Politicians love to give away money and in the United States and Germany they're giving away billions of dollars and euros to people who buy a new car to replace an older less efficient one.
The U.S. government's $1-billion (U.S.) Cash for Clunkers program is so popular it has burned through all the money allocated and politicians are scrambling to add more money to the budget. Germany planned to spend €1.5-billion ($2.3-billion Canadian) to get clunkers off their roads, but with an election coming in September the government quickly increased the dough available to €5-billion.
It's an irresistible political combination - replace older polluting cars with up-to-date clean ones and stimulate the economy at the same time. In the United States, a buyer can receive up to $4,500 (U.S.); in Germany, it maxes out at €2,500 ($3,800 Canadian).
In Canada, the feds have a miserly program called Retire Your Ride that provides a free bus pass or a discount on a bicycle which can be worth the princely sum of $300 for putting your old wreck out of its misery. But this is a possible election year in Canada, too, and Environment Minister Jim Prentice has said he's thinking about boosting the free money available to U.S. or German standards.
Trevor Pettit is an entrepreneur and ex-politician who has worked on "scrappage" issues in both government and the private sector. A few years ago, he set up a charity car donation program at http://www.autoasis.ca, which facilitates the issuing of tax receipts from charities to which individuals donate old cars.
While it's commendable to encourage the retirement of older, higher polluting vehicles in a sound environmental manner for the benefit of charities, it's no big deal for the donor.
Pettit was a one-term backbench member of Mike Harris's government in Ontario. He is now working on a bio-solids-to-energy project.
Vaughan: You've worked on this "Cash for Clunkers" idea for years. How did Autoasis come about?
Pettit: I was the head of the Ontario Auto Recyclers Association and when I left I decided to start up a program.
I contacted some charities and called up some of the recyclers. They said they'd work with me so we did it. It's basically just a website but we get a couple of cars a month at this point.
Well, there's 4,500 bucks to encourage someone to scrap a clunker in the United States. You were offering quite a bit less.
We could get you a charitable tax receipt for $60 from the organization to which you donated the value of your car. That would maybe take $7 dollars off your next tax bill. People donate cars because it's convenient and because they believe they're doing some good.
Are you certain that all the old cars that get turned in are actually taken off the road?
I don't think there's anything that says the recycler has to crush the whole car.
The recycler reserves the right to dismantle and take the parts that he thinks he can sell - but not to resell the whole vehicle.
In fact, there was some reselling. I remember some people phoning and saying I thought my car was going to be recycled but I just saw it on Yonge Street.
It should be recycled, but it has to be recycled right.
What is really needed and what the Ontario Auto Recyclers Association pushed for, for years, is an official accreditation program for recycling.
But it never comes to be. That would be a set of guidelines for everything you do as an automotive recycler.
Then you also need end-of-life legislation so that when a vehicle comes to its end, it goes to an accredited auto recycler who knows what they're doing. You need standards set out about how you dismantle the vehicle and de-pollute. If you don't measure up, you shouldn't be in this industry.
End-of-life regulations would deliver more environmental benefit than all these clunker programs put together.
The feds are thinking about boosting the incentives to be more like the United States or Germany.
In my personal view, I don't believe the government should be funding programs of this sort period.
It should be enough that they've already bailed out the auto makers - now they're looking to bail out their sales divisions and I disagree with that.
I think a strong economy would help their sales issues. We've got infrastructure problems, we've got health-care problems, we have all kinds of other issues that we could better direct our money to than car makers.
So do nothing?
A few years ago, GM Canada got involved in a program called Car Heaven where they offered $1,000 toward a new GM car if you donated your old one.
There's no reason why they can't do that now and there's no reason why any other manufacturer can't do it either. That costs the government nothing.
Michael Vaughan is co-host with Jeremy Cato of Car/Business, which appears Fridays at 8 p.m. on Business News Network and Saturdays at 2 p.m. on CTV.