Holden's decision to cut 500 jobs has two state governments considering pulling out funding deals. Source: AAP
TWO state governments are threatening to withhold tens of millions of dollars in assistance and unions are describing Holden as a "shocking corporate citizen" after the car giant announced plans to axe 500 Australian jobs.
Component makers have also warned that Holden's decision to build fewer cars means jobs will go among suppliers.
Victorian Premier Denis Napthine is warning that Holden won't see a dollar from his government if it breaks a taxpayer-funded investment deal struck just last year.
"We haven't paid any money to Holden and we won't pay money to Holden if they don't adhere to the principles agreed to," Mr Napthine said on Tuesday.
South Australian Premier Jay Weatherill also set the stage for his government to walk away from a promise to provide $50 million from 2016, part of a $275 million federal-state funding package.
He rejected suggestions from the company that no deal had been finalised, saying it was "manifest" in the exchange of letters.
Unions said every South Australian would be shocked by the company's behaviour.
"Holden took money from South Australian taxpayers and then just tore up the agreement," SA Unions secretary Janet Giles said.
She branded Holden a "shocking corporate citizen" and said if it refused to live up to its part, SA should withhold its investment and use the cash to help workers about to lose jobs.
Mr Weatherill plans to have another meeting with Holden chairman Mike Devereux later this week to thrash out a new arrangement.
He insists employment levels in SA, where 400 assembly line jobs will go, were an essential part of the agreement and he will now consider the state's options.
"I have to weigh up their commitment to investing $1 billion and the long-term security of the plant," he told reporters on Tuesday.
"I have to weigh up the present needs of these 400 workers and I also have to protect the taxpayers."
But Mr Devereux said he was mystified as to how he could be in breach of a deal that was still to be signed.
"As I sit here today we don't have a contract," Mr Devereux told Adelaide radio 5AA.
The Holden boss said the parties were six to eight months into the formal contract process that would hopefully be finalised later this year.
Under the terms of the assistance package, Holden will get $275 million from 2016 in joint federal-state funding to ensure the future of the company's local assembly operations until at least 2022.
That is on top of the near $2 billion the company has been paid by taxpayers over the past decade.
The federal government continues to defend the assistance paid to the car industry as the best way to leverage investment.
"That is, we put money in, they put more money in," Finance Minister Penny Wong said.
"We think that's the best way to ensure a viable, ongoing car industry."
Component suppliers have also backed the investment program at the same time warning Holden's move to build fewer cars will flow through to the component sector, where jobs will also go.
"The less cars that are being produced means the less components that are being made," Federation of Automotive Products Manufacturers (FAPM) chief executive Richard Reilly said.
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