Labor’s vehicle carbon target would save motorists $27.5 billion

Motorists would save $27.5 billion in petrol and diesel costs over two decades in a collective gain from Labor’s proposed fuel standards that the Morrison government has dubbed a “car-bon tax” on cars.

The savings would be almost double the cost of the shift to new vehicles with fewer carbon emissions, according to the federal government’s own modelling from a reform plan three years ago.

The fuel savings would deliver a net benefit to the economy worth $13.9 billion by 2040 and would save motorists money, according to a 109-page impact statement written by the Department of Infrastructure and Regional Development.

The owner of an average petrol car travelling average distances every year would save $519 in annual fuel costs under the changes canvassed by the government in 2016 and now proposed by Labor.

Prime Minister Scott Morrison urged voters to reject Labor at the election because its new fuel standards would add $5000 to the cost of a new car by reducing greenhouse gas emissions to 105 grams of carbon for every kilometre travelled.

Mr Morrison said only three of the top 20 cars sold in Australia at the moment could meet that standard and called on Opposition Leader Bill Shorten to admit the cost of the policy.

“He won’t tell you that it puts the cost of the car up by $5000,” Mr Morrison said.

“If Bill Shorten can’t explain his policies or won’t explain his policies and what it means for the price of a car and the price of petrol, then don’t vote for it.”

But the department’s analysis of the carbon target estimates it would add far less than this amount to new vehicles, with the capital and compliance costs increasing from $764 to $1841 over the decade to 2030 and declining slightly in the longer-term.

The additional cost for a light commercial vehicle would reach $776 in 2020 and would peak at $3120 in 2025 before falling slightly in the subsequent years.

The cost increase assumes the carbon target of 105 grams but motorists would pay a lower premium for their vehicles under less stringent ambitions for cleaner fuel.

The additional cost would be $1385 for the same average petrol car in 2030 if the carbon emissions were 119 grams per kilometre. It would be $798 if the target was relaxed to 135 grams per kilometre.

The analysis counters the government’s claim but highlights the trade-off for motorists in any switch to cleaner fuel, with a higher up-front cost for a more ambitious target but greater savings later on fuel.

While the average saving on petrol would be $519 under the most ambitious target, it would be only $399 a year under the target of 119 grams and only $237 under the target of 135 grams.

The nationwide benefits would be greater in fuel costs and economic gains with a more ambitious target, according to the government analysis.

A cut in emissions to 105 grams would deliver fuel savings worth $27.5 billion by 2040 but the target of 135 grams would only save $10.8 billion.

After taking into account the greenhouse gas benefits as well as the fuel savings, the 105 gram target would deliver a net benefit of $13.9 billion nationwide in 2040 compared to a net benefit of $5.8 billion for the 135 gram scenario.

The analysis assumed $1.30 per litre for petrol and assumed the carbon targets would start in 2025.

The Coalition’s Josh Frydenberg, then Minister for Environment and Energy, and Paul Fletcher, then Minister for Urban Infrastructure, considered the new standard for more than a year but the government decided against a carbon standard as it escalates its political attack on Labor over the impact on up-front car costs.

The Labor proposal for fuel standards for petrol cars does not have a start date, making it impossible to forecast its cost on motorists in any specific year.

The Labor policy is separate to its goal for electric cars to make up half of all new car sales by 2030, although it has not said this would be mandated to force customers to give up their petrol vehicles.

Mr Shorten offered the first hint on Wednesday on what a Labor government might do to encourage electric vehicles, saying there could be financial help to increase their use.

“We’ve got a three-word slogan for Australia – it’s called ‘made in Australia’,” he said.

“We’re going to fund an advanced manufacturing future fund and if electric vehicles are part of our manufacturing future, we’re going to provide them cheap finance.

“I would like to see us make electric cars in Australia.”

Extracted from Brisbane Times