Swan ducks the cost blow out with Cash for Clunkers - questions go unanswered

04/08/10

This morning on the ABC’s “AM” programme Wayne Swan ducked the key issue that I raised with Cash for Clunkers and that is that the government has under-estimated the value that has to be put on the vehicles to be scrapped. This is just Pink Batts on Wheels

For the scheme to work it would have to value second hand cars at approximately $4000 each, not the $2000 as it currently does.

That would blow the cost for the Clunkers scheme out to approximately $800 million, not the $394 million that has been budgeted.

Mr Swan said the cost wouldn’t blow out because the scheme is capped at 200,000 vehicles, but that doesn’t deal with the failure to correctly cost the scheme in the first place.

The cap doesn’t matter; it is the actual cost per vehicle.

He also said it wouldn’t blow out to the $1 billion estimated by Industry Minister Kim Carr because it wasn’t a stimulus package. But it works in exactly the same way as it would if it was a stimulus package.

In fact in its policy document Ms Gillard specifically stated that “Similar measures have been introduced in countries such as the United States.” The US scheme was a stimulus package and blew out in cost from $1bn to $3bn. And in the US, as with Australia, the scheme had to meet environmental standards.

Mr Swan tried to fob off the fact that the scheme would blow out to at least $800 million by saying it had had been submitted to Treasury and Finance, but they are not charged with auditing the scheme, just whether there are offsets and in this case it is offset by stripping funds from Labor’s own environmental programmes.

Whether you call it a stimulus package or an environmental package, or both, the scheme will become another “Pink Batts on Wheels.”

It is yet another example of an ill-conceived Labor scheme that will double in cost from $394 million to $800 million.

And this is yet another example of Labor’s waste and mismanagement.