VICTORIAN Liberal MP Sharman Stone has reignited a divisive debate within the Abbott government over assistance to struggling businesses, criticising members of cabinet who are resisting a request from SPC Ardmona (SPCA) for $50 million as motivated by free-market "dogma".
The coalition will face several tests of its unity on "corporate welfare" in the new year, including the potential closure of the Point Henry aluminium smelter run by Alcoa in Victoria, which is under formal review.
The government has also received public warnings from Toyota Australia that it will struggle as Australia's last automobile manufacturer, and calls for help from national airline Qantas.
Dr Stone, who has a PhD in economics, is concerned Australia's last fruit manufacturer could close by the middle of 2014 with about 3000 job losses in the Goulburn Valley region if the party leadership rejects its request when it next meets in late January.
Its major operations are located in her Murray electorate.
"There continue to be some [in the cabinet] who simply believe that any support for manufacturing somehow interferes with so-called free-market forces," Dr Stone said.
"If there were free-market forces in Australia with market decisions being made with full information and completely unbridled competition, then SPC and companies like them would be able to bring cheap labour in from wherever.
"I'm hoping that the interests of the economy will be considered, not just dogma – that the facts are considered, not misinformation or misrepresentation."
The fight over SPCA follows the hard line taken by the Abbott government on the closure of Holden late last year, with economically conservative members of cabinet successfully lobbying for the government to open the door for the car company to leave Australia.
In December, Prime Minister Tony Abbott signalled he was not inclined to give SPCA its requested funding, arguing it could lead to a "queue of businesses" asking for money.
Mr Abbott's coalition partners, the Nationals, are in favour of SPCA's request being granted.
It is understood prominent members of cabinet including Andrew Robb are vocally opposed to SPCA being given government money.
SPCA, a subsidiary of Coca-Cola Amatil, has asked for $25 million from the federal government and $25 million from the Victorian government to add to its own $90 million investment to upgrade its facilities to allow it to develop new products.
Victoria's Liberal state government has signalled it is willing to provide some money to SPCA together with the federal government, though The Australian Financial Review understands it may not be willing to give the full $25 million requested.
A decision by the federal cabinet was expected at the end of 2013 but has been delayed until the first meeting of the new year in late January.
SPCA has declined to make public a deadline by which it needs the funding in order to avoid closure. But factory equipment to develop new product lines, including an all-fruit soft serve ice cream being trialled, could take up to six months from installation to full operation and would need to be in place when fruit picking season begins in December.
"This co-investment funding is urgently required to upgrade and modernise SPC Ardmona's fruit and vegetable processing operations and transform it from a cannery into a modern food company, which will enable the business to develop innovative products, be more competitive and build export market potential," SPCA managing director Peter Kelly said.
Dr Stone said she was concerned parent company CCA could lose patience if a decision is not made by January, and decide to cut its losses.
"Things are very grim. I hope Coca-Cola Amatil's shareholders are willing to hold out and give this company time. But I'm hopeful the right decision will be made by cabinet," Dr Stone said.
In a further blow to the company, the Productivity Commission in late December found there was no justification to impose penalties on cheap fruit imports, which SPCA claims have undercut its business.
Alcoa's US parent company is expected to make a decision on the future of its Point Henry smelter after a formal review is completed in March 2014. More than 500 workers are employed at Point Henry. The company was given $40 million in taxpayer funding by Labor in June 2012 to keep the smelter open for another two years but falling aluminium prices are thought to have made it uneconomic.
A spokesman for Industry Minister Ian Macfarlane said he had not received an application for further assistance.
An Alcoa spokeswoman denied a decision to close the smelter had been made.
"We are expecting to communicate with our own people in due course," the spokeswoman said.
She declined to comment on whether the company had also asked for government assistance.
"I'm not able to comment on any conversations we have or haven't had."
Aluminium prices are at a four-year low and the outlook for the commodity for the next few years remains bleak amid global oversupply .
On Wednesday, Liberal MP Dan Tehan stepped up pressure for restrictions governing the level of foreign ownership for national carrier Qantas to be lifted, a measure Mr Abbott supports over the government buying a stake in Qantas.
However, Opposition infrastructure spokesman Anthony Albanese said Labor would not support legislation to change the Qantas Sale Act, arguing it could lead to the airline being carved up by foreign interests.
Qantas chief executive Alan Joyce has complained his airline is on an uneven playing field with Virgin Australia because of ownership restrictions.
with Jessica Gardner