SPC Ardmona's plea for $50 million in funding to keep its doors open appears to be falling on deaf ears, as members of cabinet are reluctant to set a precedent in providing industry assistance so early in the Abbott government's first term.
According to Liberal Party sources, cabinet members are mindful that there are a number of large businesses which could potentially request assistance in 2014, including Toyota Australia and aluminium company Alcoa.
They fear if SPC Ardmona's request is granted, even for $25 million at the federal level, it will raise expectations for other struggling companies.
"It's not the amount, it is the principle involved," one senior Liberal MP said. "It sets the precedent and there are going to be a lot more."
Trade Minister Andrew Robb added to public comments on so-called "corporate welfare" made by Prime Minister Tony Abbott on Thursday, indicating SPCA may have to go it alone.
"Structural change is always taking place in the economy and there are different markets and different pressures emerging, and the government's job in my view is not to stand in the way of structural change," Mr Robb said.
A decision has been delayed until the end of January, when cabinet first meets for the new year.
Industry Minister Ian Macfarlane, understood to be a supporter for SPCA to be given some funding, has been tasked with drawing up a proposal over the summer break.
Liberal MPs are relatively unconcerned about the political implications of allowing SPCA, our last fresh fruit processor, to shut down even in the wake of Holden's withdrawal in 2017.
"As long as there is a general pick up in the economic environment – the nature of economic cycles are that business do come and go. And I think the community understands that," one Liberal backbencher said.
"I think what people want to see is policy settings which are consistent and everyone understands what the rules are."
Supporters of SPCA, including local Liberal MP, Sharman Stone, argue it is in a different category to Holden as it has requested only a one-off funding injection to upgrade its facilities.
SPCA confirmed on Thursday it has clearly communicated to the government it is only asking for a one-off co-investment, and not an ongoing "handout".
The loss of SPCA would have a big impact on the economy of the Goulburn Valley region, adding to the effect of Holden's withdrawal from Victoria by 2017. According to economic modelling commissioned by the Greater Shepparton City Council, the unemployment rate in the immediate region would increase from 8.6 per cent to 11 per cent if SPCA was closed. The Goulburn Valley economy would also contract by some $165 million a year.
"We can show we have a great future here but the government needs to be part of that," Greater Shepparton City Council mayor Jenny Houlihan said.
"I would be completely disillusioned with the federal government if they didn't see the importance of stepping in here and helping to innovate and grow."
Opposition industry spokesman Kim Carr, who when in government agreed to SPC Ardmona's $25 million request, slammed the coalition's reluctance.
"Australian manufacturing can't afford more division and indecision from the Abbott government," Mr Carr said.
"In the face of unprecedented opportunities for growth in Australian agriculture and increasing demand from Asian markets it would be absolute madness to allow Australia to lose its fresh fruit processing capability."
with John Kehoe