This week I took the first step towards setting up a tax-avoidance scheme. It is perfectly legal and practically foolproof. It only relies on the continued foolishness of the Federal Government – which is pretty much guaranteed these days.
The step was to put an order in for an electric car. That included a test drive along Australia’s most spectacular road: the Captain Cook Highway north of Cairns – the Coral Sea and the reef on the right and rainforest or cane fields to the left.
Wow. We will need a new word for “petrolhead”. Not that I have ever been one. I am more an A-to-B person.
In the past year we did 20,000kms in the Toyota Landcruiser, mainly towing a caravan across the top of Australia and back while everyone down south was enjoying the pleasures of winter and lockdowns.
That took about 3500 litres of fuel. The cost included 43 cents a litre in fuel tax and another 15 cents a litre in GST – a total of $2030. This is the tax that my tax-avoidance scheme is going to avoid.
According to the Prime Minister, however, there are some downsides. I will not, of course, be able to use my electric car at the weekend. Remember, he told us that electric cars will “destroy the weekend”.
This from the party that gave us Work Choices under which employers could choose to roster the casualised workforce at a moment’s notice to work weekend shifts without any penalty rates. But that is by the by.
Also, I won’t be able to tow anything, even though the manual for the small SUV Mercedes EV I have ordered says it can tow up to 1800 kilograms, and Tesla has an EV that can tow a jumbo jet.
Trust me, EVs are very gutsy cars. Their real beauty lies in the smooth and rapid zero-to-120km/h acceleration rate. Going up and down steep winding roads is a joy. There are no gear changes with their concomitant loss of momentum. The EV grabs the road as you accelerate around corners.
Yes, the upfront cost is high – pretty much beyond the reach of anyone other than privileged semi-retired baby boomers with no mortgages and good superannuation accounts.
But never mind, unfettered “can-do capitalism” will surely bring the benefits of electric vehicles to Millennials and GenXers sometime in the latter half of the century. Meanwhile, they will have to keep paying their fuel tax and the GST on the fuel.
Yes, I am deliberately and smugly pointing out the blatant unfairness of this unmanaged set-up.
And Australia will continue to import $30 billion worth of fuel every year.
Why would a government bother to plan and give incentives to a cleaner, cheaper, more efficient transport system when you can just leave it to “can-do capitalism”?
Why bother even thinking about planning for future road funding when you can do nothing and let “can-do capitalism” do it for you?
Really, it is so 19 th century. “Can-do capitalism” sent children down coal mines and allowed the can-do corporations to tip toxic waste into rivers.
This is not good economic management. It is really dumb, or, worse, a corrupt pandering to big donors in fossil industries.
It is certainly against the national interest – unAustralian if you like.
It is now obvious that the Australian vehicle fleet will be almost totally electric within 10 years, if not sooner, given the way fuel prices are going and given the way the smarter developed countries are going.
Most European countries have phase-out plans for internal combustion engines. As a result, car manufacturers also have phase-out plans You won’t be able to buy a petrol or diesel car after about 2035, if not sooner.
It will be just like the uptake of digital cameras. No-one uses film these days. Indeed, most people have given up on dedicated cameras and just use their phone to take images. It happened in less than eight years.
It will not take long for enough people to buy EVs and proselytise about their fuel and tax saving for electric vehicles to take off.
A government that was a good economic manager would have a plan for all logistics – transport and communications – and develop incentives and tax systems to deal with the change that is coming.
If the fleet goes electric, there will be no fuel tax collections. Something will have to be done to replace the $12 billion a year raised through those taxes to fund roads. Can-do capitalists will not build roads for general public use.
The Henry tax review recognised this a decade and a half ago. It is a great opportunity to have a fairer, more efficient tax based on where and when the vehicle travels. It will give incentives for people not to travel at peak times.
The telematics technology is available to do this, but to be effective it needs some government direction and rules so that manufacturers know to install the telematics into the car while it is being built.
At present, only Victoria has a road-user charge for electric vehicles. It is 2.5 cents per kilometre. It is very crudely enforced with owners taking a photograph of their odometer at registration-renewal time. Surely, we need a national plan for national road network.
Electrifying the fleet will reduce air pollution and the health problems that come with it. It will reduce emissions. It will reduce our reliance on imported fuel, which is a security risk as well as a big economic cost.
A smart government would be on to this rather than wasting energy on problems that do not exist, like this week’s kerfuffle over “threats” to freedom of religion and voter ID.
