Senate debates

Thursday, 8 September 2022


Treasury Laws Amendment (Electric Car Discount) Bill 2022; Second Reading

4:18 pm

Photo of Jenny McAllisterJenny McAllister (NSW, Australian Labor Party, Assistant Minister for Climate Change and Energy) Share this | | Hansard source

I move:

That this bill be now read a second time.

I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The introduction of the Climate Change Bills, as well this Electric Car Discount Bill -

Sends an unmistakable signal to this Parliament, to the Australian people, and beyond -

That Australia now has a Government that recognises the economic and generational imperative of acting on climate change.

The communities we represent recognise this too.

They have rejected the fear campaigns of the past.

And they have embraced action.

In the knowledge that the cost of inaction gets higher every day.

And in the knowledge of the historic opportunities that climate action presents.

A future with cheaper energy bills and a more resilient energy grid.

A future with hundreds of thousands of new clean energy jobs, in new and growing industries.

And a future with a climate and environment that's been kept safe and strong for the next generation.

We now take the first major steps towards that future.

Australians will see this new approach right across government—and the Treasury space is no exception.

We know that Australian businesses are desperate for clearer guidance on reporting the climate risks impacting their operations.

That's why we are working closely with regulators to develop a standardised approach to climate disclosures for businesses—for a framework that is clear, credible and globally comparable.

We are signed up supporters of the G20's ambitious sustainable finance agenda—and we are doing more work here at home, in conversation with our regulators.

And, importantly, our Government will restore the Treasury's role in modelling climate risks and opportunities for the Australian economy—rebuilding this capacity after it was left to decay by the previous government.

Treasury modelling will help make sure we are charting a path that grabs the opportunities for growth and jobs that climate action offers.

And the Bill I introduce today is also about grabbing opportunities.

This Bill implements the Albanese Government's election commitment to provide a fringe benefits tax exemption for eligible electric cars that are made available by employers for employees.

It amends the Fringe Benefits Tax Assessment Act 1986 to provide an exemption from fringe benefits tax for this purpose.

The exemption applies to battery electric cars, hydrogen fuel cell electric cars and plug-in hybrid electric cars that are below the luxury car tax threshold for fuel efficient cars.

The exemption will apply to fringe benefits arising from the use or availability of an eligible electric car from 1 July 2022—provided that the car was first made available for use on or after that date.

These changes will ensure that employers providing employees with an eligible electric car will not have to pay fringe benefits tax on that car—and the cost to employees of entering into salary sacrificing arrangements in order to lease an eligible electric car will now be less than it previously would have been.

If a model valued at about $50,000 is provided by an employer through this arrangement, our fringe benefits tax exemption would save the employer up to $9,000 a year. For individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4,700 a year.

The fringe benefit tax exemption for eligible electric cars will be implemented as an ongoing measure. It will be reviewed after three years, in light of higher rates of electric car take-up, to ensure it remains effective.

The fringe benefit tax exemption is one component of the Government's Electric Car Discount, and forms part of our Powering Australia Plan—being delivered by the Minister for Climate Change and Energy.

The Electric Car Discount also includes the removal of five per cent tariffs for eligible electric cars with a customs value below the luxury car tax threshold for fuel efficient vehicles.

The Electric Car Discount package aims to help encourage greater take-up of electric vehicles and reduce transport emissions—as part of the Government's broader climate action agenda.

These measures help reduce the upfront and ownership costs of electric cars, addressing a significant barrier to buying electric cars in Australia.

The Electric Car Discount is one of the first new initiatives in the Government's plan to improve electric vehicle uptake, with further measures to be delivered as part of the National Electric Vehicle Strategy.

This includes a $500 million investment to boost electric vehicle charging infrastructure right across Australia.

Our Government has also committed to ensuring 75 per cent of new Commonwealth fleet purchases are electric by 2025. This will increase the number of second-hand electric vehicles on the market, providing more options for consumers and driving down prices in the coming years.

The transport sector is one of the fastest-growing sources of emissions in Australia, and the stronger uptake of electric vehicles can make a substantial impact in our efforts to tackle climate change.

Yet right now, Australia lags far behind our international peers when it comes to electric vehicle use.

About 15 per cent of cars sold in the United Kingdom are electric and plug-in hybrids. In Australia, it's only about two per cent.

Obviously, we are very different countries in terms of our transport networks and needs—but even so, two per cent is much, much lower than it could be, and should be.

More and more Australians are interested in the benefits of owning an electric vehicle—but they remain unaffordable for many motorists.

There are only 10 electric and plug-in hybrid cars on the domestic market selling for less than $60,000—whereas in the UK, there are about two dozen under this price.

Because they have policies and incentives to help increase the take-up of electric vehicles.

And now, Australia does too.

Accelerating electric vehicle uptake will help pave the way for a lower-cost transition to our emissions reductions targets.

This Bill is good for motorists, good for employers and their workers, and good for climate action.

Full details of the fringe benefit tax exemption measure are contained in the Explanatory Memorandum.

Debate adjourned.