UPDATED: Prime Minister Tony Abbott can’t put a final figure on how much public money will be restored to the car industry following a government backdown.

Industry Minister Ian Macfarlane announced in Adelaide today that the government would not proceed with legislation to cut $500 million from a scheme designed to support the car making and auto components industry.

But it is unclear how much of this money will be spent ahead of the three major car makers closing their production by the end of 2017 and how much will be banked as a budget saving.

The prime minister told reporters in Kalgoorlie that the scheme would “continue to operate as legislated” but would wind down as the car industry shrank.

“How much is spent under the scheme will depend entirely on applications made to the scheme and the ordinary operation of the scheme,” Abbott said.

One estimate puts the maximum total spend at $118 million, but AAP was seeking figures from Macfarlane’s office.

Macfarlane’s media release confirmed the budget would still benefit despite the change of policy.

Most of the savings from the program would still be realised, based on production volumes as Ford, Holden and Toyota wind down production based on their independent decisions to end domestic car manufacturing, the statement said.

Abbott confirmed the decision did not go to cabinet, but had been discussed at the cabinet’s expenditure review committee.

“The decision not to proceed is a perfectly sensible one given … the fact that as the car industry winds down there is a natural term to this scheme anyway.”

The government had been unable to convince the Senate to abolish the industry assistance under the Automotive Transformation Scheme (ATS).

Macfarlane says the government will withdraw changes to the legislation to give certainty to the components sector.

“We want the car industry to continue until the day that Holden shuts its doors,” Macfarlane told reporters in Adelaide this morning.

“We don’t want anything to jeopardise the survival of the industry until Holden finally closes.

“There was a level of uncertainty in the automotive industry and particularly the component industry.

“We as a government are committed to providing certainty to this industry.”

The money in the scheme was earmarked for car makers Holden, Ford and Toyota, all of whom will cease manufacturing in Australia by 2017, and the component industry.

“We won’t be touching the ATS legislation,” said Macfarlane

“This is good news for the industry, it’s good news in terms of the transformation that all industries are going to have to go through as the auto industry (closes).”

The funding will be split 55 per cent to the auto manufacturers and 45 per cent to component makers.

Federal Coalition MPs and the South Australian and Victorian state oppositions have also been lobbying hard for the change of heart, arguing political fallout from the decision threatened their seats.

The government will now withdraw its legislation and keep the $500 million in the ATS in place until the end of 2017.

The government also remains committed to $155 million in support under a scheme involving federal, state and industry funds.

Ford Australia says it is on track to transform the business into the largest automotive investor and employer in Australia.

“This ATS approach is a sensible way to help the industry’s manufacturing transition,” a spokesman told AAP on Tuesday.

AMWU national vehicle secretary Dave Smith said the government’s decision was a huge win for workers in SA and Victoria.

“Fifty thousand workers can breath a little easier because their industry should keep going to 2017,” he said.

But the government should be condemned for giving the industry “18 months of uncertainty and inaction”.

Macfarlane also announced $6 million in industry grants, which he said would help sustain the industry until it ends in 2017.

He said that funding under the ATS was contingent on cars rolling off the production line, and acknowledged he did not know whether all $500 million would be spent as the industry slows.

“There’ll certainly be hundresds of millions of dollars spent under the scheme that wouldn’t have been spent if we’d (proceeded) with this cut,” Macfarlane said.

“That exact figure I’ll tell you at the end of 2017.”

He said the government will still save $400 million in planned funding under the ATS, which was expected to finish in 2021.

“All money under the ATS is contingent on cars being made … when cars stop rolling off the assembly line, the scheme stops,” he said.

Macfarlane said he had been working with the industry on today’s policy announcement since the middle of last year.

“This discussion started with the industry in August (2014); it was completed with the Prime minister in December.”

Opposition Leader Bill Shorten said the coalition had not changed its mind on car industry funding.

“They’re just changing their tactics because they’re worried about their own jobs,” he told reporters in Sydney.

“This is a government who can’t be trusted to look after manufacturing in Australia.”

According to University of Adelaide modelling, the loss the Elizabeth Holden manufacturing plant will cost South Australia $1.24 billion and 13,200 jobs.

– with AAP