Prime Minister Tony Abbott has announced plans for a $100 million fund to help create jobs in the states affected by the closure of Holden in Australia.

South Australia’s Labor Government quickly slammed the package as “manifestly inadequate”.

The package will include $60 million from federal coffers, with an additional $12 million from Victoria.

Holden announced last week it would stop making cars in Australia by 2017 due to a “perfect storm” of poor economic conditions.

Its decision will put 2,900 people out of work — 1,600 from the manufacturing plant in South Australia and 1,300 in Victoria.

Mr Abbott says the Government is “talking to South Australia for a commitment in the same order as Victoria’s and we’d hope to get $20 million perhaps from Holden”.

But he has emphasised the Government will not prop-up unprofitable businesses.

“We don’t want to see corporate welfare, what we want to see is a country which has got the economic fundamentals right,” he said.

“Government’s job is to foster the muscles and the sinews and bones of our economy, if you like, so that the private sector can add the bulk.

“This Government will be very loathe to consider requests for subsidies.

“We will be very loathe to do for businesses in trouble the sorts of things that they ought to be doing for themselves.”

Fund to support manufacturers, research

The Government says the fund will kick in next financial year and will provide support for car parts manufacturers to find new customers, for research that leads to new products or processes in the sector and for existing manufacturers that expand in SA or Victoria.

The Prime Minister also announced reviews of the SA and Victorian economies and says he will chair a Federal Government taskforce to develop ways to build industry in Australia, to make recommendations to Cabinet by June.

“As well as the obvious things — getting the fundamentals right — we’ll be looking at new options to reduce the costs of energy, new options to encourage innovation,” Mr Abbott said.

But Holden’s closure has cast doubt on the entire automotive industry in Australia, with concerns it may force Toyota and the broader car parts sector to follow suit.

That would put up to 40,000 people out of work.

Mr Abbott has previously indicated he wants to help Holden workers transition into new jobs by focusing on the existing strengths of the affected communities.

The aim will be to re-skill and retrain the workers with a view to keeping them in the sector.

The Government said today Holden had indicated it would “set aside at least $100 million for costs relating to the wind-down” of its business.

“Holden workers will also be eligible for employment support with a Job Services Australia provider,” the Prime Minister’s statement said.

Holden first began making cars in Australia in 1948.