Electric cars are set to become cheaper and government fleets will go green after members of the crossbench struck a deal to pass a labor bill and phase out public support for petrol-based plug-in vehicles.
Both the Greens and independent David Pocock are hailing a win in the Senate, as they agreed to support the government’s push to make EVs cheaper and more available through secondhand markets.
“These changes are a win for motorists, a win for businesses and a win for climate action,” said the treasurer, Jim Chalmers.
The Treasury Laws Amendment (Electric Car Discount) Bill 2022 was set to pass the Senate this week, after the government won support from the crossbenchers. The government’s original plan was to cut fringe benefits tax on low-emission vehicles to encourage fleet owners and employers to replace petrol vehicles with greener alternatives.
Chalmers and energy minister Chris Bowen said in July that the changes could cut the price of some electric vehicles by up to $9,000 for businesses, or $4,700 for individuals buying a car through salary sacrifice. Savings would be backdated to July, and would apply to cars retailing below the luxury car tax threshold for fuel efficient cars of $84,916.
The tax cuts would apply to battery electric, hydrogen fuel cell and plug-in hybrid vehicles. However, progressive crossbenchers had raised concerns about benefits being extended to plug-in hybrid vehicles with petrol motors.
Amendments on behalf of the Greens and Pocock jointly were to be moved in the Senate on Tuesday afternoon.
The changes would see the phasing out of support for petrol-based plug-in hybrids on April 1, 2025. Bandt also said it would prioritize zero-emissions electric vehicles in the government fleet procurement policy, by removing plug-in hybrid vehicles except in exceptional cases circumstances.
“The Greens have fast-tracked electric vehicles,” Bandt said.
“The government fleet will go electric, and when these cars are sold secondhand, it will help bring the cost down of EVs for everyday people.”
He said it showed the government could be pushed into going “further and faster on climate”.
Pocock, who also proposed the sunset clause to government, said taxpayers should not be subsidising petrol cars.
“I welcome the government’s constructive approach to meeting me in the middle and excluding plug-in hybrids after 1 April 2025. This provides fleet companies certainly and allows the government to deliver on their promises around delivering charging infrastructure over the next three years,” he said.
“The opportunity is to broaden access to clean, efficient technology of the future.”
Pocock said the incentives would directly benefit “mostly wealthier Australians”, but noted that expanding the use of fleet vehicles would boost the second-hand EV market in coming years.
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“More Australians should enjoy the benefits of owning an electric vehicle, including much lower fuel costs, lower maintenance costs and a better driving experience,” he said.
“Bold and decisive action is needed to address high EV prices, a lack of supply and insufficient charging infrastructure.”
It is understood that the Australian Tax Office would also provide clarifying guidance on where charging infrastructure could also be exempted from fringe benefits tax. The amendments also call on the government to undertake reviews of the legislation after its implementation, including reassessing what types of vehicles should be covered by the FBT discount provisions.
Chalmers said the government had worked “in good faith with the crossbench”.
Shortly after the deal was announced, Greenpeace said parliament should go further in addressing emissions from cars by legislating tougher fuel efficiency standards.
“While the world is racing ahead in the adoption of electric vehicles, in Australia this year only 3.39% of new vehicle sales were fully electric,” said Greenpeace senior campaigner Lindsay Soutar.
“Strong fuel efficiency standards will keep us in the fast lane toward cheaper and more accessible electric vehicles for Australians, whilst tackling dirty climate pollution and cost of living pressures.”
with AAP