Greens propose future bans on Petrol and Diesel vehicles

Ambitious policy platform could shape the future of motoring in Australia.

Imagine an end to sales of new cars with internal-combustion engines, or even imagine government offering tax concessions to buyers of electric vehicles.

That's the broad thrust of a plan from the Greens, as outlined in a new policy announced this week. The Greens are lobbying for the federal government to reduce taxes and duties payable on electric vehicles (EVs), as a means of lowering the purchase price by as much as 20 per cent.

Offsetting the lost revenue for government would be an additional 17 per cent impost payable on cars priced above the luxury car tax (LCT) threshold. That would lift the LCT from its present rate of 33 per cent to 50 per cent, generating a healthy cashflow for government over a four-year period – before EV buyers begin enjoying lower purchase prices.

And all that is merely incidental to the ultimate goal – 100 per cent of new-car sales to be EVs by 2030. It's a goal that's in line with other countries around the world, including the Netherlands and India. That well-known bastion of zero-emissions road transport, Norway, is committed to an even earlier deadline for the end of petrol and diesel vehicles – 2025.

In essence, the Greens want the local automotive distributors to begin seeding their respective model ranges with electrified vehicles from 2020. Electrified vehicles are defined as hybrids, plug-in hybrids, battery-electric vehicles and fuel-cell vehicles.

These low-emissions vehicles would populate the model range in increasing numbers, phased in over three years on a sliding-scale basis – two per cent of the model range by 2020, five per cent by 2021 and 10 per cent by 2022. Presumably, market forces would steadily drive up the proportion of EVs in each model range as the cost of buying a conventional, fossil-fuelled vehicle rises.

Companies unable to comply could engage in a credit-trading scheme, administered by the Clean Energy Regulator. And to encourage consumers to purchase EVs, the Greens suggest government at state and federal levels offer concessions, in the form of reduced import tariffs, GST and registration fees.

Hybrids or high prices

From 2025, according to the plan, new cars sold in Australia would be required to emit no more than 105g/km of CO2, a figure that equates to less than 5.0L/100km. That's hybrid or plug-in territory, at the very least. Given the current level of technology, the plan would effectively spell the end for diesels and the only petrol engines to be permitted would be either very small in displacement or capable of extending the range of a hybrid or plug-in vehicle.

And that would be a stop-gap anyway, with the plan positing exclusively zero-emissions vehicles to be sold new in Australia just five years later. No hybrids, no plug-ins and certainly no conventional vehicles with petrol or diesel engines. Just battery-electric vehicles (or maybe fuel cell vehicles, if there's viable infrastructure for those vehicles by then).

The reason for the Greens setting a 2030 deadline is due to the average age of the Australian vehicle fleet. Research conducted by the party indicates the average car remains on the road in Australia for a life of 18 to 20 years, which is significantly more than the oft-stated average age of 11 years for the national vehicle parc. Outlawing internal-combustion-engined (ICE) vehicles from sale in 2030 won't actively take existing vehicles off the road. Even with natural attrition (crashes, theft, criminal damage and natural wear and tear), many ICE vehicles would remain in circulation, emitting carbon-dioxide up to 2050 and beyond.

There’s one stumbling block, however. David McCarthy, Senior Manager for Corporate Communications at Mercedes-Benz Australia backs much of the policy overall, but questions the tax concessions the Greens have cited.

"The price reduction of an electric car... that's a furphy..." McCarthy told motoring.com.au.

"The three pillars on which [the Greens have] based this price reduction of electric cars are fatally flawed."

Those three pillars are the import tariff, GST and state registration fees.

Most EVs – hybrids, plug-ins and battery-electrics – are built in countries that have entered into a free trade agreement (FTA) with Australia, so the five per cent import tariff doesn't apply to those cars – sourced from places such as Japan, South Korea, Thailand and the USA.

Furthermore, major brands from Germany are already gearing up to sell low or zero-emissions vehicles in Australia, but an imminent free trade agreement with the European Union will end the tariff for those vehicles as well. In other words, circumstances are already overtaking the Greens proposal. According to McCarthy, trade negotiators in Australia and Europe anticipate an FTA in less than two years.

"With the discussion of the European free trade agreement – which is under way, which would exclude LCT, but also import duty – by the end of 2019... there won't be import duty on any cars, other than potentially from the UK," says McCarthy.

