Cleaner Car Rebate Scheme

By John Cadogan | July 27th, 2010

Politics is a sham. The car industry – mostly – is rubbing its hands together at the prospect of Julia Gillard’s proposed Cleaner Car Rebate scheme, which will see $2,000 handed over to the owners of 15-year-old (or older) cars, provided they replace them with a new, fuel-efficient car.

Sounds good. New cars are both safer and cleaner, right? So no arguments there. More newer cars on the road and fewer old ones gets a big tick from moi.

The Cleaner Car Rebate Scheme (CCR) scheme will target 200,000 pre-1995 cars, at a taxpayer-funded cost of $394 million, according to the government – which obviously has a few fundamental arithmetic issues… The scheme will run from the start of 2011 until the end of 2014.

The scheme is Labour’s take on ‘cash for clunkers’, widely employed around the world during the global financial crisis, though not in Australia. Instead, during the crisis, the Rudd government handed out big tax breaks for businesses prepared to buy a new car. In all these cases the motivation was economic stimulation, not greener motoring.

Prime Minister Gillard is playing the ‘green’ card this time in an attempt to be seen to take action on CO2 – something Kevin Rudd failed at, which hurt his popularity significantly. Like all pollies, she’s playing to win.

Frankly, however, the car is hardly the worst contributor to Australia’s CO2 emissions. I wrote a whole column on that, shortly after Ms Gillard moved into the big office. You can read it here.

The bottom line is that passenger cars emit under eight per cent of our national CO2 emissions, while electricity generation, together with coal mining is the big culprit at almost 50 per cent.

So, where is the $394 million funding for the CCR coming from? The Cleaner Car Rebate will be offered at the cost of other environmental initiatives already in the budget. According to Wind Energy and Solar Power Australia, the CCR will be funded through reductions to programs like the Solar Flagships program and the Renewable Energy Bonus Scheme – totaling $370 million.

Seems funny, doesn’t it? Demonising the car at the expense of programs directly aimed at reducing coal-fired power, even when the car’s not the big contributor and ‘big coal’ is. It’s also one of the PM’s first complete about-faces. In the days just after she took the reigns, she said: “Moving forward means making record investments in solar power and other renewable energies to help us combat climate change and protect our quality of life.” She didn’t mention anything about sticking the knife into those same schemes just to grab a few dumb voters.

Apparently even the Greens agree the CCR is a cheap shot. Greens deputy leader Christine Milne said the program was the right policy “but from the wrong purse”.

She added: “It is completely wrong to take money out of Australia’s renewable energy future to pay to take clunkers off the road…The Greens would take the money from coal via a carbon tax, or from fuel excise, whereas the Prime Minister’s rhetoric on climate change is becoming even more hollow as she prepares to attack the solar industry one again.”

And you can bet nobody at Holden is doing handsprings big-time over the CCR. The Commodore – Australia’s most popular car – doesn’t even qualify for the rebate. And, Ford-wise, only the turbo four-cylinder Ecoboost Falcon, yet to debut, gets the CCR nod. And we don’t even know yet if the Ecoboost Falcon will be a winner – if history repeats it could go down in the annals in the same way as the Starfire four-cylinder Commodore (fail).

What replacement cars do qualify? Ms Gillard said: “In terms of the cars that would meet the standards, we’re talking about the kind of cars so many Australians drive, like a Toyota Hybrid Camry, Holden Cruze, Ford Falcon EcoBoost, Toyota Corolla, Mazda3, Mitsubishi Lancer, Hyundai Getz.”

