Motor Vehicles (Electric Vehicle Levy) Amendment Bill

Second Reading

Adjourned debate on second reading.

(Continued from 26 August 2021.)

Dr CLOSE (Port Adelaide—Deputy Leader of the Opposition) (16:48): I rise to indicate that I am the lead speaker on this side of the chamber on this bill and that we will be opposing this legislation. I was thinking about how do I succinctly say why we would oppose this, and I feel like saying: read the room. Read the room on what is going with climate change. Work out that what we need to do is put every effort we have, every instrument, every tool towards decarbonising, and this bill drags us in the other direction.

Why? Why would you do this? It is not even that it is a piece of legislation that will come into force in the near future. What it is, though, is a very clear message to people considering having a zero carbon emitting vehicle that there is a tax coming, that there are costs coming. Will that be enough to dissuade people? I do not know, but it might. What I do know is what we are facing. We are facing runaway climate change.

In this state, we do an exceptional job when it comes to stationary energy, that is, the energy system is very low carbon not least because of the efforts made under the Rann and then Weatherill governments to introduce low energy and renewable energy forms of technology: solar panels, wind and, of course, we use gas to firm, not coal.

That is terrific. Do we rest on our laurels? We cannot and we cannot for two reasons. One is that climate change is real and everyone has to do their bit. There is no good asking developing nations struggling with their standards of living to drop their carbon emissions if we are not doing every single thing we can in the developed world to do the same.

The other reason is just as pressing. We need a low-carbon economy because decarbonising the world is coming and if we are not ready for that economically, technologically and in lifestyle we will be left behind. A perfect example of that is, in fact, electric vehicles. We do not have the full range. We do not have the cheaper ones. They do not bother to sell them here because we are not buying them.

I will absolutely pay respect to the government for investing in more charging stations. That is a disincentive, particularly in a country like Australia, where we like to go for long trips and where we have a lot of space between places. I get that that can put people off and the government has done something about that.

At the same time, we do not have the range, particularly at the cheaper end of vehicles, to encourage people when they are weighing up between the options, when they are looking at the family budget, wondering which way to go. Every effort needs to be to tip them towards electric and saying that you are going to tax them tips it the other way.

Our emissions that come from transport are higher—nearly 30 per cent of our emissions come from transport—than our stationary energy because, as I mentioned, we did such a good job previously and this government, to its credit, at least has not turned its back on renewables. Despite some pretty fierce words, particularly on Sky News, The Bolt Report, something dreadful like that, the Premier loved to leap on blaming renewables for the statewide blackout.

But, since the election, they have chosen to wrap themselves in our legacy and I appreciate that because climate change is bipartisan—should be, it is not in Canberra, but should be. Here we face a question of what to do about transport energy. Where we are at the moment is only 0.7 per cent of new car sales in South Australia are electric vehicles. I think we can all agree we are not where we need to be if we take climate change seriously and if we want to rejig our economy to be decarbonised.

What does it look like in other nations? In Europe and in the UK—it breaks my heart a little to have to talk about those separately—around 10 per cent of new car sales are electric vehicles. But in Norway it is 75 per cent. They have made the jump. They made the jump early in low-carbon stationary energy and they are making the jump early in transport energy. That is where we need to be because when you are in a place where you are having great uptake of technology you are also likely to be in a place where you will be innovating technology, where you will be having people enthused enough and mentally prepared enough to think about low-carbon technology that they will start to be investing and considering new forms of technology.

Who knows? We could even get a car industry back sometime in this state. Heaven forbid that a federal Liberal government would chase it away again. Who knows? In the distant future we might have such innovation here should we embrace this technology.

What we are hearing from the other side is that instead of looking at this they are looking at this. They are saying, 'Well, when you have a petrol vehicle you pay fuel excise and some of that fuel excise is used for roads.' Not all, not by a longshot, but some—and certainly not hypothecated, not required to be spent on roads—but some of it is spent on roads. They are saying, 'We are a bit worried that we are going to lose access to the federal money collected by the federal government spent back on our roads.'

I understand that and, if we were not in a deep, difficult crisis with climate change and desperately needing to change our emissions profile and our technology uptake, I could understand that we would interrogate that question of whether there needs to be another form of raising tax. But there are some problems with that.

First of all, it is actually a national tax and this does need to be solved nationally. If there is going to be a replacement for fuel excise, let's have a national conversation about that. Secondly, it is not hypothecated, so we are replacing a hypothecated tax with one that is not. Thirdly, the real problem for the falling revenue in fuel excise are the cars that are more efficient, the four-cylinder cars, the ones that use less petrol. Is the government going to be consistent and say, 'We need to make them pay more than they are otherwise paying in order to compensate for their relative efficiency'? No, they do not. In fact, it is cheaper—as it should be—to register your car here if it is a four-cylinder; $138 to register your car. Six cylinders go up to $281 and V8s toV12s are $407.

