The proposal is intended to remove polluting, unsafe cars from Australian roads, with similar initiatives already implemented in France, Germany and Brazil leading to an increase in new vehicle sales by as much as 10 per cent.
The MTA NSW proposal would see the Australian Government pay up to $3000 for vehicles more than 10 years old, with the cash incentive to be put toward a new car purchase to help stimulate the car industry.
These older cars would then be crushed, permanently removing them from Australian roads - with the Government reminded that the cost of this scheme would be largely recuperated through the inherent cost of GST associated with every new car purchase.
"We are not specifying buy Australian or anything else," MTA NSW's James McCall said. "We need to help the industry, including 103,000 small businesses that make a living from the car industry and 318,000 workers."
The MTA estimates that of the 15 million vehicles in Australia, about half are more than 10 years old and a further two million of those worth less than $3000.
"The key is the grant has to be at least equal to what the owner would get if they traded it," Mr McCall said. "Our submission asks the Government to set aside a maximum of $4.5 billion, spread over three years, which will be plenty to cover the cost."
While the proposal has upset some used car dealers, the scheme would be more than welcome for the struggling Australian automotive industry, with new vehicle sales hitting a six-year low in February.