Interesting list. Flawed at both ends. The ageing Getz is due to be phased out soon, and may not be available for much of the CCR. Also, and more importantly, heading the PM’s list is the Toyota Camry Hybrid, which isn’t exactly the kind of car “so many Australians drive”. It’s a highly taxpayer funded, locally manufactured sales under-achiever. It’s technologically middle-aged (for a hybrid). It is certainly, as Toyota claims, the most advanced car ever made here – which is not that difficult, seeing as the local manufacturers aren’t widely regarded as automotive technology innovators. The Federal government paid $35 million, and the Victorian government another $35 million to the world’s biggest car company, Toyota, to get the Hybrid Camry built here. And the biggest customers for it are governments. Sales, frankly, are disappointing. Especially to private buyers. With the CCR, Ms Gillard is putting even more taxpayer funding behind this car. It begs the question: When is enough enough? It’s hardly as if Toyota is a not-for-profit organization with a principle objective of altruism.

There’s a footnote here: Hybrids are generally a high-priced joke. After more than 10 years on the market, and countless new entries lately, hybrid SUV and car sales are still just over 4000 units annually, in a market of roughly one million. Anyone who thinks hybrids can to any measurable degree help clear the air, as it were, is both having a bad acid flashback to the Sixties as well as a failure at basic numeracy.

And how much CO2 does Ms Gillard intend to save? One million tonnes of CO2 over 10 years. Now, in my view, that just rolls off the tongue. It’s one of the great sound bites. You can drop it into the TV news or the radio. It sounds like a pretty big number.

It’s also a sham. One million tonnes over 10 years. Please. We emit 537 million tonnes a year of greenhouse gas in total. That’s more than half a billion tonnes in a decade. Passenger cars emit 42 million tonnes annually. That’s 420 million tonnes in a decade, and Ms Gillard is proposing to reduce emissions by one of those millions of tonnes. It makes you wonder how dumb her advisors think the electorate is. One million tonnes in the scheme of things isn’t even a drop in a bucket floating across Bass Strait.

But it is possible to save millions of tonnes of CO2 annually, starting January 1, 2011. It’s not just possible; it’s dead easy. It doesn’t involve a kickback to old car owners, or a big splash of cast to the local car industry to tool up to produce another inconsequential but high-priced and ageing hybrid.

Ms Gillard can give me $50 million. I’ll get together with Singleton Ogilvy Maher, Mojo, or some other big advertising agency. We’ll put together a really snappy advertising campaign aimed at reducing fuel consumption by 10 per cent. In practice, most Aussies could achieve this with just a few changes to the way they drive, and no major heartache.

Say we’re only halfway successful with that, and the saving is only five per cent. What would that achieve? The saving would be over two million tonnes a year. That’s 20 million tonnes over a decade – 20 times what Ms Gillard hopes to achieve with $200 million. That’s 20 times the result for a quarter of the price – making it 80 times as effective. For that, I’d charge a small commission – say 50 per cent. I think that’s only fair, copping a $25 million earn for doing such a damn fine job, because having just spoken to a mate in one of those big ad agencies, we could certainly do it all for $25 million. The other 25 would just be, well, a waste.

But the government would never go for it. Why? Well, it’s simple: passenger cars consume 18 billion litres of fuel annually. A five per cent saving would be 900 million fewer litres of both petrol and diesel. And, to the Government, each litre of fuel represents 38 cents in excise plus 12 cents in GST – 50 cents in total taxation revenue per litre. And that’s a $450 million hole in the budget.

You can see why governments don’t really want fuel consumption cut, right?

Putting an effective vehicular CO2-cutting scheme in place would cost the treasury almost half a billion dollars in foregone revenue. Over 10 years, that’s a $4.5 billion black hole. And no politician in his (or her) right mind would be seen dead sniffing around a crazy notion like that.

Carter3310

“Old” or not, the idea of destroying perfectly good cars bothers me. My Honda is almost twenty years old. It is reliable, economical and enjoyable to drive and doesn’t use much gas … just because something isn’t new doesn’t make it a “clunker”.

Cameron

Lucky it ain’t compulsory then……
Reckless1

How much petrol does it use though.

And how good is the ABS, will the air bags work, and you should get new tyres – the ones you have are probably 10 years old and unsafe at any speed.

A 20 year old Honda is not a safe car.

capago

haha my ’89 pug 405 mi16 was hella quick….handled well and the ABS saved me because i forgot about one last little chicane

so yes…it did work well lol go european!

