New report claims massive job losses if Australian car industry is shut down Holden's manufacturing future in Australia is still in doubt. AS the manufacturing future of Holden and Toyota remain uncertain, the car industry has published a new report which claims the Australian economy would be $21.5 billion smaller if the automotive manufacturing industry died in 2018. The economies of Melbourne and Adelaide would also suffer massive job losses that would take until at least 2025 to recover. However in a major embarrassment likely to undermine the findings, one of the firms involved in the latest study did a report earlier this year for another client that recommended taxpayer funding to industries should be cut. The new report prepared by the Allen Consulting Group, using economic analysis from Monash University, found that the $500 million the car industry received each year generated a claimed $21.5 billion in economic activity. This contradicts a report in April this year prepared by ACIL Allen - the company formed when ACIL Tasman merged with the Allen Consulting Group - which recommended taxpayer support be cut from struggling industries. "Subsidies to particular industries are a tax on the remainder of the economy," said the ACIL Allen report prepared for the Property Council Of Australia. They have become more significant in the last decade, totally nearly $9 billion annually. The more successful industries, those that do not need subsidies, prop up the less successful ones. Last week, Federal Government sources claimed Holden was close to shutting its Australian manufacturing operations. The contradictory findings have not stopped the Federal Chamber of Automotive Industries from releasing the latest study, which it commissioned after the original one prepared in April was spiked once Ford announced in May it was shutting its factories in 2016. In a media statement issued overnight FCAI chief executive Tony Weber said "without Government support for automotive manufacturing, significant foreign direct investment would cease, as overseas headquarters redirect investments to other automotive manufacturing countries." "This report shows the value of automotive manufacturing ... as a whole-to the economy, communities, the supply chain and other industries," Mr Weber said in the media statement. The FCAI will be using this report as a basis for our submission to the Productivity Commission's review of the automotive sector. Financial support for the industry is an investment in Australia and this investment needs to be long-term. The report commissioned by the car industry claims: Automotive manufacturing in Australia receives around $500 million in Government funding each year. For this investment, the Australian economy is $21.5 billion larger (based on an economic welfare net present value calculation). The modelling worked on a scenario where Australian automotive manufacturing shuts down over a two-year period from 2017 to 2018, (the timeframes that Holden and Toyota would close). On a per person basis, Government assistance to automotive manufacturing is around $18 per person - low by global standards. In the UK taxpayers contribute about $30 per person to the car industry, but the UK builds 1.5 million cars per year - compared to Australia's tally of about 220,000 - and employs tens of thousands more factory workers than in Australia. The $21.5 billion return in Australia equates to $934 per person in benefit, the report claims. If Australia lost car manufacturing: - Australia's GDP would be $7.3 billion smaller (in today's dollars) by 2018. - Billions in foreign direct investment would cease, as head offices direct investment to other automotive manufacturing countries, not to other industries in Australia. - Employment losses in Melbourne would equate to some 33,000 jobs in 2018, and around 6600 in Adelaide. - Employment levels would not return until around 2027 for Melbourne and 2025 for Adelaide. - The economies of Adelaide and Melbourne would be heavily impacted with gross regional product (GRP) contracted by up to 1.4 per cent and it is likely GRP will be lower than pre-closure levels until the end of 2031, while employment could fall by around 1.5 per cent. The report found that if barriers to export were removed and the Australian industry could return to 2008 levels of exports (when 160,000 vehicles were exported), Australia's consumer welfare would increase by $7.1 billion over time. Holden and Toyota were yet to comment on the findings as this report was published. Last week, Federal Government sources claimed Holden was close to shutting its Australian manufacturing operations, and Toyota Australia confirmed a decision on Altona's future would be made next year. This reporter is on Twitter: @JoshuaDowling