Cleaner Car Rebate Scheme

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.
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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.