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Govt under pressure to include fuel in emissi -

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VIRGINIA TRIOLI, PRESENTER: Well, if a reminder was needed of the battle facing the Australian car
industry, it arrived today with news that up to 500 jobs will be lost when Holden ends the
production of four cylinder engines in Melbourne. It's a symptom of a global shift to more fuel
efficient cars; a reaction in no small part to skyrocketing fuel prices. And there's no escaping
that issue in Federal politics.

The heat's now on the Government to say whether petrol will be included when its carbon emissions
trading scheme begins in 2010.

From Canberra, Ben Worsley reports.

BEN WORSLEY, REPORTER: The holiday long weekend: what better time to add more fuel to the political
fire of the moment.

BRENDAN NELSON, OPPOSITION LEADER: Well, ask any motorist filling up over the long weekend if they
thing five cents a litre less for petrol is a good idea or not. Ask them. Mr Rudd is giving them a
pair of binoculars to look at the price of petrol. We're giving them a five cent cut in the price.

KEVIN RUDD, PRIME MINISTER: What we're dealing with here is a new global reality when it comes to
higher petrol prices, like we haven't had really since the 1970s.

BEN WORSLEY: That new reality provides an uncomfortable backdrop for what may become the
Government's toughest task: structuring a carbon emissions trading scheme by 2010. What will be in
the scheme and what won't is an increasingly difficult decision, although it seems most agree on
principle.

ROSS GARNAUT, CLIMATE CHANGE ADVISER: I said in the interim report and in our discussion paper on
the emissions trading scheme that the cost to the economy will be less the broader the coverage.

PENNY WONG, CLIMATE CHANGE MINISTER: And this is the approach favoured by economists, most
businesses and business advocates including the Business Council and the Australian Chamber of
Commerce and Industry as well as community groups and climate advocates.

BEN WORSLEY: That may be so but including fuel in a trading scheme means even more pain at the
bowser, somewhere between five and 17 cents more a litre.

BRENDAN NELSON: Well, Mr Rudd's key adviser Professor Garnaut seems to think that high petrol
prices is not a bad thing. We think it's a bad thing.

BOB BROWN, GREENS LEADER: It is more painful to leave petrol out than it is to put it in because it
will put a bigger burden on the rest of the economy and it will mean Government has less
opportunity to be able to help people who are poorer to go across to public transport and to get
into cheaper vehicles.

BEN WORSLEY: The pain of petrol prices isn't just felt at the bowser. The trend to smaller greener
cars is taking an increasing toll on the manufacturing industry worldwide. Today, Holden announced
the loss of hundreds of local job as it ends the production of its four cylinder engine in
Melbourne.

MARK REUSS, HOLDEN MANAGING DIRECTOR: This is not the sort of announcement you want to have to make
as a new MD after only a few months on the job, but it was a decision that has been anticipated and
was inevitable once we were advised by our customers that requirements for the engine were coming
to an end.

BEN WORSLEY: The union predicts 500 jobs will go by the end of next year.

DAVID OLIVER, MANUFACTURING WORKERS' UNION: It's disappointing that they've made this announcement
but we know there's international pressures on Holden. They made a worldwide announcement a few
days ago about repositioning their manufacturing operations. But, you know, we have to, as a
nation, start looking about, well, what kind of vehicles will we be driving over the next decade or
10 to 20 years.

BEN WORSLEY: The Government insists that's exactly what it's doing - it's pushing ahead with its
green car innovation scheme, despite criticism from its own Productivity Commission.

KIM CARR, INDUSTRY MINISTER: You can't predict that every job that currently exists in the industry
will be there to the future, but we are doing all that we can to put the industry on a more
sustainable basis. We are talking to the companies about getting new investment into the industry
to transform this industry quickly so that we can get on Australian roads Australian-made cars
which are cleaner to operate, which are cheaper to operate and which are able to move into new
areas of technological advancement.

BEN WORSLEY: Some, but not much consolation.

Ben Worsley, Lateline.