Well this site very nearly became a white elephant 
However with the re-election of Labor, we now know for sure that Cash for Clunkers is coming to Australia. We can also expect more details on the scheme to be announced as the post-election dust settles. Suffice to say it looks like pretty good news for the auto industry and anyone who’s got an old banger they are planning to upgrade!
CLEANER CAR REBATE
The Gillard Labor Government will provide $394 million to support motorists to purchase new, low-emission, fuel-efficient vehicles. Households will be able to receive a $2,000 rebate towards a new vehicle by trading in their pre-1995 car for scrapping.
This is part of Federal Labor’s plan to make positive changes to how we live, work and travel.
Over four years from 1 January 2011 to the end of 2014, the Cleaner Car Rebate is expected to result in significant cuts in Australian fleet emissions as close to 200,000 pre-1995 vehicles are taken off the road and replaced with more fuel-efficient, environmentally friendly cars. Rebate will be capped over its four years of operation at 200,000 vehicles. Improving the efficiency of our vehicle fleet
Older vehicles emit higher levels of carbon dioxide than newer vehicles, clogging our atmosphere with harmful pollution. They also hit motorists at the petrol station because they are less fuel-efficient, costing more for every kilometre driven.
Households that trade in a car manufactured before 1 January 1995 will be eligible for a $2,000 rebate when they purchase a new car that has a Green Vehicle Guide greenhouse rating of six or higher (see www.greenvehicleguide.gov.au).
This is an important measure for reducing the age of the Australian car fleet compared with other countries. While the average age of cars in Australia fell from 10 years to 9.7 years between 2004 and 2009, this was still higher than recent measurements in countries such as the United States (9.4 years in 2008), the European Union (15 members) (8 years in 2008) and Japan (6.2 years in 2002).
Similar measures have been introduced in other countries such as the United States, but the Cleaner Car Rebate has a greater emphasis on introducing lower-emission vehicles into the Australian car fleet over the medium term.
What are the benefits?
It is anticipated that the measure will see close to 200,000 pre-1995 vehicles taken off the road over four years from 1 January 2011 to the end of 2014, generating the following benefits over the decade:
CASE STUDY 1
Angela has finished her studies at university and gets her first full time job.
She trades in her 1986 Holden Commodore for scrapping and buys a Holden Cruze. She will receive a $2,000
Angela could use this money to offset the cost of a new Cruze, which costs around $24,000. The rebate is equal to almost 10 per cent of the cost.
In addition, Angela will save on fuel costs. If she drives 10,000 kilometres per year, she will cut her annual fuel bill from $1,183 to $910 – that’s a saving of over $270 every year.
CASE STUDY 2
Matthew is a father of four whose children have grown up and reduced the need for the family’s 1992 Toyota Tarago Wagon.
He trades in his car for scrapping and buys a Toyota Corolla for around $25,000. He receives a $2,000
Matthew decides to go on more driving holidays. If he drives 15,000 kilometres per year, he will cut his annual fuel bill from $1,802 to $1,424 – that’s a saving of almost $400 every year.
How it will work
Individuals who meet the following criteria will be eligible under the scheme. The trade in vehicle must:
The new vehicle must:
Eligible cars include:
What happens to the traded in cars?
Older vehicles will be scrapped under the scheme to ensure that higher-emitting vehicles are not returned to the road, and that the emissions profile of the Australian fleet is being constantly reduced.
This means they will be crushed and sold as scrap metal. The Gillard Labor Government will prescribe the scrapping requirements following consultation with industry, to ensure that they are consistent with the environmental objectives of the program. This process will be managed by AusIndustry.
Stringent compliance checks
The scheme will be managed by AusIndustry and protected by rigorous anti-fraud and compliance provisions, including regular spot-checks of car dealers and scrap yards. There will also be a number of check and control points in the process, which will enable AusIndustry to monitor how the scheme is operating from day to day and manage demand.
All dealers and scrap yards will be required to register to participate in the scheme. Each car dealer’s registration will need to be backed by a car manufacturer (e.g. Ford or Honda).
OFFSETS
Consistent with the Gillard Labor Government’s commitment to return the budget to surplus in three years, Federal Labor will redirect $520 million over the forward estimates from the Solar and CCS Flagship programs and Renewable Energy Bonus Scheme.
The programs will continue to support action to reduce carbon emissions, with more than $320 million worth of rebates remaining in the Renewable Energy Bonus Scheme, over $680 million available for the Solar Flagships program and over $450 million available under the Carbon Capture and Storage Flagships program over the next four years.
| Financial Implications (Underlying Cash Balance, $m):
2010-11 |
2011-12 | 2012-13 | 2013-14 | Total | |||||||
| Cleaner Car Rebate | -66.8 | -117.1 | -107.7 | -102.6 | -394.2 | ||||||
| Offsets | |||||||||||
| Renewable Energy Bonus Scheme | 75.0 | 75.0 | 150.0 | ||||||||
| Solar Flagship Program | 50.0 | 170.0 | 220.0 | ||||||||
| Carbon Capture and Storage Flagship Program | 75.0 | 75.0 | 150.0 | ||||||||
| Net Impact of Cleaner Car Rebate | 8.2 | -42.1 | 17.3 | 142.4 | 125.8 | ||||||
Well in short Labor have announced that they will commit the sum of $394 million towards the scheme which, if Labor is re-elected is intended to cover the program between January 2011 and December 2014.
Whether this sum will be enough is in serious doubt with Industry minister Kim Carr previously estimating $1Billion would need to be spent on such a scheme to guarantee it’s success. At the time (early 2009), he rejected the idea of Cash for Clunkers arguing that it was indeed ‘too expensive’
$400m assumes that 200,000 ‘clunkers’ will be taken off the road in that time out of an estimated 2 million pre-1995 vehicles currently on the road. Whether this is likely to be an underestimate or an over estimate remains to be seen but in future posts we’ll discuss how likely the Australian public will be to take advanatge of the Cash for Clunkers rebate.
How Much Cash for Your Clunker?
Big news for the Australian autromotive industry when Julia Gillard announced on Saturday that, should Labor be re-elected, they will introduce a Cash for Clunkers type scheme (officially called the Cleaner Car Rebate) to encourage Australians to trade-in their old cars for new, safer and greener vehicles.
Cash for Clunkers
In essence the Cash for Clunkers scheme means that owners of pre 1995 vehciles will be able to claim a $2,000 cash rebate should they trade their car in for an ‘approved’ new car. This rebate will be given once the trade-in has been sent for scrapping.
There are several disctinct arguments for a Cash for Clunkers scheme:
1) It’s green. Many pre-95 cars would today be considered ‘gas guzzlers’ so by taking them off the road and replacing them with more fuel-efficient new cars should reduce the overall emmissions for that driver.
2) It will stimulate the economy. This was the primary motivation when the Cash for Clunkers scheme was announced in Europe and the US in 2008. The automotive industry there (and in Australia) is such an important part of the economic picture that more activity created by the cash for clunkers rebate would be very welcome.
3) It means safer cars. Technology and particularl;y autoimotive safety has come a long way in the last 15-20 years. Through the Cash for Clunkers scheme, pre 1995 cars will be replaced with newer safer cars replete with ABS, airbags and other standard safety equipment.
There’s a lot to consider with this scheme and in future posts we’ll be addressing the counter argument against the scheme, the politics of Cash for Clunkers as well as the technical aspects such as the list of approved cars and how to claim your rebate. Stay tuned…