Leith

So what about families like mine when we have 6 children?

Which of those tiny boxes passed off as cars can fit us?

The privately owned, and illegal monopoly, RTA already has too much control over us. I wont be giving the government more of a strangle hold by letting them have an investment in my vehicle.

AC

You should probably use the $2000 for a vasectomy instead..

Damian

“You should probably use the $2000 for a vasectomy instead..”

That’s pretty harsh, but it’s nonetheless, a very rational line of thinking.

AC

It was a joke. Trying to lighten the mood a tad. Everyone is taking this far too seriously. Since when has a Labor policy (in recent times) not turned to shit just before or during implementation.

Reckless1

6 kids, well, you’ve collected $30,000 in gov’t handouts just to have them, and collect another $20,000 a year in gov’t cash handouts.

Don’t see why you should get the $2000 as well….but if you bleat enough you’ll probably be given it to buy an eco bus

Sparky

Reckless you say some stupid things sometimes.
Perhaps he should sell his kids to fun a new vehicle too eh?
On the plus side – perhaps this means you aren’t inclined to breed yourself

Bezza

This won’t end well. It will distort the car market and sure fire introduce some nasty tactics from buyers and sellers alike.

I see no end but money, common sense and dignity being thrown into the wind.

http://carAdvice The Salesman

You do live in the same world as us, Right?

Shak

People calm down, while i agree the scheme is massively flawed, it has its merits for those who need it. Some people out there do want that extra bit of cash to get over the line. But yes the, scheme has too many flaws to be workable.
JEKYL & HYDE

forget the “cash 4 clunkers” and bring back the investment allowance.it was the least publicised,most effective measure that “KRUDD” dreamn’t up last year.and don’t change anything to do with the solar energy scheme,because i can seriously see the day where everybody will have some solar cells on their roof.my dad’s had freely heated hot water for 30 years…

Dlr1

…the investment allowance was a poorly thought out policy that distorted the market unnecessarily and the real winners were no doubt the mostly overseas factories that built the vehicles on which the allowance was claimed. No doubt plenty of Thai and Japanese auto workers loved the scheme.

JEKYL & HYDE

that’s the biggest load of b.s. i’ve heard of today.it was a win win 4 pretty much everybody in business.maybe you would like to forge ahead with the insulation scheme,or the $900 handouts…

Dlr1

do you live in some alternate universe where Hiluxes and Rodeos and power tools are actually manufactured in Australia? Too much of what the depreciation allowance was claimed on was manufactured overseas. It does nothing for our terms of trade or balance of payments. So what if a few retailers made some margin. The bulk of the value of an imported vehicle goes OS, just like all those $900 cheques that were spent on plasmas.

JEKYL & HYDE

you must be far to intelligent to even bother with these forums.i suggest that you run for parliment.when you run,i’ll personally give you a thousand or so sound idea’s on improving the balance of trade.here’s a few to start.how about making a gov’t run super fund that invest’s in our own country’s infastructure?what about raising the hell out of tariff’s so all foreign products are dearer then the locals?how about making our farmers actually grow something instead of selling their water,and forcing coles and woolies to actually sell this product?nah,that’s all too hard…

now if you had actually spent the time to see what i had wrote,your would realise that my point was simply that out of all the scheme’s krudd put in to stop the economy going into meltdown,the investment allowance was a winner.it’s had nothing to be with the balance of trade,but stimulate the economy it did.hell,anybody in retail will tell you the same.who sells the imported products?aussie businesses maybe?and if your business didn’t make coin,you didn’t buy,you didn’t claim…

Roman

Interesting read John. If we take Gillard’s policy of replacing our ageing fleet seriously, then why are the vehicles on the list restricted? Surely most modern cars have more efficient engines than their counterparts of 20+ years ago, so replacing a 20-30 year old clunker (Govt words not mine) with even a Commodore etc should qualify?
Bob

This new scheme, just shows how incompetent this labor Government is! They can’t get anything right!
ABMPSV

Not a bad idea but what about charging motorist by how much CO2 coming out from exhaust. Say up to 150g/km would be tax and from 150 to 200, 200 to 250 and 250 and over.

