$20m Ford grant faces the axe

[Poetic Justice]

Source: http://www.news.com.au/heraldsun/sto...3-2862,00.html

THE Rudd Government wants to axe a $20 million grant to Ford promised by its predecessor.

The Rudd razor gang decided in December to ditch the grant, which could jeopardise plans to build a new four-cylinder Ford at its Broadmeadows plant.

But the new Government has since received legal advice that Ford could pursue a legal claim based on a breach of faith.

The Herald Sun learned of the Ford setback on the same day Mitsubishi announced it would close its Adelaide plant.

In May 2006, the former Howard government pledged $52.5 million in special assistance to Ford.

Ford has received $32.5 million, but the remaining $20 million was not due to be paid until 2009-10.

The grant was intended to help Ford start production on a new Falcon project, known as E8.

But last July Ford sought to modify the agreement so the money could be spent on developing the four-cylinder Focus.

Production of the Focus, Ford's first locally made small car in a decade, is due to start at Broadmeadows in 2011, creating 300 jobs.

But the new contract between Ford and the Government was not formally amended before the November federal election.

Sources said the Government's strategic Budget committee of Cabinet met on December 18 and discussed axing the grant.

Subsequently, the Australian Government Solicitor advised the committee Ford could sue if it proceeded with its decision.