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NINETY EIGHT REGENCY

Cash For Clunkers Comes To Australia

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Julia Gillard unveils a cash for clunkers policy to get dirtier old cars off the road

Julia Gillard

Julia Gillard, with Colin Foot and his 1987 Toyota Celica, after launching a cleaner car rebate in Brisbane. Picture: Kym Smith Source: The Australian

AUSTRALIANS who trade in older cars for more fuel-efficient vehicles will be eligible for a $2000 rebate under a new initiative unveiled by Labor.

Julia Gillard also announced stricter compulsory pollution standards for new cars from 2015, adding new elements to Labor's climate policy.

The Prime Minister said the $394 million cleaner car rebate would help take some 200,000 pre-1995 vehicles off the road over four years from January 1, 2011 to the end of 2014.

However, the rebate would only apply when motorists purchased extra-efficient vehicles, such as the Toyota Camry Hybrid, Holden Cruze or Hyundai Getz.

“The amount of carbon we anticipate saving through this measure by getting the 200,000 old cars off the road is one million tonnes,” Ms Gillard said at Beenleigh, near Brisbane.

“Australians own a lot of old motor cars, and those old cars guzzle a lot of petrol and they spew out a lot of pollution,” Ms Gillard told reporters in the marginal Labor-held electorate of Forde.

The policy is similar to US President Barack Obama's 2009 “cash for clunkers” policy, although that was also aimed at helping America's ailing car industry.

Ms Gillard admitted there were around two million old cars in Australia, and this policy would take only 200,000 off the road.

“Of course not everybody is in the position to trade in their old car and get a new car,” she said.

“But for those Australians that are thinking about maybe being able to make the decision, but are equivocating, need that extra bit of helping hand, this is that extra bit.”

The cost of the program will be met with cuts from other programs, including the government's solar and carbon capture and storage flagship programs, as well as the renewable energy bonus scheme.

Tony Abbott said the policy contradicted the view of Industry Minister Kim Carr, who last year rejected the need for a cash for clunkers scheme to stimulate new car sales.

“I should point out that just last year, the Industry Minister Senator Carr dismissed these programs as wasteful, complicated and an unnecessary use of finite resources,” the Opposition Leader said in Perth.

“So, certainly in bringing this program in the government seems to have humiliated the Industry Minister who was dead against these programs when they were first mooted last year.”

The Prime Minister also opened a new front against vehicle manufacturers, announcing tough new compulsory pollution standards for all new cars from 2015.

Emissions from light vehicles will be cut by 14 per cent by 2015 and 30 per cent by 2024, if Labor is re-elected.

Other recent changes to emissions standards sparked a sharp rebuke from vehicle manufacturers, who claimed the move put jobs at risk.

The 2015 start date would allow industry a four-year transition period to prepare for the new regime.

Today's announcements add to Labor's climate change policy, outlined yesterday.

The policy includes a crackdown on dirty power plants and a $1 billion investment in greening up the electricity grid.

Ms Gillard also wants to set up a 150-person Citizens Assembly to help the government nut out consensus on the difficult issue of a carbon price.

link:

http://www.theaustralian.com.au/national-affairs/julia-gillard-says-she-will-pay-2000-to-get-old-cars-off-the-road/story-fn59niix-1225896392135

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Gillard promises cash for clunkers

Out with the old: Sales of small imported cars are likely to spike under Labor's proposed scrappage scheme.

What is green?

$394 million pledged to rid Aussie roads of inefficient pre-1995 cars

27 July 2010

By JAMES STANFORD

THE Gillard government’s proposed $394 million cash-for-clunkers scheme would only benefit importers of low-end vehicles to the detriment of the local industry, according to the opposition and key industry sources.

While local manufacturers declined to comment on the policy during the election campaign, GoAuto sources confirmed the scheme was expected to result in few sales of locally produced cars.

Under the proposal, which was announced last weekend by prime minister Julia Gillard, Australian motorists would qualify for an incentive of $2000 to buy a new, fuel efficient car from January 1, 2011.

They would be required to trade in a pre-1995 vehicle on a new vehicle with an average CO2 emission rating of 220g/km or less. The old cars would be scrapped.

A GoAuto source said the scheme would likely benefit brands with the cheapest new cars on the market, which are all imported, as these vehicles were generally popular with motorists graduating from a used model.

“The kind of people driving cars that are worth less than $2000 as a trade-in are unlikely to buy anything but the cheapest new cars,” said the source.

The type of vehicles eligible under the program has also attracted criticism, with the opposition leading the attack.

Left: Prime minister Julia Gillard. Below: FCAI chief executive Andrew McKellar.

