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11 March 2015

'This is an own goal': Ian Macfarlane accused of bungling car industry assistance announcement

The government is trying to claim credit for being generous when in reality it is benefiting from decisions encouraged by its former parsimony.

The federal government's attempt to capitalise on a decision to keep $500 million in assistance for the car industry has backfired spectacularly, with senior colleagues of Industry Minister Ian Macfarlane accusing of him of bungling the announcement and scoring a political own goal.

Mr Macfarlane said on Tuesday that hundreds of millions in assistance would flow to the car industry, amid confusion over the policy backflip that was approved by the Expenditure Review Committee - including Prime Minister Tony Abbott, Treasurer Joe Hockey, Finance Minister Mathias Cormann and Deputy Prime Minister Warren Truss - but which bypassed the cabinet and Coalition party room.

But senior government sources said the expectation was that only about $100 million of the $500 million fund available through to 2017 would likely to flow to car makers and component manufacturers.

Industry Minister Ian Macfarlane makes the announcement alongside South Australian Liberal senator Simon Birmingham.

And furious Liberal economic dries in the ministry rounded on Mr Macfarlane and said most of the money in the Automotive Transformation Scheme - which is worth $900 million between now and 2020 - would not be spent.

Mr Macfarlane would say only that the government would calculate how much of the $500 million fund had been spent in 2017, by which time Ford, Holden and Toyota will have ended domestic car manufacturing and component makers will face a difficult future.

He confirmed the additional $400 million available from 2017 to 2020 in the $900 million fund would not be spent.

Two ministers, who asked not to be named, immediately criticised Mr Macfarlane, with one saying he "hadn't actually done anything".

That minister said Mr Macfarlane, who has been a minority advocate of industry assistance within the cabinet, had essentially placed a barnacle back on the ship of government - a reference to the Abbott government's recent moves to scrape off unpopular policies and reset the government's political agenda.

"This is an own goal. It is complete incompetence," that minister said.

"We won the war [on industry assistance] but Macfarlane was an unhappy general," the minister continued in a clear reference to the losing fight Mr Macfarlane led in the early days of the Abbott government to keep Holden and Toyota manufacturing in Australia.

A second minister said while about $100 million through to 2017 would be spent, the rest would still be realised as a saving even though the government had abandoned legislation to axe the scheme in the face of a hostile Senate.

The $400 million allocated between 2017 and 2020 would be banked as a saving because funding, as Mr Macfarlane said on Tuesday, is "paid on a per car produced basis. When the car production stops the scheme stops."

"There was a level of uncertainty in the automotive industry and particularly the component industry that was concerning the government, in that we need the component industry to be there, [until] the very last day that Holden and Toyota roll cars off the assembly line at the end of 2017," he said.

Mr Macfarlane said the decision had not gone to the party room because "to have the story leak out of the party room would have been quite a disaster".

But Victorian and South Australian MPs in seats affected by the decision - and where the Coalition is particularly unpopular - had been briefed about the plan.

Mr Macfarlane dismissed suggestions the government was throwing good money after bad,even though the remaining three car makers will still quit Australia.

"We are ending the age of entitlement to the auto industry in 2017, that was always going to be the case. There was always going to be hundreds of millions of dollars under the ATS as amended still going to the industry," he said.

Mr Abbott said there was nothing unusual about the process when asked it if was another "captain's pick".

"There is nothing unusual, nothing unusual, nothing irregular about the decision not to proceed with the legislation not to repeal this particular scheme," he said.

"The decision not to proceed with the repeal legislation is a perfectly sensible one, given the situation in the Senate."

Opposition Leader Bill Shorten said the government was belatedly junking unfair policies.

"But I do not believe for one minute that the Liberal National government has changed its mind. They're just changing their tactics because they're worried about their own jobs," he said.

Mr Abbott will visit South Australia and Victoria this week.


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The Prime Minister's pride and joy. Tony Abbott endured months of political pain defending the policy before reluctantly dumping it in February. This was a result of significant resistance from inside the Coalition party room, in Federal Parliament and in the business community.

GP co-payment
One of the most controversial measures of the 2014-15 budget, it seemed doomed from the beginning and was finally abandoned this month. The move followed a tumultuous time, with conflicting reports on whether it was going to be scrapped, modified or retained.

Defence pay
After stubbornly refusing to lift the pay increase for defence personnel in last year's budget, the government eventually caved this month, increasing it from 1.5 to 2 per cent per annum. Independent Senator Jacqui Lambie, whose vote is valuable in the hostile Senate, has led the charge on the issue.

Car subsidies
Unable to pass legislation to end subsidies to automotive manufacturers, the government announced on Tuesday that they would continue with the funding while manufacturers are winding down. Industry Minister Ian Macfarlane defended the decision, saying they expect to spend only $100 million of the $500 million originally allocated.