While I am pleased to have achieved a consensus report, I am
disappointed that Senators from the Labor and Liberal parties were not prepared
to go further, particularly with regards to measures that were fiscally
Throughout the course of this inquiry, the Committee was presented with
strong evidence on the benefits to Australia of accelerating EV uptake. With
the right leadership, Australia has an opportunity to capitalise on the global
EV transformation. That would result in benefits to the economy, our
environment, and public health.
Seizing this opportunity does not have to come at great cost. Measures
like setting national EV purchasing targets will come at no cost to the
Australian Government. While others, like investing in public charging
infrastructure, can be offset by sensible policy reforms in related areas.
As the Committee found, targets can provide confidence to consumers and
businesses and encourage vehicle manufacturers to make a broader range of EV
models available. Setting specific targets for the light passenger, light
commercial and metropolitan bus sectors would also bolster the business case
for expanding domestic EV manufacturing and supply chain activities.
The Australian Government establish national targets for EVs to make up:
25 per cent of new light passenger motor vehicle sales by 2025;
30 per cent of new light commercial vehicles sales by 2025; and
20 per cent of new metropolitan bus sales by 2025.
Fiscally balanced measures
Backed by modelling from the Parliamentary Budget Office, I presented
the Committee with a fiscally balanced package of measures to support the
transition to EVs in the short to medium term, while addressing longer term
challenges posed by the emergence of EV technology, such as reductions in fuel
excise revenue (summarised in Table 1). Further background on the measures
detailed below can be found in Chapter 5 of the Committee Report.
||Fiscal impact (2018-19 to 2021-22)
||Changes to the Luxury Car Tax from
2018-19 (narrowing definition of fuel efficient vehicles to 4L/100km,
returning the standard vehicle rate to $57,180, and indexing both to vehicle
||Introduction of Road User
Charge on EVs from 2025-26, phased in over five years and levied at same rate
at fuel excise.
||Exempting EVs from import
tariffs from 2018-19 to 2025-26
||Exempting EVs from fringe
benefit tax from 2018-19 to 2025-26
registration/stamp duty reduction co-funding
||Mandating 50% of all new Australian
Government fleet leases be EVs by 2025-26
||Highway and workplace charging
infrastructure grant funding
||EV manufacturing grants scheme
||EV research and development
I Luxury car tax
I recommend the Australian Government implement changes to the luxury
car tax (LCT) as a means of improving the price competitiveness of EVs and
funding measures to support EV uptake.
The structure of the LCT does provide fuel efficient vehicles with a
lower tax burden (a higher tax threshold) than other vehicles. However, I note
evidence that the differing indexing mechanisms for the two thresholds has
meant that, over time, the price advantage for fuel efficient vehicles has been
While the Committee heard there is some support for exempting EVs from
the LCT, I do not see this as an appropriate measure. Instead, I support
modifying the LCT in three ways: narrowing the definition of 'fuel-efficient
vehicles'; returning the taxation threshold for standard vehicles to its
2009-10 level; and indexing both rates to motor vehicle CPI.
Due to improving fuel efficiency, the number of vehicles which qualify
as 'fuel efficient' vehicles for the purposes of the LCT has significantly
increased since 2008. The definition of 'fuel-efficient vehicle' should be
updated to take account of fleet fuel efficiency improvements. Narrowing the
definition to vehicles with fuel consumption not exceeding four litres per
100km, down from seven litres per 100km, would provide a greater price
advantage to BEVs and PHEVs, which currently make up the vast majority of
vehicles that use less than four litres per 100km.
The different mechanisms for indexing the LCT threshold for
fuel-efficient vehicles and standard vehicles has resulted in the LCT threshold
for standard vehicles increasing by $9,151 over the previous 10 years, compared
with an increase of $526 for fuel-efficient vehicles (see Table 5.1 in
Committee Report). This is despite the average price of vehicles having significantly
reduced over the same period, as indicated by the decrease in the motor vehicle
CPI expenditure class (down 12.2 per cent since 2008). As such, I see no policy
rationale for having lifted the standard vehicle rate, and I support returning
that rate to its 2009-10 level. I also support indexing these vehicle rates to
motor vehicle CPI, so that any increase to the thresholds reflects increases in
the average price of vehicles, rather than CPI in general.
Analysis provided by the Parliamentary Budget Office estimates that
narrowing the definition of fuel efficient vehicles to four litres per 100km,
lowering the standard vehicle rate to $57 180 (as it was in 2009-10), and
indexing both rates to motor vehicle expenditure class of CPI would generate $1.54
billion in Government revenue out to 2021-22 and $5.77 billion out to
The Australian Government narrow the definition of 'fuel efficient
vehicles' to vehicles that do not use more than four litres of fuel per
100 kilometres, reduce the standard luxury car tax threshold to $57 180,
and freeze the index both rates to motor vehicle CPI.
II Road user charge
I note the historical decrease in fuel excise, and projected further
erosion over time, and agree with the proposition that this revenue will need
to be replaced. Reducing fuel excise could be partially offset by the
introduction of a road user charging scheme specifically on EVs in Australia.
