Warnings fees on utes could rise, after clean-car policy creates million-dollar funding gap

Transport Minister Michael Wood will review the clean-car scheme in the coming months. Photo / Mark Mitchell

Transport Minister Michael Wood will shortly review the cost of the fees and rebates in the Government’s “feebate” scheme after the runaway success of the policy has meant it is paying out millions more in rebates each month than it collects in fees.

Wood said he was reviewing the rates of fees and discounts “in the coming months” to make sure the scheme still worked, but added that no change would take effect until April 1 next year.

The clean-car discount is meant to encourage people to buy cleaner cars by offering a discount of up to $8625 from the price of an electric or low-emissions car. These discounts are paid for by fees of up to $5175 on dirt cars. The Government said it would regularly review fee and discount levels when it announced the scheme.

The scheme is meant to be self-funding, but it could become a victim of its own success, paying out millions more in fees each month than it collects in revenue. This could mean fees going up or discounts going down when the scheme is reviewed in just a year’s time.

The scheme has paid out nearly a hundred million dollars more in rebates than it has collected in fees. Until the end of June, the scheme paid out $116.9 million in discounts, but it only collected $25m in revenue.

However, these figures do not tell the full story. The scheme has been offering rebates since July 1 last year, but it only began collecting fees on April 1 this year. In the interim, the scheme was funded by a $300m loan from the Government that will have to be repaid.

For the three months in which the scheme has been collecting both fees and rebates, the numbers are tighter – although the scheme has still paid out almost a third more in discounts than it collected in fees over those months.

In the three months to June, the scheme collected $24.96m in fees and paid out $33m in rebates. In April, the scheme paid out just over $1m more in rebates than it collected in fees, in May, that figure increased to $2m, and in June the deficit was just under $5m.

Wood said he was confident there was enough funding to cover the scheme.

“The Government has granted a crown loan to Waka Kotahi of $300m, which will be used to cover the cost until the 1 April 2022 changes can cover the cost of the Clean Car Discount. We’re beginning to see parity between the fees and rebates, and we are confident that there are enough funds to cover the scheme.”

He said the scheme had been a huge success at incentivising the uptake of cleaner cars.

“The clean-car discount has proven a huge success with more than 57,000 light electric and non-plug-in hybrid vehicles registered, resulting in significant emissions reductions across cars coming into New Zealand.

“It has also clearly influenced importers of vehicles, who in many cases have been importing lower-emitting vehicles into the New Zealand market to meet demand – this is the scheme working as it is meant to, to clean up our fleet,” Wood said .

The scheme was mainly designed by former Associate Transport Minister and current Green transport spokeswoman Julie Anne Genter, who tried to enact it in the last Parliament but failed to win the support of New Zealand First.

She said the scheme was working to bring more low-emission vehicles into the country, “which was exactly the goal”.

“If the rebates are greater than the fees, that means it has been even more effective than expected at incentivising a positive change in vehicle purchases,” she said.

Genter said that in other countries, fees had gone up on polluting cars to continue funding rebates on clean cars.

“Of course, at that point, it’s time to consider a shift to slightly higher fees, to be able to keep up the pace and level of rebates, so we continue decreasing the average emissions from the vehicles we bring into New Zealand.

“That is how the policy is designed, and it has been very successful in other countries. In France, for example, over 15 years they have moved to much higher fees on polluting vehicles,” Genter said.

The National Party’s transport spokesman, Simeon Brown, said the gap between fees and rebates was a failure. “Wood said this would be a balanced scheme. It just shows Labor can’t even organize a car tax.”

He urged the Government not to increase fees.

“They’re already punishing ute drivers and trades and farmers enough. They should be making sure these people can’t be punished more. They haven’t listened to industry or consulted enough,” Brown said.

Act’s transport spokesman, Simon Court, described the discrepancy as a “fiscal hole”.

He urged Wood to “abandon the policy altogether”.

“It doesn’t reduce emissions at an acceptable price and it’s putting additional cost on the productive sector,” Court said.