Senate debates

Monday, 21 June 2021


COAG Reform Fund Amendment (No Electric Vehicle Taxes) Bill 2020; Second Reading

11:39 am

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Shadow Special Minister of State) Share this | Hansard source

I seek to make some comments about the COAG Reform Fund Amendment (No Electric Vehicle Taxes) Bill 2020. We know that Australians will need to transition to cleaner forms of transportation if we are to make meaningful reductions in our carbon emissions and avert the worst effects of climate change. Transport emissions make up 18 per cent of Australia's total greenhouse gas emissions. This makes transport the third-largest sector by emissions, and it is also the fastest growing source of emissions. Although transport emissions dropped during COVID, they have rebounded quickly as movement restrictions have eased. Based on the latest figures, passenger motor vehicle emissions make up 55 per cent of road transport emissions and eight per cent of total Australian emissions. Australia needs to change this. In the first instance, this means prioritising active transport, like walking and cycling—something I know you're very interested in, Mr Acting Deputy President Sterle—and, where possible, making the collective investment needed for mass public transport to be a realistic option for Australians who are travelling to work, school or the shops. But cleaner, low-emissions private vehicles will also have to be part of the solution.

Unfortunately, Australia lags the world in the take-up of electric vehicles. In 2020, there were almost a million cars sold in Australia, and just 6,900 of them were electric. That's a market penetration of barely 0.7 per cent, compared with the global average of a little over four per cent. Take-up is more than six per cent in China, around 11 per cent in the UK and the EU, and almost 75 per cent in Norway, which is the world leader. The problem isn't just that we have a low rate of EV use in Australia; it's also that there's barely any growth. Electric vehicles tripled their market share in the EU and the UK from 2019 to 2020. In Australia, 6,700 were sold in 2019 and 9,900 were sold in 2020—a growth rate of less than three per cent. As a result, there are just 20,000 registered electric vehicles on Australian roads. This isn't because Australians don't want to drive electric vehicles. Surveys show that the majority of Australians would consider buying an electric vehicle as their next car. So what's the problem? Fifty per cent of those same poll respondents say that the purchase cost of an electric vehicle is one of the main reasons stopping them from purchasing one. There are no cheap electric vehicles for sale in Australia. Precisely zero new models are sold for less than $40,000, and there are just five models available for less than $60,000. In the United Kingdom, by contrast, there are 26 models in that price range. This of course is the government's fault. What has gone wrong?

The truth is that one of the greatest impediments to the widespread take-up of electric cars in this country has been the coalition government. They have done absolutely nothing to develop local manufacturing capacity. In fact, they gutted it years ago, as we saw with Holden and Toyota, in what was a very disgraceful period in Australia's history. The government cut financial support and dared Australia's last remaining automotive manufacturers to leave the country. The consequences of that decision didn't end with Holden. They ricocheted through the automotive supply chains from Adelaide to Melbourne. They were the death of countless small and medium manufacturing and industrial firms, and they ended the working lives of thousands of hardworking Australians, particularly in my home state, who had jobs they enjoyed and were proud of. And that was for petrol vehicles. The government's record on electric vehicles is much worse. Just last year, Renault pulled its Zoe EV model from Australia, citing a lack of government support. There is a lot that could have been done to encourage electric vehicles, such as providing subsidies for the development of charging stations, making it easier to import EVs and adjusting policy settings to support their take-up and use. We could even look at manufacturing subcomponents onshore.

Currently, Australia produces nine of the 10 minerals required for the lithium iron batteries, but largely sends these overseas as raw materials. We have a competitive advantage to value-add to these resources and create processing and manufacturing jobs for EV components, especially batteries. But it's hard to do that when we have barely any electric vehicles on the road.

The government could have provided support and incentives for local manufacturing capacity. The government has instead done next to nothing. This is because this government is paralysed on climate change. After eight years of government, they still don't have an energy policy. We are waiting on the outcome of yet another leadership challenge in the Nationals. I think at this point we do know that Mr Barnaby Joyce has been elected as the new leader of the National Party and therefore, under the conventions, again will become the Deputy Prime Minister of Australia. This government is uninterested in climate change as an issue unless it can weaponise it as part of a culture war. Let's not forget that it was the government who ran a scare campaign last election threatening that the introduction of electric vehicles would end the weekend, a claim that was as shameless as it was untrue. The tragedy is that Labor's energy policy prioritised Australia's future energy needs and would have seen our government investing in renewables and storage, creating new industries and new jobs whilst lowering power bills for Australian families.

In the same way, a government which was serious about reducing Australia's transport emissions would support the uptake of electric vehicles that are cheaper for families to run over the long term. That is why Labor has committed to developing Australia's first national electric vehicle strategy. Labor will cut taxes on non-luxury electric vehicles, including import taxes and fringe benefits tax, to give people a choice and ensure that more Australians who want electric cars can afford them. Labor will cut government taxes on non-luxury electric vehicles, including import taxes to give Australians a choice. By reducing upfront costs, Labor's electric car discount will encourage uptake, cutting fuel and transport costs for households and reducing emissions at the same time. Labor's electric car discount will encourage carmakers to supply more affordable electric vehicles to Australia, which will in turn increase competition, drive down prices and give consumers more choice. Labor will pursue policy settings to encourage Australian manufacturing of EV components and consider leveraging existing Commonwealth investments in its fleet and infrastructure spend to increase electric vehicle stock.

Unfortunately, unlike Labor's policy proposals, this bill will not make a meaningful impact on electric vehicle take-up by ordinary Australians. This bill seeks to disincentivise taxes or charges on the purchase and use of electric vehicles by states and territories. While this may seem like a good idea given all I've just said about the electric vehicle market in Australia, the truth is far more complicated. Australian jurisdictions developed mechanisms for funding the construction and maintenance of roads and other infrastructure which assume that most private vehicles are fuelled by petrol. As Australians transition away from petrol vehicles to electric vehicles, taxes like fuel excise will deliver less. Governments will need to transition towards new models of funding road infrastructure, and it's likely that some of these models will include a capacity to recognise the impact of electric vehicles, like all vehicles, on our roads, bridges and tunnels. That's not necessarily a bad thing. Our aim should be to ensure that our policy settings as a whole support the use of electric vehicles, not that use of electric vehicles should be for all intents and purposes free.

This bill is a blunt instrument. The measures in the bill would adjust the formula for allocating GST revenue between states and territories to neutralise the effect of any tax, levy or charge imposed on electric vehicles but not on other vehicles. Where a state or territory sought to impose such a tax, the benefit of that would be neutralised through a reduction in the proportion of GST revenue they would receive. This would be redirected to other states in the normal manner. COVID-19 has seen a significant decline in GST revenues for the states at the same time there has been increased demand for critical services, especially in the health sector. The distribution of GST revenue is generally set by the independent Commonwealth Grants Commission. Adjustments to the GST formula are very rarely made, and particularly not to penalise states for using their potential heads of revenue. Changes to the GST formula need careful consideration and consultation. Australia needs to support our electric vehicle market. Unfortunately, this bill isn't the way to do that. What we need is what the Morrison government and its predecessors have failed to do—a real and comprehensive plan to lower the cost of vehicles, encourage a greater range of models to be imported, build the infrastructure needed to support them and grow Australia's local manufacturing capability. That's why Labor is proud to stand behind our electric vehicles policy.


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