In 2022, Labour won the Australian federal election and in 2023 a National-led coalition took power in New Zealand. Inevitably, with new governments on both sides of the Tasman we’ve seen changes in the ways the different legislations are approaching vehicle emissions reductions.
New Zealand's coalition government abandoned the Clean Car Discount. This program rewarded purchasers of EVs and penalized buyers of high-emitting vehicles. The removal of the Clean Car Discount has led to significant concerns about the future of emissions reductions in New Zealand.
In contrast, Australia introduced several new measures to accelerate the transition to a cleaner fleet. Key among these is the exemption from Fringe Benefit Tax (FBT) for EVs and PHEVs below the luxury car threshold*. Additionally, Australia has removed GST on EVs and PHEVs, targeting Novated Leases where employers pay for car leases and running costs out of an employee's salary package. With over 1,000,000 novated leases in Australia growing at about 4% annually, these incentives could significantly increase the number of EVs on the road.
Government messaging around emissions reduction and climate change in general has definitely pivoted in both countries, with New Zealand’s government prioritising the economy over emissions and Australia’s providing stronger leadership on emissions reduction. However, despite these divergent paths there is one area where Australia’s approach is resonating with Kiwi legislators: The Clean Car Standard.
As discussed in a previous blog, The Clean Car Standard aims to encourage a greater supply of low and no emissions vehicle imports into NZ and Australia by charging importers for vehicles with high CO2 emissions and giving credits for vehicles with low CO2 emissions.
New Zealand jumped into this ahead of Australia but as the legislation began to bite increasing concerns were raised by the automotive industry. Industry feedback stated that New Zealand’s standards were too stringent and increasingly difficult for importers to meet as they were out of step with the manufacturing standards of leading vehicle manufacturers. NZ’s new Government agreed and consequently Transport Minister, Simeon Brown has said that the standards will change to match Australia’s because, in the government’s analysis, the two countries were effectively one car market.
Not everyone is happy about these changes. Drive Electric, NZ’s clean car lobby group, argues that if New Zealand aligns its standards with Australia's, it should also adopt Australia's 'comprehensive' incentives to buy EVs. Drive Electric pointed to research that showed tailpipe carbon pollution from new cars entering New Zealand had risen since the government scrapped subsidies for buying EVs, saying: "The fleet is already getting dirtier and now we're weakening emissions standards."
For EV buyers in New Zealand, the government’s flagship policy centres on an expansion of the public EV charging network from the current 1,400 chargers to 10,000 by 2030. Although critics of the scheme question whether that number will be delivered. During the election, the National Party pledged $257 million over four years to meet that goal, but so far, only $95 million has been allocated over the same period.
The question remains: Will New Zealand's shrinking EV sales justify the investment in charging infrastructure? This year, EVs account for just 8.5% of new passenger vehicle sales, a sharp drop from 27.2% last year. If this downward trend continues, it wouldn't be surprising to see the government re-evaluating its priorities.
As these policies continue to unfold, it's clear that while Australia and New Zealand are moving in different directinos on emissions, both are navigating a complex landscape. For Fleet Managers, and EV advocates, the coming years will reveal whether these strategies succeed in building a cleaner future - or whether new challenges will emerge. A deeper dive into the various State and Territory incentives for EVs will be covered in the near future.
*It’s not as straightforward as New Zealand’s now defunct Clean Car Discount, but removing GST on EVs and PHEVs should be a generous carrot. The incentive is targeting Novated Leases, where the employer pays for a car’s lease and running costs out of an employee’s salary package through a combination pre-tax and post-tax salary deductions. There are over 1,000,000 novated leases running in Australia at any one time with a growth rate of around 4% a year which could add up to more EVs on the road than otherwise. The government has also changed the luxury car threshold to favour EVs, further sweetening the deal.