Bezza

Hey that would be sensible (and what they do in much of Europe I believe).

So therefore it is a silly idea and you need to be taken off to a re-education camp forthwith. Oh and your, family frinds and pet pooch too lest they also start getting useful ideas.

LOL
Dave

There are worse chemicals than Co2 coming from cars. Diesels produce harmful emmisions such as particulate matter.

i would prefer my car to have highish C02 than for it to produce harmful diesel exhaust.

Lets just hope the Commodore makes the CCR list once it goes E85.

http://carAdvice The Salesman

I will have to go out and buy a bunch of $500.00 VR – VS Commodores to on sell.

freddo

VS Commodores were produced from 95-97. How does that make them pre 95?

Dlr1

VR sold from 1993 !

Simon

I have heard it said (although I haven’t confimed it) a condition of receiving the $2G for your clunker is that you have owned it for 2 years.

Crossy

Yet another ill conceived scheme by the Labor Party. This has nothing to do with cars, the environment, CO2, etc. It’s purely a vote getter and as such it only sounds great to the dumbos out there that vote for these clowns. Why not put Peter Garrett in charge of it as well?
NacaYoda

How does creating a need for 200,000 new cars, help the environment? Won’t all that additional manufacturing and raw material processing be a considerably greater CO2 producer than the calculated savings?

It might make Australia’s local CO2 emmission figures look (a tiny bit) better… but at the cost of other nations producing more CO2 in order to supply us with cars! This isn’t very “globally minded”.

And how will $394 million (plus at least that in setup and administration fees no doubt) help to environmentally handle the recycling of all these clunkers? And have we estimated the CO2 emissions of that undertaking?

Is anyone counting the real costs here?
Environmentally or financially?

-1 for Gillard.

Technofreak

Totally agree!

go away

wont this just make the cheaper cars more expensive – getz etc, dealers wont need to work hard to sell those cars cause youve already got $2000, wont prices just slowly rise by 2000. it happened with houses.

and lets be honest, youd probably be safer in a early 90s commodore than in a getz anyhow, little pieces tin foil in an accident.

Technofreak

I agree.

Gary

Totally pointless policy ‘given a run’ as it costs no money as it takes from other Green programs and based on the assumption that the Gullible will fall for it.
In reality,Julia ‘All-Talk’ Gillard does another KRudd. In fact from the Polices she is pushing, it is hard to tell KRudd has gone. Maybe KRudd’s policies were actually Gillard’s or maybe All-Talk is just a Puppet of the Labor Factions.

Simon

I have a strong suspicion that if Labor gets back in office, it won’t be too long until they get another leadership spill and put up a Union hardliner.

Yogi

CA,

Simple calc!

537 Million tonnes x 10 yrs = 5.37 Billion Tonnes not half a billion!

“We emit 537 million tonnes a year of greenhouse gas in total. That’s more than half a billion tonnes in a decade.”

Good article though!

Cheers
nickdl

Good article but please can everyone stop making comparisons of the Starfire Commodore/EcoBoost Falcon?

There’s no way with Ford’s extensive research and development that they would sell a Falcon, let alone a larger Explorer without enough power. Car makers simply can’t afford to get it wrong in this day and age.

The Starfire Commodore had a crappy NA 4-cylinder, the Falcon’s has two turbos and will make way more torque than the 3.0 Ecotec. These two engines couldn’t be more different.

Yonny

Oooh, the Starfire 4 cylinder…. what a nasty piece of work that was. I had the bad luck to drive one in 1982 (a rental car) – it used more petrol than the normal 6 cylinder version because you had to flog it silly just to get it to move. It was so slow it bordered on being unsafe to drive.

You’d like to think no manufacturer in this day and age would be that stupid.

