THERE WERE growing indications last night that a scrappage-type scheme for the motor industry will form part of today’s Budget.
An incentive for an industry which has seen new car sales collapse this year has been discussed by Cabinet in the weeks running up to the Budget.
There has also been a strong lobbying campaign by the industry and also by backbench Fianna Fáil deputies, led by the Wexford TD Sean Connick.
Green ministers are understood to have expressed reservations about the scheme. The grounds of the concerns revolve around the prospect that a scrappage scheme will not in itself promote lower carbon emissions.
And it was also argued that a stimulus to encourage consumers to buy new cars would result in money being spent on imports rather than indigenous goods, and that too large a proportion of spending on vehicles would seep out of the Irish economy.
However, it is believed that the Greens will not make it a red line issue.
At a meeting of the Fianna Fáil parliamentary party last month, the Minister for Finance Brian Lenihan told TDs and Senators that he would consider the possibility of a scrappage scheme.
A campaign led by the Society of the Irish Motor Industry (SIMI) claims a scrappage deal for cars aged nine years or older would not only secure up to 10,000 jobs at threat in the industry at present, but also raise much-needed tax income for the Government.
A motion supporting the introduction of such a scheme, tabled by Mr Connick, was supported by 30 of his colleagues. At the time, Mr Connick said his clear impression was that Mr Lenihan was giving it serious consideration and that he was also willing to examine the Vehicle Registration Tax (VRT) situation that has left car dealers at a price disadvantage when exporting cars from Ireland to the UK.
“He said he is certainly going to consider it. He is also looking at the situation facing dealers who are trying to export cars to the UK, who are at a disadvantage,” said Mr Connick at the time.
He also pointed out that 12 other European countries have already introduced car scrappage schemes with positive results. He instanced the British scheme which turned a 30 per cent decline in March of 2009 into a 6 per cent increase in August. Germany’s scheme also led to an increase of 18 per cent in sales in the first quarter of 2009, said Mr Connick.