Industry reacts to dumping of car schemes

There has been a mixed reaction from the automotive industry following the federal government’s decision to scrap a couple of schemes for the automotive sector to find funds to assist flood and storm victims in Queensland and Victoria. Tim Byrne investigates.The net effect [of cash for clunkers] on the environment is negligible.

The federal government has taken the knife to the Clean Car Rebate – referred to by some as the “cash for clunkers” scheme – and the Green Car Innovation Fund, as it looks for ways to fund the massive repair bill that resulted from the devastating floods in Queensland and Victoria and Cyclone Yasi.

The Australian Automotive Aftermarket Association (AAAA) welcomed the announcement by Prime Minister Julia Gillard to scrap what it described as the ill-conceived $430 million Cleaner Car Rebate scheme.

AAAA executive director Stuart Charity said the Cleaner Car Rebate scheme was so poorly designed that it would have delivered no net benefit to the environment.

“The Gillard scheme was loosely based on economic stimulus programs initiated in Europe and the USA to help recovery from the global financial crisis,” he said.

“Research has shown that, while these ‘cash for clunkers’ programs do encourage people to buy new cars, the net effect on the environment is negligible when emissions produced in the manufacture of the new cars is included in the calculations.

“As environmental, economic or social policy, this scheme had no redeeming features. It would have paid millions of Australian taxpayer dollars to overseas car makers, it was open to rorting, and it totally ignored other less costly and more effective solutions.”

Consult with industry experts
The AAAA and other key automotive industry bodies were not consulted prior to the launch of the program, according to Charity.

“As an association representing 1300 businesses in a sector that turns over $11 billion each year, we hope to be consulted prior to the launch of new automotive-related initiatives in future,” he said.

“There are simple, low-cost policy options to achieve real emission reductions in Australia’s in-service vehicle fleet. Many countries have achieved substantial reductions in vehicle emissions through regulations requiring vehicles to be regularly inspected for safety and emissions compliance.

“A five-minute check, using diagnostic equipment commonly available in many licensed motor repairers, can determine the emissions performance of a vehicle. If emissions testing was part of mandatory annual roadworthy and safety checks, Australian families would be making a huge contribution to emissions reductions – and they would be safer on the road.”

Meanwhile, Federal Chamber of Automotive Industries has indicated its disappointment at the government’s decision to abolish the Green Car Innovation Fund (GCIF).

“It is a bitterly disappointing decision and one which is to be regretted,” FCAI chief executive Andrew McKellar said.

“The Green Car Innovation Fund has delivered significant dividends, helping to secure key investment decisions for new models and investment in more environmentally friendly vehicles and technology.

“The program was originally put in place in response to the 2008 review of the automotive industry, after extensive consultation with the industry and other stakeholders and it is a key element of the government’s new car plan.

“The decision to abolish the Green Car Innovation Fund comes as an unwelcome surprise and it sends an adverse signal to international investors responsible for future investment in the Australian industry.

“We urge the government not to renege on the clear policy framework which it has implemented to secure new investment and jobs in the industry. We urge the government to re-think this decision.”

Union questions government commitment
The government’s failure to consult with industry and unions has led to bad policy threatening thousands of jobs and billions of dollars of investment, according to AMWU national secretary of the vehicle division, Ian Jones.

“It is vital that Queensland and Victoria are rebuilt after the devastation of the floods,” Jones said. “However, the method to do so puts a cloud over thousands of jobs in the automotive industry.”

He said the government has not entered into any discussion with unions or industry regarding the proposed spending cuts, including the GCIF, saying the government has no idea how this abandonment of the manufacturing sector will hit working families.

“There has been no cost benefit, no consultation,” he said. “I am left with the view that the government has abandoned the Australian automotive industry.

“When Queensland and Victoria are rebuilt the Gillard government will have a new crisis on its hands all of its own making – the decimation of the automotive industry.

“At the last federal election South Australia and Victoria voted for the Gillard Labor government. They are manufacturing states and thought that Kevin Rudd’s commitment to being a prime minister of a country that makes things held true for the new leader.

“Victorians and South Australians voted for the Gillard government because they had a solid manufacturing policy. Julia Gillard seems to have abandoned that position and taken Sophie Mirabella’s flat earth position – with absolutely no consultation on the implications for the 10 per cent of Australians who work in the manufacturing sector.

“I am calling on Julia Gillard to commit to the Australian car industry. On behalf of my members I will be calling for urgent talks with the Gillard government around the future of the car industry and manufacturing in general.


“During these talks I will clearly outline how her bad policy positions are threatening thousands of jobs and billions of dollars in investment. I will also be tabling some sensible remedial actions the government can take that don’t exacerbate the effects of the current bad policy position the government has taken.”

Innovation Minister Senator Kim Carr said all contractual commitments and grant offers made by the government through the GCIF would be honoured; and applications received as at 27 January will be processed.

“The government’s commitment to Australia’s automotive industry is strong and we recognise that manufacturing is a vital part of a strong and diverse economy,” Carr said.

This is a message he said he will be taking directly to global CEOs when he visits company headquarters later in the year.

“The Green Car Innovation Fund is only one component of the New Car Plan for a Greener Future,” he said.

“The fund itself represents an additional commitment of up to $500 million to our manufacturing sector which will leverage approximately $2 billion in total investment. The Australian government’s partnership with the sector will be maintained. This partnership sustained investment at a time of global retreat.

“Thanks to the Green Car Innovation Fund our automotive sector will be more environmentally sustainable.

“The New Car Plan is introducing new technologies in Australia at a very rapid rate from hybrid engines, electric vehicles, new fuel systems, batteries and light-weighting. The plan is instrumental in enabling the Australian automotive industry to emerge from the global economic crisis in better shape than many of its international counterparts.

“The plan is strengthening the automotive supply chain by underpinning investment, building capability and expanding markets internationally. The industry is providing a critical mass of design, engineering and manufacturing skills fundamental to a diverse and resilient Australian economy. The industry is producing higher-quality vehicles with high-skilled, high-wage jobs for Australians.

“The centrepiece of this plan is the Automotive Transformation Scheme, which will provide support worth $3.4 billion up to 2020.

“This continued commitment to the plan and the range of other industry schemes administered by my department show that we remain committed to ensuring Australian automotive manufacturers produce Australian made vehicles that are easier on the pocket and the environment.”