LPG subsidy reprieve welcomed

THE LPG industry and the VACC have welcomed a stay of execution for the federal government’s LPG subsidy scheme.

There had been speculation in the lead-up to the budget that the LPG subsidy would be axed.

So far, the scheme has seen $250 million of assistance given to motorists converting their engines to LPG or purchasing new LPG models since it was introduced in August 2006.

It was reported in the lead-up to the federal budget that the Expenditure Review Committee had decided to discontinue the program ahead of its proposed 2014 end date.

Instead, the government announced it will provide an additional $19.1 million in 2007/08 for the LPG scheme in response to rising demand.

However, the government did not make clear its position on the LPG subsidy going forward and there is no indication whether it plans to run the program through to the proposed 2014 end date.

VACC executive director, David Purchase, said the organisation was pleased to hear the LPG scheme was not axed in the budget and that more money was made available.

“We congratulate the (federal) treasurer on recognising the value of the subsidy and the importance of LPG as Australia’s alternative fuel,” Mr Purchase said.



Left: VACC executive director David Purchase.

“We thank the government for this additional funding over the next financial year,” he said. “However, VACC will continue to push for the long-term future of the subsidy and ensure its security for the full period to 2014.” Mr Purchase said it was clear that LPG had an important role to play in Australia.

“The benefits of LPG to the Australian economy are immense. Our vast reserves of LPG have the potential to reduce the nation’s dependence on imported fuel and to greatly benefit our massive trade imbalance,” he said.

Under the LPG scheme, private customers receive a $2000 subsidy for having their used car converted to LPG and receive $1000 for buying a new vehicle that runs on LPG.

The new dual-fuel VE Commodore LPG attracts a $2000 subsidy because the conversion work is done by HSVi at Holden's Elizabeth factory in South Australia after the car is manufactured, while single-fuel E-Gas Falcon models only qualify for a $1000 subsidy because the LPG work is done in-house at the time of manufacture.

While around five per cent of Commodore sales and around 25 per cent of Falcon sales are fitted with LPG engines, almost all of these vehicles are purchased by businesses and therefore do not qualify for the LPG subsidy.

Prior to last week’s budget announcement, Ford and Holden told GoAuto they were unconcerned that the LPG subsidy could be scrapped because it is an assistance scheme for private motorists and that the vast majority of their LPG new-car sales are with fleets.

Both car-makers have rejected the inference made by GoAuto that they were putting profits before the environment by failing to back the scheme. Ford said in the original article that it was supportive of the subsidy, and representatives from both manufacturers have since reiterated their support for the subsidy’s continuation.

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