Cash for clunkers: the devil is in the detail
Federal Government needs tight control to prevent widespread rortingThe proposed Cash for Clunkers scheme could lead to widespread rorting if the Australian Government does not put strict measures in place.
That's the warning from the Federal Chamber of Automotive Industries which represents the Australian car industry.
In Germany's Cash for Clunkers scheme, a scam was exposed where up to 50,000 cars that were supposed to be scrapped ended up being exported -- creating a flood of cheap cars in Eastern Europe and Africa.
German regulations said the traded-in cars had to be taken to a junk yard – as opposed to being crushed for use as recycled metal.
Unfortunately German authorities acted too late to thwart that scam, not that they were too bothered. The program boosted new car sales in Germany by a staggering 40 per cent in a glum economy.
The Cash for Clunkers protocol was more strict in North America: authorities there insisted cars be crushed as opposed to simply being delivered to scrap yards. They also insisted that engines be filled with silicon to prevent them being broken up for spare parts.
The chief executive of the FCAI, Andrew McKellar, said similar measures should be adopted here to make sure the road was truly rid of old cars.
He told the Carsales Network: "The Federal Government needs to make sure the cars it is paying to take off the road, stay off the road."
He also said the Federal Government needed to ensure there was strict criteria on what old cars were eligible for the $2000 rebate.
For example, in some overseas schemes, the authorities insisted the car be road worthy, registered, and owned by the applicant for at least 12 months. This prevented unscrupulous people paying $500 for old cars to recoup a $2000 refund. It also prevented fraudulent registration safety checks.
"I understand the Government will require at least two years of continuous registration to prevent rorting," McKellar said. "Those sorts of safeguards are going to be an essential part of the program."
-- picture courtesy Delmarva Recycling
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