Cash for clunkers: Victorian Government announces pilot program

Premier Daniel Andrews announced the move on Facebook Sunday night, with the pilot program set to begin in regional areas of Victoria.

While full details have not been released, it's understood grants will be awarded to young Victorians to help replace a total of one thousand older vehicles currently registered across the state.

The announcement said the Government will provide "grants to help young people in regional areas scrap their old car and buy something newer and safer".

Exactly how much the grants will be has not yet been announced – but the incentives will need to be attractive, with used-car sales seeing record demand at the end of 2020, driving average prices to all-time highs.

A second program will also be trialled, the statement read, giving lower-income Victorians aged over 65 who live in the country access to more modern vehicles through "short-term, affordable leases on newer and safer cars to help them get around safely".

The most well-known 'cash for clunkers' scheme was introduced by the US Government in 2009 as a way to help boost its weak economy, following the stock market collapse the year prior.

The US Government committed US$3 billion (AU$3.7B historically) to the program, which lasted only 29 days. Rebates of as much as US$4500 (AU$5500 historically) were provided to those who traded in their old cars for new models.

Above: Victorian Premier Daniel Andrews.

Former Prime Minister Julia Gillard announced a similar scheme in 2010, known as the 'Cleaner Car Rebate', which would have provided an incentive of $2000 to swap old cars for new – but the proposal was eventually scrapped, with the money said to have been allocated to flood victims.

In May 2020, the Australian Automotive Dealers Association (AADA) called on the Federal Government to look at introducing a new program to help stimulate the auto industry, which experienced a 48.5 per cent sales decline the previous month.

Despite the sharp pullback earlier in the year, new-car sales saw a strong recovery by December 2020, seeing an annual year-on-year shortfall of only 13.7 per cent.

A 'cash for clunkers' scheme would have benefits beyond economics, with a younger fleet of cars on the road improving emissions, as well as saving lives.

"This would provide a stimulus for the automotive industry and assist in making Australia’s passenger vehicle fleet safer, while also reducing emissions,” James Voortman, CEO of the AADA, said of the proposal back in May.

By lowering the average age of Australia's car fleet by just a single year, it would "save up to 1377 lives and create a $19.7 billion benefit in trauma and emission reductions over a 20-year period", according to a study by the Australian Automotive Association.