Labor’s cash-for-clunkers policy wheeled out on Saturday isn’t the worst climate change policy we’ve seen in the election campaign — Julia Gillard’s ‘citizens’ assembly’ has an unassailable lead on that front — but it’s hardly the most efficient emissions-reduction policy that we’ll see.

It will be funded by cuts to the Solar Flagship, CCS Flagship and Renewable Energy Bonus Scheme programs. The Solar and CCS Flagship programs have been particularly slow to roll out since they were established by the government in the 2009 Budget.

Environment Victoria, quoted in The Age, calculated the $2000 rebate for trading in pre-1995 cars and buying a vehicle rated for low carbon emissions would cost $394 a tonne of CO2-equivalent, making it up to 20 times more expensive than an emissions trading scheme.

But the scheme merely adds another layer to the many, often contradictory price signals already built into how we treat automobiles.

Under the Labor policy, we’ll spend $394 million encouraging people to buy new cars. The vehicles can be either Australian-made or foreign-made; there’s no protectionism involved. But it comes on top of the more than $1.2 billion we’re paying, through tariffs on imported vehicles, and direct payments to Ford, Toyota and Holden, to the local car industry, that amount to a $24,000 annual subsidy for the job of each car industry worker. The Australian automobile industry is de facto publicly-funded.

As the government essentially acknowledges in its other Saturday announcement about tougher emissions standards for vehicles from 2015 (why are we waiting so long?), despite this, the local car industry has been allowed to get away with making dirtier vehicles than overseas competitors.

But governments also systematically subsidise transport-related pollution. A study by Chris Riedy of the Institute for Sustainable Futures for Greenpeace in 2007 calculated that transport subsidies amount to around $7 billion. These include subsidies for heavy vehicle use of diesel and the encouragement of car use by the current Fringe Benefits Tax regime.

And don’t forget, under the CPRS, the government intended to spend hundreds of millions of dollars eliminating the impact of a carbon price on the price of fuel.

The biggest subsidy of all relates to the refusal of both sides of politics to require motorists to pay for the cost of the externalities of their road use, most particularly congestion, which is now estimated to cost over $10 billion a year, and rising. Congestion not merely costs the economy billions and degrades the quality of urban life, it contributes to transport carbon emissions.

Because of the importance of transport in the taxation system, the iconic status of automotive manufacturing — no other industry benefits from such taxpayer generosity — and the timidity of politicians in the face of motorists, the purchase of and use of motor vehicles is a mess of subsidies, some directly designed to discourage behaviour virtually explicitly encouraged by others. Rather than fix it, politicians just prefer to pile new subsidies on top of the old ones.