Clean Car Rebate
What Is It?
In order to reduce CO2 emissions, the Clean Car Rebate was introduced to give importers of cars a rebate based on how low each imported car’s emissions are. The scheme was to be funded by adding a tax to importing cars whose emissions are too high. The amount of money taxed/rebated was scaled, based on how high/low the emissions are1.
What Happened?
Immediately after the rebate was introduce, there were reports of prices of low emissions cars increasing by an equivocal amount to the rebate. It was said that the rebate therefore had little difference on people’s inclination to buy low emissions cars (source?).
It is understood that the scheme was failing to pay for itself due to not enough higher emissions cars being imported (source?). As a result, the government changed the policy to reduce cutover point for what is considered a low emissions car and increasing fees for high emissions cars2.
Analysis
It is said that the change in policy meant that the government was charging people to import low emissions cars like hybrids3. While the government say that the change was so they can improve the quality of low emissions cars, hybrids are undoubtedly more clean than the average petrol or diesel car that’s currently on the road. Therefore charging taxes to import hybrids seems counter productive and supports the assertions that the government changed the policy because it didn’t go to plan, fiscally speaking.
More analysis is required to say whether the policy was a success, because we need to work out if there was a change in import trends after the policy was introduced and also to determine if the policy was responsible for increasing the number of clean cars being imported. Aspects of the policy that were certainly a failure were due to overspend and recent changes which now tax importing clean cars such as hybrids. Additionally it’s unfortunate that this policy has an inflationary affect on car prices at a time of inflation and supply driven price increases.
This policy has also been termed “a kick in the guts for rural people and farmers” who require cars such as Ute’s (source?).
There has also been some controversy that this policy gives tax money back to people who are rich enough to buy higher end cars, who perhaps don’t need the money anyway.
[OPINION] Chatting to a local car importer, it is his perception that this is an inefficient policy because without the policy, imported cars typically replace higher emissions cars from existing stock anyway, and the policy just puts money in the hands of wealthy importers. His view was that a better policy would be to introduce emissions testing into the WOF to get rid of high polluting cars; replacing one stinky vehicle that bellows smoke while driving down the road with any newer imported car, would remove more CO2 than the difference between 10 low vs high emission cars. While some analysis needs to be done to confirm this, I tend to agree with him - though I appreciate that this would disproportionately affect lower income people, but perhaps this could encourage more people that can barely afford cars onto public transport, which could be argued to be beneficial for all involved.