No place to hide for LCT

The Benz spokesman is certain that the LCT will be sacrificed by the federal government to push the Euro FTA deal over the line. What's more, given both Mercedes-Benz and BMW source SUVs from North America, those companies are likely to advise the EU trade negotiators that the LCT should not apply to ANY vehicles, not just those prestige models from Europe. 

A European FTA would potentially exclude Jaguar Land Rover, a company in the process of rolling out its new I-PACE electric SUV in the very dawn of 'BREXIT' – the UK's exit from the European Union. But drawing up an FTA with Britain is likely to be one of the government's priorities in the post-BREXIT era anyway.

"This calculation of potentially 20 per cent saving... import tariffs [are] not going to apply. Because it basically doesn't apply now, other than to Europe," McCarthy continued. As for the 10 per cent GST (Goods and Services Tax), he was equally uncertain that would yield concessions for EV buyers.

"GST? That is a federal tax that can only be changed by agreement with the states. That ain't gonna happen. The states haven't agreed to any change to GST, ever.

"Stamp duty and registration? A state matter. Again, some states might do it, some might not.

"I think they did those calculations on the back of a recycled envelope," McCarthy concluded.

But overall, McCarthy is actually in favour of most points the Greens have promoted in the plan.

"I think 105 grams of CO2 is achievable… it'll be a stretch, but it's achievable.

"I do agree with them, we don't believe the rationale exists to delay implementation of this measure until 2025.

"I like the fact that the credits can be traded between companies. Makes sense.

"I'm not sure the target is going to be achievable, but I do like the fact that they include battery-electric, plug-in hybrid electric, fuel cell. So I'm glad they recognise plug-ins, because the majority of people's journeys are 30 to 50 kilometres. A plug-in is a very viable option for a lot of people."

McCarthy observed, however, that the Greens have contradicted themselves by championing a measure designed to encourage the purchase of cars that are more fuel-efficient, forgetting that such a measure already exists: the luxury car tax dispensation for vehicles that use under 7.0L/100km.

In actual fact, it was the Greens who arm-twisted then federal treasurer Wayne Swan to accept this dispensation. Now, instead of offering buyers of fuel-efficient vehicles a tax break, they've gone punitive, pushing for owners of fuel hogs to be slugged a higher tax.

They’re now arguing in favour of a 105g/km emissions ceiling that is essentially the same as capping fuel economy in a combined-cycle test below 5.0L/100km. The CO2 emissions figure equates to roughly 4.6L/100km. If implemented, that figure would ensure that a large number of distinct prestige models – mostly from Europe – currently enjoying dispensation from the LCT, would incur it after all.

And the sort of cars that would sneak in below that 4.6L/100km economy figure would not be small cars with turbocharged/direct-injected engines. They would be hybrids at the very least, and most likely plug-in hybrids and a handful of electric vehicles.

McCarthy doesn't object to the emissions and fuel economy figures proposed by the Greens however. His company is already committed to alt-energy vehicles that could meet those figures. As far as the prestige automotive sector is concerned, the Green's dispensation for low-emissions vehicles above the LCT threshold has achieved outstanding results.

"That has worked," McCarthy said. "It has changed buying behaviour in our vehicles; it has been an incentive for us to get vehicles to Australia that are seven litres or less, because it provides a price incentive for the buyer.

"It is a rarity in politics for policy to work as intended – and it has."

The high cost of charging stations

Another cornerstone of the Greens plan is a $45,000 subsidy for public charging stations.
McCarthy admitted that he was not impressed by the Greens' thinking in regards to public charging stations for EVs.

"The cost of a charging station, conservatively... is 300 grand. So $45,000... yes, that's a help."

Clearly, McCarthy feels that doesn't go far enough. He suggested, as an alternative, "accelerated depreciation" for any business setting up and operating one or more charging stations.

"How about this: that the federal government offers accelerated depreciation – over five years rather than 20 – of a public charging station, if 50 per cent or more of the value of that station has been produced in Australia. That would encourage production of all the stuff that goes with it, and the batteries.

"What it would do is it would create charging points, it would create economic activity, it would create jobs, it would kick-start an industry in providing something that we all know is going to be necessary. It's not like we're painting rocks here.

"At the end of the day, we're only going to need more charging stations, over time. Let's create a local industry. Let's use, for example, the money that is in the car industry funds [ATS] that hasn't been used. Let's use that to provide some incentives, because there are batteries made in Australia, but let's start making the sort of batteries we need.

"It has legs; we want manufacturing jobs, we want high-technology jobs. This is something that everyone agrees; we're going to have more and more electric cars, but what do they need? They need charging points..."