Crispin Hull
This article first appeared in The Canberra Times and other Australian media on 27 November 2021.
The clear evidence based on global sales data and other underlying trends is that the transition from internal combustion engine (ICE) to electric vehicles (EV) is a classic technology disruption similar to those for digital cameras and smart phones, and for the same reason – that emergent EV technology is functionally, technologically, environmentally & economically superior to incumbent ICE technology and other alternatives (eg H2FCEV).
Global ICE sales have been declining since 2017 while EV sales are increasing exponentially. This means that the market has already entered the steep/fast transition stage of a classic ‘S’ shaped adoption/transition curve. The likely 50/50 crossover point for ICE/EV sales is just a few years away, probably 2025-2026.
China is on track for 35% EV sales penetration by 2023, with a number of Chinese auto makers already transitioning most of their production to EVs (China’s vehicle market is the largest in world at 20M vehicles annually)
A significant number of major auto manufacturers have already stopped their development of new ICE powertrain technology (eg VW, Mercedes, Volvo etc), with the intention of completely ending ICE vehicle production around the end of this decade.
There’s no question that battery performance and price were early issues for EVs, but both of these are now being resolved, with prices falling by 90% and battery life increasing beyond the life of the vehicle in the course of this decade. Materials intensity is dropping, and by 2040 battery materials intensity will be around 10-15% of 2010 numbers. Tesla’s long-term objective is make its new batteries with materials recovered from its end-of-life batteries.
Battery charging times are a non-issue for urban driving, and recharging times are dropping very quickly for long-distance driving with the advent of ultrafast chargers and new EV electrical architectures.
Good analyses on the ICE-EV disruptive transition are available at:
https://seekingalpha.com/article/4225153-evs-oil-and-ice-impact-2023-and-beyond
https://www.rethinkx.com/transportation
The successive coalition governments have been blocking Australia’s progress for over 15 years now. As Morrison said, they are the “Don’t Do” government, and are blocking the “Can-Do” Capitalists (the progressive ones that is). For the sake of greed (and repaying their donors), the Coalition is steering us back towards the 19th century. If Morrison thinks government should be “Don’t do”, why does he think we need a government at all?
Steam ships, steam locomotives, propeller-driven airliners, typewriters…all gone, to be followed by the internal combustion engine and hopefully by the Coalition government. Let’s not forget Kodak actually invented the digital camera but didn’t pursue it as it might have affected their film sales. I can just imagine a Morrison-like marketing man advising the Kodak board….
https://www.sciencedirect.com/science/article/abs/pii/S0269749120320480
The above study puts the social benefits (health) of EVs in a city the size of
Toronto at $3.8 billion CAD. Surely some of this flows into government coffers and can replace road funding taxes?
One of the great advantages of EVs that is not often mentioned is not requiring the elaborate electro-mechanical systems of emission control which bedevil fossil-fuel vehicles, particularly diesels. On the other hand EVs have one big downside: the battery. No amount of smart technology can overcome basic physics and chemistry, consequently batteries (as used in a vehicle) have a limited life. Therefore an EV owner faces a very large replacement cost – possibly near 100% as a vehicle with less than half its battery life left is probably worthless.
On the likely progress of take-up of EVs, the digital camera analogy is false. Digital photography is an enormous improvement in convenience – negligible film cost, instant results, DIY processing. EVs are expensive, refuelling takes time (imagine queuing at the “servo” when each vehicle needs 30 minutes) and if you run out roadside service cannot bring you a can of fuel. Interestingly, the NRMA, the motorists’ association in New South Wales and a major promoter of EVs, still devotes most of its reviews to new conventional vehicles which private buyers would contemplate keeping 10 years on average.
But, but, but… we will have “technology not taxation” yet your article points out the status quo of Morrison’s “can do capitalism” gives us taxation not technology. Kodak was a great capitalist international corporation that didn’t adapt to technology. We could change Australia’s name to Kodakia and remove any doubt as to our future.
I am sure Morrison will make no apologies for this. That’s his usual mantra when things are rotten.
He is desperate hence his trying to get religious votes, voter id, blaming states for lack of vaccines.
Next he will say we are at the head of the queue for EV.
He reminds of of comical Ali, the Iraqi spokeman who was filmed saying there were no US troops in Baghdad when we could plainly see US tanks in the background.
Once again the Australian media is partly to blame esp one news organisation who have been downplaying climate change and millions of gullible or greedy Australians have believed them.