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Gillard refuses to discuss cash for clunkers. Silence confirms cost blow outs. Another costly flaw exposed.



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Media Release

Authorised and printed by Brian Loughnane for the Liberal Party of Australia Cnr Blackall and Macquarie Sts BARTON ACT 2600

The Hon Andrew Robb AO MP Shadow Minister for Finance and Debt Reduction Federal Member for Goldstein

Friday 6, August 2010

Gillard refuses to discuss cash for clunkers. Silence confirms cost blow outs. Another costly flaw exposed.

Julia Gillard has refused to acknowledge the pending financial disaster of the Cash for Clunkers “Pink Batts on Wheels” scheme.

This morning on ABC 774 Julia Gillard was quizzed about the widespread criticism of the scheme and she refused to answer the question - instead replying that Labor had costed all it policies.

However the Departments of Treasury and Finance have already determined that Labor’s costs have blown out.

Not one Labor minister has contradicted the fact that the scheme will blow out in cost to $800 million from the estimated $400 million that it would cost to run.

Today another costly flaw has been uncovered in the Cash for Clunkers “Pink Batts on Wheels” scheme that will see the cost of it blow out even further than the estimated $800 million that it will cost to run.

The Department of Finance in its analysis of the scheme has noted:

“It has been assumed that the cost of scrapping vehicles traded in under the proposal will be met by motor vehicle dealers, although Finance notes the arrangements for the scrapping are to be determined following consultation with industry.”

Because the $2000 rebate goes to the purchaser of a new car and the trade in has to be “crushed and sold as scrap” - the dealer will be left with nothing except the value of scrapping the car which is about $80 per tonne.

The dealer will be significantly out of pocket as he would have to also pay for the vehicle to be towed or trucked to a scrap yard and it is unlikely that the $80 would cover that cost and the administrative work associated with getting rid of the car.

Not only would the dealer be out of pocket on that transaction, but the dealer will also lose because he will not be able to either resell the trade-in his yard or sell it to a wrecker where you could expect about $1000 or so return for a 1992 Tarago.

Media Release

Authorised and printed by Brian Loughnane for the Liberal Party of Australia Cnr Blackall and Macquarie Sts BARTON ACT 2600

For a dealer to participate the government would have to reimburse the dealer for the lost earnings from the sale of the trade in and also for the cost of scrapping it.

The government would have to meet the trade value either as a resale or as a car for wrecking.

Using Labor’s own example of a 1992 Tarago traded-in for minimum of between $1500 and $3600 Labor would have to reimburse the dealer a minimum of $1500 if he was not to be out of pocket.

Even being generous and allowing for a minimum of $1000 per vehicle traded that would see the government having to reimburse dealers some $200 million ($1000 multiplied by 200,000 cars) which has not been allowed for.

Labor has not included these costs in its scheme which Industry Minister Kim Carr has already pointed out would cost $1 billion.

The figures are now coming home to roost for the Labor Party with its Cash for Clunkers “Pink batts on Wheels” scheme.

It is yet another extravagant example of the waste and mismanagement that characterises the Rudd/Gillard government.

No wonder Julia Gillard and her ministers do not want to discuss such a disaster.

We’ll end the waste and stop Labor’s reckless spending.

Media Contact: Cameron Hill, 0408 239 521