Abbott tells Holden to cut costs

In a move that will increase pressure on unions to accept wage cuts proposed by the company, the Opposition Leader said the Coalition would support boosting a $275 million government grant to keep Holden making cars in Australia only if it was tied to cost reductions.

“We would be prepared to look at further generous assistance but we'd want to make sure… Holden had credible plans to reduce their cost of production and to boost their volumes and the only way to boost their volumes is to have a serious export strategy,” he said.

Opposition Treasury spokesman Joe Hockey said yesterday that only with a “very compelling case” would the Coalition increase subsidies to the carmaker.

“The fact is there is already a massive amount of money being provided to the automotive industry. Unless there is a very compelling case put forward by Holden, you'd need to think twice about throwing more money to a… single manufacturer, where so many others in the manufacturing industry are doing it tough.”

The Coalition's qualified support for more assistance came as Industry Minister Kim Carr described the company's claim for up to $265m more in taxpayer funds as an “extraordinary” figure. As revealed in The Australian, Holden wants government assistance almost doubled to $540m to remain in operation, or it will quit manufacturing in Australia in three years. Holden has said the figure is “speculative”.

Negotiations over Holden's future have intensified in recent weeks after Holden general manager Mike Devereux said it would not survive as a local manufacturer without reducing costs. Wages account for about 65 per cent of the cost of vehicle manufacturing in Australia, which equates to more than $3000 a vehicle higher than General Motor's best practice.

Workers are resisting the company's demand to cut workers' wages by about $10,000 a year, saying workers are not overpaid compared with similar employers. Holden is understood to need both a significant reduction in costs and an increase to government assistance for General Motors to approve a retooling of its Adelaide plant over the Christmas production break in preparation for two new vehicles.

Senator Carr said he was unable to reveal details of negotiations with the carmaker, but warned that the Coalition's position would threaten Holden's operations. “The Liberal Party have a policy… position which would see the end of the automotive industry in Australia if implemented,” Senator Carr said. “The Labor government remains absolutely committed to ensuring we have a prosperous automotive industry.”

A company spokesman said Mr Abbott's conditional offer of assistance aligned with the company's strategy to reduce costs. “We already have a laser-like focus on reducing our costs and improving our productivity; that is what we are discussing with the unions at the moment,” Holden spokesman Sean Poppit said. Negotiations on wage cuts were continuing with workers, who “have always been paid a fair and reasonable wage.”