HOLDEN REVEALS BILLIONS IN SUBSIDIES

By Simon Lauder

Updated 1 hour 2 minutes ago

Photo: Government support: Julia Gillard in the driver's seat of a Holden Cruze during a 2011 visit to Holden's Adelaide plant (AAP)

Carmaker General Motors Holden has revealed that it has received $2.17 billion in Federal Government assistance in the past 12 years.

The figure, which is much higher than previous estimates, was released by Holden after a dispute with the Australian Financial Review newspaper.
And it is set to reignite debate about the virtues of government handouts for Australia's automotive industry.
GM Holden's director of government affairs Matt Hobbs says some of the $2.17 billion is yet to be cashed in.

Audio: Holden reveals billions in subsidies (AM)

And he insists the assistance is good value for taxpayers, because the subsidies underwrite tens of billions of dollars in local investment.
"We've received $1.8 billion worth of incentives - both duty reductions and cash - over the last 12 years, and that's allowed us to undertake automotive manufacturing in Australia and spend over $32.7 billion, and $21 billion of that in the supply of those," Mr Hobbs said.
"It's a lot of money to receive but it's a huge amount to spend in the economy and we're very, very proud of the fact that we've been building cars here and spending a lot of money in the economy."
The amount averages out to $150 million a year for Holden.

University of Wollongong economist Henry Ergas says the figure is about 40 to 50 per cent more than previous estimates, and he believes it is a significant waste of taxpayers' money.
"It doesn't seem to help the industry adjust," Mr Ergas said.
"It just keeps it in existence, and there seems to be no prospect of getting it off life support to being internationally competitive and viable."

'Wealth-generating industry'

Mr Ergas says resources are being spent on an industry that cannot survive without subsidies, and argues those funds would be better spent on viable industries.
But Mr Hobbs says Holden would close its Australian plants if the subsidies were cut.
"It's a great deal for the country ... [and] if the assistance wasn't there, we'd go away. We would just do this somewhere else in the world," he said.
But he denies his position is a form of blackmail.
"No, it's about informing people about what our business can bring to this community and then providing what is necessary to bring the investment to this country," he said.
"Other countries fight viciously for it because it's a wealth-generating industry."
A spokesman for Industry Minister Greg Combet says the Government supports manufacturing because it provides jobs, technologies, investment, and other economic benefits.
http://www.abc.net.au/news/2013-04-02/holden-reveals-billions-in-subsidies/4604558
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