Australian Prime Minister Tony Abbott abandoned a plan to cut $691 million in funding to car producers and component makers in Australia as he attempts to boost the government’s flagging poll ratings.
The government will maintain full funding through the Automotive Transformation Scheme after the planned cuts were blocked in the Senate, Industry Minister Ian Macfarlane said Tuesday.
Toyota Motor Corp., Ford Motor Co. and General Motors Co.’s Holden unit are due to close production lines by the end of 2017, spelling the death of the nation’s car manufacturing industry. That’s placed about 50,000 jobs in Australia’s auto and parts industry in jeopardy and threatens to drive up unemployment already at a 121/2-year high. The decision not to proceed with cuts places further pressure on the nation’s finances as the government tries to rein a budget deficit.
“We want to provide the auto industry with certainty right through to the closure,” Macfarlane told reporters in Adelaide. “When Holden and Toyota close their doors, that will be the end of the car industry’s manufacturing industry but hopefully not the component industry.”
Voters in South Australia, which has the highest unemployment rate in the nation, have already been angered by the government’s decision to invite overseas bidders to compete for a A$50 billion submarine-building contract, instead of awarding it to Adelaide-based defense contractor ASC Pty.
Abbott’s government, elected in September 2013 vowing to cut taxes and red tape, planned to reduce subsidies to car makers as part of its bid to halt “corporate welfare” to ailing companies.
The industry, including parts manufacturers who supply the three car makers, employed 50,370 in February 2013, according to government data.
The ATS was started in 2011 to provide about A$1.9 billion in assistance to motor vehicle producers, service providers and component and machine tool producers.
The government has struggled for momentum amid a slowing economy, unpopular policy measures and questions over the political judgment of Abbott, who last month fended off a challenge to his leadership from his own party’s lawmakers.
A Newspoll published in The Australian newspaper Tuesday showed Labor leading Abbott’s Liberal-National coalition government by 55 percent to 45 percent on a two-party preferred basis, up from a 6 percentage point margin in the previous poll conducted two weeks earlier.
The survey of 1,161 voters, conducted March 6-8, had a margin of error of plus or minus 3 percentage points.