Australia may soon follow in the footsteps of other international markets with a 'cash for clunkers' program dubbed Cleaner Car Rebate, offering a $2000 boost to new car buyers trading in pre-1995 cars.
Prime Minister Julia Gillard announced the program this week as part of her government's election climate change policy, with a total cost of around $394 million.
If the Labor Government is re-elected, the program will kick off from January 1 next year.
With the ultimate aim of getting around 200,000 old vehicles off the nation's roads, the program will offer a $2000 rebate on cars built before 1995.
While the specifics of the plan have yet to be revealed, Ms Gillard said that motorists will be eligible for the rebate on the purchase of a new, lower-emission and more fuel-efficient vehicle.
"People will go to their car dealership, they will negotiate, get the price that they can get for their new car, and their rebate will be paid when their old car is scrapped," Ms Gillard said.
Ms Gillard said the rebate is part of a plan to cut vehicle emissions by one million tonnes, with mandatory emissions regulations to be introduced for new cars from 2015.
Overall, the Labor Government expects its rebate program and emissions regulations to reduce carbon dioxide emissions by 2.6 million tonnes, while saving $1.8 billion in fuel costs by 2024.
"Australians own a lot of old motor cars, and those old cars guzzle a lot of petrol and they spew out a lot of pollution," Ms Gillard said.
"I want to help Australians to update their motor vehicles."
The government will fund the rebates by redirecting funds from three programs set up to increase the use of solar power, carbon capture and renewable energy, Ms Gillard said.
The program has gained the support of the Federal Chamber of Automotive Industries.
“One in five vehicles on Australian roads is more than 15 years old with many of those not meeting the environmental and safety standards we now expect,” FCAI Chief Executive Andrew McKellar said.
“A key part of any strategy to reduce carbon emissions from road transport must address the impact older cars have on the environment.”
“The industry will obviously need to work through the finer detail of this proposal before it can be implemented,” he added.