End of the road for car subsidies: Macfarlane

The Abbott government has told Holden it must brace for an end to taxpayer assistance as a "final solution" is prepared for the carmaker. Industry Minister Ian Macfarlane met with Holden general manager Mike Devereux at the company's manufacturing plant in Adelaide's north yesterday to begin talks on assistance under a Coalition government.

Holden is seeking a new taxpayer-funded subsidy to support a $1 billion investment in two new vehicle models at the plant, in addition to $275m committed last year. Mr Macfarlane prefaced talks by warning "there is not a lot of money" on offer, and said that if Cabinet approved extra financial assistance for the carmaker, it would be the last hand-out on his government's watch.

"I want to say to the industry, there will be one shot at this," he said. "We can't go on supporting this industry. They have got to become internationally competitive." Mr Macfarlane indicated he would try to salvage Ford's future operations in Geelong in Victoria, after the carmaker announced in May it would cease local production in 2016.

"I'd like to think I can do something with Ford," he said. Mr Macfarlane said he was focused on the design centre, but would enter talks "an optimist".

Opposition industry spokesman Kim Carr said the government's ideal of a self-reliant carmaking industry was a "free market fantasy". "It doesn't work like that. The automotive industry does not exist anywhere in the world without coinvestment from local governments," he said.

Senator Carr said federal Labor's pre-election policy of providing an additional $500m to the automotive sector until 2020, and $300m per year thereafter, was the level of government investment required to guarantee Australian carmaking.

The meeting between Mr Macfarlane, Mr Devereux and South Australian Labor Premier Jay Weatherill comes after Holden secured $15m in annual savings from a revised enterprise bargaining agreement with the company's 1700-strong Elizabeth workforce. The union agreed to a range of concessions, including a pay freeze, which Holden claimed was needed to secure the future investment.

The carmaker had previously indicated a decision on government assistance would be needed before the Christmas shutdown period to allow retooling of the Elizabeth factory. But Mr Macfarlane said no government decision would be made until it received a preliminary report on the carmaking sector from the Productivity Commission, which he hoped could be completed within three months.

"It is going to take some time," he said. "I'm going to ask GM in Detroit to be a little bit patient; I know they have got deadlines, I am doing my best. I will try to do something in the short term . . . just to keep everything going until we can get the final solution." Mr Devereux would not comment on when the company needed a final decision by.

David Smith, the national secretary of the AMWU's vehicle division, said it was not possible for the sector to survive without taxpayer assistance. "It doesn't work like that in any other country in the world, so why would it work in Australia?" he said.

Independent South Australian senator Nick Xenophon said he was confident Mr Macfarlane would secure a new co-investment deal. "This is not just about South Australia's interests, this is about the national interests," he said.