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Holden takes $2.1bn toll on taxpayers

Price we pay: Holden’s government funding equates to about $2200 for each locally made vehicle rolling off the company’s production line since 2001.

Car-maker reveals heavy reliance on public purse to keep manufacturing alive

Holden logo2 Apr 2013

HOLDEN has opened its books to show the amount of taxpayer dollars pouring into its Australian car-making program, arguing that without it we would not have an industry.

The details, released today in response to a Freedom of Information request filed with the federal government, reveal the car-maker has received about $2.1 billion in government assistance since 2001 to help it compete against imported vehicles.

A story published in the Australian Financial Review today estimated that Holden had received about $2.2 billion in government handouts – twice the amount of any previous estimates of the level of taxpayer support the car-maker had received.

Based on the number of cars built over that time, Holden’s subsidy equates to about $2200 for each locally made vehicle rolling off the company’s production line since 2001.

GM Holden director of government relations Matt Hobbs told GoAuto that disclosing the information would help taxpayers and government talk about the amount of financial help the industry needed to “make a decision about policy in a rational way”.

“We’re having an ongoing debate about the car industry in this country, and we want people talking about facts,” Mr Hobbs said.

“If people keep writing things that we know to not be accurate, then it’s time to release the figures and say, ‘Here’s the figures, this is what they are, let’s talk real numbers.’” Holden’s figures show the car-maker has spent $21 billion on locally made parts for its cars since 2001.

It shows labour costs have totalled $5.9 billion, while engineering and design costs have totalled $3.1 billion.

Capital investment has totalled $2.7 billion, the car-maker says. Over the same time, Holden claims it has paid $1.4 billion in income taxes.

Holden’s biggest draw on the public purse has been the Automotive Competitiveness and Investment Scheme (ACIS), which has paid out more than $1.5 billion to the car-maker.

It still has $215 million in outstanding funding due next year for what it calls a “new-generation co-investment scheme”, and has received more than $188 million from the now-defunct Green Car Innovation Fund (GCIF).

The Gillard government wound up the $1.3 billion GCIF program in early 2011 to help pay for flood damage in Victoria and Queensland, raising concerns from all three Australian car-makers that other funding programs could also be cut, jeopardising their future.

Mr Hobbs said Holden would be seeking “clear, consistent and competitive” policy covering the car-making industry to ensure there would not be a repeat of the snap decision to terminate programs halfway through their lifecycle.

“Without that, we can’t (build cars),” he said.

Mr Hobbs said Holden still had “a few million” dollars of outstanding investment from the GCIF that was due next year.

Over the past 12 months, Holden has received more than $150 million from the Automotive Transformation Scheme designed to help it stay competitive with foreign car-makers.

Other significant grants include $13 million from the Productivity Places Program designed to help with training assembly line workers, and $12 million to help engine plant employees improve their skills.

A spokesman for federal climate change, industry and innovation minister Greg Combet said the government supported car-makers because it provided jobs, technologies, investment and other economic benefits to Australia.

“Our New Car Plan is providing $5.4 billion in support to the auto manufacturing industry and this is supporting around 250,000 jobs directly and indirectly,” the spokesman said.

“(The plan is also) supporting investment by auto manufacturers in improving their competitiveness and delivers significant spin-off benefits for Australia’s economy.” Holden is not saying how much money – government or otherwise – it has poured into the development of the VF Commodore due out in June.

However, the car-maker has gone on the record to say General Motors partner Chevrolet paid for most of the Commodore’s sweeping interior refinements, and GM would soon invest more than $1 billion of its own money to help Holden to keep building cars here as part of the company’s next-generation program.

Holden’s financial track record in Australia has taken a few wrong turns in recent years, culminating in a five-year run of red ink that saw it lose between $6 million and $147 million a year.

Its latest result for 2011 saw it post a $89.7 million profit – the exact same figure as the government grants it received for the year.

Holden's track record 2000-11


2011 - $89.7m profit
2010 - $112m profit
2009 - $21m loss
2008 - $70m loss
2007 - $6m loss
2006 - $147 loss
2005 - $145m loss
2004 - $335m profit
2003 - $287m profit
2002 - $257m profit
2001 - $285m profit

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GoAutoNews is Australia’s number one automotive industry journal covering the latest news, future and new model releases, market trends, industry personnel movements, and international events.