Treasury confirms blow-out in Cash for Clunkers
04-August-2010
The wheels are already beginning to fall off the Cash for Clunkers “Pink Batts on Wheels” scheme with the Departments of Treasury and Finance discovering a $31 million blow out in costs.
Labor is trying to squib the blow out by saying they have changed the “profile of expenditure” but “not changed the total cost”.
Basically Labor is saying they accept that their costings are wrong, but won’t explain how it can be wrong and not wrong simultaneously. This is just policy on the run.
Further Treasury did not address the issues that the Coalition have already raised that to make the scheme work you would have to spend at least $4000 per car instead of the $2000 as guessed by Ms Gillard and Mr Swan.
As Treasury noted:
“The profile of the estimated expenses over the four years is sensitive to the assumptions that are made regarding the take-up of the rebate where an individual is induced by the rebate to purchase an eligible vehicle.”
The Motor Traders Association of NSW estimates that the government would have to offer a minimum of $3000 per vehicle, according to respected online magazine www.goauto.com.au
In the same article on March 25 last year industry insiders said the price would have to be nearer $5000 to encourage people to trade their cars. Unless the price is set correctly people will be more likely to sell their car than scrap it.
On these estimates the scheme would blow out in cost to $800 million – in line with estimates by Industry Minister Kim Carr that the scheme would cost $1 billion.
The cost of Ms Gillard’s ill conceived scheme has been massively underestimated. For it to operate the costs will have to double to $800 million.
This scheme has all the hallmarks of the pink batt scheme and the BER.
This is just another example of the waste and mismanagement that has characterised Julia Gillard’s government.
Ms Gillard has form when it comes to managing these sorts of schemes. Even a cursory examination of the costs associated with the Cash for Clunkers scheme shows it will have to blow out if it is to meet its aims.
Labor has now taken to pillaging Medibank private, at a cost of $195 for every one of its two million members to pay for such dodgy and ill-conceived initiatives such as “Pink Batts on Wheels.”
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