Liberal industry spokesperson Sophie Mirabella said: “This is a deeply flawed program with the (regular) Toyota Camry and hybrid Camry the only eligible Australian-made vehicles. It will inevitably undermine local jobs.”

According to the government’s Green Vehicle Guide, the 3.0-litre V6-powered Holden Commodore misses out on qualifying for the scheme by 1g/km of emissions.

Ms Gillard mentioned the Australian-made four-cylinder Ford Falcon EcoBoost would qualify, but it is not due for release until the first quarter of 2011 and its emissions ratings have not been finalised.

The Holden Cruze small car, which is due to begin production in South Australia early next year, should be eligible under the scheme.

A long list of imported vehicles qualify under the scheme include the big-selling Toyota Corolla, Mazda3, Mitsubishi Lancer, Hyundai Getz and Holden Barina.

However, concerns have been raised that the scheme could be open to rorting.

The South Australian state executive director of the Motor Trade Association, John Chapman, said the program could “distort the market if people can go out and pick up an old bomb for a few hundred dollars and then trade it in for the $2000 rebate”.

A Labor statement appeared to combat this concern by stating the vehicles to be turned in must also have been registered and insured by the person claiming the rebate for 24 months prior.

It must be a passenger vehicle and be petrol- or diesel-fuelled.

Labor said that the new vehicle to be bought by an individual and not a business and not incur the luxury car tax.

Federal Chamber of Automotive Industries (FCAI) chief executive Andrew McKellar supports the plan but would want further clarification should Labor be returned to government.

“There are a lot of things that still need to be detailed,” he told GoAuto this week.

He said the FCAI was concerned that the program could have a disruptive effect on the industry prior to its introduction.

“We need to ensure the competitive impact or distortion it might have on the market is assessed,” he said. “We would be concerned that any pulling back (of sales) would be considered.”

Mr McKellar said the scrappage scheme was quite targeted and “wasn’t going to help everybody”, but he still supported it.

“We welcome any move to help motorists move away from older vehicles and into more efficient and far safer vehicles. Getting 200,000 of these old, inefficient vehicles off the road is a useful contribution if it can be achieved,” he said.

Mr McKellar said state governments could do more to move motorists out of older vehicles by tightening up vehicle checks which the FCAI says allows many unroadworthy vehicles to remain in the vehicle fleet.

The cash-for-clunkers program announcement represents a dramatic policy change after the Rudd government dismissed such schemes that were introduced overseas in 2009 in response to the global financial crisis. Federal industry minister Kim Carr told GoAuto in March 2009 that a car scrappage scheme was not on the cards because “it’s extremely expensive and there are finite resources for the government”.

Instead, the government used a 30 per cent and then 50 per cent Capital Investment Allowance for businesses to stimulate the new-car market to the end of 2009.

Last year, Senator Carr estimated a scrappage scheme would cost $1 billion, but the new scheme will be capped at $394 million, covering 200,000 motorists and running for no more than four years.

The $2000 incentive is modest compared to the $5000 stumped up under the German government’s scrappage scheme. The British system offered motorists $3500 and the US program offered $5000.

Initially, the US government pledged $US1 billion for its cash for clunkers scheme, but that money lasted just one week. It ended up investing another $US2 billion by the time the scheme wound up in August 2009.

It is not clear exactly what kind of response the Gillard government cash-for-clunker proposal would generate, but it would offer significantly less money than the US program.

The Labor scrappage scheme would be financed using funds that had been previously allocated to environmental initiatives including solar energy generation development, carbon capture research and rebates for the Renewable Energy Bonus Scheme, which helps householders reduce emissions.

Prime minister Gillard said it was important to reduce the average age of cars on Australian roads, which is sitting at 9.7 years, behind the European Union at eight years and Japan at 6.2 years. “Australians own a lot of old motor cars and those old cars guzzle a lot of petrol and they spew out a lot of pollution,” she said.

“When we look at climate change and our nation’s carbon footprint, light vehicles contribute about 10 per cent of that carbon footprint. So the practical measures we can take to make a difference to the kind of vehicles that people drive,” she said.

Labor says the plan will save motorists $344 million in fuel costs and cut one million tonnes of CO2 emissions.

Ms Mirabella suggested the cost of the program dramatically outweighed the environmental benefits.

“Under this program, Labor will be paying a staggering $394 per tonne of CO2 abatement, when the government’s own discredited ETS priced carbon at less than $30 per tonne,” she said.

“This is the most ill-thought-out program imaginable and will inevitably result in the Gillard government wasting tens-of-millions of taxpayer dollars.”

LINK:

http://www.goauto.com.au/mellor/mellor.nsf/story2/D734E1E68716FCD4CA25776D001CD971

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CSpec    515

Great! Most economists view cash for clunkers as one of the stupidest policy decisions of the past few decades.

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