eligibility broadened to cover he promotion of advanced automotive operations including components and materials, developing new technologies and engineering and design work when that work is done in Australia.

The committee was chaired by NSW Labor senator Sam Dastyari. Deputy chairman was SA senator Sean Edwards, Queensland Nationals senator Matthew Canavan, Victorian Labor senator Kim Carr, Queensland Labor senator Chris Ketter and SA independent senator Nick Xenophon.

Other Senators participating were Victorian Motoring Enthusiasts Party senator Ricky Muir, Victorian independent John Madigan, Victorian Greens senator Janet Rice and ACT Liberal senator Zed Seselja.