On topic, it’s probably just as well we don’t have a price on carbon dioxide yet, as this scheme, which effectively prices it at $397 per tonne, would look very silly indeed.

Jack

Great point! Imagine if this $397 price was listed on a market! Any market participants would be mad not to see the discrepancy in price ($397 vs $12ish in Europe currently) and severely take advantage of this. Prices would then form an equilibrium, and we the people “the market” will have spoken: “$12″. Could it be possible the Labor government will pay too much for this policy?!

Riker

My goodness, just more policy made on the run by a totally incompetant federal Labour Gov’t. C’mon fella’s do we need to keep being treated like this. Another poor policy that will see scheming skum rort the system….
john

So you can’t get it for the Commodore, so what ? This is a $40 000 car, what difference will $2 000 make ?

Anyway, its really only $1 000, cos a going registered car is worth $1 000.
And how many people with rusty old Magnas and VN Commodores are going to buy a new car ?
Mick

This scheme is nothing more than a political stunt. Most funding for any green technology is for things that can be seen, if it were out of sight technology it would be out of mind, and hence give little political advantage. Examples of things that can be seen are wind turbines and solar panels. These stand out and gives people the warm feeling the government is actually doing something. In reality, wind power only provides the states power when there is sufficient wind, and they turn off above 42C (when you need power the most) to prevent overheating. Solar panels are expensive and effiency is dependent on sunlight. This also means that on cloudy days or nighttime they don’t really work their best! The real green technologies are the ones you can’t see, but they are viable in certain parts of Australia and can provide baseload power. Geothermal is one example of out of sight, out of mind, clean, efficient power generation that has had time to mature, and with investments in it will only get better. Another viable example, although not as mature, is wave energy harnessing (not to be confused with tidal power). There are many different systems for that, but the one developed in WA is probably the best. These may take 5 years for geothermal and 10 for wave to come online, and although excellent solutions that provide cheaper, clean power, its not good politically.

The government should never say any policy is a climate solution like they have, simply because Australia with its 1 percent of the total worlds emissions is such a small player that even if we changed emissions to 0, after 100 years thats a change in atmospheric CO2 of around 2ppm, which is around a third the seasonal variation! (atmospheric CO2 goes up and down with the seasons, with an upwards trend).

In other words, this will do nothing to help the environment, its purely a political stunt to win votes when the hundreds of millions of dollars could go into developing real solutions like goethermal and wave energy for power generation, which then can be adapted elsewhere in the world.

Another thing they could do is fund the conversion of rice farming which is a very low value crop that uses large amounts of water into drought tolerant mustard seed crops (significantly higher value per area of land too), which can be used for biodiesel that can be used for trucks, trains, and diesel vehicles. Its proven technology, the rice farmers would become multi-millionaires from the higher value crop if they’re willing to convert, and it would save the importation and reliance on overseas supplies.

This government won’t do anything that could be considered a solution as real solutions as I mentioned here don’t give the political gain they try to con people with.

aladdin

Jeez Mick, calm down mate.
I think you’ve gotten a bit carried away, don’t you?

Simon

John Cadogan, that’s the best article I’ve ever read of yours. Sadly the CA audience is probably too small for it to make much of an impact. Also the “cleaner car rebate”, while despised by many, will also be overlooked by most as they will always vote along party lines, afraid of the alternative government.
What really annoyed me was the smug looking Penny Wong as JG made the announcement. As if to say her green credentials are vindicated and she has something to be proud of.
Facts aside, well done Penny – you’ve just hoodwinked more of the electorate that think you give a damn about the environment.
I am totally p|$$3d that they are robbing the “Solar Flagships program and the Renewable Energy Bonus Scheme”.
If that program wasn’t effective, it should have been improved, not turfed. I appreciate election time is about buying votes, but this is so irresponsible they should be called out on it by all media, the voting public and the Greens/Coalition.
Technofreak

It’s unfortunate that even after all the dodgy bankers and politicians stunts over the last few years that people will still accept this idea as being a good idea….when clearly it is not.
Oh well…never mind.
bigClunker

Wow, I almost gave away my 1991 nissan pintara to the junkyard! Now I can keep it for a few months longer and barter it for the new one!

