New Zealand / Environment

Fuel-car levy could subsidise electric vehicles - govt

14:10 pm on 27 April 2018

The government is considering putting a levy on imported petrol vehicles to help subsidise electric cars.

Fuel taxes contribute much to the National Land Transport Fund. Photo: 123RF

In a draft discussion document, the Productivity Commission estimated carbon prices may need to be 12 times higher, up to $250 a tonne, to reach the government's goal of net zero emissions by 2050.

Climate Change Minister James Shaw Photo: RNZ / Rebekah Parsons-King

It called for a shift from fossil-fuels to clean electricity and greater use of farmland for forestry and horticulture.

Green Party co-leader and Climate Change Minister James Shaw told Morning Report one option being looked at was the prohibitive cost of electric vehicles.

"The whole point is that we avoid those rising costs ... if we leave it any longer then we are exposing ourselves to that risk" - Climate Change Minister James Shaw

"So what the report is talking about is a freebate system where essentially we charge a price on - we put a levy on - fossil fuel vehicles and you use that revenue to subsidise electric vehicles."

"What we all know right is that electric vehicles are a lot cheaper to run because they're roughly about a third of the price per kilometre versus petrol, they're a lot cheaper to maintain because they've got fewer moving parts, but the up-front cost of the vehicle is prohibitive."

"If we continue to allow greenhouse gas emissions to increase, and we don't invest in new technologies, and we don't switch our car fleet and we don't change how we do electricity, then yes they're suggesting that there will be a bit of a shock to the economy."

He said he did not know when such a change might be brought in, and it was just one of many options they were considering.

Infrastructure New Zealand chief executive Steven Selwood told Morning Report most New Zealanders were dependent on the mobility provided by second-hand japanese imports at a relatively low cost, but he was not sure about the tax idea.

"I'm never quite convinced that taxes are the best answer" - Steven Selwood and Matt Lowrie on EV subsidy and Auckland Transport plan

"On the other hand the opportunity to really accelerate the adoption of electric vehicles is positive.

Greater Auckland transport blog editor Matt Lowrie agreed New Zealand needed to get more electric vehicles but was also not convinced.

"Whether it should be a tax on new vehicles, on diesel vehicles, I'm not entirely sure," he said.

"As manufacturing improves it will also bring the cost down, but we definitely need to find ways to encourage more people to use them."

The National Party said the proposed levy would amount to a tax on the poor.

National's transport spokesperson Jami-Lee Ross said the government should follow their lead and continue prioritising electric vehicles for the crown fleet.

Mr Ross said a levy would hit people at the lower end of the socio-economic spectrum hard.

He said people who can only afford cheap secondhand Japanese imports would effectively be subsidising the cost of electric cars for the wealthier New Zealanders who can afford them.