Millions of dollars of the subsidies could be wiped out by a carbon tax and higher electricity costs associated with the new emission targets, industry observers said.
There is considerable anger in the industry over the impact of the carbon tax -- which domestic manufacturers will have to absorb while many importers will not -- as the government has sought commitments from Ford and General Motors Holden to continue their operations in Australia, The Australian reported Wednesday.
Manufacturing Minister Kim Carr has arranged a deal with Ford in Detroit, agreeing to contribute $34 million of federal government funds towards a $103 million package to improve the efficiency of its Australian cars and maintain its Australian operations through 2016.
But Ford's emissions targets suggest that when the $23-a-ton carbon tax begins on July 1, its maximum bill for direct emissions may be $3.3 million over the next four years, combined with a possible $19.8 million hike as the cost of the carbon tax is passed on by suppliers, particularly electricity providers.
Opposition climate action spokesman Greg Hunt said Ford's potential carbon tax liabilities showed the "senselessness of the government's policies."
"On one hand, they are handing out taxpayers' money to supposedly protect jobs, while on the other they are taking back that money via the carbon tax," he said. "It is a ridiculous situation and will ... put Australian jobs at risk."
The Australian government is also negotiating with General Motors to maintain its local operations, with a deal that could go as high as $100 million, The Australian reported.