Watchdog for ‘green’ fund

THE federal government will police its $1.3 billion Green Car Industry Fund (GCIF) to prevent double-dipping by car-makers or components makers during the 10-year program.

AusIndustry also warned car and component makers that measures governing the fund would include claw-back provisions if a company that received grants did something at odds with the aim of the project or something that decreased the national benefit of the program.

The conditions were spelled out by AusIndustry last week at a roadshow to brief would-be applicants on how the GCIF would operate when it kicks off later this year.

AusIndustry general manager Judy Zielke said in Melbourne that companies would be eligible to make more than one request for grants, but each must be for a separate project.

The morning meeting in Melbourne – there was a second in the afternoon – was told that parts developed with the assistance of grants would not necessarily have to be made in Australia.

In answer to a question from Mr Stuart Charity of the Australian Automotive Aftermarket Association, the meeting was told the main test was whether there would be a commercial benefit for Australia.

While it was preferable any production be done in Australia, parts made overseas would be acceptable as long as there was a commercial return to Australia.

The fund, which has been almost trebled in size from the $500 million first proposed by now- innovation, industry, science and research minister Kim Carr, has been designed to help the local automotive sector produce cleaner vehicles with cleaner processes.

Two grants have already been made. The first went to Toyota, which will receive $35 million to assist with the introduction to local production of a hybrid version of the Camry.

Left: The Chevrolet Cruze small car.

The second went to GM Holden, which will receive $149 million (and $30 million from the South Australian Government) to help fund the introduction of a new small car with petrol and diesel direct-injection engines.

Ms Zielke stressed to the well-attended morning session in Melbourne that the GCIF program was competitive and that not all projects put up for consideration would necessarily be funded.

“This is something new to Australia. We are aiming to conduct world-focussed research and development in Australia,” she said.

“Only the best projects will be funded. This will be a competitive process.” She said every application must be backed by a compelling business case.

“You have to show us what makes your application better than the others,” she said.

The criteria for a grant included the reduction of greenhouse gases, the technical merit and extent of the innovation, the commercial potential of the proposal and the contribution it would make towards helping the local car industry become more competitive.

Ms Zielke said applicants would have to demonstrate their capacity and capability to undertake the project. This included why the applicant needed extra funding.

“You have to show why it is difficult for your company to undertake the project, why you need the extra money,” she said.

The applications will be assessed by Innovation Australia, an independent statutory authority, which would assemble a committee of people drawn from industry and academia and people with business expertise and skills to make final decisions.

Applications would be assessed every six to eight weeks during the life of the program, although she indicated the grants would not be meted out at a steady rate of $130 million a year.

“We expect funds disbursement will ramp up quickly and then taper later in the program.” The program will be divided into two streams, one for the car-makers and one for the parts makers.

The car-makers, in Stream A, have to be registered under the Automotive Competitiveness and Investments Scheme or its successor, the Automotive Transformation Scheme, must be able to finance the rest of the project for which funds are being sought and must have access to any intellectual property (IP) needed for the project.

Applications by car-makers cannot be less than $10 million but the cumulative total of all grants to one car-maker cannot exceed $300 million.

Participants in Stream B must be incorporated and not be tax-exempt, cannot be a car-maker, must be able to fund the rest of the project and also have access to the IP needed.

The minimum grant permitted will be $100,000. Car-makers will be able to participate in a consortium in stream B but cannot be the lead company.

Grants will be disbursed on a one-to-three basis, which means applicants must contribute at least three times the amount of any grant received.

If the entire $1.3 billion GCIF is disbursed, research and development spending of at least $5.2 billion that would be created.

After the briefing, Ms Zielke dismissed speculation that applicants would be limited to one grant only.

“That’s not true. You can do multiple projects,” she said.

“But there will be no double-dipping for the one project,” she warned.

In addition, AusIndustry would examine the success of any earlier projects for which grants had been disbursed before approving any subsequent grant by an applicant.

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