Labor will provide $215 million, with the South Australian and Victorian governments contributing the remainder, to help Holden build two next-generation cars in Elizabeth, SA.
Holden has agreed to spend more than $1 billion to ensure it continues to provide jobs in Australia designing, engineering and building cars until at least 2022.
"This funding is not a handout - it is a strategic investment that will boost our economy, foster innovation, build new business opportunities and promote adoption of new fuel-saving and safety technologies," Prime Minister Julia Gillard said in Canberra on Thursday.
The Australian car maker, owned by General Motors of the US, had indicated to the government 12,000 jobs could be shed if there was no government support. It estimates $4 billion will be injected into the economy over the life of the new vehicle program.
As well, the federal and Victorian governments are going to provide $35 million to help auto parts companies break into the global market and supply other industries such as mining.
Industry Minister Greg Combet said without the deal Holden would "most likely have closed its Australian manufacturing operations".
The new cleaner and greener models - the design of which Holden has yet to disclose - will bring "economic, environmental and innovation benefits", he added.
South Australian Premier Jay Weatherill, whose uncle worked for Holden for 50 years, said he had a message for the Holden's workers: "We've secured your future."
However, asked whether the company - which shed 100 jobs at its SA Elizabeth plant earlier this year - would cut more workers in the future, managing director Mike Devereux could not give any guarantees.
"If you can tell me what the Australian dollar is going to be seven, eight, nine years from now, what all of my competitors are going to do in terms of launching cars, how many cars might be sold in Australia, what interest rates are going to be, I might be able to tell you how many vehicles I would be able to produce and therefore how many employees I might have," he said.
But in the short term the company had a "pretty strong business model", he said.
Mr Devereux also said Holden would look at ways of using its Australian operations to connect with and enter new markets in China, India and ASEAN nations.
Australian Manufacturing Workers Union vehicle division federal secretary Ian Jones told AAP job numbers would depend on how well Holden's future products sold, saying conditions now were "tougher than in the GFC".
"What we've sought is a product guarantee from them, which we've got," he said.
"And the only thing that determines whether you've got jobs is how well the product is received in the marketplace."
The Australian automotive industry directly employs 55,500 people and supports around 200,000 additional jobs.
As the federal coalition reviews its industry support policy to find spending cuts, Mr Devereux said industry and government "co-investment" is critical to the future of the car industry.
"Australia does not compete on a level playing field, and without co-investment this country would struggle to attract new capital investment," he said.
Australian Greens MP Adam Bandt says any funding for Holden should be conditional on the car maker producing electric vehicles.
Opposition industry spokeswoman Sophie Mirabella said there hadn't been a cost-benefit analysis, and it wasn't clear where the money was coming from or the criteria under which it was granted.
"It is policy on the run - it is shambolic," she said.
Mr Combet told reporters the final contract with Holden, which is yet to be signed, would indicate the program's exact financial impact on the federal budget over coming years.
ninemsn.com.au 22 Mar 2012
Another scam that the mass media is keeping a lid on.
The monies are going straight into the coffers of the unions.