Carr drives hard bargain on $3000 local vehicle rebates

By Julian Bajkowski

Federal Innovation and Industry Minister Kim Carr is playing a straight bat to mounting speculation that Canberra could give struggling local carmakers a $3000 per vehicle rebate for each Australian-made car sold to federal, state and local government agencies.

The proposed option is believed to be part of ongoing negotiations between the car industry and the government as local producer Holden ratchets up pressure for extra financial support to keep factories open in the run-up to the federal election.

The mechanism of a rebate for local cars sold to government could be a more politically and financially palatable package for the government to sell over the traditional mechanism of funnelling money into factories that produce stock that does not sell.

“The Labor Government has made no secret of its continued support for the automotive manufacturing sector. And the Minister has said consistently over many years that we encourage governments to use Australian-made vehicles for their fleets – including through COAG,” a spokeswoman for Senator Carr said.

“However, suggestions that particular additional support measures for the automotive sector have been agreed are nothing more than speculation.”

Agreement or otherwise, a key question car sellers will want answered is whether a rebate would create a sufficient margin for local prices to be discounted against cheaper imports to make them more enticing to fleet buyers.

While the federal government maintains a car fleet that is mostly Australian, state government buyers in Queensland and Western Australia particularly run fleets that are around 75 per cent foreign made.

At the same time, cost pressures and limited budgets in local governments has made buying Australian cars more difficult, especially when there is a preference for smaller more economical and cheaper cars that are usually imported.

The push to buy to is not constrained to the car industry.

The federal government at the moment makes bidders for many bigger Commonwealth contracts (usually more than $20 million) create and adhere to an Australian Industry Participation (AIP) plan.

The AIP plans mean that prospective suppliers to government need to spell out how they will open up opportunities for smaller and medium sized businesses sell into big deals that the government awards.

The requirements came into effect in 2010.

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