By Gord Stewart
The ‘ute tax’ cry in the farmers’ recent ‘Howl of a Protest’ got no traction with Government. But it did shine light on an important issue and the need for speedy and significant action to address it. Just not in the direction the anti-ute-taxers were hoping.
Waka Kotahi NZ Transport Agency sets it out clearly. The Zero Carbon Act requires CO2 to be reduced to net zero by 2050. (Methane and nitrous oxide are a separate issue.) Transport is responsible for 47 percent of total CO2 emissions. Two-thirds of it comes from light vehicles – cars, sport utility vehicles (SUVs), vans, utes and light trucks, all under 3.5 tonnes. Successfully tackling the climate crisis will require a dramatic change in the make-up of the vehicle fleet.
Problem is, we have no vehicle fuel-efficiency standards in New Zealand. With this, the trend has been toward the purchase of larger, heavier, less-fuel-efficient, higher-carbon-emitting vehicles. Ten years ago the trusty Toyota Corolla was our biggest seller (last year it was seventh). Utes and SUVs now regularly top the list.
Ford Rangers, Toyota Hiluxs and other utes – bought for personal use – roam the streets of our towns and cities. Oversized SUVs get the kids to school and the shopping done before a trip to the gym.
If all this isn’t enough, New Zealand is a dumping ground for cars unacceptable elsewhere. Mark Gilbert, chair of Drive Electric says, “We have now got one of the oldest, dirtiest, most unsafe fleets in the world.”
The trends noted above suggest that calls for an ‘environmental conscience’ when purchasing a vehicle have not worked. At least not on enough of us. Clearly incentives are needed. Money ‘talks’ and, with new policies coming, the Government hopes we’re listening.
There will be rebates for vehicles with low- or no-CO2 emissions and fees charged for those with high emissions. Probably good to note here that the fee (or ‘tax’ if you want to be more emotive about it) will apply to all high-emitting vehicles, not just utes.
Also, if farmers and tradies feel hard done by, probably good to remind them that when it’s purchased as a work vehicle, they can claim back GST, depreciate the vehicle over time, and include all running costs as a business expense. It’s then, essentially, a ‘free’ vehicle for personal use. Still a pretty good deal. (Also, if a van suits for work, there are now several EV models available.)
Here’s a snapshot of the Government’s plans, plus some ways the policy could be more effective.
Dealer imports. The Clean Car Standard, subject to legislation being passed, will see vehicles with high CO2 emissions incurring a fee (higher the emissions, the greater the fee). For vehicles below a set standard, importers would receive a credit. This is meant to encourage a shift to the import of cleaner cars.
The fee should be set at an appropriately high level, and rise over time. It’s time to ‘internalise the externalities’ as economists like to say. Currently, the many negative side effects of high-emitting vehicles – social, health, environmental – are not factored into the price. In fairness, this must change.
Individual purchases. Clean Car Discounts are in effect now, with set rebates available. From January, the discount will be on a sliding scale based on the vehicle’s CO2 emissions. If zero or low emissions, a rebate applies – electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) will feature here. Vehicles with high emissions will incur a fee.
For best effect, the scheme should include all used vehicles, not just imports. This could encourage a faster turnover of low/no emission vehicles and further discourage purchase of high-emission ones.
Licensing and registration. Current rego fees differentiate only between petrol and diesel vehicles. Let’s add new categories for EVs and PHEVs at lower rates. Within each category, there could also be a sliding scale based on emissions.
ACC levy/WoF fee/third party car insurance. These could be higher (and graduated) for larger/heavier vehicles. This would acknowledge the higher risk and severity of injuries incurred by those in smaller cars (and damage to their vehicles) when in an accident with an SUV or ute. It would also help to cover the added wear-and-tear on roading caused by these vehicles.
Fringe benefits and depreciation. Drive Electric’s Mark Gilbert is all for relaxing the fringe benefit tax on company EVs and accelerated depreciation of them. The latter would allow companies to move vehicles into the second-hand market sooner. (Conversely, fringe benefit allowances on high-emission vehicles should be eliminated.)
Every ‘signal’ to sway vehicle preference is a good one, not just purchase price.
Of course, a big part of the transport solution is to get people out of private vehicles and on to public transport – and walking and cycling whenever possible.
But when we do have to drive, the hope is we’ll be in a vehicle that travels more lightly on the land.
- More on this topic: Climate Aotearoa: What’s happening & what we can do about it, edited by Rt Hon Helen Clark, published by Allen & Unwin, 2021. Comprehensive coverage of climate change and its impact on New Zealand in nine chapters over three sections (The Science, The Issues and The Solutions). Contributors include climate scientist Dr Jim Salinger, business journalist Rod Oram, and youth activist and local politician Sophie Handford. Royalties go to support the work of 350 Aotearoa.
- Gord Stewart is a sustainability consultant with a background in environmental management and economics