The EV tax, as estimated—once on, in the future—will be something like $443. You are giving a whack to EVs that you are not giving to four-cylinder cars and yet four-cylinder cars are actually undermining the fuel excise far more than electric vehicles. It does not take into account the significant savings to the community, and therefore to the government, of having a low-emission vehicle—savings in air quality, savings in amenity and in our emissions—which we all want to do, right? We all want to lower emissions. We are all on board with this and yet we are going to charge a zero-emission car more.

The government have come back and forth a few times on this idea. The first time they announced it they said that they were, I think in the last budget, going to bring it in soon after the budget measures. That went away and it was going to be maybe after the election. Then it reared its head again; it came back in this budget speech—not in the budget papers, not in the budget measures—and it has been reworked in what I suspect those opposite thought was a really clever way to get this through.

They recognised that if they came out only with a tax they would be the only jurisdiction in Australia that simply taxed electric vehicles and did not have any kind of incentive. The other two states that have this tax or are in the process of going to have this tax—in the case of New South Wales who has pushed it out to the future as well—they have substantial incentives.

The government thought, 'What we will say is that we will do a $3000 incentive for vehicles that are essentially under the luxury car tax level and we will make that contingent on getting this tax that will tick away like a time bomb to leap into reality further down the track.' There is no reason to link those. To say that you must have one to have the other is a choice. It is a furphy to say, 'You can only have an incentive if you have a tax.' It is not in the legislation, so opposing this legislation does not stop the incentive.

It is not that it is out of the budget—because presumably they have budgeted the $3,000 car incentive—so there is nothing stopping them should they be unsuccessful with this bill from doing the right thing and incentivising the purchase of electric vehicles, nothing. Will they? In some ways, politically it would be great if they decided not to because then we get to look even purer on electric vehicles than we already do by simply opposing this tax. I would be surprised if they turned away from people in the end.

There is no necessity to vote for this bill in order to get the incentive. There is a necessity to vote against this bill if you want to use every instrument at your disposal to deal with climate change—and on this side we do. On this side, we are prepared to say that we will move as swiftly as we can to decarbonise this economy and, if there is a tax issue or a funding of roads issue, we will participate in a national discussion about how that works, but we will not be imposing an additional road-user charge on people who choose to go early in the right direction to have an electric vehicle.

Mr KNOLL (Schubert) (17:00): I rise to support this very important piece of legislation, one that during my time as a minister was very keenly debated at the Transport and Infrastructure Council, which I think has since been replaced under the new national cabinet arrangements. It is something that has been very much on the agenda of both TIC, as it was then known, and also the Board of Treasurers discussions at a federal level to come to an early landing on what is an important and vexing issue in Australia.

Electric vehicles are coming. Every single major manufacturer in the world is in the process of developing electric vehicles. In fact, many have scaled back their innovation and design in internal combustion engines and are solely focusing on electric vehicles. In fact, companies like General Motors, out of the US, have some very firm commitments around their switch to electric vehicles. They are coming.

Putting to the side for one moment the positive environmental impacts of electric vehicles, the reason electric vehicles are coming is that the cost of manufacturing those vehicles will move down the cost curve, and it is largely about the improvement in battery technology. We are continuing to see that improve all the time, not just in relation to cars but also in relation to household batteries, and everywhere we see battery improvements happen. In fact, the iPhone 13 came out just this week, and we again saw improvements to battery technology. This is continuing to evolve.

Electric vehicles are coming. The reason they are coming is that, once the cost of the vehicle moves down the cost curve, and given there is a lower cost to maintaining an electric vehicle because it has fewer bits to maintain, they will become cheaper to own over the life cycle of that vehicle. It will not be so much about environmental benefits as it will be about pure economics that will see electric vehicles take over the globe because they are cheaper once we move down the cost curve.

It is inevitable that electric vehicles are coming to Australia. It is inevitable that electric vehicles are coming to South Australia. It is fairly sure that, in a market like South Australia, notwithstanding some of the positive comments from the member for Port Adelaide, we are simply going to be purchasers of electric vehicles because all of the OEMs around the globe are the existing internal combustion engine vehicle manufacturers who are the ones who are switching. It could be that in the future the assembly of these vehicles is best done on a regional basis, but I have not seen any evidence that that is the case, so the countries that are manufacturing cars now are the ones that will manufacture them into the future.

What I desperately reject is the idea that, by putting in place a user-charge regime, we are going to stop electric vehicles from coming. That nexus, that causation, is one that has not been proven. It has not been proven because the fundamental driver to move to electric vehicles will be overall cost. User charge or no user charge, those costs are coming down. These vehicles will become more efficient and they will become cheaper.

Another inconsistency with the argument the opposition is proffering is the fact that at the moment these cars are more expensive. An electric vehicle user charge is inevitable. In the short run, it is actually those who can afford it who will get this subsidy, this benefit, and it is those who continue to have to use cheaper internal combustion engines who will be subsidising the wealthy people, who are able to afford electric vehicles, the higher they are at the moment at the cost curve. The reason we know this is the case is that most of these vehicles are more expensive and hit the threshold to be subject to the luxury car tax.

