The federal government's clean-car rebate program may be running on empty.
Internal estimates from Transport Canada suggest Ottawa greatly underestimated the amount of money needed for the rebates, by as much as $65 million in its first year alone.
The 2007 budget earmarked $160 million for the eco-rebate, split evenly over two years. The program offers rebates of up to $2,000 to car-buyers based on a vehicle's fuel efficiency. But estimates obtained under the Access to Information Act show the government expected to spend between $117 million and $145 million in the program's first year.
Based on those estimates, the eco-rebate would go over budget by at least $37 million — and by as much as $65 million — in its first year.
It's not clear how much of that spending would be offset by the levy assessed on gas guzzling vehicles.
The government's latest budget did not extend the program's funding beyond the initial two-year period. Transport Minister Lawrence Cannon has said there's no need to extend it because it "served its purpose."
But the estimates raise new questions about whether the program was becoming too much of a drain on federal coffers. One environmental group questioned whether the eco-rebate, slated to end next March, proved more popular with consumers than the Tories expected.
"Sounds to me like what needs to be done is a thorough analysis of what changed," said Bob Oliver of Pollution Probe.
Transport Canada provided data only for the 2007-08 fiscal year under access-to-information. It's not known how much the department expects will be spent in the program's second year.
Rebate program an 'unmitigated disaster': analyst
Auto analyst Dennis DesRosiers cautioned against drawing links between the estimates and the program's popularity. Citing reports compiled from industry data, he says the eco-rebate hasn't affected vehicle sales.
"The whole program has been an unmitigated disaster since Day 1," DesRosiers said.
"It's just further evidence that their program has been a disaster and one of the reasons why they dropped it."
The clean-car scheme has been widely panned by industry, labour and environmentalists. Critics say it puts Canadian automakers at a competitive disadvantage by largely rewarding people for buying imported models. The eco-rebate and a so-called "green levy" on gas guzzlers that consume more than 13 L/100 kilometres were surprise additions to the 2007 budget.
A report last fall by the C.D. Howe Institute said the government rushed the program without "adequate consultation with the industry."
The Toronto-based think-tank also said there should have been a phase-in period to give North America's Big Three automakers — General Motors, Ford and Chrysler — time to retool their fleets since, on average, "they sell less fuel-efficient vehicles."
That was reflected in the list of vehicles eligible for the rebate from the 2006 model year, which was largely dominated by imports. But vehicles made by General Motors, Ford and Chrysler have crept up eligibility lists for the 2007 and 2008 model years.
The program has also been an administrative headache. Although the rebate began March 20, 2007, forms to apply for it weren't posted on Transport Canada's website until October.
Since then, the government has issued $71.9 million in rebates, department spokesman Patrick Charette said in an e-mail.
He said the government received more than 80,000 rebate applications and sent 62,547 cheques between Oct. 1, 2007, and May 30, 2008.