Treasury critical of ‘feebate’ scheme

The Government’s ‘clean car’ proposals have come under fire from Treasury officials.

The proposals include emission standards and a ‘feebate’ scheme to penalise polluting vehicles and reward low emission ones.

Treasury staff say “neither measure would have a significant impact on emissions”, according to a report released to RNZ under the Official Information Act.

But associate transport minister Julie Anne Genter pooh-poohs the Treasury report, telling RNZ the findings are “wrong”, adding that the proposed policies could make a real difference.

The Treasury report explains Ministry of Transport (MoT) forecasts the feebate scheme would reduce emissions by hardly more than 1.6 million tonnes over 20 years.

New Zealand’s gross emissions are reported to be 80.9 million tonnes annually.

Treasury suggests dumping the feebate scheme and consulting on just the fuel standards.

Genter says Treasury’s advice doesn’t compare with that from the Productivity Commission and many other developed countries.

She says the MoT forecast doesn’t consider that the fuel efficiency standards would be gradually increased.

The forecast also assumes there would be a reduction in pollution under the status quo, which Genter believes is too optimistic.

She says overseas evidence shows such policies make a big difference in reducing transport emissions.

That’s perhaps referring to international keynote speakers at EVworld NZ in August, such as Sweden’s Jakob Lagercrantz – who Genter listened to – saying a similar ‘bonus malus’ feebate style scheme running in his country for about a year had been successful with fine tuning.

The National Party has attacked the ‘clean car’ proposals as a “car tax” forcing some car buyers to pay thousands more.

National transport spokesman Chris Bishop says: “Ministerial advice released under the Official Information Act shows Treasury understands what Julie Anne Genter seemingly does not – that her Government’s car tax is bad policy.

“Treasury warned the Government that implementing a car feebate would create a ‘double burden’ for those needing to buy higher-emitting vehicles, such as double-cab utes, while creating a ‘double benefit’ for those able to buy low-emission and electric vehicles.

“National could see from the outset that it wasn’t fair to make families pay thousands more for a used seven-seater van while wealthy executives got discounts on a Tesla Model 3 or BMW i3.”

Bishop says National warned Genter – “and it turns out Treasury did as well” while adding the ‘clean car’ plan would reduce emissions by just 0.09% over 20 years.

“National believes financial incentives, not penalties, are the best way to support this country’s shift to electric vehicles.”