FED: New Holden car can help drive economy forward, says Rudd
By Julian Drape and Jordan Chong22 Dec 2008 6:44 PM
CANBERRA, Dec 22 AAP - People aren't buying new cars but that hasn't stopped the federal government giving Holden $149 million to build more of them.
The prime minister says the announcement will boost the economy and proves Australia is at its best with its back against the wall.
New motor vehicle sales fell for the fifth consecutive month in November, to their lowest level in more than five-and-a-half years, as the global economic downturn dampened consumer appetite for spending.
The number of new motor vehicles sold fell by 5.2 per cent, seasonally adjusted, the Australian Bureau of Statistics (ABS) said on Monday.
As the figures were released, Kevin Rudd was in north Adelaide where Holden will build a new small car to hit the roads by 2010.
The fuel-efficient, four-cylinder model will be built alongside the existing Commodore range.
The commonwealth will contribute $149 million over three years from its $6.2 billion car plan, aimed at making the industry greener and more competitive.
Mr Rudd says there's no contradiction in building more new cars when the bottom is falling out of the market.
"Let's not gild the lily ... there are huge pressures out there," the prime minister told reporters in Adelaide.
"If you look at the downturn in auto sales in the last 12 months, this is really tough.
"But by giving confidence through the introduction of this new line for the future, it does help."
He said the government's action was better than the alternative - "which is to sit around and wring your hands".
The South Australian government will chip in $30 million over four years for Holden's new car, while the company is expected to invest in excess of $500 million.
It will secure 600 jobs at Holden's Elizabeth plant and another 600 in the component manufacturing sector.
Mr Rudd said Holden was a "great company" and the announcement of a new model was a "great day".
It proved "when we've got our backs against the wall, we are at our best".
But the federal coalition isn't convinced.
Opposition treasury spokeswoman Julie Bishop says Mr Rudd has lost control of the budget.
"On the one hand, the prime minister is making massive spending announcements, apparently designed to stimulate the economy," Ms Bishop told reporters in Sydney.
"On the other hand, the government is stating that it will make massive spending cuts and re-announce the establishment of the razor gang."
Finance Minister Lindsay Tanner announced in November Labor's razor gang - which found $7 billion in savings in 2008-09 - would still be at work next budget as it tries to find efficiencies in public administration.
Now he says the government will be looking "even harder" for savings due to the on-going global financial crisis.
Ms Bishop says the government should wait for the impact of its $10.4 billion economic stimulus package and recent interest rate cuts to kick in.
"Mr Rudd appears to have lost faith in the spending package, which is essentially half the budget surplus, because he's flagging another spending package shortly."
AAP jcd/cdh
