Truss denies his letter was trigger for Holden closure

ACTING Prime Minister Warren Truss says it is 'absurd' to suggest the federal government's lack of support for Holden led to its decision to shut down its operations in Australia.

The Wide Bay MP said manufacturing had become and more difficult in Australia because of the high costs of productions, rising on-costs including electricity, and the strong Aussie dollar.

Holden's announcement came a day after Mr Truss wrote to the car giant demanding it reveal its plans.

The letter came after Holden's chief Mike Devereux failed to declare what Holden would be doing during an appearance at a Productivity Commission hearing.

Mr Truss said he believed Holden should be upfront with its workers.

"It is the Australian government's view that GM Holden must immediately provide a clear explanation of its future intentions and explain what its plans are for its Australian manufacturing operations,'' Mr Truss wrote.

"An immediate clarification of GM Holden's future plans is needed to end the uncertainty for Holden's workforce, its suppliers and the people of Australia."

Holden said it made its decision on Wednesday afternoon.

But Mr Truss said he believed the Detroit based firm had  already decided to close.

"My letter followed speculation that Australia had already made a decision,'' Mr Truss explained on Wednesday.

"There were reports in newspapers in the United States,'' he said.

"The speculation around was the decision was already made.''

The Opposition says the government should have exercised more diplomacy rather than goading the car giant to close.

Prime Minister Tony Abbott had earlier declared that Holden would not be getting any more taxpayer-funded subsidies.

Mr Devereux said the decision to close was made in Detroit on Wednesday afternoon.

Holden chief said he immediately flew to Adelaide to tell workers at the Elizabeth plant.

Mr Devereux said federal government funding would not have sustained its Australian operation.

But yesterday Holden said the $1.8 billion of federal money it got in the past decade has led to $33 billion in "economic activity" and $127 million a year of PAYE taxes.

Mr Truss said car manufacturing had declined by a third in recent years, including under the previous government.

He said the reality was there were more than 50 models of cars being sold in Australia - compared to about 20 in the US for a much bigger market.

Mr Truss said the government had not planned for Holden's closure.

"Certainly we have not made plans for something we hoped would never happen.''