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Estimates: Car manufacturing subsidies questions

Economics Legislation Committee 
Department of Industry 

21 November, 2013

Senator WRIGHT: I have some questions in relation to car manufacturing subsidies, so we may need to have the other person come back up to the table and play musical chairs. I understand that in the last few minutes you actually gave an indication in response to a question from Senator Carr as to the budgeting for the ATS over the forward estimates up to 2019-20. Was that correct?

Mr Durrant: It was 2020-21. That is the forward estimate in the out-year, so it is the remaining profile available under the capped element of the ATS. It is the amount of appropriation; there is a special appropriation made to the ATS—the capped element of the ATS—out to 2020-21.

Senator WRIGHT: My question is: what is currently budgeted over the forward estimates for subsidies to the car manufacturing industry? Are there any other programs or any other budgeted amounts over the forward estimates that could come within the meaning of the word 'subsidies' that are not encompassed in the ATS?

Mr Durrant: Yes, there are a couple of other programs.

Senator WRIGHT: Could you tell me what those are?

Mr Durrant: There is an uncapped element of the ATS, and that is available only to the motor vehicle producers. And the uncommitted funds in 2013-14 are $57.8 million. In 2014-15 it is $45.2 million. In 2015-16 it is $30.9 million. In 2016-17 it is $16.6 million. And in 2017-18 it is $4.7 million—and that is when that element concludes. In addition, there is a program called the Automotive New Markets Initiative. Uncommitted funds for that initiative in 2012-13 were $3.1 million. In 2013-14 it is $11.6 million. In 2014-15 it is $10.1 million. And in 2015-16 it is $7.1 million. And I do note that that program is supported by the Victorian government, which made a contribution to that program.

Mr Lawson: I should just add that what my colleague has gone through are programs that are specifically related to the automobile industry. The automobile industry may be the recipient of other generally available programs—just to make that clear.

Mr Durrant: In addition, there are some ad hoc grants that have been made available to Toyota and to Holden. So as far as Toyota is concerned there is a Toyota Australia supplier development grant program. In 2013-14 that is $1 million. In 2014-15 it is $1 million, in 2015-16 it is $1 million and in 2016-17 it is $1 million. There is also an ad hoc grant to Toyota Australia for its major facelift. Committed funds in 2013-14 are $5.9 million. And in 2014-15 it is $17.7 million. For Holden the ad hoc grant for 2013-14 is $36 million. In 2014-15 it is $50.7 million. In 2015-16 it is $112.7 million. And in 2016-17 it is $15.6 million.

Senator WRIGHT: Thank you. So, I understand that the Productivity Commission's inquiry into government support for automotive manufacturing is due to report on an interim basis by 20 December this year and there will be a final assessment due in March 2014. Am I correct in that?

Mr Durrant: That is correct.

Senator WRIGHT: I am interested to understand whether the Productivity Commission's inquiry will consider all of these programs that you have indicated as coming within the meaning of the word 'subsidies'. That is the first part of the question. The second part is that you have indicated that there will be other aspects of government programs that the automotive industry would benefit from as well as other industries. Are they going to also be included in that Productivity Commission inquiry?

Mr Durrant: One of the terms of reference that the commission will take on board is to evaluate possible alternative public support mechanisms, and that does include retargeting assistance, including within the Automotive Transformation Scheme.

Senator WRIGHT: I do not know that that clearly answers my question. It certainly talks about the ATS, then.

Mr Durrant: Yes, and I think it is written in such a broad way that it will include all assistance that falls into the space of manufacturers of motor vehicles.

Senator WRIGHT: And to what extent will this assessment by the Productivity Commission dictate what is forecast in the 2014 budget with respect to subsidies for car manufacturing? What is the role of the assessment in terms of that decision making?

Mr Lawson: The Productivity Commission provides advice to government; the government takes that advice and other advice into consideration and comes to conclusions.

Senator WRIGHT: I was going to ask the minister if there is any further information that he could shed on that question in the sense that we understand that the coalition has made a certain commitment to reduce funding, but there is also going to be this Productivity Commission inquiry. To what extent will the assessment of the Productivity Commission actually forecast—or have an influence on the forecast in—the 2014 budget?

Senator Ronaldson: Clearly the government has asked the Productivity Commission to conduct this inquiry to see what the sustainable way forward is for the car industry. I think you can safely assume that the outcome of the Productivity Commission will form a significant part of the government's future decisions in relation to the industry and what moneys may or may not need to be allocated in the context of forthcoming budgets.

Senator WRIGHT: And my other question is: what other forms of review will occur in addition to the Productivity Commission's inquiry to determine ongoing car manufacturing subsidies before the 2014 budget?

Mr Ryan: Other reviews—I am not quite sure where that question goes, but are you talking in terms of free trade agreements?

Senator WRIGHT: I am asking because I am from a state where a significant employer is General Motors Holden—South Australia. I think the public is interested in understanding what other considerations, what other reviews or assessments will go into what will be significant decisions to be made in the 2014 budget.

Ms Beauchamp: I think there will be an opportunity for a number of stakeholders to provide input to the Productivity Commission process by way of submission, so I think we will get a fair understanding of where the stakeholder interests might be in those submission.

Senator WRIGHT: Yes, but I am interested in whether there is any other consideration, evaluation, assessment or review that is also going to be going on in terms of the automotive industry before the budget.

Senator Ronaldson: When the government's policy is finalised in relation to this then I assume it will take into account any number of factors, and the Productivity Commission inquiry is certainly an important part of that.

Senator WRIGHT: That is not really the question, though. I guess I am asking you: are there any other foreshadowed inquiries or assessments that are being undertaken by the department that will inform decisions or that will potentially inform decisions to be made before the 2014 budget?

Ms Beauchamp: At this stage we have not commissioned any external evaluations or assessments, but we will be looking at, internally, both from a portfolio perspective and the perspective of a range of other portfolios, what we need to do across government to inform government.


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