16
Jun

Alan Kohler’s big diesel subsidy lie on ABC

Their ABC’s Alan Kohler really should know better — but then again, he’s so misty-eyed about the fantasy of useless renewable energy, he actually might not.

On Sunday’s prime-time ABC-TV news, there he was contrasting and explicitly attacking the government’s apparent multi-billion dollar subsidies for gas-guzzling and (my words, his implication) planet-destroying) utes and its refusal to provide any subsidies for (my words again, his implication again) planet-saving electric cars.

After running a clip of minister Angus Taylor rejecting any subsidies for luxury cars, Kohler’s closing comment was: “but subsidies for diesel utes? No problem”.

That basic characterisation was completely false. The government has not put in place a subsidy specifically for diesel utes or even utes and SUVs generally and specifically excluded electric cars.

If a business buys an electric ute it would get exactly the same ‘subsidy’ as a business — and only a business — gets in buying a diesel ute.

Ah, but there aren’t any electric utes, although they are supposedly coming, very expensively.

But there’d be nothing to stop a business buying a diesel ute on the basis that the engine first be replaced by an electric one — if anyone was quite as dark green insane as Kohler would like us all to be.

Indeed, such a person would be exactly copying the utterly idiotic example set by the federal government in the opposite direction: buying submarines that first – at the cost of tens of billions of dollars – have to have their nuclear engines replaced by diesel ones.

Returning to Kohler’s insanity, a business can buy any number of electric SUVs right now, and get exactly the same — and indeed bigger — “subsidy” as in buying a ute.

Buy a $70k Kona electric and you can get a $17,500 “Kohler subsidy” if you are a 25 per cent small biz taxpayer.

That’s double the $8750 “subsidy” on buying the $35k petrol version.

Hmm, makes sense. Not. You get the bigger “subsidy” but are still out of pocket a net $52.5k as opposed to $26.25k.

The broader point, as my italics indicate, is that none of this is a subsidy; it’s just the bring-forward of an everyday tax deduction for business on all purchases of capital items, not just diesel utes or SUVs, diesel, petrol or electric.

You also get it for office machines, furniture, computers, telephones, any plant and equipment that’s tax-deductible depreciable.

You, simply, get to write any of these purchases off upfront at 100 per cent, instead of having to do it over four or five years. You don’t get to write off more, only quicker.

This was done deliberately by the government to boost the economy. Yes, it costs the budget bigtime right now — nearly $50bn out to 2024-25 — but’s that’s exactly the point. It’s to boost business cash flows and to encourage them to spend.

The cost will reverse down the track when those businesses don’t get the ‘out-year’ deductions on the asset.

Yes, Treasurer Josh Frydenberg was talking about tradies buying new utes, but that was pure political sales talk.

Kohler was also conflating the rise and rise of SUVs as the consumer car of choice with this exercise.

By far the great majority of SUVs bought — and there are twice as many SUVs sold as utes and vans combined — are by ordinary consumers who don’t get a tax write-off.

It’s not exactly a mystery why Ford and Holden went down and out. Just about everyone was answering the question: have you driven a Ford (and Holden) car lately, with a big no.

Exactly the same goes for Kohler’s electric cars. Given the – equally subsidised or unsubsidised — choice, tradies buy non-electric SUVs.

Extracted from The Australian