Car makers and the auto component industry will keep access to about $100 million in public funds to the end of 2017 after a government policy backdown.
Since last year's federal budget, Labor, the Greens and crossbench senators have been blocking a government bill to close the Automotive Transformation Scheme.
The coalition had argued the scheme - which included funding until 2020/21 - was not needed as Holden, Ford and Toyota would no longer be making cars in Australia from the end of 2017.
But Industry Minister Ian Macfarlane on Tuesday said the legislation would be scrapped and the scheme would remain open until the final car rolled off the production line in 2017.
Related Reading
No figures on car industry spend: Abbott
The government is concerned that withdrawing the funding would hurt the automotive component industry and potentially lead to the three car makers shutting up shop earlier than planned.
"We don't want anything to jeopardise the survival of the industry until Holden finally closes," Mr Macfarlane said.
The funding will be split 55 per cent to the auto manufacturers and 45 per cent to component makers.
The $400 million committed beyond 2017 will be counted as a budget saving.
Prime Minister Tony Abbott would not put a figure on the amount the government would provide.
"How much is spent under the scheme will depend entirely on applications made to the scheme," he said.
Having been previously criticised by coalition MPs for making "captain's picks", Mr Abbott confirmed the decision did not go to cabinet but had been discussed by the budget committee.
Federal coalition MPs and the South Australian and Victorian state oppositions have been lobbying hard for the change of heart, arguing political fallout from the decision threatened their seats.
Mr Macfarlane - who also announced the first round of $155 million in car industry grants - said he had first begun work on the policy change last August, with the prime minister approving it just before Christmas.
Ford Australia said it was a sensible decision while Holden said it would strengthen the company's ability to keep local manufacturing until 2017.
AMWU national vehicle secretary Dave Smith said it was a huge win for workers in SA and Victoria.
But he called for the scheme to be kept going after 2017, with funds directed to after-market component suppliers and the truck and bus sector.
Opposition Leader Bill Shorten said the coalition had not changed its mind on car industry funding.
"They're just changing their tactics because they're worried about their own jobs," he said.
Liberal backbencher Sharman Stone, who was unable to convince Mr Abbott to support her local fruit cannery SPC Ardmona, said she hoped the policy change went further.
"I'd hope that other sectors like the food manufacturing industry will be recognised," she said.
Greens deputy leader Adam Bandt said the budget saving should go into making electric cars.
Mr Bandt said the government's "backdown" wouldn't be enough to create sustainable jobs in a cleaner Australian car industry.
"Australian component manufacturers must produce for Australian major vehicle companies in order to receive support," he said.
"This holds back Australian component makers for meeting demand from across the world, particularly in the growing market for electric and alternative fuel vehicles.
“We need to change the rules so that these manufacturers can receive this industry assistance and grow to meet this global demand.”
Share
