Federal and state governments would have to consider waiving stamp duty and car registration on electric vehicles as well as giving them the special use of transit lanes to reach Labor’s ambitious new target for electric car sales.

Motorists might also have to accept “preferential parking” for the plug-in vehicles under a detailed report to the federal government on how to ensure half the nation’s new cars are electric by 2030.

The Commonwealth is also facing a $2 billion annual blow to the budget if it encourages the shift away from petrol and diesel vehicles, with Bloomberg New Energy Finance predicting a steep decline in fuel excise revenue.

Opposition Leader Bill Shorten has promised $100 million to build a network of charging stations while vowing to make it easier to drive an electric vehicle and setting the 50 per cent target for new car sales.Advertisement

But his goal has sparked a furious debate over the cost to motorists and governments to engineer the huge shift, given electric vehicles made up only 0.2 per cent of Australia’s new car market in 2017.

The Australian Renewable Energy Agency told the federal government last year that plug-in electric vehicles – not including hybrids with petrol engines and batteries – could reach 611,800 in sales by 2030, equivalent to 49 per cent of new sales.

The forecast assumed a “moderate intervention scenario” including state decisions to forego stamp duty and car registration, federal moves to help build charging infrastructure and changes to road rules to allow preferential parking and use of transit lanes.

The forecast, modelled for the government agency by consulting firm Energeia, also assumed all three levels of government would increase their fleet purchases of electric vehicles.

The sales would only reach 22 per cent by 2030 under the consulting firm’s “no intervention” scenario.

Mr Shorten has not said how he would encourage the sale of electric vehicles, leaving the policy to be formulated if Labor wins the election, while the Coalition has considered the shift in the market without making a decision.

Social Services Minister Paul Fletcher has warned in the past of the unfairness of allowing motorists with electric cars to escape any tax while those with petrol vehicles pay fuel excise.

One option is to charge a fee according to the distance travelled rather than the fuel used but this would risk a backlash from voters.

Petrol excise raised $6.2 billion last year while diesel excise raised $11 billion. Bloomberg New Energy Finance estimated last year that the steady rise of electric vehicles would subtract $1 billion from that revenue by 2029, more than $2 billion by 2033 and $5.5 billion by 2040.

A Senate inquiry into electric vehicles, held last year and chaired by South Australian Senator Tim Storer, heard conflicting forecasts for the decline of petrol and diesel vehicles.

Bloomberg New Energy Finance senior associate Ali Asghar told the inquiry his firm forecast that 60 per cent of new car sales would be electric by 2040, but the Victorian Automobile Chamber of Commerce said its top forecast was 20 per cent over the next decade.

“We don’t believe in subsidising the purchase of electric vehicles,” VACC senior research analyst Steve Bletsos told the inquiry. “We think that is an unsustainable policy that introduces a distortion into the market.”

The inquiry made clear that federal finances were exposed to a double blow from spending measures that encouraged electric vehicles at the same time the shift in the market weakened fuel excise revenue.

Grattan Institute energy program director Tony Wood said the move to electric vehicles would deliver significant gains by reducing greenhouse gas emissions, given transport makes up 17 per cent of the nation’s carbon emissions.

Mr Wood told the inquiry the fall in the price of electric cars, and the competition from other options such as hydrogen vehicles, was largely up to the international market and outside the federal government’s control.

Senator Storer made a series of recommendations as chair of the inquiry including a national target for electric vehicle adoption and a federal scheme to roll out charging stations, two ideas embraced by Mr Shorten this week.

“I am pleased that Labor has used the recommendations I made as a template for its own commitments to enable Australia to catch up with comparable countries around the world,” Senator Storer said.

However, he also called for a series of measures that would cost $1.535 billion over four years including exempting electric vehicles from import tariffs, reducing car registration and stamp duty and exempting them from fringe benefit tax.

Senator Storer’s plan, costed by the Parliamentary Budget Office, would fund these incentives by raising $1.54 billion from an increase in the luxury car tax.

Extracted from Sydney Morning Herald