The car industry has proposed a revamp of the Gillard Government’s “cash for clunkers” program. They say it will reduce the cost from $400 million to $200 million while still meeting the Government’s target of saving one million tonnes of CO2.
The nub of the proposal is that the rebate on new cars should be increased from $2,000 to $5,000 but targeted strictly at ultra efficient cars like the hybrid Toyota Prius and a number of very small diesel and petrol cars that offer similar levels of efficiency.
This would address a perceived failing of the Gillard Government proposal, which provides the rebate to medium and large cars, including some variants of the new Commodore and Falcon.
Whereas the Government’s proposal would cost a ridiculous $400/tonne of CO2 saved, the industry proposal costs a merely expensive $200 per tonne.
The industry scheme seems like an advance on the original poorly thought-through idea. “Cash for clunkers” was evidently hatched at short notice and released in the heat of the election campaign.
But the modified approach still has drawbacks. It rewards, at taxpayer expense, buyers who would’ve bought ultra-small cars anyway. It’s also likely to increase the price of cheap, old cars and make life a bit harder for drivers confined to this end of the second hand market (although as it only takes 50,000 clunkers off the road it won’t have as big an impact as the Gillard scheme, which eliminates 200,000). And it doesn’t provide an incentive to make all those other small, medium and large cars that most buyers will continue to buy any more efficient. Read the rest of this entry »