What putting a regime in place does now helps ensure that electric vehicles do come to this country, to this state, by delivering regulatory certainty. When it comes to energy provision in this country, regulatory certainty is something the industry has been craving. When somebody is deciding whether or not they are going to buy new a vehicle, one of the key considerations is going to be, 'Once I buy this vehicle, what possibility is there for some sort of change in the taxation regime that is going to change the maths around the ownership of this vehicle?' Uncertainty in this space is going to lead people not to want to purchase electric vehicles.

The regime we put in place seeks not to put this in place today, for charges to start today, but to give ourselves time for this market to mature. There are some who would suggest that cost parity for electric vehicles is coming in about the middle of this decade, and there are some who suggest it might take a few years forward of that, but what we know with similar technologies is that there are often step changes. As more and more advancements and developments are undertaken, these things tend to come down, sometimes exponentially.

I think in this case, somewhere in the middle of this decade, or potentially a year or two after that, purchase parity is going to be achieved between internal combustion engines and electric vehicles. From that point on, the market is going to do what the market does, and that is choose the vehicle that makes the best sense for individuals. Delivering certainty right now guarantees that people are going to have certainty when the time comes for them to decide whether or not they want to purchase an electric vehicle.

However, there is a more fundamental reason an electric vehicle user charge is important, and it is something that Mr Harris, from the Productivity Commission, has talked about for a long time. We actually have user charging on our train network, we have user charging at our ports, we have user charging on our public trains. We basically have user charging now on basically every single level of transport infrastructure and transport provision in the country, save and except for road infrastructure and private vehicles. It is the last area in which we have this clumsy, indirect taxation regime.

To offer a counterpoint to the member for Port Adelaide's comment around hypothecation of the fuel excise, somewhere in the last two to three years—depending on the maths you look at—we actually flipped. From the amount of fuel excise we collect being about twice what we spent on roads nationally about 20 years ago, it has flipped so that the increase in the cost of provision of road transport infrastructure now exceeds the amount collected via fuel excise and motor registration. We are now in a situation where we are spending more on our roads than we collect in tax.

So hypothecation or no hypothecation, the maths is fairly simple: we are spending more than we get, and therefore all the money collected goes towards this. The opportunity for us to use electric vehicle road user charging to create a cents per kilometre charge, rather than an indirect per litre charge, is a great innovation that is going to help drive innovation across our country. For instance, a group of people with electric vehicles and road user tokens in their vehicles will have the opportunity to say, 'I'm willing to spend more money to fix this road here.'

We have been trying hypothecated road user charging for heavy vehicles for a long time, and it is something that has only slowly happened at a federal level with a number of trials, including here in South Australia. From an industry perspective, they are more than happy to pay for the roads to get upgraded; it allows for greater productivity benefits for them.

Imagine being able to do that for all private vehicles, knowing that when you drive on the road the money you are paying in user charges actually goes towards the roads you use. That is a fantastic development and one that will drive innovation and better spending when it comes to where our very scarce road infrastructure dollars need to go. It would complete what has happened in every other transport sector in our country, and that is a more directly correlated relationship between who is paying the tax and where that money goes. For that reason, if for none other, this is a very important innovation here in Australia and certainly in South Australia.

To wrap up, can I say that this is inevitable. We already see a number of jurisdictions in this country moving down this path. What we are seeking to do, by coordinating the introduction of these charges across the country, is give a higher degree of regulatory certainty. Mark my words: if we do not deal with this issue now, it is only going to become more difficult to deal with later on. If we do not deal with this issue now, it will come back to haunt us in five or 10 years' time because what will happen is federal taxation revenue will plummet.

The push then will be to give less money for road infrastructure to state governments. State governments will then have to try to find the shortfall to make sure that their road infrastructure gets built and maintained properly, and we will then have to do something much like what we are talking about doing here right now. But, if we do it now, we do it in a way that delivers certainty and also takes away the pain of this issue politically.

There is an opportunity to put something in place now, whilst there are only a few electric vehicles on the road, so that there is mass take-up and there is a common understanding. What I would hate is a situation in five, six or seven years' time where the haves are able to get a tax discount because they do not have a user charge but the have-nots, who are still driving internal combustion engine vehicles, are cross-subsidising the very people who should be paying their fair share.

That is what I thought the Labor Party stood for; it is clear that they do not. It is clear that they have missed the fundamental economics of this situation. Again, the nexus here that somehow, by not having a road user charge, we are going to get around this issue is nonsense—absolute nonsense. I would say: deal with it now, deliver certainty now, deliver innovation in road user charging and more direct taxation in this space now and allow the industry to get on and help to bring electric vehicles here to South Australia.

Debate adjourned on motion of Mr van Holst Pellekaan.