$200mill package to Ford, Holden, Toyota to offset FBT changes

[Brazen]

One theory looks it to be a rebate on companies that buy Australian made cars. But it is actually remarkably short of details.

If it is customer incentive I think thats a good idea, as I think people are getting a bit fatigued from the handouts going to the carmakers themselves.

http://www.adelaidenow.com.au/news/s...-1226690260377

THE Rudd Government has come up with a $200 million rescue package to be shared with all three local car makers - Toyota, Holden and Ford - to make up for the damage caused by changes to Fringe Benefits Tax.

But industry experts have already slammed the offer - $100 million a year over two years - saying it will cover only a fraction of the increase in FBT on company cars.

The package amounts to $3000 for every locally-made vehicle based on government estimates.

But employees on an average wage who take out a novated lease on a $34,500 car will be $8400 worse off over the four-year life of a novated lease under the FBT changes announced on July 16.

"This $200 million will be a drop in the ocean compared to the billions of dollars in damage to the broader motor vehicle industry," said the president of the Australian Salary Packaging Industry Association, Leigh Penberthy, who doorstopped Prime Minister Kevin Rudd during a school visit last month to arrange an urgent meeting.

Industry Minister, Senator Kim Carr said the $200 million package was not a response to the FBT changes and the immediate downturn in new-car sales growth.

"This is nothing to do with FBT," Senator Carr told News Corp. "We are strenuously going to defend the changes to FBT on the basis of fairness.

"Our measures are aimed at lifting demand for Australian-made cars which are their lowest production levels since 1957. This stimulus is a result of the changes in the dollar and the fragmentation of the market."

Mr Penberthy said the rescue package won't make up for the forecast 10 per cent shortfall in new-car sales and subsequent job losses across other sectors of the motor industry.

A report this week said 65 per cent of new-car dealers plan to make redundancies in the coming months based on the predicted drop in sales if the changes to FBT are not reversed.

"This is a band-aid on poorly constructed policy that will do substantial damage to an industry that employs more than 300,000 hard working Australians," said Mr Penberthy. "If this policy is not reversed a significant number of jobs will be lost."

The Federal Chamber of Automotive Industries and representatives from all three local car makers said they would not comment on the $200 million handout until they had seen the details.

However the government is yet to decide how the money will be spent and whether the funds would go directly to the three car manufacturers or to car buyers.

"We will work the details out with the companies," said Senator Carr, who dismissed claims that the FBT changes are damaging the car industry.

"The companies that manage the leasing on these cars are over-egging the pudding," he said. "Company executives will still drive cars. They won't ride pushbikes, I can assure you."

Initial proposals floated earlier in the week considered a $3000 rebate only to government employees who took out a novated lease on a locally-made car.

But News Corp understands the new deal will also apply to private sector company buyers of a locally-made car.

Missing from the $200 million rescue package are any concessions for company buyers of imported cars. Foreign brands represent 64 of the 67 car marques sold in Australia.

Last year Australians bought 972,236 foreign cars and 139,796 locally-made Toyotas, Holdens and Fords.

Preliminary figures have shown the FBT changes have had an instant impact on new-car sales, blunting growth to 2 per cent in July when the market had been growing by 5 per cent before the FBT overhaul.