Australians will get $2000 when they trade in their pre-1995 car and buy a new vehicle
The new scheme is part of Australian Prime Minister Julia Gillard's climate change policy, due to come into play on 1 January 2011.
Anyone who trades in a car manufactured before 1995 for one that meets emissions standards will receive the $2000.
"Australians own a lot of old motor cars, and those old cars guzzle a lot of petrol and they spew out a lot of pollution," Gillard said.
"I want to help Australians to update their motor vehicles," she said, noting that the old cars would be turned into scrap metal."
The rebate will be on offer for 200,000 new vehicles, costing the Government A$394 million. It will redirect funds to pay for the scheme.
The plan is not likely to come to New Zealand.
A spokesperson for New Zealand's Transport Minister told Radio NZ that a scrappage trial was held in some centres last year but was not found to be cost effective.
However Green MP Kennedy Graham says the incentives were so poor it was hardly worth people taking up the offer and the Government should be prepared to put more money into such packages.
New Zealand's Automobile Association says roads in this country would be made safer with such a plan, since the average age of vehicles is 12.5 years.