The Australian Automotive Aftermarket Association (AAAA) is calling for the Cleaner Car Rebate scheme to be struck from the Gillard Government agenda.
Despite widespread criticism following the July 2010 election pledge and a detailed review of all the flaws in similar programs introduced around the world, the Gillard Government is pressing ahead with plans to introduce a Cleaner Car Rebate scheme.
The $394 million taxpayer funded scheme aims to take 200,000 pre-1995 vehicles off Australian roads by paying car owners a $2,000 subsidy to scrap their vehicle. Funds will be diverted from existing environmental programs to pay for the scheme.
In July, the Government announced that the scheme would be introduced from January 1, 2011. However, the Minister responsible for the Scheme, Senator Kim Carr, announced on November 6 that implementation would be delayed until July 1, 2011 "to ensure a smooth roll out".
The Department responsible for the administration of the scheme is AusIndustry.
AAAA Executive Director Stuart Charity said the Gillard Government scheme is ill conceived, open to rorting and abuse and will cost jobs while delivering no tangible benefit to the environment.
"This is another pink batts debacle waiting to happen, but this one is on wheels," Mr Charity said.
No tangible environmental benefits
Research shows that up to 20 percent of a car's life cycle emissions are produced during its manufacture and that from an environmental perspective, the optimal vehicle life is 19 years*. In calculating the environmental benefit of the Cleaner Car Rebate, no account was taken of the emissions produced in the production of the 200,000 new vehicles put on the road.
The European Commission and European Federation for Transport and the Environment have both urged the abandonment of scrappage subsidies, because they do more environmental harm than good, by artificially accelerating the car life cycle.
"The fundamental flaw in vehicle scrappage schemes is that they focus on vehicle age rather than actual emissions produced. This approach is based on the erroneous assumption that old cars are dirty cars. However, the true culprits are gross polluters - vehicles of any model year that are poorly maintained," Mr Charity said.
"The truth is many 15-year-old cars in good condition will achieve better environmental performance than vehicles listed on the Government's Green Vehicle Guide, particularly the four wheel drive SUVs and utes."
To qualify for the rebate, the purchased vehicle must score six or higher on the Green Vehicle Guide 10 point greenhouse rating. The emission limit at level six is 220 grams of carbon dioxide for every kilometre driven. This is not a high bench mark- it is about the average for most new cars available on the Australian market.
The decision to press ahead with the introduction of the Cleaner Car Rebate scheme is in direct contradiction to research released by the Department of Environment, Water, Heritage and the Arts** in September 2009, which found that "replacing older vehicles with newer vehicles, without significant changes in the mix of vehicle sizes, engine capacities or fuel types, would not result in significant greenhouse gas emissions benefits".
"Do we need to give 200,000 people $2000 of taxpayers money to buy a imported car that delivers average environmental performance, when the car they own now could achieve significant improvements in emissions performance after a simple service?" Mr Charity challenged.
Costly to the automotive industry
Mr Charity said the automotive aftermarket industry was not consulted by government prior to announcing the scheme.
"The Government must understand that the automotive aftermarket that services and maintains much of the Australian vehicle fleet employs more than 300,000 people and contributes about $11 billion to the local economy. Many of these are Australian family owned businesses and this scheme will cost jobs," he said.
"In Europe and North America, officials learned that cash for clunkers programs simply brought forward consumer purchasing decisions and increased the market share for low price imported small cars from Korea and Japan.
"The majority of the cars eligible for the Cleaner Car Rebate are imported. Essentially, these taxpayer funds are encouraging sales of foreign made vehicles. This further reduces the market share of Australian made vehicles, and costs more jobs and loss of investment in the Australian automotive industry.
"Scrappage schemes are also prone to black market scams that re-birth vehicles for export. German officials discovered that about 50,000 of the cars scrapped in their cash for clunkers program were re-birthed in North Africa.
"It also appears that Minister Carr was not consulted prior to this election pledge. When this idea was first mooted in February 2009, Industry Minister Carr said it was a very costly way to cut vehicle emissions. He rejected it then saying it is extremely expensive, complicated and a wasteful use of finite resources.
"Now he is responsible for the scheme and must defend its serious faults, while trying to minimise the damage it will cause to Australian automotive manufacturing and the automotive aftermarket. It is ironic that this costly plan, which will damage small business and destroy automotive industry jobs, is to be implemented by the same department charged with creating jobs in the industry," Mr Charity said.
No win for taxpayers or the environment
Mr Charity said only car importers and their dealers benefit from this scheme. "These businesses do not need taxpayer funded incentives to boost car sales. Year to date vehicle sales in Australia are up 14.5 percent on 2009," he said.
"We have an automotive aftermarket that keeps all vehicles on the road and performing to manufacturers' specifications. A National In-Service Emission Study*** commissioned by the Australian Government clearly demonstrated that reductions in pollution levels of up to 25 percent can be achieved through good maintenance practices, such as the replacement of air and fuel filters, replacing or adjusting spark plugs, plug leads, timing, points and petrol caps.
"The people that devised this scheme have little understanding of how the Australian vehicle fleet is structured or the technical aspects of vehicle performance, emissions, and life cycle.
"Rather than creating another new bureaucratic process, the Government should be working with the existing effective market systems that helps manage the lifecycle of vehicles on Australian roads. The repair, retrofit and upgrade of 15-year-old vehicles will deliver a better environmental outcome - and will be a much cheaper policy.
"This scheme has no redeeming features and it should be scrapped," Mr Charity said.
CLICK HERE TO HERE STUART CHARITY INTERVIEWED ON MELBOURNE'S MTR RADIO
* Dutch study published in Transportation research, 2000.
**2nd National In-Service Emissions Study, Department of Environment, Water Heritage & the Arts, 2009.
***National In-Service Emission Study, National Office of Road Safety, 1996.