Mates, we see faults with all new rules, depending on how that will affect us. surely, it is partly a stunt, but it may have some silver lining. It is not only directed at reducing carbon which the author proved. I think there will be another stimulus for new car business.

Of course, this scheme won’t benefit all of us. It’s like the baby bonus. Or any other scheme.

Only flaw is that they should have started the scheme right after election. Now i should linger around with that clunker for six more months?? Doesn’t sound good strategy.

Jack

May I suggest as an alternative we have NO schemes at all and a far lower tax rate, with far fewer individual taxes and a far simpler tax system?

Flame away.

Simon

Simpler tax? You will wear the wrath of a thousand accountants with such a sensible comment!

http://www.facebook.com/MadJezza Jezza Hilfers

Gillard what are you thinking, its a bloody terrible idea!!! Deffinately not the way to go about the climate change issue
ridley

When you rob Peter to pay Paul, you can always rely on Paul’s vote.
Confused

WTF Jules? I really want Labour to stay in power – who wants the mad monk? But this is such a knee jerk mindless waste it makes it hard to support her.

The whole climate change thing is a sham. Why is it STILL not compulsory for ALL new homes to include a rainwater tank and solar panels???

Hello Canberra reality check – how do you read????

Simon

Hehe, mad monk. Yes I’m not a fan either. I really wish the LNP had a better leader worth voting for. That said, I can’t see JG being anything other than a union puppet. The LNP would do well to counter this “green facade” with discounted rego for 5 star rated cars on the green vehicle guide.
In QLD, 4 cylinders is over $600, 6 cylinders over $800 and you got it, the V8s over a cool $1G. There is no indication the rego rises will stop. I get scared when I think what they will be charging us in 20 years. I guess this is back to Cardogan’s article about the government’s reduced income from oil taxes.

http://www.climatesceptics.com.au Bill Koutalianos

Another wasteful and cynical policy based on nonsense rather than science. More than anything else this policy exposes a lack of policy integrity. Funding new cars from the funds earmarked for renewable energy exposes what Julia really thinks about the climate debacle. Tony once said it, but only The Climate Sceptics Party have the guts to say it. If you scrape below the surface of the man-made climate change scam and think back to what you were taught in science class you will begin to realize that you have been conned. The whole theory is based on a grain of truth and a mountain of lies. 2500 scientists didn’t all agree to anything.
Byron

I accept the idea, but pre-1995 is to early. I mean I’d except maybe 1980, but you still see 1990-1995 cars running around. Whats going to happen to us leaner’s who want to buy a car? Many of the cheap cars are 1990-1995 models that sell for $1000-5000 depending on make/model etc… I’ll be really pissed off if Julia Gillard goes ahead with this scheme. Plus what about those parents who have old cars. Not everyone wants to buy a new car & $2000 is bullshit & doesn’t go anywhere towards a new car.
TrumpyTripple

Well there you go $2K less for your pre 1995 trade-in. The only winners are the car salesman leaching from this deal. Typical labour government.
The Realist

What do people think they’ll get when they vote for Labor or the Greens – a competent government?

Do the plebs on these boards even know what the Greens stand for??
Reg Seaborn

Stupidity…What about people who own cars aged prior to 1995 and have to trade them in for a new car for $2ooo then have to pay it off. What’s going to happen to all the club cars, and don’t forget the pensioners and others who are meeting hard times now?
Sexythang

the bottom line is…why sell off you’re perfectly usable pre 1995 car to fund another loan when the name of the game is to save money in the face of an economic crisis (or near future) as well as the threat of the pathetic carbon tax (which adds on to burden caused by the meteoric rise of interest rates and inflation). the only reason most people have a pre 1995 car is because they dont want to buy a brand new car.