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LPG grants to be phased out

Cautious: LPG Australia industry development manager Phil Westlake says the government needs to monitor the impact of reduced subsidies for LPG conversions.

LPG industry wary of federal phase-out of conversion subsidies for private cars

General News logo14 May 2009

THE LPG autogas industry has reacted cautiously to a federal government decision announced in this week’s budget to phase out subsidies for aftermarket LPG conversions for privately owned vehicles.

Under the revised scheme, the current grant of $2000 a vehicle will be incrementally reduced by $250 annually over the next four years, to $1000, before being scrapped altogether in June 2014.

The $2000 grant for factory-fitted LPG systems for private buyers will remain unchanged “for the life of the scheme”, meaning it may also be killed off in mid 2014.

While welcoming the certainty of the revised LPG Vehicle Scheme and extension of the subsidy program – albeit reduced – for some years, the industry’s peak body, LPG Australia, is concerned that the move could negatively impact installers and LPG conversion equipment suppliers, costing jobs.

LPG Australia industry development manager Phil Westlake said LPG installers had invested substantially to meet demand for conversions, thanks to the subsidy scheme which had already injected $430 million into the industry.

He said almost 100,000 motorists had taken advantage of the federal scheme last year, each making an average saving of $994 per car in fuel savings.

80 center imageBut he urged the government to monitor the planned incremental phasing out of the subsidies.

“We will be watching and assessing carefully the full impact of changes on our installer networks and equipment suppliers, and will be communicating this to the government,” he said.

Mr Westlake said cutting subsidies could deny access to a cheaper alternative fuel for the motorists who needed it most.

“It makes good sense for the government to continue the LPG Vehicle Scheme over the longer term, as it fits with their policy of providing alternative fuel options and improved technology to provide greener motoring,” he said.

LPG Australia claims LPG can deliver 10 per cent fewer CO2 emissions than petrol.

According to a statement by federal industry minister Kim Carr, the current $2000 LPG conversion grant for private car owners will be cut to $1750 on July 1 this year, before being further reduced to $1500 on July 1, 2010, then $1250 on July 1, 2011, and finally $1000 from July 1, 2012, before being deleted on June 30, 2014.

The statement said the revised scheme committed a further $423 million from July 1 this year until its conclusion in 2014.

“The measure ensures that families who are seeking relief from fuel costs will continue to receive substantial assistance to encourage them to convert to LPG,” it said.

“By its conclusion, more than half a million motorists will have taken advantage of the scheme.” LPG Australia says the LPG conversion industry is largely made up of small businesses. In the past year, the number of businesses is said to have expanded 8.5 per cent to 2500, with the number of accredited installers growing 6.5 per cent to 7200 in the same period.

The industry claims to contribute about $345 million to the Australian economy each year, with exports of more than $20 million a year.

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