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Government may give Holden more money before Christmas

Editorial
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The coalition government is considering providing struggling car maker Holden with short term funding before Christmas as it waits to finalise its long term plans for the industry.

The Australian Financial Review reports that the government has "basically agreed" to the terms of references for a Productivity Commission inquiry into Australia’s car manufacturing industry and it may release an interim report before the new year.

The proposed new funding is not something that Holden actually sought. When asked by the Australian if Holden had asked for more money this year, a representative for the Federal Industry Minister Ian Macfarlane said, "No, not that I'm aware of."

This proposed new funding comes as the government is telling Holden that it must increase its exports if it wants to secure more long term government assistance.

The government claims that, in order to be sustainable, the company needs to lift exports from the current level of 17 per cent to 30 per cent.

As The Australian reports, the Labor opposition and the unions claim that such an increase is unrealistic and that, by demanding it, the government is setting Holden up for failure. 

According to opposition industry spokesman Kim Carr, without a drop in the dollar such an increase is not possible.

"Obviously everyone wants to encourage exports .  . but you have got to face economic realities with the dollar at that rate,” Carr said.

And David Smith, the national secretary of the AMWU's vehicle division, concurred with view that high dollar makes the target difficult.

"Holden traditionally had a very strong export program, but that has been hammered by the high dollar," Smith said.

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