SPC Ardmona's bid for $25 million in federal government assistance has been rejected by the federal cabinet.

Coca-Cola Amatil, SPC's Australian-owned parent company, immediately responded, saying it has been forced to consider ‘‘alternative plans’’ for its Victorian plants.

Prime Minister Tony Abbott and Industry Minister Ian Macfarlane confirmed that the proposal, which was discussed by cabinet on Thursday, has been turned down.

Mr Abbott said he thought cabinet's decision to reject the $25 million appeal ''does set an important marker''. He said businesses must understand that they needed responsibility for their own restructuring and survival.

''This is a very very strong business,'' Mr Abbott said of Coca-Cola Amatil.

''And I think this is a business which truly has the resources to ensure that SPC Ardmona is in a strong position to restructure.''

Mr Abbott said he had faith that despite the government's decision SPC Ardmona had a strong future.

He said he knew the chairman of the parent company Coca-Cola Amatil, David Gonski, would not let the company die.

He said he believed that jobs would be maintained in Shepparton, Victoria, where the SPC fruit business resides.

In a statement, the company responded, saying its investment plans would have to be reassessed, resulting in a write-down of the business.

“The government decision is disappointing in light of the fact that SPC Ardmona had presented to both the Federal and Victorian governments a solid business case for a one-off co-investment of $25 million each with CCA committing to a significant and much greater investment of more than $90 million,’’ CCA chief executive Terry Davis said.

“This was to be invested in best-in-class technology for both new product development and for efficiency gains to enable the transformation of the production facility in the Goulburn Valley into a modern, high-tech food company, utilising clean, green Australian-grown fruit and vegetables.”

CCA said it had ‘‘strong investment plans’’ for SPCA, which were dependent on the receipt of both federal and Victorian government grants, and had committed a further investment of more than $90 million to support the government contribution.

Peter Kelly, Managing Director, SPC Ardmona said the decision by cabinet came as a surprise and would be a shock to food manufacturers in Australia.

“This is an unexpected and extremely disappointing decision by the Coalition, particularly after the enormous support we have received for our business plans from the local community and beyond,’’ he said.

“To build a sustainable and profitable business in Australia you need to innovate; to innovate you need to invest. Without investment some of Australia’s best loved packaged fruit and vegetables brands may disappear and consumers won’t have a choice to buy clean, green Australian packaged grown fruit at retailers.”

Mr Macfarlane said he felt for the workers and that their fates were the company's responsibility.

The Prime Minister suggested that SPC had given its workers conditions that were too generous and needed to be renegotiated.

He described the company's enterprise bargaining agreement as "pretty extraordinary" and mentioned redundancy payments that were well above average.

''We grow very good fruit,'' Mr Abbott said. ''We have got excellent farmers... let them have a go, and that's what I think can be done.''

Mr Abbott indicated the government would no longer be inclined to give handouts to companies.

''We think the first task of business is to do its business and the first task of management is to ensure its house is in order,'' he said.

''We will create the frameworks to make it possible for you to do that.''

Mr Abbott said Coca-Cola Amatil had already done a lot to restructure the SPC business, and he encouraged them to continue the ''turnaround'' of the fruit processing business.

''It's not really the government's job to restructure a particular business,'' Mr Abbott said.

''It's the management's job.''

The SPC debate saw splits emerge within the Coalition and the cabinet before Thursday's decision.

Industry Minister Ian Macfarlane was expected to press the case to support the company and Agriculture Minister Barnaby Joyce warned his colleagues against an "all or nothing view" when it came to government assistance.

Liberal MP Sharman Stone, whose electorate of Murray includes the SPC Shepparton site, has been a vocal advocate for funding for the company.

Dr Stone told ABC Radio in Melbourne, shortly after the decision, that she was "a bit devastated" by the news.

She said her government colleagues had not informed her of the decision, noting she had to wait for the Prime Minister's press conference.

Dr Stone said she was now worried about "plan B," for SPC,  adding "this is not the end for me".

On Thursday morning, before the decision, Dr Stone told ABC Radio that without the extra funds, the Australian fruit processing industry would die and thousands of jobs would be lost.

"It means no more Australian processed fruits,'' she said. ''That's a tragedy, for the nation, not just for my local area.''

Labor leader Tanya Plibersek and Industry spokesman Kim Carr said it was "another dark day for Australian jobs at the hands of the Abbott government".

In a statement, they said the Coalition had decided to send "thousands of Australian jobs overseas and shut down another key manufacturing sector" by refusing to provide the $25 million to SPC, which they described as an Australian icon.

"Tony Abbott himself said the first rule of government is to do no harm. Today his government has done great harm to the people of the Goulburn Valley and the future of Australia’s manufacturing industry."

The Australian Manufacturing Workers' Union joined Labor in condemning the decision.

"This decision is not in the interests of anyone," national secretary Paul Bastian said

"It is based on a naive and cruel desire from this government to maintain their ideological purity when it comes to manufacturing support at the expense of thousands of jobs and whole industries."

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