06-08-2025
Productivity Commission advises government to scrap EV incentive
Sabra Lane: The Federal Government's economic roundtable is in a fortnight and it's getting advice from all quarters on tax changes and what policies to put in place to reach net zero carbon emissions as quickly and cheaply as possible. The Productivity Commission, the Government's main adviser, is suggesting that the fringe benefits tax may no longer be necessary to encourage people to buy electric vehicles. The Electric Vehicle Council says drivers might be in for a rude shock. Myles Houlbrook-Walk reports.
Myles Houlbrook-Walk: Martin Tsang is in the market for a new set of wheels to fit his kids and his parents.
Martin Tsang: When we go out as a complete family with the grandparents and my kids, so we can't fit everyone in a five-seater. In an ideal world, a plug-in hybrid or an EV that could fit six people would be preferred.
Myles Houlbrook-Walk: Ultimately though, the cost of a car is crucial to his final decision.
Martin Tsang: Look, I think it's getting there. In terms of EV pricing, I think it's slowly coming down. I've got friends that have leveraged some of those. Definitely, I've noticed that people around me have taken them up.
Myles Houlbrook-Walk: A new report tabled by the Productivity Commission is questioning whether some concessions currently available to drivers should remain in place. One of them is the fringe benefits tax exemption for electric vehicles. Currently an employee can lease a car through salary sacrificing and save about $5,000 a year. Head of Policy at the Electric Vehicle Council, Aman Gaur, says the exemption is crucial for encouraging lower emission car uptake.
Aman Gaur: Removing it now, as suggested by the Productivity Commission, would be like ripping out the charging cable halfway through the trip.
Myles Houlbrook-Walk: The Productivity Commission says this exemption is an unnecessary expense for the public, given the government has introduced new rules around fuel efficiency. Those rules put a cap on emissions and penalise car manufacturers which exceed them, basically incentivising manufacturers to provide more fuel efficient, low or zero emissions vehicles. Aman Gaur supports this, but says more can be done.
Aman Gaur: The government has done great work in terms of the vehicle efficiency standards. What we need now is for the government to invest in different strategies and different policies at both the federal and state level to get more Australians into EVs.
Myles Houlbrook-Walk: So will these changes make much of a difference to total electric vehicle uptake? Toby Hagon writes for car website EV Central.
Toby Hagon: It'll certainly have an impact on sales, but how big that impact is, obviously we're not sure at the moment. Plenty of people are obviously leveraging that very generous tax discount to try and get into an electric car. But equally, when we've seen other incentives for EVs removed, a lot of the states and territories used to offer cash rebates effectively, and we haven't seen sales of electric vehicles fall over as a result.
Myles Houlbrook-Walk: Toby Hagon suggests with more manufacturers offering more choices to consumers, the tide of demand for these vehicles is firmly heading in one direction.
Toby Hagon: Particularly from Chinese brands, there's literally an onslaught coming. Some of them are planning to launch upwards of 10 new models a year, which is all but unheard of in the Australian market. So there's just so much coming that it's difficult to see the sales not heading in one direction.
Sabra Lane: That's car writer Toby Hagon, ending that report by Myles Houlbrook-Walk. And the federal government's been contacted for comment.