However, I am mindful that the imposition of road user charge on EVs
may, given the current price disparity between EVs and ICE vehicles, serve as a
disincentive to the purchase of EVs. To this end, I recommend phasing in a road
user charge on EVs from 1 July 2025. According to modelling by the Parliamentary
Budget Office, this would generate $639 million in Government revenue out to
The Australian Government phase in a road user charge on EVs over a
five year period (20 per cent per year) from 1 July 2025, levied at an
equivalent rate to fuel excise, and calculated on a per kilometre travelled
III Import tariffs
The evidence to the Committee is that the up-front price premium on EVs
serves as a deterrent to motorists purchasing these vehicles. In order to
reduce the upfront cost of EVs and address this price disparity, it would be
appropriate to exempt EVs from import tariffs from 1 July 2019 to 30 June 2026
(after EV-ICE price parity is expected). Modelling from the Parliamentary
Budget Office estimates this would decrease the Australian Government fiscal
and underlying cash balances by $300 million over the 2018-19 Budget forward
The Australian Government exempt EVs from import tariffs from 1 July
2019 to 30 June 2026.
IV Fringe benefits tax
In order to further reduce the upfront cost of EVs, it would also be
appropriate to exempt EVs from fringe benefits tax (FBT) from 1 July 2019 to 30
June 2026. Modelling from the Parliamentary Budget Office estimates this would
decrease the Australian Government fiscal and underlying cash balances by $140 million
over the 2018-19 Budget forward estimates period.
A lack of clarity around the calculation of EV operating costs in FBT
and salary sacrificing arrangements can put EVs at a disadvantage when compared
to ICEs. I therefore recommend a review of the operation of the FBT to ensure
that EVs are not unfairly disadvantaged when the exemption period ends.
The Australian Government exempt EVs from fringe benefit tax from 1 July
2019 to 30 June 2026, and review fringe benefits tax and salary sacrifice
arrangements to ensure EVs are not unfairly disadvantaged compared to internal
combustion engine vehicles.
V Registration and stamp
The ACT Government has already put in place a stamp-duty exemption for
zero emissions vehicles and a significant reduction in registration fees. I
recommend that the Australian Government allocate $390 million in co-funding to
help state and territory governments to temporarily reduce stamp duty and
registration charges on all new and existing EVs.
The Australian Government allocate $390 million in co-funding to help
state and territory governments temporarily reduce motor vehicle registration
and stamp duty for all new and existing EVs.
VI Government fleet target
A mandated target that EVs comprise 50 per cent of new purchases or
leases for the Australian Government fleet by 2025 would underpin an increase
to EV uptake in Australia. Analysis provided by the Parliamentary Budget Office
estimates a target of 50 percent by 2025 would decrease the Australian
Government fiscal and underlying cash balances by $5 million over the 2018-19
Budget forward estimates period, and $39.5 million out to 2025-26.
The Australian Government establish mandated targets that 50 per cent of
new Australian Government motor vehicle purchases/leases be EVs by 2025.
VII Public charging
I recommend the Australian Government establish a $300 million grant
fund to support the rollout of highway and workplace EV charging infrastructure
where it is not commercially viable without government support.
I note the range of business models emerging around the development of
commercial EV networks, particularly in metropolitan areas, and recommend that
the Clean Energy Finance Corporation (CEFC) establish a dedicated 'EV Charging
Infrastructure Program' of $300 million from its existing funding allocation to
support the rollout of commercial EV charging infrastructure.
Given the roll out of public charging infrastructure in rural and
regional areas may not be a commercially attractive option for private
operators, the Australian Government should consider allocating additional
funding to support rural and regional charging infrastructure.
The Australian Government establish a $300 million grant fund to support
the rollout of highway and workplace EV charging infrastructure where it is not
commercially viable without government support, and a $300 million EV Charging
Infrastructure Program within the Clean Energy Finance Corporation to support
the roll out of commercially viable EV charging infrastructure.
During the inquiry, it became clear that the current Automotive
Transformation Scheme (ATS) is not designed to provide assistance to companies
involved in the manufacture of EVs and EV components. However, rather than
trying to adjust the requirements of the ATS to encompass the EV industry, a better
approach would be to establish a specific grant scheme for domestic EV and EV
component manufacturing. To this end, I recommend the Australian Government establish
a $300 million EV and EV component manufacturing grant scheme.
The Australian Government establish a $300 million manufacturing grants
scheme for domestic EV and EV component manufacturing.
IX Research and development
The Australian Government allocate $100 million to an EV technology
research and development grants scheme.
Importation of second hand EVs
As a further means to address the barrier that price forms to motorists
purchasing an EV, and increasing the availability of EVs through the
second-hand market, I support amending the Road Vehicle Standards Rules to
facilitate the importation of second hand EVs.
The Road Vehicle Standards Rules be amended to allow all EVs to be
considered eligible for independent importation, irrespective of whether a
model has been previously sold by Original Equipment Manufacturers (OEM) in
Australia, but only after the models cease being sold new in dealerships.
Vehicle dimension limits
The Australian Government work with the state and territory governments
through the COAG Transport and Infrastructure Council to amend state and
territory based light vehicle dimension limits to reflect the heavier weight
(battery pack related) of light commercial EVs.
I note the establishment of the United Kingdom's EV Experience Centre
and the EV Discovery Centre in Toronto, Canada. Such centres provide an
excellent opportunity for consumers to experience, and become familiar with the
benefits of, EVs. I support the proposal by the Australian Industrial
Transformation Institute, Flinders University, for a pilot EV experience
centre, or 'Future Mobility Centre', at Tonsley in South Australia.
The Australian Government work with Flinders University and automotive
and energy industry partners to establish a pilot Future Mobility Centre (FMC)
at Tonsley, South Australia.
Senator Tim Storer
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