Incentivise me

26 February 2021

­There’s an upside and a downside

It doesn’t matter whether it’s pink batts, LPG conversions, or electric car subsidies – many of these well-meaning government incentives should come with warning stickers on them. 

Incentive programs are often designed for good use – to move people from one technology to another or to use less energy, for example. However, seldom is much thought given to the long-term effects on business once the program ends.

History has shown many dangers associated with incentivising relatively stable markets. For every opportunistic pop-up business that profits and moves on, there are legitimate operators left ‘in’ the market that find themselves on the downside of the program. 

Take the pink batts scandal. Legitimate operators were there before the Rudd government incentive program was announced and they remained in the aftermath. But life was never the same. Meanwhile, opportunistic operators ran with the money, possibly to pop-up elsewhere at the next announcement of yet another government funded program.

Incentives can work if carefully managed. However, care needs to be taken in assessing the potential elimination of local businesses pitted against incentivised service providers, who have moved onto the next honey pot.  

The Andrews Government cash-for-clunkers scheme is the latest in a long line of incentive programs that need clear thought and industry consultation before the fine print is released later this year.

Mr Andrews, I support any efforts to get Victorians out of older vehicles and into safer new ones, but don’t leave legitimate car dealers and vehicle recycling businesses behind at the expense of pop-up or back yard operators.

Words: VACC CEO, Geoff Gwilym. As featured in the Herald Sun 26 February 2021.

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