Emails and documents released under the Official Information Act reveal further details of Treasury's opposition to the Government's transport plans, Marc Daalder reports
Treasury wanted a new vehicle emissions standard to be phased in over the next seven years instead of the next four.
As part of the Government's efforts to reduce emissions from transport, vehicle importers will need to steadily reduce the emissions of their fleets to an average of just 105 grams of CO2 per kilometre by 2025, down from 171 g/km today. But Treasury pushed in feedback on the policy for the deadline to be delayed to 2028, on the basis of feedback from the motor industry.
"We recommend that you support the later date of 2028 as the vehicle industry has indicated that this is the earliest possible date they could meet the target due to international supply constraints around low emissions vehicles. The paper also raises concerns about the achievability of the earlier targets without implementing other policies to target emissions from the light-vehicle passenger fleet," Treasury officials wrote in a draft briefing in January, released as part of a batch of documents about transport emissions under the Official Information Act.
In other emails and documents, Treasury rubbished the usefulness of the Government's feebate scheme and the extension of an exemption from Road User Charges for electric vehicles.
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".
And Newsroom reported in August that Treasury had argued the feebate scheme should be pushed back to a future Budget instead of being funded in Budget 2021.
"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]," officials told Finance Minister Grant Robertson prior to the latest Budget.
In the new batch of correspondence, officials say the feebate scheme would have little impact on emissions and would be an unsound investment.
"The Treasury agrees that emissions from transport will need to reduce and that the Government will need to focus on this as part of its forthcoming Emissions Reduction Plan. However, the forecast emissions reductions from the discount are modest and the actual impacts are uncertain given dependencies on behavioural assumptions and a lack of clarity on how this initiative interacts with other measures, including the Emissions Trading Scheme," officials advised in April.
The programme is meant to be fiscally neutral, with revenue obtained from fees on high-emitting vehicles being recycled into rebates on electric vehicles and fuel efficient cars.
"We are unable to determine whether the feebate will be fiscally neutral, as key parts of the policy have not been developed. Given the policy is intended to operate as a disincentive to the purchase of high emissions vehicles, and that price parity is expected to be achieved over the decade, we are not confident that the fee revenue will be sufficient to cover the costs in full," officials wrote in the same April advice.
The scheme was meant to receive additional funding in the form of a $301 million loan from the Crown to Waka Kotahi/NZ Transport Agency. However, by June, this had been changed to a grant to Waka Kotahi due in part to the risk that the scheme would cost more than it brought in. This would place a liability on Waka Kotahi to repay the loan from money in the National Land Transport Fund (NLTF), which is meant to be spent on transport infrastructure.
The new documents also show Treasury opposed the recent extension of the RUC exemption for electric vehicles.
"There is no evidence that the current exemption from RUC for EVs, and any future exemptions, incentivises increased uptake of EVs," Treasury wrote.
"The proposal could result in foregone revenue of up to $90 million to the NLTF. However, as the modelling does not consider the Clean Car Discount, we expect this impact to be higher."
The Government announced on Wednesday how NLTF money will be spent over the next three years. Alongside this, it said it was asking Waka Kotahi and the Ministry of Transport and Treasury to review how transport infrastructure should be funded as fuel tax revenue decreases with increasing electrification.
