The near total lack of federal government policy on electric vehicles is causing states to take matters into their own hands, and there is a danger that will lead to a repeat of the infamous “railway gauge” issue, Senators have been told.
The “railway gauge” issue refers to a pre-Federation muddle where the various Australia states built their railways to differing specifications, with the result that trains often couldn’t travel interstate, and passengers and goods crossing the border had to switch trains.
Tony Weber, chief executive of the Federal Chamber of Automotive Industries, made the comparison when speaking at a senate economics committee hearing on a federal bill, put forward by the Greens, that would punish states like Victoria that are looking to impose their own road user taxes on electric vehicles.
Like most other witnesses, Weber accepted a road user tax would eventually have to be introduced as EVs replaced petrol cars, resulting in a drying up off fuel excise revenue. But he said this should not be done before the EV market had taken off. And when it is introduced, he said it must be nationally co-ordinated.
“At the appropriate time, we should move to a road user charge, that’s clear. And if a state decides to go down that path themselves I think it’s really important that there is a nationally-consistent approach that is adopted amongst all the states. Because the last thing that we would want, Senator, is another railway guage issue in this country,” he said.
The hearing was a chance for the industry to vent its frustration at the Victorian government’s extemely controversial tax. Pretty everyone agreed it was perverse to slap a tax on EVs now when they represent less than 1 per cent of new sales.
Behyad Jafari, chief executive of the Electric Vehicle Council, told the senators Victoria’s tax, which is due to come into force in July but is yet to pass parliament, is “the worst EV policy in the world”. He said it would make EVs more expensive than they already are, and add a prohibitive level of complexity, as EV owners would have to keep a log of the kilometres they travel.
“The state is telling you, just don’t buy yourself an electric vehicle and save yourself the headache,” he said.
Nissan Australia’s head of electrification Ben Warren said the tax “absolutely will have an impact on uptake of electric vehicles as it currently stands, without any offsets or subsidies.”
But as the senators questioned the various witnesses, it was the absence of federal policy that emerged as the fundamental issue. Warren said this absence of policy set Australia apart from other countries.
“Unlike other comparable markets around the world that have stated objectives backed with strong policy and supportive measures, Australia continues to be a difficult market to justify launching and selling zero emissions vehicles.”
Asked what he would like to see from the federal government, he said: “Really the starting point is having a consolidated national target or national objective for the market to move towards, that gives certainty to industry and certainty to consumers as to what the future holds.”
He said such a clear policy would be the “yardstick against which everything is measured”. “Then as we move into other policies and other frameworks, we can then actually measure them against that overarching long-term objective.” But under the current federal government, no such objective exists.
The closest thing the federal government has come to an EV policy is the Future Fuels Strategy, a confused document that is lukewarm-to-cold on EVs, seems to prefer hybrids, is keen to allow people the choice to continue driving petrol cars indefinitiely, and contains none of the serious EV policies that have proved effective overseas, such as fuel standards, tax incentives and a clear cut-off point for the sale of internal combustion engine vehicles.
Although Victoria’s tax has become the most urgent problem facing the EV industry, no one has accused the Victorian government of actually being ideologically against EVs.
Jafari reiterated a point that he and many others have made before, that this is about snatching a source of tax revenue off the federal government while no one is looking, not about stalling the EV market. In fact, by seizing control of road tax for EVs, Victoria will have a financial incentive to encourage EV uptake. With that in mind, the industry is pushing hard for the Victorian government to include a package of EV incentives to go with the tax.
But that wouldn’t help with the problem of national inconsistency. Rachel Smith, director of policy and advocacy at the Australian Logistics Council, said the lack of clear, federally co-ordinated policy on taxation of EVs was making it difficult for logistics companies to know what sort of vehicles to buy when it came time to upgrade.
“Our members are reporting to us that they are very keen to modernise their fleet, because there is an ageing freight fleet,” she said. “So on average they’re about 17 years old in Australia, which is lagging compared to the rest of the world, and they would like to invest in greener and cleaner technology. However, at the moment with the lack of Commonwealth leadership in terms of road user charging, it is a road blockage for them.”
Weber said the approach to taxation of vehicles needed to be standardised nationwide and apply to all vehicles alike, and should not differentiate between internal combustion engine, electric, hybrid and hydrogen vehicles.
“It’s really important that we have consistency, it needs to be technology-neutral, and we need to eliminate a raft of taxes and focus and work with the governments to get a tax that meets those key principles of good taxation: equity, efficiency, simplicity and policy consistency.”
Such a tax would seem to rule out fuel excise, and demand a new universal road user charge, a policy that could be politically unpalatable to the government because it would require replacing an invisible tax – fuel excise – with a highly visible one.
James Fernyhough is a reporter at RenewEconomy and The Driven. He has worked at The Australian Financial Review and the Financial Times, and is interested in all things related to climate change and the transition to a low-carbon economy.