Interview with Melissa Clarke, ABC Radio National

HOST, MELISSA CLARKE: The full exemption from fringe benefits tax for affordable EVs purchased through novated leases will be scaled back and in three years’ time there'll be a 25% discount instead. The Climate Change and Energy Minister joined me a short time ago. Chris Bowen, thank you for speaking with AM this morning.

MINISTER FOR CLIMATE CHANGE AND ENERGY, CHRIS BOWEN: Good morning, Mel. Pleasure. This exemption for EVs from the fringe benefits tax was designed to encourage the take-up of low-emissions vehicles.

Why are you winding it back? Well, for a couple of reasons. It has been spectacularly successful.

We've seen a very big take-up of EVs. Four years ago, one in 50 Australian car purchases was an EV or a plug-in hybrid. Now it's one in four.

But also, our New Vehicle Efficiency Standards have been working well to bring in more affordable models. So, four years ago, there was no EV available for under $40,000. Now there's about 10.

So that's enabled us to better calibrate the tax exemption going forward, to focus it on those more affordable models that are now available, that weren't available before, to lock it in, make it permanent, make sure that Australians realise it's there and they can access it; but also to properly calibrate it, to take time, three stages, to give Australians time to make the purchases they want to do.

It's all about choice and makes it sustainable. How much will this increase the cost of the average EV that would be under the current rules? Well, for the average EV, not at all, because any EV that is below $75,000 won't be impacted at all until 2029.

And indeed, Mel, one of the other points is I think it will encourage manufacturers to reduce the cost of their EVs down below that $75,000 if possible, for those that are, you know, on the cusp of being $75,000 or so. But it's still going to cost individuals who are getting an EV through a novated lease thousands of dollars a year more without this exemption.

Well, Mel, with respect, only if they buy an EV more than $75,000 until 2029. If you buy an EV $75,000 or less, no change at all. What's your modelling on how this will change or impact the take-up of EVs?

We certainly expect EV take-up to remain very, very strong. It's been increasing, obviously, particularly in recent months, but not only in recent months. It may be that some Australians, particularly from 2027 onwards, choose to buy a slightly more affordable EV below $75,000 instead of below $91,000.

But we believe that the take-up will continue at pretty close to current rates. So, you think the trajectory will remain the same? Yeah, that's right.

Given you point to the success of measures to improve the take-up of EVs, why does there need to continue to be a concession at all? Why not scrap it all together? Well, because I think there's great public and social benefit from EVs.

Obviously, there's the carbon impact. There's also respiratory health impacts. Also, many Australians have been contemplating buying an EV but haven't made the final choice to.

There's still issues around about whether people want to buy an EV or not. It's an appropriate thing to do. This is pretty much in keeping with international approaches, particularly as the cost of EVs is coming down.

If you say the cost of EVs is coming down… It's coming down. There's a greater range of models available than ever before. You're happy with the trajectory that it is going on.

So why does there need to be subsidies for people purchasing cars? At a time when the budget is so constrained, why does this need to be a priority? And that's why we've made this sensible change, Mel, which does save $1.7 billion over the forward estimates.

So, it is a substantial saving, but it's a better calibrated support for EV purchases, which, as I said, the country benefits when we have a higher EV take-up. Yesterday, Australia and Japan signed a joint statement of fuel security. It follows weeks of diplomacy across Asia on energy supplies.

Has your government foregone an opportunity to raise more tax from gas exports so as to not upset trading partners that we get refined fuels from? No, I don't believe that's an appropriate way of framing the considerations that the government always goes through with all its budget decisions. Obviously, the budget now is very close, Mel, very close, not long to wait, but I don't think it's any secret that this will be a reforming budget with changes.

So, we're not shy of making changes, but we carefully calibrate those changes, carefully consider all the options involved. But the government did look at options for changing gas exports and now that seems to have been ruled out. Is that because of the discussions that have been had around fuel security?

When the Treasurer releases the budget next week, you'll see that we've carefully calibrated all the reform options available before the government and made appropriate decisions and announcements. Chris Bowen, thank you very much for speaking to AM this morning. Good on you, Mel.

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