Briefings in a Budget-related document dump show officials recommended funding for the EV subsidy be deferred to future Budgets, Marc Daalder reports
Treasury officials mounted a final, unsuccessful attempt to delay the Government's feebate scheme ahead of this year's Budget, newly-released documents reveal.
While Transport Minister Michael Wood had proposed a transport climate package involving a vehicle emissions standard, the feebate scheme and a biofuels mandate, alongside several other redacted policies that didn't get the final stamp, officials initially told Finance Minister Grant Robertson to only approve the standard.
In early March briefings to Robertson, Treasury wrote, "We support the Clean Car Standard component and recommend that the remaining components are deferred across the Government term to enable further policy work to be completed and decisions on transport investment to be made in the strategic context [of outstanding decisions on the Climate Change Commission's final advice and the Government's emissions reduction plan]".
The misalignment of Budget 2021 and the commission's timeline prompted Treasury to recommend a slimmed down climate package across a range of sectors. In a March 29 presentation to other ministers, Robertson promised, "I anticipate we will need to invest significantly more in this priority in Budget 2022".
Earlier, Treasury had told Robertson that Wood's proposal needed work.
"Some parts of the package submitted by the Minister of Transport are more developed than others, with strong evidence, well-understood international best practice, and consideration of an NZ context. Other parts reflect the identification of a problem and early workings on potential policy responses to these problems."
However, Treasury has long opposed the feebate scheme. In emails dating back to 2018, when the policy was first under consideration, Treasury and Ministry of Transport officials battled over the utility of the scheme and the degree to which the Emissions Trading Scheme alone might reduce emissions.
In one missive from the original development process, a Treasury official said electric vehicle subsidies like the feebate scheme were "a costly way to reduce emissions".
Treasury ultimately told Robertson in March of this year that funding should focus on "investment-ready initiatives that are of the least fiscal and economic cost with the greatest short-term impact on emissions reductions", which in its view excluded the feebate. He used similar terms - referencing "targeted investment in those initiatives that are implementation-ready, representing the highest value-for-money" - in the March 29 presentation, which contained funding for the emissions standard but not the feebate scheme.
Between that presentation and a final one on April 6, however, the feebate scheme made its way back into the climate package, in the form of a $301 million tagged contingency to resource the provision of rebates before corresponding fees kick in on January 1, 2022.
Wood told Newsroom that the feebate scheme had never been taken from consideration, despite the late March presentation excluding it.
"That was simply about the Budget process itself, in which the Clean Car Discount needed to have funding confirmed in the Budget process and that didn't come until a little bit later in the process," he said.
