Cash for clunkers 'pink batts on wheels' 50 reasons why it is a dud

19/08/10

Julia Gillard’s Cash for Clunkers scheme is the perfect example of why Labor should not be re-elected. It shows that Labor has learnt nothing over the past three years.
Anyway it is sliced or diced, the scheme is a dud.

It has been roundly criticised by industry; to work it would have to blow out in costs; it gives subsidies to people who don’t need them; it would push up the price of second hand cars; it doesn’t help the local industry, and so on.

From any angle that you look at it there is a flaw in it, and that is because Labor dreamt it up on the run - the same as they did with the Pink Batts scheme and the BER. If it was ever to be implemented it would be a failure on the same scale, with cost blow outs and rorts.

Below are 50 examples of why the scheme is a dud from various perspectives.

It is a list of 50 good reasons not to trust Labor, or give them a second chance.

The rebate will blow out in cost to $800 million from $400m;

Each car bought would get an effective subsidy of $4000 plus;

Treasury and Finance said Labor’s figures were under-costed;

Industry minister, Kim Carr, says the scheme would really cost at least $1 billion;

Most of the subsidy would flow to overseas manufacturers;

Only two Australian cars qualify for the scheme;

Nearly 1000 imported vehicle models meet the greenhouse standard;

It will be rorted;

There would be fewer cars for poorer people to buy;

Students and first car buyers would be priced out of the market;

The subsidy would push the price of a second hand car up by $2000- $4000 or more;

It would not create one job in the Australian vehicle manufacturing industry;

Jobs would be created in overseas car building companies;

It would encourage people to buy imported cars;

Treasury says dealers get nothing from the scheme;

To make it work dealers would have to get $1000 per car at least. That would add another $200 million to the scheme;

It could create a boom and bust in the car market;

Retailers would suffer as consumer dollars are diverted to buy cars instead of household items;

Car repair businesses would suffer as there would be fewer older models cars on the road;

Taxpayers would be subsidising the purchase of exotic cars such as the Lotus Elise R Convertible while only two Australian cars would get a subsidy;

Treasury says 165,000 cars would be bought regardless of the rebate at a cost to taxpayers of $330 million;

The scheme would only see 35,000 new cars bought as a direct result of it. That gives an effective subsidy of $11,000;

The Victorian Automobile Chamber of Commerce says the scheme is more “about spin and being seen to be doing something”;

It is a fiendishly expensive way to reduce C02 at $400 per tonne on Labor’s figures

Solar panels reduce CO2 at a cost of $250.

Wind power at $76

Gas instead of coal at $67

Planting permanent forests at $26

Planting harvest forests at $10;

Industry Minister Kim Carr rejected the scheme as too expensive;

On Kim Carr’s figures it would cost $850 per tonne of C02;

Car dealers would only get $80 per tonne for scrap unless the government compensates them;

It will distort consumer decisions at the expense of one sector of the economy for another;

It would destroy $760 million of the nation’s wealth by failing to allow cars to be driven to the end of their useful life;

Kim Carr said Cash for Clunkers would work in “harmony” with the Green Car Fund then hypocritically ripped money out of the Fund to pay for other promises, thus compromising the scheme’s already shonky integrity;

Ms Gillard stripped money from the carbon capture and storage programme which helps industry develop technology for carbon capture technology to pay for Cash for Clunkers, then hypocritically demands industry build power stations with carbon capture technology;

The GM of Suzuki Australia says $2000 rebate is not enough and that $5000 would be needed to make the scheme work – that would cost $1bn as Kim Carr said it would;

The executive director of the Australian Automotive Aftermarket Association believes the scheme would hurt the local parts industry;

It would need a huge new bureaucracy to police it;

Every dealer, scrap yard and wrecker would have to have an inspector to make sure the scheme is not rorted;

It would create a blizzard of paperwork for small car dealers;

In the USA, on which the scheme is modelled, costs blew out from $1 billion to $3 billion;

In Germany, where the cars were also meant to be scrapped, a black market sprung up in second hand spares which were sold into Eastern Europe and Africa. A similar black market could develop domestically to meet the demand for spares from owners of older cars;

It is a bizarre policy that actually not only encourages, but pays for the destruction of the nation’s wealth;

A Tarago as quoted in Ms Gillard’s policy would be worth only $80 as scrap, but would have a real value of $6404 at a wrecker’s yard;

The campaign director of Environment Victoria said Labor would effectively be buying twice as many cars as it does tonnes of annual pollution reduction;

In Spain, where the Cash for Clunkers scheme was extended twice “to prevent the market from dropping even more” industry analyst Polk says it will take at least four years for the market to recover;

The Australian market could suffer a similar, albeit smaller, hangover because of Cash for Clunkers;

Even the Greens don’t like Cash for Clunkers saying it is robbing Peter to pay Paul;

An imported Volkswagen Beetle 1.6l 5 Speed sold at $30,918 is eligible for the scheme, as is a Suzuki Alto at $12,990, but a Commodore or Falcon is not despite Kim Carr saying LPG Commodores and LPG Falcons should be eligible;

The scheme was dreamed up on the run as is demonstrated by Labor’s policy document where they say “each car dealer’s registration will need to be backed by a manufacturer (e.g. Ford or Honda)” yet no Fords are eligible;

Labor says the Cash for Clunkers would save $344 million in fuel costs, but that saving would only flow to richer people who could afford to buy an imported car;
It is hardly fair on the less well off that the rich get a subsidy for buying a car and then the supposed benefits of $344 million in fuel savings;

Cash for Clunkers only benefits those who sell trade their car for another. If you trade your car and decide to use public transport and a bicycle to cut carbon emissions you get nothing. Only if you choose to drive would you get a subsidy to cut greenhouse gases;

Cash for Clunkers is fixing a problem that doesn’t exist, as each year some 1,000,000 new cars are bought anyway – without any subsidy.

As one car dealer told Paul Kent of the Daily Telegraph:

‘“I’ll tell you one thing,” he said, and here is an absolute truth, “the ones that are going to get ripped off are the ones that can’t afford it.”’

That dealer could have been talking about the taxpayers of Australia.

Cash for Clunkers is truly “Pink Batts on Wheels.”