South Australian Senator Nick Xenophon has criticised the federal government’s decision to end the Automotive Transformation Scheme in 2018, saying it will speed up the demise of the sector.
Treasurer Joe Hockey, who delivered his first budget yesterday, said the scheme will end due to the decision by Ford, Holden and Toyota to end car manufacturing. They will all have shut their factories by the end of 2017.
The predicted savings from ending the ATS are $176.7 million in 2018-19, followed by $95.2 million and $28.6 million in the two years following.
Xenophon said there would be a “manifestly inadequate” $400 million remaining in funding from 2015 in the scheme, which has been running since 2011 and assists those involved in the automotive industry to diversify.
"They have simply chopped the scheme off at 2018 without bringing that funding forward to the years in which it could make a real difference to the automotive supply chain,” he told the ABC.
"The consequence of that is that there won't be a chance for the industry to restructure and transition for the 10,000-plus jobs that are involved in the automotive products sector."
Richard Reilly from the Federation of Automotive Products Manufacturers said it would harm research and development in the sector.
The task of transitioning away from automotive for suppliers in the industry is generally seen as a difficult task. Industry expert Professor Goran Roos has predicted that around 20 – 25 per cent of auto suppliers who have not yet diversified will survive.
Image: News Corp