Crush a bomb: car industry stimulus proposal
Monday March 23, 2009, 10:36 am
The car industry wants people to be paid to crush their cars and use the money to buy new, more efficient vehicles.
The Motor Traders' Association (MTA) of New South Wales has written to federal Treasurer Wayne Swan with the plan, under which people would receive a $3,000 certificate in return for offering their car for the scrap heap.
Cars more than 10 years old and with a re-sale value of under $3,000 would be eligible for the scheme, which MTA chief executive James McCall says would get unsafe, polluting cars off the road.
"The majority of the cars that would come under the scheme would be pre-1987 and wouldn't have catalytic converters in them, which means they'd be spewing out pollution at a great rate," he said.
"It's a good opportunity to get them off the road.
"Cars under $3,000 are also often not safe and this would be a great contribution to public safety."
Mr McCall estimates there are between 1 and 1.5 million eligible cars in Australia, and this plan would see that number of cars head to the crushing yard over three years.
This would require $4.5 billion in federal funding, but with $1.5 billion recouped in GST revenue. The MTA has commissioned Access Economics to produce more detailed economic modelling.
The scheme appears to present some car owners with a difficult offer to refuse, with the certificate set at $3,000 regardless of the value of the car.
"If you've got a bomb worth $500 and you're driving it around, it'll qualify. If you've got one worth $2,500 it'd qualify. Get them off the road," Mr McCall said.
The crushing for cash plan is based on systems already in place in Germany, France and Brazil, with legislation in front of the United States Congress as well.
"In Germany where the system's working very well, there's been a 10 per cent increase in car sales. That is significant," he said.
He says a system in Japan whereby cars over five years old cannot be re-registered also shows how getting old cars off the road helps the economy and the environment.
"It keeps the roads safe; it keeps the atmosphere clean, because the newer the car the better it is in terms of pollution control; and of course it boosts the economy.
"They've seen the benefits for years."
The suggestion comes after Australian Bureau of Statistics (ASX: ABS.ax) figures showed new vehicles sales fell to a six-year low in February.
