Labor to slash $200m from green car fund

A GILLARD government would slash $200 million from the Green Car Innovation Fund (GCIF) if it wins the August 21 election, citing lack of demand for the program.

The surprise expenditure cut announced last weekend follows the Liberal coalition’s promise to cut $278 million from the GCIF – a policy that, up until last Saturday, federal industry minister Kim Carr was citing as a key reason why the car industry should support a Labor re-election.

Senator Carr told the annual conference of the Federation of Automotive Products Manufacturers (FAPM) on August 6 that the Opposition’s plan to take $278m out of the fund would “make it difficult for the fund to meet its existing commitments – and virtually impossible to support new projects”.

Now, the Gillard government has decided that it, too, will take $200 million out of the GCIF, reducing it by $100 million in both 2012-13 and 2013-14.

“This will ensure that Green Car Innovation Fund better reflects demand for the program,” the government said in a statement jointly released by treasurer and deputy prime minister Wayne Swan, financial services minister Chris Bowen and outgoing finance minister Lindsay Tanner.

It also said the GCIF “will still have unallocated funding available if new proposals come forward”.

Left: Industry minister Kim Carr. Below: Treasurer Wayne Swan.

In an interview with GoAuto last week, Senator Carr defended the GCIF, which in November 2008 was increased from $500 million to $1.3 billion, running over nine years to assist Australian manufacturers, suppliers and others in the car industry.

It was subsequently cut by $200 million in the 2010-11 budget, leaving $790m unallocated. With the latest cut, the funding pool has fallen to $590m – of which an undisclosed amount has already been assigned.

As GoAuto has reported, the GCIF has attracted only a small number of applications, largely because it has excluded companies – particularly small component manufacturers – who could not afford start-up investment costs, such as the three-to-one eligibility criteria.

Shadow innovation minister Sophie Mirabella described the government’s latest move to cut GCIF funds – and to slash $37.6 million from its Retooling for Climate Change program – as “a piece of breathtaking hypocrisy”.

“For months, Mr Carr has been stalking marginal electorates slamming the coalition’s responsible decision to make savings from these two poorly targeted initiatives,” Ms Mirabella said.

“Julia Gillard even said on Mr Carr’s behalf last week that the two programs were ‘hugely successful Labor initiatives’ and that ‘coalition ... cuts to the Green Car Innovation Fund would put investments by Holden, Ford and Toyota at risk’.

“In making these cuts, Labor demonstrates it will say and do anything to stay in power, even if it means abandoning any semblance of consistency.”

Senator Carr told GoAuto last week that the government had relaxed the requirement for companies to provide 75 per cent of program investment (with taxpayers tipping in one dollar for every three private dollars in a project), revealing there was now flexibility in the guidelines.

“It doesn’t have to be three-to-one. We are prepared to come lower than that, but it still has to be real money. We want some skin in the game, genuine skin in the game,” he said.

“Given the state of the industry, it is a true measure of its success that there has been so much investment already – in terms of the commitments that we have made so far – and I say to you, there are very significant program initiatives in the pipeline, awaiting approval processes to be concluded.”

Grants already issued include $149 million grant to Holden (for Cruze), $42 million to Ford (for the EcoBoost Falcon), $35 million to Toyota (for Camry Hybrid), $2.4 million to SMR Automotive (for vehicle mirrors), $996,000 to Century Yuasa (for batteries) and $440,000 to Orbital (for a Flex-DI system for Changan Automobile).