Govt relaxes criteria on motor fuels

Press, 4 December 1985, Page 2

Govt relaxes criteria on motor fuels

By

Patricia Herbert

in Wellington

The Government yesterday announced that its criteria for liquefied petroleum and compressed natural gas conversion loans will be relaxed on December 9 to help the ailing alternative fuels industry. The Minister of Energy, Mr Tizard, said the deposit required from motorists would be reduced from 25 per cent to 10 per cent. The announcement represents for him a victory over the Treasury which persuaded the Cabinet, against Mr Tizard’s advice, to put the screws on in June. Then, together with the imposition of the 25 per cent requirement, the interest rate on loans was raised from 10 per cent to 17 per cent and the repayment period cut from three years to two. This was in response to a surge in demand whipped up by a series of petrol price rises which was outstripping both the industry’s capacity and the Government’s ability to fund the programme. The scheme was careering out of control with loans running at 6000 a month compared with only 2000 in 1984, said Mr Tizard. The object of the amendments, he said, was to pull them, back to a monthly rate of 1600; but they hit harder than expected so that in October only 640 loans were granted and less than 2000 conversion kits sold. Mr Tizard said the figures showed that the 25 per cent deposit was deterring many

motorists from having their cars converted and that he had opposed it from the outset, predicting exactly that effect It is the second time this year that he has publicly clashed with the Treasury, having earlier alleged that it had gone berserk and was pursuing its own policies rather than those set by the Government — an outburst which earned him a rebuke from the Prime Minister, Mr Lange. The latest changes have the same objective as the last lot — to keep demand steady but down to a rate of about 1660 a month. Mr Tizard said the slashing of the deposit combined with more competitive pricing and the effects of the strong Kiwi dollar would mean an initial cash payment of somewhere between $126 and $206 compared with $4OO to $5OO previously. He hoped this would encourage more people to use the scheme. The moves were presaged in a speech he delivered last week to the L.P.G. Association’s annual meeting in Wellington. Acknowledging that the general trend in the conversion business in recent months had been discouraging, Mr Tizard said that corrective measures had to be delicate or the pendulum could swing the other way as it had in June when the Government “put the brakes on.” With hindsight, he said, Eerhaps the toughening up ad been too tough and some fine-tuning was needed to give the industry “a mild stimulus.”