We Can’t Confuse Climate Change Policy and Upper-Class Welfare
It is no surprise to many that Australia is lagging behind in our climate change policy. In order to remain economically sustainable, we need meaningful economic innovation to create a greener economy.
For some, this means diversification from high-emission industries; for others, it means ensuring all businesses and individual households have a sustainability plan in place.
Then there’s the discussion of electric vehicles.
It formed a pillar of Labor’s campaign at the 2019 election, which arguably was one of their downfalls. Australia is not electric-vehicle ready. A lot more infrastructure is required before we start making commitments around the number of electric vehicles or the emissions they will be producing.
That was the glaring mistake in Labor’s 2019 campaign. How do more affordable EVs travel from Adelaide to Wilcannia on a single charge? Longreach to Birdsville? Or Birdsville to Mt Isa? Or Port Augusta to Birdsville? Tablelands to Borroloola? There are parts of Australia that are just missing out.
On top of that, there are still areas within the country that do not have a reliable supply of electricity. The roadhouse at Border Village in South Australia needs to generate its own electricity. What happens then when an EV charging station is needing to generate its own electricity and is needing to power an increased number of electric vehicles? 100 electric vehicles over the course of a week take, on average, 2800kW to charge. That’s the same as running your dishwasher over 185 times in one week.
That’s all without even discussing the amount of time it takes to fully charge electric vehicles.
To enter the electric vehicle market in Australia, prices start at just under $50,000. These low prices have a pay-off, unfortunately. You will only be able to travel a mere 315km. Conversely, you can pick up a sedan or even a light SUV for just over $15,000 with a range of just over 600km on a full tank.
For a secondhand electric vehicle, you are still looking at over $10,000 as a starting price point. If you are looking at a fuel-guzzler, secondhand cars start at a couple of hundred dollars.
Electric vehicles are priced at an entry-level point for middle- to upper-class Australians. For an Australian on minimum wage, the cheapest electric vehicle in Australia, purchased brand new, is $12,000 above their annual salary. A secondhand electric vehicle will cost them a third of their annual salary.
The Barr government in ACT has made a commitment in conjunction with their Greens coalition partners to allow Canberra residents to borrow up to $15,000 to buy an electric or hydrogen car at a zero-percent interest rate. The government has also committed to offering free vehicle registration for two years on new electric and hydrogen cars.
This is a great step forward for environmental sustainability, especially as the ACT’s electricity grid runs off 100% renewable energy. Not only will an increased number of cars be running off electricity but they will also be running off renewable electricity.
But there’s a problem with this. Canberrans in a lower socio-economic income band have done it tough this year. Between the bushfires and the pandemic, some Canberrans have lost their jobs and are still unable to find work. The Canberra Liberals promised to freeze rates for four years and to lower the cost of car registration. This would have had an impact on low-income earners.
Instead, we are facing a bizarre twist in which Labor is incentivising new electric vehicles with free registration, creating a layer of middle- to upper-class welfare. Sure, it’s an incentive towards a more environmentally sustainable future, which is incredibly important for our existence on this planet and for the economy in general. However, we need to be careful we are not widening the gap between low- and high-income earners in our climate policy.
If, over the next four years, petrol vehicle registration fees increase, we will know it is the lower-income earners subsidising the higher-income earners’ purchase and use of electric vehicles.
To compound this, in Australia, we pay a fuel excise. This means that our fuel is taxed, so for petrol vehicles, every kilometre driven is taxed for road maintenance and upgrades. Electric vehicles are heavier than your standard petrol vehicle with the battery alone making up for 500kg of weight in some cars. This means the cars will put more pressure on the roads, meaning roads are likely to need an increase in maintenance. Someone has to pay for this.
In some states, they are considering a per kilometre tax on electric vehicles. Others are considering just taxing them at the time of purchase and registration. For the states not looking to tax electric vehicles either per kilometre or heavily before purchase, we are starting to head towards that dangerous zone of middle- to upper-class welfare in which lower-income Australians are subsidising their higher-earning mates in their vehicle purchase and running.
In a world where transport accounts for one-fifth of CO2 emissions, we need to transition towards electric vehicles; however, it needs to be a fair transition for everyone.
It is something we must be increasingly mindful of as we work out ways moving forward to incentivise participation in the green economy. We cannot push our future forwards while leaving the most vulnerable of the population behind.