Opposition slams Toyota deal The World Today - Wednesday, 11...

Opposition slams Toyota deal

The World Today - Wednesday, 11 June , 2008 12:11:00
Reporter: Alison Caldwell


EMMA ALBERICI: The Federal Government is under pressure over its decision to give Toyota $35 million as an incentive to start building hybrid cars in Melbourne.

On his first visit to Japan, Prime Minister Kevin Rudd announced the money would be used to help the company produce 10,000 of the vehicles at the Altona plant in Victoria. The money is to be made available from the Federal Government's Green Car Innovation Fund.

But the Opposition has labelled yesterday's announcement as a publicity stunt, saying Toyota would have made the vehicle anyway, without the added incentive of taxpayer's money.

Toyota claims the extra funding helps to secure the deal.

Alison Caldwell reports.

ALISON CALDWELL: It's been a publicity coup for the government. The announcement of up to $70-million in taxpayer subsidies to Toyota to help it develop its hybrid car at Victoria Altona plant has been generally well received, but the Opposition smells a rat.

Industry spokesman Eric Abetz:

ERIC ABETZ: It seems that the $35-million was a very expensive photo opportunity for the Prime Minister in Japan, and has not done anything other than possibly brought forward the decision of Toyota.

ALISON CALDWELL: He says comments from Toyota officials show the company would have begun hybrid car production here without the inducement. He says it's a waste of money.

ERIC ABETZ: Whilst I'm sure Toyota welcomed the $35-million it's now quite clear that it was not a decisive factor in their decision to build the hybrid plant in Victoria.

ALISON CALDWELL: Toyota says the money helped close the deal for the company. A spokesman described the funding as an encouragement to go ahead with the plan. Rumours Toyota would soon be building hybrid cars here have been around for months.

In May, Federal Innovation Minister Kim Carr confirmed negotiations were continuing fruitfully.

The Age newspaper reported senior Toyota executives were strongly behind making its Altona plant the regional base for its green Camry, provided the right government incentives were secured.

It's still not known how much the Brumby Government's subsidy is. The Premier would only say it would be less than the $150-million he expected the deal to add to the local economy.

Motoring analyst, John Mellor, is the editor of the website Go Auto. He says the impending deal was an open secret for months.

JOHN MELLOR: We the motoring media has understood that they were always planning to do a hybrid Camry here, so yes it's been around for awhile. I think that maybe the events of the last few days probably brought it forward a bit.

Our understanding is that maybe they were going to wait for the next generation of Camry before they did a hybrid.

But the, you know, Rudd Government has waived the green money in front of them and has obviously made up their mind up to bring the program forward. That money is probably going to unleash activity that may not have happened without the money being put on the table.

ALISON CALDWELL: The Federal Government's $35-million could be seen as a drop in the ocean for Toyota whose net annual profit is in the order of $US 15-billion.

The company reportedly spent just over a million dollars US lobbying the Bush administration on vehicle financing in the first quarter of this financial year.

Senator Kim Carr is on his way to Detroit to talk to GM and Ford executives. They'll know all about the Government's $500-million green car fund.

Former Victorian premier, Steve Bracks, is leading the Federal Government's automotive review. It's believed he will consider expanding the green car fund beyond the $500-million already on the table. In other words, expect more announcements in the months ahead.

GM Holden's chairman in Australia is Mark Reuss:

MARK REUSS: $500-million is not chicken feet at all but, you know, you're going to see us taking advantage of those funds on a multifaceted stand point, fuel stand point, from a hybrid standpoint, from a diesel stand point, from an LPG stand point, from an E85 stand point.

We have a very, very multifaceted approach, and we aren't going to ride any one silver bullet.

ALISON CALDWELL: Wheels car magazine editor, Ged Bulmer, says incentives are important to the industry.

GED BULMER: It's a pretty good carrot isn't it? I think that any car company in the world would sit up and take notice with that amount of money being waived.

But the other side to that is in terms of the $35-million that the Federal Labor Hovernment is putting up, Toyota has basically got to match that three-to-one, so Toyota has got to put in … put their hand in their pocket for $100-million of their own money to pump into Australian research and development.

So I think there's certainly a good return there when you're just looking at the Federal Government component of that grant.

ALISON CALDWELL: Toyota's annual net profit is around $US 15-billion, do you think they needed to have those incentives to bring the business to Australia?

GED BULMER: Well you would have to say that with Toyota being the world's most profitable car company by a significant margin, you know, at a time when plenty of other car companies, international brands such as General Motors and Ford are really struggling, and Toyota is well and truly in profit, you'd have to say that they don't need any government incentives.

But I guess what incentives like this do is ensure that our automotive industry is prepared for a future. It moves them into new areas of technology without that sort of spending.

I'm not sure that we'd get there. I'm not sure that companies like Toyota would pump the sort of money that's required to stay abreast of new technology into this market, if there weren't Government incentives to do so.

EMMA ALBERICI: Wheels magazine editor, Ged Bulmer, ending Alison Caldwell's report.