Holden fires on Canberra as Carr hits Detroit

FEDERAL industry minister Kim Carr will meet with General Motors and Ford Motor Company executives in the United States this week, and has announced plans to meet their regional management in China – and senior Toyota executives in Bangkok – later this year.

The minister issued a statement on Monday outlining his travel plans and emphasising the government’s commitment “to an economically sustainable automotive industry” in Australia, just hours after Holden chairman and managing director Mike Devereux warned that the decision to axe the Green Car Innovation Fund (GCIF) threatened the industry’s long-term viability here.

The comments from Mr Devereux, who is also the president of car industry’s peak industry body, the Federal Chamber of Automotive Industries (FCAI), appear timed to coincide with Senator Carr’s trip to GM headquarters in Detroit.

“Holden had accessed around $200 million of that (green-car) funding – we had to invest at a three-to-one rate so that means $600 million of money coming into Australia for a $200 million co-investment – and frankly, losing that fund makes it very difficult to look forward to figure out where will that co-investment attraction come from in the future,” Mr Devereux told ABC radio’s AM program.

“Australia is not a low cost country. It also is a country with virtually zero import tariffs. So you've got relatively high costs, zero barriers to entry and in order for it to make sense to make things here there needs to be some, what I consider to be ‘smart industry policy’ which there was just a few years ago.”

Left: Mike Devereux and Julia Gillard shaking hands. Below: Julia Gillard behind the wheel of the Cruze.

He later told ABC radio in Adelaide: “Australia cannot become a hole in the ground for south-east Asia to pull minerals out of and then shift finished goods back to this country.”

Mr Devereux’s comments come five weeks after Holden announced that it had received a further $39.8 million from the GCIF to introduce fuel-reduction measures – including aluminium body panels – on the next-generation VF Commodore due in 2014.

As GoAuto has reported, Holden has received $189 million in green-car handouts from the federal government – more than half of the $340 million dished out to car companies and automotive component suppliers to date.

The government axed the GCIF in January to help pay for Queensland’s flood reconstruction, although applications are still being processed.

Mr Devereux’s opposition to the fund’s axing was made clear early in February, when he wrote to prime minister Julia Gillard expressing the industry’s disappointment with the government’s decision.

The Holden chief also emphasised the importance of the GCIF at the line-off ceremony of the Australian-built Cruze small car in March, which was attended by the prime minister.

“There is no way we were able to do this if we didn’t have that public/private partnership,” he told GoAuto, referring directly to the fund and the $149 million Holden received for the localised Cruze program.

Mr Devereux also told GoAuto at the time that Holden supported a carbon tax.

However, this week he told the national broadcaster that Holden anticipates the tax will add between $35 million and $50 million a year to its bottom line (based on a carbon price of $20 to $30 a tonne) – and that it will be even more difficult to look to future investments once the tax is introduced.

“There is no question that we need to reduce emissions, absolutely no question,” he told AM.

“Holden is committed to doing that. We build the most fuel efficient small car here in Australia. But there has to be some public-private partnership to negotiate what are fairly rocky shoals here.”

And to ABC 891 in Adelaide he added: “It will increase the cost of doing business here and there probably ought to be some type of a co-investment scheme to offset some of that cost.”

Senator Carr hit back at Mr Devereux’s comments, saying “the Federal Chamber of Automotive Industries, of which Mr Devereux is president, has said that it was ‘reassured’ by the government’s commitment”.

Putting a positive spin on the Holden chief’s comments, which have put the federal government under more pressure in the lead-up to its announcement of a price on carbon, Senator Carr also said: “Mr Devereux’s comments reported today reaffirm his view that the automotive industry and its advanced technologies are central to Australia’s manufacturing capabilities and that a long-term and consistent policy framework is necessary to attract investment in the global automotive industry.

“The government is very aware of the need for investment certainty, especially given the long lead times for new model cycles. That is why we are implementing the $5.4 billion ‘New Car Plan for a Greener Future’ until 2020.”

The minister also highlighted that the $3.4 billion Automotive Transformation Scheme (ATS), which took effect on January 1, 2011 – and from which opposition leader Tony Abbott promised to cut $500 million – “will help vehicle and component makers get cleaner and greener products to market”.

“ATS participants have estimated that they will invest $4 billion in capital and innovation from 2011 to 2015,” Senator Carr said.