By Staff Writer

Prime Minister Kevin Rudd has announced a $6 billion package to ensure the car industry’s smooth transition to a carbon-restricted economy by 2020.

The Green Car Plan more than doubles the $500 million Innovation Fund to $1.3 billion, encouraging Australian car businesses to develop and sell environmentally friendly vehicles.

Mr Rudd said the rescue package was to safeguard the Australian economy against the ongoing financial turmoil, by providing the industry with a competitive edge in the international market.

“The 13-year New Car Plan for a Greener Future is about manufacturing competitive, low-emission, fuel-efficient vehicles in Australia.

“It will create well-paid, highly-skilled green jobs for the future,” he said in a statement.

Drawing on the recommendations of the automotive industry review, the plan aims to secure $16 billion in investment in the Australian car industry over the life of the plan.

Under the new scheme, tariffs on imported cars will be halved to five per cent in 2010, making Australia the third-lowest tariff regime among economies.

“Australia will continue to pursue a free trade agenda because the future of the industry lies in innovation and global integration, not industry protection with old-fashioned quotas and tariffs,” Mr Rudd said.

“The $7.7 billion automotive industry is critical to Australia’s economic future because it employs over 60,000 Australians, and is critical to national R&D and exports.”

He said Australia was one of 15 countries in the world that could design, engineer and build a car “from scratch”, and was determined to maintain that capacity.

“The plan has a high level of support at the beginning to accelerate reform and renewal, eventually tapering down to zero.

“A New Car Plan for a Greener Future provides the investment certainty the industry needs as it adjusts to significant new challenges,” he said.

More information on the plan, along with the review of Australia’s automotive industry, can be viewed here.