For our readers who are outside of Australia, we are currently in the throes of the Federal election campaign. As part of the election campaign, the currently governing Labor Party has announced that, if re-elected, it will introduce a ‘cash for clunkers’ scheme.
Owners of cars manufactured prior to January 1995 would be eligible to receive a $2,000 rebate if they buy a brand new fuel efficient vehicle and trade in their old car. The Labor Prime Minister, Julia Gillard, claims that the measure would see nearly 200,000 pre-1995 vehicles taken off the road, reducing carbon emissions by 1 million tonnes. There are currently an estimated 2 million pre-1995 vehicles on Australian roads.
According to the Sydney Morning Herald, the $394 million cost of the scheme will be financed by cuts in several other climate programs, including $220 million coming off the solar flagship program.
These measures have been proposed for environmental reasons and are designed to reduce carbon emissions; as opposed to the ‘Cash for Clunkers’ scheme introduced in the US (read our previous blog post ‘Cash for clunkers’ here) which was introduced as an economic stimulus measure during the GFC. The US scheme was highly successful, with over 700,000 vehicles being traded in for an equal number of efficient vehicles and approximately $3 billion spent by the government on the program, according to cashforclunkers.org.