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Cash for clunkers: "pink batts on wheels" open to rorting.

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Media Release


Tuesday 10 August

Sophie Mirabella MP

Shadow Minister For Innovation, Industry, Science and Research Federal Member for Indi


The Cash for Clunkers scheme is an open invitation to rort. The trade-in price for a car that was to be scrapped would not meet the profit that it could generate at a wrecking yard or as a re-sale, opening the door to corruption.

The German Cash for Clunkers scheme saw widespread rorting with parts from cars that were meant to be scrapped being exported to Africa and Eastern Europe instead.

This scheme would allow someone to receive money for scrapping their car only to then either sell the car to someone else, or break it down and sell the parts and make a tidy profit at the expense of taxpayers.

Under Julia Gillard’s proposal any pre-1995 vehicle would have to be scrapped and crushed without recompense to the dealer.

Julia Gillard’s example of a 1992 Toyota Tarago, which would be traded for the $2000 rebate and is then supposedly scrapped and crushed as required under her proposal, is a rort waiting to happen.

Normally when a car like that is traded, it is either resold or sent to an auction at which it is privately bought or sold to a wrecker where it may fetch about $1000.

Under the government’s proposal these options are no longer available to a dealer.

The only option open to a dealer to recoup any cash is to sell the vehicle for scrap which would return about $80 per tonne. This means a dealer is left with a significant loss.

If that Tarago were to be wrecked today, it could generate approximately $5822 in income for the wrecker (see attached inventory) and generate about $900 at a minimum income for the dealer as opposed to $80 for scrap.

That differential means unscrupulous people are likely to subvert the scheme and sell the vehicle directly to a wrecker - as they did in Germany.

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The only way to prevent rorting of the scheme would be to have an inspector at every car yard, every scrap metal merchant and every car wrecker in the country.

The scheme has all the hallmarks of the Pink Batts scheme and the BER, for which Julia Gillard must take responsibility, which were both rushed out without planning and were subsequently rorted.

The fact is that this scheme is ripe for rorting and cost blow outs. Each day another flaw is revealed in its design and cost.

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

The scrap value of a 1992 Tarago (as estimated by a local wrecker) would approximately be the following:

Front Panels: $200

Bonnet: $200

Computer: $120

Steering Wheel: $120

Head Lights: $175

Bumper/Bull Bars $500

Engine: $1700

Diff: $300

Starter Motor: $65

Air Con: $150

Suspension Struts $85 each

Exhaust System: $150

Tail lights $88 each

Doors: $220 each

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Wheels: $50 each

Radiator: $220

Alternator: $50

Distributor: $120

Seats: $88 each

Indicators: $120

Mirrors: $120

Auto: $500

Cost $5822

Plus GST $582

Total Cost: $6404

Media Contact: John Polack, 0410 482 261