Second Reading Speech, Treasury Laws Amendment (Electric Car Discount) Bill 2022
I'm really excited to be introducing this bill today, and particularly to follow the Minister for Climate Change, having just presented some of the broader climate change bills to the Parliament.
The introduction today of those bills by the Minister, as well this Electric Car Discount Bill today, sends an unmistakable signal to this Parliament, to Australian industry and to the Australian people and beyond, that Australia now has a government which understands the economics of cleaner and cheaper and more reliable energy, and recognises the generational imperative that we have to act on climate change.
The communities that we represent recognise this as well. They have rejected the fear campaigns of the past and they have embraced action in the knowledge that the cost of inaction gets higher every day. And understanding the historic opportunities that climate change presents — climate action in particular: a future with cleaner, cheaper energy and a more resilient energy grid; a future with hundreds of thousands of new clean energy jobs, leveraging our traditional strengths and creating new and growing industries as well; and a future with a climate and an environment that's been kept safe and strong and secure for the generations that follow us.
Today we take the first major steps towards that future.
And Australians will see this new approach right across government — and the Treasury is no exception.
We know that Australian businesses are desperate for clearer guidance on reporting the climate risks impacting their operations.
That's why we are working closely with regulators to develop a standard approach to climate disclosure for business — for a framework that is clear and credible and globally comparable.
We are signed-up supporters of the G20's ambitious sustainable finance agenda — and we are doing more work here at home, in collaboration with our regulators as well.
And, importantly, our government, with the agreement of the Minister, will restore the Treasury's role in modelling climate risks and opportunities for the Australian economy — rebuilding this capacity after it was left to decay by the previous government.
Treasury modelling will help make sure we are charting a path that grabs the opportunities for growth and jobs that climate action offers. And the bill I introduce today is also about grabbing these opportunities.
It implements the Albanese Government's election commitment to provide a fringe benefits tax exemption for eligible electric cars that are made available by employers for employees.
It amends the Fringe Benefits Tax Assessment Act 1986 to provide an exemption from fringe benefits tax for this purpose.
The exemption applies to battery electric cars, hydrogen-fuel-cell electric cars and plug-in hybrid electric cars that are below the luxury car tax threshold for fuel efficient cars.
The exemption will apply to fringe benefits arising from the use or availability of an eligible electric car from 1 July 2022 — provided that the car was first made available for use on or after that date.
These changes will ensure that employers providing employees with an eligible car will not have to pay fringe benefits tax on it — and the cost to employees of entering into salary sacrificing arrangements in order to lease an eligible electric car will now be less than it previously would have been.
If a model valued at about $50,000 is provided by an employer through this arrangement, our fringe benefits tax exemption would save the employer up to $9,000 a year. For individuals using a salary sacrifice arrangement to pay for the same model, their saving would be up to $4,700 a year.
The fringe benefit tax exemption for eligible electric cars will be implemented as an ongoing measure. It will be reviewed after three years, in light of higher rates of electric car take-up, to ensure that it remains effective.
The fringe benefit tax exemption is one component of the Government's Electric Car Discount, and it forms part of our Powering Australia plan. I again give the credit for that plan to the Minister for Climate Change and Energy.
The Electric Car Discount also includes the removal of the 5 per cent tariff for eligible electric cars with a customs value below the luxury car tax threshold for fuel-efficient vehicles.
The package aims to help ensure and encourage greater take-up of electric vehicles and reduce our transport emissions — as part of the Government's broader climate agenda.
These measures help reduce the up-front and ownership costs of electric cars, addressing a significant barrier to buying them in Australia.
It's one of the first new initiatives in the government's plan to improve electric vehicle uptake, and we'll have more to say about further measures to be delivered as part of the National Electric Vehicle Strategy.
This includes a $500 million investment to boost charging infrastructure right across Australia.
Our government has also committed to ensuring 75 per cent of new Commonwealth fleet purchases are electric by 2025. This will increase the number of second-hand electric vehicles on the market as well, providing more options for consumers and driving down prices in the coming years.
The transport sector is one of the fastest-growing sources of emissions in Australia, and the stronger uptake of EVs can make a substantial impact in our efforts to tackle climate change.
Yet right now, Australia lags far behind our international peers when it comes to EV use.
About 15 per cent of cars sold in the UK are electric and plug-in hybrids. In Australia, it's only about two per cent.
Obviously, we are very different countries in terms of our transport networks and needs — but even so, two per cent is much, much lower than it could be, and much lower than it should be.
More and more Australians are interested in the benefits of owning an electric vehicle if they can — but they are unaffordable for too many Australian motorists.
There are only 10 electric and plug-in hybrid cars on the domestic market selling for less than $60,000 at the moment — whereas in the UK, there are about two dozen under this price, because they have policies and incentives to help increase the take-up of electric cars.
And soon, with the passage of this legislation, Australia will too.
Accelerating EV uptake will help pave the way for a lower-cost transition to our emissions reduction targets.
This bill is good for motorists, it's good for employers, it's good for workers, and it's good for climate action.
Full details of the fringe benefit tax exemption measure are contained in the explanatory memorandum. I commend this bill to the House.