We are in a climate crisis, which requires the rapid shift to net zero emissions through the electrification of all sectors of the economy.
With light vehicle transport alone responsible for ten per cent of Australia’s emissions, electrifying our transport system must be a high priority for this Parliament. The Australian Greens support financial incentives to encourage the take-up of electric vehicles and to bring down their costs over time. Importantly, a priority is to make them more widely available across all household income ranges.
Since the introduction of this bill, the government has committed to consult on vehicle fuel efficiency standards. However, the emissions benefits of this legislation haven’t been quantified by the Department. The government has not estimated the expected abatement of this measure, nor the expected uptake.
The measures in this bill are inadequate to support the rapid and broad uptake up of electric vehicles. Without additional measures Australia will remain in the electric vehicle slow lane.
The government must accelerate the introduction of fuel efficiency standards, larger investment in electric vehicle charging infrastructure and implement additional incentives to lower the cost of electric vehicles.
In the absence of detailed Departmental forecasts, it was broadly agreed by witnesses that these measures alone will not drive significant uptake, nor make any significant new dent in Australia’s emissions, particularly with the proposed inclusion of plug-in-hybrid vehicles.
The Inclusion of Plug-in-Hybrid Vehicles (PHEVs)
Plug-in-Hybrid Vehicles (PHEVs), while being able to run on an electric charge, still rely on burning petrol through an internal combustion engine. Many submitters and witnesses such as Climateworks, The Australia Institute, Dr Diane Kraal, Dr Anna Mortimore, Greenpeace and Evie Networks had reservations about including PHEVs, as they are not consistent with a zero emissions transport system.
The task of decarbonising starts right now, as Ms Rachel Lynskey from Climateworks, pointed out in her testimony:
The average Australian vehicle, according to the ABS, is around 10 years; although we know the global average of vehicles on the road is around 15 years, which really is a compelling time frame. If we are heading for the net zero by 2050, we need to look at the ending of sales of internal combustion vehicles by 2035 to really give that 15-year buffer to ensure the entire vehicle fleet can turn over so we are running a totally zero-emissions vehicle fleet by 2050 and meeting those climate goals.
Furthermore, studies by the International Council of Clean Transportation, cited by Evie Networks, show that the real-world emissions of PHEVs are on average three to five times higher than what they are reported to emit. PHEVs spend far more time off batteries and in internal combustion mode that what is assumed.
The bill as presented, risks being yet another fossil fuel subsidy.
Australian Governments already spend $11.6 billion a year of public money to subsidise the burning of coal, oil and gas. It is the Australian Greens’ view that public money should not subsidise fossil fuels, and that money should instead be used to accelerate the uptake of electric vehicles.
Recommendation
The Treasury Laws Amendment (Electric Vehicle Discount) Bill 2022 should not lock more fossil fuel subsidies into the tax system. Plug-In-Hybrids should be removed from the scheme so that benefits are restricted to zero emissions vehicles.
Recommendation
The Customs Tariff Proposal No.5 2022 should also be withdrawn and reissued to remove plug-in hybrids so that benefits from tariff reductions are restricted to zero emissions vehicles.
Recommendation
The savings from removing PHEVs from the Treasury Laws Amendment (Electric Vehicle Discount) Bill 2022 and Customs Tariff Proposal No.5 2022 should be redirected to support further electric vehicle uptake.
A further important theme raised by many and varied stakeholders, such as auto companies, finance providers and civil society witnesses, was the inclusion of personal electric vehicle charging infrastructure within the Fringe Benefits Tax (FBT) exemption scheme.
The operating and maintenance costs of internal combustion engines can be claimed within existing FBT schemes. It is the view of the Australian Greens that this principle should also extend to personal electric vehicle charging infrastructure when purchased with an electric vehicle after the scheme’s start date. Charging infrastructure is central to the ongoing operating expenses of an electric vehicle.
This addition will have minimal fiscal impact on the budget but will provide important social infrastructure as well as better utilise household solar electricity in the middle of the day when supply is most abundant.
Recommendation
The Treasury Laws Amendment (Electric Vehicle Discount) Bill 2022 should be extended to include personal electric vehicle charging infrastructure within the definition of ‘exempt car benefits’.
Senator Nick McKim
Member and Greens Treasury Spokesperson
Greens Senator for Tasmania