Local ‘Cash for Clunkers’ scheme delayed

THE federal government has deferred the start of its controversial Cleaner Car Rebate Scheme to July 2011 in a bid to avoid any problems or oversights caused by haste.

The deferral was instigated at the insistence of Senator Kim Carr, the minister for innovation, industry, science and research, who has inherited the scheme from the department of the environment.

The scheme was launched during the recent federal election campaign and caught the industry by surprise.

It looks like several “Cash for Clunkers” schemes implemented in Europe and the US during the early days of the global financial crisis, with one important difference: the Australian scheme will be capped at 200,000 vehicles and $430 million.

In an apparent move to avoid the sorts of problems that blighted the housing insulation program – caused by poorly qualified company owners and poorly trained workers – Senator Carr is determined to address all possible problems before the scheme kicks off.

Left: Senator Kim Carr. Below: Federal shadow minister for industry, innovation and science Sophie Mirabella.



“The ministerial responsibility for the program has recently been transferred to me and I’d like to talk to more people about the scheme’s design and to ensure all the delivery mechanisms appropriate,” the minister told GoAuto.

Senator Carr said he had spoken to the Federal Chamber of Automotive Industries (FCAI) and the Federation of Automotive Products Manufacturers (FAPM), and they agreed that a delay would be appropriate.

“I want to ensure all the delivery mechanisms are complete,” he said.

“We have got to make sure that the computer systems are tested and fully functional and I have got to make sure that any issues that have been thrown up so far are able to be resolved.”

The minister said he wanted more clarity around some of the simpler issues raised by the scheme.

“Things like who gets the benefit: the customer, the car yard or the wrecker’s yard?“How do you transfer the old vehicles from the sale yard to the wrecker’s yard?“What parts on the vehicles are scrapped and what parts are to be recycled?“What do you do with the refrigeration (air-conditioning) gases for instance, and all the oils and fluids?“The wrecker’s yards that want to participate have to be able to demonstrate that they can capture the (air-con) gases and that the vehicles have been taken off the road. Do we cube them? Do we shred them?“Those are the administrative details I need to make sure are clear.”

The six-month deferral will give the department time to discuss the issues with the wrecking industry, the car sales yards and the vehicle manufacturers.

“How do you build a national scheme for wrecking cars? We haven’t wrecked cars before,” he said.

The Cleaner Car Rebate Scheme will run over four years from the new start date.

Car owners will be able to trade in cars built before 1995 and receive a $2000 rebate when they purchase a new car with a Green Vehicle Guide greenhouse rating of six or higher.

This rating is equivalent to emissions of 220 grams a kilometre and excludes most locally made vehicles, excepting the Toyota Camry range and the 3.0-litre Holden Commodore. Ford’s imminent EcoBoost Falcon is expected to qualify when it is launched next year, as will the Holden Cruze when it goes into production here from March.

The Australian Automotive Aftermarket Association (AAAA) this week attacked the Gillard government’s decision to proceed – despite widespread industry criticism following its July 2010 election pledge - with the ‘cash for clunkers’ scheme, which it describes as an “environmental lemon”.

AAAA executive director Stuart Charity said the scheme is ill conceived, open to rorting and abuse and will cost jobs while delivering no tangible benefit to the environment.

“This is another pink batts debacle waiting to happen, but this one is on wheels,” he said.

“The fundamental flaw in vehicle scrappage schemes is that they focus on vehicle age rather than actual emissions produced. This approach is based on the erroneous assumption that old cars are dirty cars. However, the true culprits are gross polluters – vehicles of any model year that are poorly maintained.

“Do we need to give 200,000 people $2000 of taxpayers money to buy a imported car that delivers average environmental performance, when the car they own now could achieve significant improvements in emissions performance after a simple service?“This scheme has no redeeming features and it should be scrapped,” said Mr Charity, who added that the $11 billion automotive aftermarket industry was not consulted by government prior to announcing the scheme, which he said was prone to black market scams that re-birth vehicles for export.

The opposition shadow minister for industry, innovation and science, Sophie Mirabella, was quick to criticise the Cleaner Car Rebate Scheme as “ludicrously expensive”.

She claims the scheme will cost $394 for each tonne of CO2 emissions avoided, versus the proposed $30 a tonne price that was to be enshrined in the Emissions Trading Scheme, which the opposition and the Greens defeated in parliament.

Mrs Mirabella said the Cleaner Car Rebate Scheme could develop into a “fiasco” and would be ripe for abuse.

However, Senator Carr pointed out that his department had been administering the Liquefied Petroleum Gas scheme for some time without any mishaps.

“We are putting what could be described as very large explosive devices in the backs of people’s cars under that scheme,” the minister said.

“We have been able to avoid any major administrative problems with that.

“We’re dealing with small traders who fit the vehicles, so we have the administrative machinery available to do this (Cleaner Car Rebate program).

“We are going to apply it to a new scheme and I just want to be very thorough and careful about how this works.”

Senator Carr defended the scheme against arguments that the emissions created by manufacturing a new car were much greater than the emissions of an old, inefficient car that would be taken off the road.

“I can’t see that that is possibly right. This (scheme) is about vehicle emissions. We are trying to improve the current position on road transport.

“We can improve vehicle efficiency there is no doubt about that. We are doing that through the Green Car Innovation Fund in Australia and we need to ensure that Australian-made cars are part of the scheme.

“The primary policy objective here is to reduce vehicle emissions on Australian roads, which currently contribute 12 per cent of total emissions and is the fastest growing area of emissions.

“I have to find a way to do that in a manner which is economically responsible … and ensure that we have sound administrative practices. We have to make sure it works.”