The Abbott government dropped the proposed cuts to subsidies for car manufacturers in Australia.
The Abbott government dropped the proposed cuts to subsidies for car manufacturers in Australia. PAUL Crockafp

Govt backflips over funds for car factories

THE Abbott government will lose up to $500 million in budget savings, after backing down over its planned cuts to subsidies for car manufacturers in Australia.

It was the latest in a string of policy backflips, after the paid parental leave scheme and Medicare co-payment were ditched in recent weeks.

Although Treasurer Joe Hockey had previously ruled out subsidies for car companies to continue operating, the proposed cuts were dropped on Tuesday.

Industry Minister Ian Macfarlane said there was uncertainty about the future of the car industry in Australia, so the legislation to cut the funding would be "withdrawn".

That was despite Holden and Toyota previously stating their car factories would close as of 2017, irrespective of changes to government policy.

Opposition industry spokesman Kim Carr said the backflip was "all about politics", claiming 200,000 jobs were at risk due to the now-abandoned plan.


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