Aotearoa has been super sizing its vehicle fleet for over a decade and given Jacinda Ardern claim that Climate Change as her generation’s nuclear-free moment, why is her government not smacking ute owners and other gas guzzlers much harder than just the feebate?
Transport creates about 47 percent of Aotearoa’s carbon emissions, and from 1990 to 2018, domestic transport emissions increased by 90 percent, according to the Climate Change Commission Report. Fuelled by tax advantages and lax regulation, much of that increase is due to the increase in the size of vehicles in Aotearoa.
Some 80 percent of new vehicle registrations are double-cab utes or SUVs and the increase in the sheer size of vehicles in our fleet has more than wiped out efficiency gains from better technology.
This month’s national farmer “howl of protest” against the “ute tax” began just as a deluge struck, inundating large swathes of the country with a “once-in-50-years” flood.
Farmers and those involved in the protests seem incapable of joining the dots. Instead of acknowledging the obvious link to climate change, organisers proudly presented pictures of a ute towing a small sedan from a flood.
“Is this a legitimate use of a ute?” their caption asked.
Marc Daalder of Newsroom in an article titled “Feebate won’t bankrupt farmers but climate change might ” noted that over half a metre of rain fell in parts of country between last Thursday and Friday with meteorologists attributing some of the intensity to climate change.
“This weather event was certainly worse due to climate change,” said Nathanael Melia, senior research fellow at Victoria University of Wellington’s Climate Change Research Institute.
Luke Harrington of the Climate Change Research Institute co-authored a paper on the economic costs of climate change induced extreme weather events that found virtually all of 12 major rainfall events between 2007 and 2017 were at least partially attributable to climate change.
While the feebate will help screw the scrum away from large vehicles, by adding around $3000 to the cost of Aotearoa’s most popular vehicle, a $60,000 Ford Ranger ute, it is far from enough to reverse the trend, according to Professor of Environmental Sociology, Dr Kirsty Wild.
“We can’t just rely on that (the feebate). We have to think about how we can discourage people from driving large vehicles in built-up areas,” the University of Auckland professor said in an interview on Kathryn Ryan’s Nine-to-noon show on RNZ.
Wild blames weak regulation and car company marketing for the vehicle upsizing trend. Exhibit A is the tax treatment of double-cab utes, the second most popular category of vehicles in this country after SUVs. Until 1991, company cars with more than one row of seats attracted Fringe Benefit Tax, seriously discouraging companies from providing such vehicles.
But in in 1991 a court decided that if a vehicle was designed for dual purposes, neither could be the “principal” purpose and as double-cab utes do not have a principal purpose of carrying passengers, they qualified as work-related vehicles under the Income Tax Act 2007.
IRD seemed to strengthen this ruling in its 2017 guidance which concluded that double-cab utes satisfy the requirements of the definition of a “work-related vehicle” because they were designed equally for carrying people and for carrying goods. However, the IRD document adds a rider saying: “Qualifying as a work-related vehicle does not mean, however, that FBT is never payable when a double-cab ute is available for private use.”
The stipulation that FBT be paid even on double-cab utes when they are used for private purposes has been more ignored than complied with. Tax expert Terry Baucher a couple of years back greeted then IRD Minister Stuart Nash to a tax conference, saying: “Welcome to the South Island, where we don’t pay FBT on company vehicles.”
In response to an OIA request in February, IRD said its policy team is looking at various aspects of the FBT rules as part of its Environmental Taxes workstream of its Tax Policy Work Programme, “to ensure that the rules do not encourage more environmentally damaging outcomes. The treatment of double-cab utes is being considered in that context.”
IRD refused requests to release communication between the minister and department on the subject on the grounds that the payment of FBT is “under active consideration”. That refusal was repeated this month.
Inland Revenue Minister David Parker hasn’t actually done anything in the six months since my first request although he has made noises hinting he may one day finally do something. He told NZ Herald that his advice from IRD was that double-cab ute owners weren’t exempt from paying FBT, despite popular belief to the contrary. Parker claimed existing rules weren’t being enforced.
“The advice I have is there isn’t actually an exemption for double-cab utes, the question is whether the existing rules are being properly enforced,” he told NZ Herald.
Something seems likely to happen here, but why, when the Ardern government’s rhetoric is so forceful, is their action so feeble, when a simple law change would do the trick? And why is IRD sitting on its hands, if existing rules are not being enforced?
Prof Wild says the FBT exemption is important because it makes double-cab utes relatively cheap. Equally importantly, she says, we lack the kind of emission standards Europe has in place. Lax regulations for “work” vehicles like double-cab utes also apply in the US so car makers circumvent emissions standards, making these vehicles far cheaper to produce and therefore more profitable.
Today, Ford, for example, spends 85 percent of its massive marketing budget on SUVs and pick-ups (utes) and the link between marketing, profit and sales is strong.
In Aotearoa, ironically, marketing memes focus on being close to nature. “There are lots of images of vehicles being driven through the countryside – you can escape the city, you can be in nature,” Dr Wild says. That is also coupled with toxic images of such vehicles allowing dominance – of the vehicle being a beast, or raptor. As the boss you can ram your way through both the countryside and the city and to hell with other lesser road users.
Meanwhile, SUVs are marketed more on the basis of style and envy, but also fear. SUVs sit higher so their headlights blind others and if there is a collision, the SUV rides over the sedan, penetrating the cab.
“You are literally killed by these giant cars,” says Dr Wild.
They are almost twice as likely to kill pedestrians, even in slow speed Zones, and, in the US, they are mainly responsible for, in recent years, reversing a long-term reduction in pedestrian deaths.
Dr Wild said farmers and their utes are only part of the problem. “The biggest issue is in the cities. We don’t want people in giant vehicles to be driving to the dairy.”
Had Aotearoa maintained a trend towards smaller cars that was happening around the turn of the century, when the Toyota Corolla was the best seller, rather that today’s monster Ford Ranger, efficiency gains would mean our overall transport emissions would have been down rather than almost double the 1990 level, she says.
As well as scrapping the FBT exemption on utes and introducing the feebate, policy solutions should include robust fuel efficiency standards, introducing low emission zones, not registering cars that fail to fit normal parking places and discouraging driving in general, says Dr Wild.
Greenpeace also reckons the government should, at least until there is sufficient uptake, switch the FBT exemption on utes to EVs (electric vehicles).
“If we all work together, we can discourage this size creep. We can all send a message that we want our vehicle size to be heading in the other direction again, as it did in the ‘70s and ‘80s,” Dr Wild says.
(Simon Louisson reported for The Wall Street Journal, AP Dow Jones Newswires, New Zealand Press Association and Reuters and briefly was a political and media adviser to the Green Party. )