http://www.theaustralian.com.au/national-affairs/cash-for-clunkers-is-pink-batts...LABOR has a history over the past three years of failed programs: think pink batts, the Building the Education Revolution and the green loans scheme. Nothing is more emblematic of Labor's failure to manage the economy and programs than these failed billion-dollar schemes. Now they are proposing to add another to the list: it's called "cash for clunkers".
With this scheme Gillard is offering a $2000 rebate for people who trade a pre-1995 car and buy a new car from a select range of mostly imported vehicles that can cost anything up to $40,000 or more.
Gillard says the scheme will cost $394 million over four years and take 200,000 clunkers off the road in that period.
It will not achieve either goal.
Industry Minister Kim Carr and his department have already concluded that a scheme such as this would cost about $1 billion to implement. He told the online auto magazine GoAuto on March 25 last year: "The difficulty is that it is extremely expensive and there are finite resources for government."
"Cash for clunkers" will blow out to the $1bn price tag because Gillard has underestimated the value that has to be put on the vehicles to be scrapped.
According to GoAuto, the Motor Trades Association of NSW estimates that the government would have to offer a minimum of $3000 a vehicle, while another industry insider says the price would have to be nearer $5000 to encourage people to trade their cars.
Unless the price is set correctly people will be more likely to sell their car privately than scrap it, as Gillard proposes.
The scrap price must meet the trade-in price if the scheme is to work ,and to do that will mean a massive blowout in the cost of the scheme.
Averaging the two estimates above would see a cost per vehicle of $4000, more than twice the price Gillard is offering.
That would see cost of the "cash for clunkers" scheme blow out to approximately $800m, which is close to the original Department of Industry's estimate of $1bn. This is in line with experience in the US, where the cost of the scheme blew out from $US1bn to $US3bn.
It will push up the price of old cars for those who can ill-afford a price increase -- students, people on low incomes and young couples looking to save for a home.
This scheme has all the hallmarks of the failed pink batt scheme and the BER for which Gillard is directly responsible.
The opportunity for rorting is huge.
This is just another example of the waste and the mismanagement that has characterised Gillard's government.
Another factor Gillard hasn't seemed to have taken into account and militates against its introduction is that each year about 900,000 new cars are bought; that's about 75,000 a month.
Thus this scheme will be subsidising people who are already in the market for a new car.
Labor will simply be paying people to make a purchase decision they are already going to take.
Gillard claims that her scheme will take clunkers off the road and replace them with new cars, thus reducing the amount of carbon dioxide in the environment. But that is already happening as new cars are being bought that have lower carbon dioxide emissions.
Gillard's "cash for clunkers" scheme is a dud.
lTo achieve its goals it will blow out the cost to $800 million, double what is being budgeted for.
lIt will potentially subsidise people who are already going to buy a new car.
lLocal vehicle manufacturing companies will not benefit from the subsidy as five of the seven cars on the approved list of vehicles are imported.
lThe reduction in carbon dioxide is being met as new cars are coming into the national vehicle fleet at a rate of 75,000 a month anyway.
lRorting will be rife if overseas experience is repeated.
lThe price of old cars will increase for those who can least afford a motor vehicle.
By anyone's standards this scheme represents a massive waste of taxpayer funds.
It fails on every count.
As with the pink batts scheme and the BER, which were rushed out without attention to the detail, "cash for clunkers" will see taxpayers' funds squandered for no purpose.
Industry Minister Carr is right. The scheme is expensive and the resources of government are finite. We are already deeply in debt and deficit. Australia cannot afford more of our now scarce tax dollars wasted on more poorly conceived and ill-thought-out ideas such as "cash for clunkers".
The Rudd-Gillard government clearly has no sense of living within its means.
Its spend, borrow and tax mindset can no longer be afforded.
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