The Government’s decision to hike fees on imported high-emitting vehicles like utes is being labelled a “kick in the guts for farmers and tradies” by the Opposition.
But the Government says changes are needed to keep the Clean Car Discount sustainable and some utes aren’t “necessarily needed for practical reasons”.
The scheme is intended to be self-funded. Charges are added to some high-emitting vehicles, and this is meant to pay for subsidies on low or zero-emission vehicles.
However, the initiative has been so successful that alterations are being made to ensure it will be self-funded.
These include lowering the rebate offered on some new zero-emission vehicles while increasing the subsidy for used imports.
More vehicles will also attract charges, while the maximum charge on high-emission vehicles like some large SUVs, vans and utes, will jump from $5175 to $6900 for new vehicles and from $2875 to $3450 for used imports.
“The scheme is successfully exceeding industry and government projections, with 20 percent of all new passenger car sales being electric in 2022. A substantial increase from eight percent in 2021,” Transport Minister Michael Wood said.
“The scheme is facilitating an increase in the number of EVs entering the fleet we did not expect until 2027. As planned we are further targeting the scheme to maintain its success, and ensure it will be self-funding until its next review.”
The scheme is projected to reduce emissions by 3.4 million tonnes by 2035 – “an additional 50 percent out to 2035 over and above what was forecast when it started”.
“It will deliver twice the emissions reduction forecast between the start of the scheme and 2025.”
The Ministry of Transport also highlighted the changes were necessary to “ensure that the scheme remains financially sustainable while also moving New Zealand’s vehicle fleet towards zero emissions”.
But the increase to the fees – what the Opposition has labelled the ‘ute tax’ – has angered National’s transport spokesperson Simeon Brown.
“Tens of millions of dollars in subsidies has been handed out to wealthy people buying Teslas, using money paid for by farmers and tradies that have been working hard keeping our economy moving,” Brown said.
“Now those farmers and tradies will have to pay even more for Labour’s failed policies with higher penalties on utes and light commercial vehicles. This is a kick in the guts for our farmers and tradies who rely on utes for their jobs and don’t have alternative EV vehicles they can buy.”
Wood told reporters on Tuesday morning that the top two selling vehicles under the current scheme cost generally between $15,000 and $20,000 and more Toyotas have been purchased through the scheme than Teslas.
However, more than $80 million has been paid out in rebates to Teslas, according to National Party-obtained figures.
Wood said the scheme helps create a second-hand market that lower-income families can then access.
“While we have reduced slightly the discount levels at the top end, we’ve actually slightly increased the discount amounts that would be applicable to imported secondhand vehicles because we recognise that in that category we want to try and preserve as much support as possible.”
Wood also made the point that the scheme is intended to lower emissions across the transport fleet and he would rather people purchase a Tesla than a “huge big gas guzzler which puts out more carbon dioxide emissions”.
Acting Prime Minister Carmel Sepuloni was also asked on AM about the change to high-emitting vehicle fees.
She said it might persuade people driving utes in Auckland “where they’re not necessarily needed for practical reasons” to switch to an electric vehicle.
“There’s also a number of New Zealanders – and we see a lot of these in Auckland, too – who are driving around with utes in Auckland where they’re not necessarily needed for practical reasons,” Sepuloni said. “Sometimes they are but they’re not necessarily and, hopefully, this will actually persuade them to move to electric vehicles.”
ACT leader David Seymour called that “out of touch” and compared it to a time when former Prime Minister Jacinda Ardern suggested there was a “legitimate use” for some utes.
“Carmel Sepuloni arrogantly lecturing Aucklanders that they don’t need utes shows the Labour Party can’t help themselves when it comes to telling people how to live their lives,” Seymour said.
“This is Jacinda Ardern’s ‘legitimate use’ gaffe all over again. The Deputy Prime Minister has revealed that the real reason for the ute tax is to force people out of certain kinds of vehicle.”
The Motor Trade Association welcomed the changes but believed they could have gone further.
“The CCD has influenced the higher number of EVs we all see on our roads,” chief executive Lee Marshall said.
“The MTA strongly supports the decarbonisation of our fleet and industry. We know that harmful emissions have a significant impact on population health. But we want to move to a future where the CCD is phased out.
“That’s because as long as we have the scheme in its current form, hard-working people who rely on larger vehicles and light commercial vehicles are being penalised, while people who can afford an EV are getting a little sweetener they don’t need.”
“Let’s be honest; if you were going to buy a Tesla for $60,000, you were also going to buy it for $65,000. But only a select few are wealthy enough to even consider that kind of decision.”
But Marshall said the decision to remove or reduce the rebate for low-emitting petrol vehicles and hybrids was disappointing.
“Both were much more in reach of most people than EVs and had an important part to play in emissions reduction,” Lee said.
“For example, a Suzuki Swift, which meets recognised emissions testing standards, used to qualify for around $2500 rebate – now, nothing.”