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Australia to produce hybrid cars -

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BRENDAN TREMBATH: In Japan, where the Prime Minister Kevin Rudd has announced the Australian
Government will contribute $35-million to support Toyota's plan to build hybrid cars at the
company's plant in Altona, Victoria.

Mr Rudd has been in the Japanese city of Nagoya.

The Prime Minister said the money would come from the Federal Government's Green Car Innovation
Fund.

Victoria's Government will also be making a financial contribution.

Toyota currently employs 3,500 workers and builds 150,000 cars a year in Australia.

North-Asia correspondent Shane McLeod is travelling with the Prime Minister and joined me on the
line from Nagoya.

SHANE MCLEOD: Well, the announcement has been made. Toyota says it will start building these hybrid
versions of its Camry sedan from 2010. It will make about 10,000 of these cars every year. It's
going to get a grant from the Federal Government as you mentioned. $35-million from the
Government's Green Car Innovation Fund and the Prime Minister, Kevin Rudd, he says this is an
investment in Australia's future.

He says there will be benefits for motorists in terms of more fuel efficient cars and also for the
environment but he defended himself against claims that the government was using its money to prop
up an inefficient industry.

KEVIN RUDD: It is a bit like saying that all innovation policy which involves the injection of a
public investment and a private R and D (research and development) operations is wrong.

I don't have that view. I never have had that view. I never will have that view.

R and D, particularly those related to clean green technologies, constitute a public good and
whether those public goods are executed through formally public research or in private research
associations and institutions or associated with a private company is immaterial.

What we have here is an important unpinning technology which we will now have manufactured in
Australia.

What we need to do as a nation is in fact, to have smart investments in new innovations and new
technologies right across the entire generation of fuel efficiency and energy efficiency. Why?
Motorists and consumers need lower prices in an age where we now have a global oil shock and
secondly, on top of that, we have now new, a new global environmental imperative called climate
change.

BRENDAN TREMBATH: The Australian Prime Minister, Kevin Rudd. North Asia correspondent Shane McLeod
is with the Prime Minister in the city of Nagoya. Shane McLeod what is the $35-million to be used
for?

SHANE MCLEOD: Well, at this stage it is still being decided. The President of Toyota, Katsuaki
Watanabe actually said as much. That he hadn't known until just recently how much money would be
forthcoming from the Australian Government so exactly what it will be used for is yet to be
determined.

But from the Prime Minister and the Industry Minister Kim Carr who are both here for the
announcements, their intention is that it will be used both to assist Toyota to change over to new
production system that will be required to install the hybrid technology but also for research and
development and that is something that the President of Toyota Katsuaki Watanabe appreciated.

He said that the company obviously does it owns research and development but encouragement from the
Australian Government, he says, is very welcome.

KATSUAKI WATANABE (translated): When the cost must be incurred, investment is required for research
and developmental production facilities. To have some subsidies made available is something that we
appreciate very much. If it helps us do that but at the same time to our own benefit for research
and development or production equipment, we have been making it.

We will continue to make important investments on or on regardless of whether the subsidiaries are
made available. We will conduct our own research and development and we will make investments in
production equipment in a timely and speedy manner.

BRENDAN TREMBATH: The Toyota President, Katsuaki Watanabe speaking through an interpreter there.

Shane McLeod, where is the Prime Minister going next?

SHANE MCLEOD: Well, we are at the business end of the trip. We are getting ever closer to Tokyo and
the Prime Minister will arrive there this evening.

So from Nagoya we head towards the capital. He will be stopping off at the Australian war cemetery
here in Japan and paying his respects there and also stopping in at a local supermarket where we
understand he will having a look at some of the Australian produce that is on sale there and he
finishes up his official program today by stopping in at an exhibition of the Australian Indigenous
artists, Emily Kame Kngwarreye and that is the largest ever overseas exhibition by an Australian
artists.

BRENDAN TREMBATH: North-Asia correspondent, Shane McLeod.