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Rudd labelled 'hypocritical' over green car g -

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Rudd labelled 'hypocritical' over green car grants

The World Today - Friday, 20 June , 2008 12:22:00

Reporter: Ashley Hall

ELEANOR HALL: The Federal Government is fending off accusations of hypocrisy over its Budget night
axing of a small business development grant program.

The Commercial Ready program was closed down, even though hundreds of companies were still in the
queue for help.

One company from northern New South Wales has said it intended to apply for $5 million to help it
develop a hybrid drive system for trucks. Its chairman says that without the funding, the company
will have to be wound up.

And now the Federal Opposition is accusing the Government of getting its priorities wrong, when it
has axed this program while giving Toyota a $35 million grant.

Ashley Hall has our report.

ASHLEY HALL: With fuel prices soaring and increasing concern about the effect of greenhouse gases
on the planet, the Federal Government has paid plenty of attention to the pursuit of new ways to
power cars and trucks.

It's a direction the Ballina-based company Permo-Drive has been following for nearly a decade. The
hybrid drive system it's developed for trucks is just about ready to hit the market.

Chris Marshall is the company's chief engineer.

CHRIS MARSHALL: It's brought together a bunch of mature components which is already out in the
industry, being hydraulics systems, and assembled in such a fashion that it's provided a method by
which you can capture the normally wasted braking energy and then put that captured energy back in
drive line when the vehicle accelerates, such that when you go to accelerate off from a set of
stopped lights, rather than the engine providing 100 per cent of the power, it might only provide
80 or maybe even 70 per cent of the power and that is where you get your fuel savings.

ASHLEY HALL: How much of a fuel saving?

CHRIS MARSHALL: In an urban, 7.5 tonne vehicle, the savings will be in the order of 20 to 30 per
cent. Now, that relates to, on another perspective, that relates to approximately a 50 cents per
litre saving.

ASHLEY HALL: But like many new businesses, keeping money flowing has been a big challenge, so the
company turned to a Federal Government program of so-called Commercial Ready grants, just months
before the program was axed in the Federal

Budget.

CHRIS MARSHALL: When the Commercial Ready grant was axed, of course the venture capitalists came
back and said "Oh, now we're going to reassess what we were going to invest", i.e., the $7.5
million. So all of a sudden it put everything back in jeopardy again.

ASHLEY HALL: The directors of Permo-Drive are now preparing to wind up the company, which might see
the technology leave Australia.

CHRIS MARSHALL: It's very disappointing of course that the money hasn't gone into an Australian
invention and industry to further develop Australia's foothold in the automotive world.

ASHLEY HALL: Just over a week ago, the Prime Minister Kevin Rudd announced the Japanese car maker
Toyota would be the first recipient of funding from the Government's Green Car Innovation Fund.

It's a fund set up to help bolster the development of new green technology.

Instead, $35 million has been handed to Toyota to manufacture existing technology in Australia. At
the time of the announcement, Toyota's president Katsuaki Watanabe said he didn't know how the
company would use the money.

KATSUAKI WATANABE (translated): We are not sure in what way we would like to use that amount.

ASHLEY HALL: The Federal Opposition Leader Brendan Nelson says the decisions smack of hypocrisy.

BRENDAN NELSON: What he was more concerned about was getting a $35 million photo opportunity with
Toyota, who didn't ask for $35 million of Australian tax payers' money.

We still don't know how Toyota is going to use it and I think Mr Rudd, if he is serious about
Australia's environment, he's now got to look at the Permo-Drive company, he needs to talk directly
to the people that run the company and restore the $5 million investment.

ASHLEY HALL: At the time the program was cut, there were more than 200 companies with applications
pending.

GREG BEAVER: The hardest thing with any technology or innovation is getting it through the various
barriers to market and the first one is raising the capital, particularly with something that is
capital intensive like this.

ASHLEY HALL: Greg Beaver is the director a venture capital fund which supports early-stage
innovation companies.

He was also a seed investor in Permo-Drive and still holds shares in the company.

GREG BEAVER: It's so hard to attract that early stage investment. And all these companies typically
start off with what we call the three F's: friends, family and fools, but jump in early and invest
in support on the idea. The next round of funding is usually the harder step forward.

ASHLEY HALL: The Minister for innovation, Senator Kim Carr, says the axing of the program was a
casualty of the so-called war on inflation, but a new streamlined set of grant programs will follow
a review of the National Innovation System.

And Senator Carr says if Permo-Drive still wants assistance, it should explore the new Climate
Ready program of Government assistance.

ELEANOR HALL: Ashley Hall reporting.