Australia is setting up an A$100-million ($89 million) fund to support regions that will be affected by the decision of US carmaker General Motors to stop production in the country by 2017. The fund will also directly support workers affected by GM’s decision. GM recently announced that it would end vehicle and engine production in Australia by the end of 2017 – a huge blow to the country’s already struggling auto industry – citing high costs, a strong Australian dollar and a small, yet fragmented and very competitive local market.
Australian Prime Minister Tony Abbott is introducing the fund and related programs to help the country shift from heavy industrial manufacturing to "higher value-added" production.
"In the end, no government has ever subsidized its way to prosperity," Abbott remarked, adding that Australia government will hate to consider requests for subsidies. “We will be very loathe to do for businesses in trouble, the sorts of things that they would be doing for themselves."
The A$100-million fund will be provided by the Australian federal government (A$60 million), the Victorian government (A$12 million), and the South Australian government (remaining amount). According to Abbott, the government expects GM to contribute to the fund. Workers affected by the closure of GM’s Holden unit could access some support from the fund, which will help current components makers in Victoria and South Australia.