Hon STEVEN JOYCE (Minister of Transport) Link to this
I move, That the Road User Charges Amendment Bill be now read a second time. I would like to thank members of the Transport and Industrial Relations Committee for their prompt consideration of this short bill. This bill does two things: it enables the exemption of light electric motor vehicles from the requirement to pay road user charges, and it ensures adequate notice of road user charges increases.
The Government supports new technology as a means to bring about low-carbon transport. In the future, as new technologies emerge and more vehicles become less reliant on traditional fossil fuels, we will need to give further consideration as to how we recover the cost of those vehicles using the roading network. It is important that all road users pay the costs they impose on the roading network. That is the principle of the user-pays system we have, and it is implicit in the hypothecation of road revenues. This bill deals with one new technology that is available now: vehicles able to run wholly or partly on electricity. Having electric vehicles in our fleet has advantages. They are more efficient and they are cheaper to run than conventional vehicles. They will reduce our need to import fossil fuels and increase the security of our transport and electricity systems against energy disruptions, while maintaining personal mobility. They produce little or no toxic emissions, and they have the potential to substantially reduce transport greenhouse gas emissions. Unfortunately, for the time being those vehicles are expensive.
This bill proposes a practical means to encourage the uptake of electric vehicles, a goal announced by the Government in 2007. In her first reading speech on this bill, Jeanette Fitzsimons commented: “we are asking all road users—rich, poor, and unemployed—to pay the road-user charges for those who can afford to buy electric vehicles.”, and that she would be “very concerned if the subsidy were to go longer than the 4 years that is proposed.” That is one reason why the 4c per kilometre exemption from paying road-user charges for light electric motor vehicles is to be transitional and limited in duration. The Government’s intention is that exemption will expire at the end of June 2013, at which point the initiative will be reconsidered. Several submitters on the bill pointed out that when the exemption expires, plug-in hybrid electric vehicles will be subject to both road-user charges and fuel excise duty for the petrol they use. This is a matter that will be addressed before the expiry of the exemption in 2013.
It is only reasonable to give notice of increases to road-user charges. These charges are a significant cost for commercial transport operators. This bill proposes to give 6 weeks’ notice of increases to charges, as recommended by the Road User Charges Review Group and supported by submitters to the select committee. The problem in the past with giving notice was the loss of revenue through large-scale pre-purchasing of road-user charges at cheaper rates. This bill proposes a tidy and neat solution to that problem. It provides that road-user charges licences for heavy vehicles expire 1 month after an increase comes into effect. Licences for lighter vehicles would not expire early. I will take this opportunity to respond to questions about the expiry of heavy vehicle licences raised by the previous Minister of Transport, the Hon Annette King, in her first reading speech on the bill. She asked how this requirement would work, and what it would cost to administer. The fact is that in a normal course of events most operators of heavy vehicles purchase their licences on a weekly or fortnightly basis, so they will be largely unaffected by the expiry of licences 1 month after the fee changes. Refunds of road-user charges for unused kilometres will be available for those who need to purchase a new licence that overlaps with an old licence. Customers in that situation will be credited their refund at the time of the purchase of the new licence. No one will need to actually apply for any refunds, because they will be automatically provided at the time the new licence is purchased. No additional administrative costs for the expiry and refund process are expected.
The Hon Annette King also asked about avenues for trucking firms, in particular, to rort the system, and what leakage of revenue could result. Quite simply, there will be no additional avenues for firms to take advantage of the system, because this proposal is closing down an opportunity currently in place. Yes, there will still be the ability for heavy vehicle owners to buy licences 1 month ahead, and some may alter their purchasing practices to do that for that month. That behaviour will be monitored. It can be accounted for in future increases if necessary. I also point out that the licence expiry provision is a reinstatement of a similar provision that was repealed in 2002. It was repealed because of the burden of transaction costs, administrative difficulties, and inconvenience carried by the approximately 400,000 light vehicle owners and the Government agencies involved in that relicensing. Therefore, we are not seeking to provide for the expiry of truck licences for light vehicles in the same way as we are for heavy vehicles. The benefits in terms of lower administrative costs of road-user licensing continuing for light diesel vehicles exceed any expected revenue losses.
There are a number of changes that I intend to make to streamline the road-user charging system. One of those is to put in place a systematic and predictable system for changes to the rates of road-user charges. Let us not forget that, unlike fuel excise, road-user licences are purchased in advance, and those advance purchases come at a cost. That cost, when combined with future streamlining of the charging system, will put the system on a more businesslike footing.
This bill deals with two specific issues relating to road-user charges. It was considered by the select committee on 23 July, and no major issues arose from its consideration. I will be following the committee’s advice and submitting one minor wording change by way of a Supplementary Order Paper at the Committee stage. Again, I thank the select committee and the officials for their work on the bill. The bill will help encourage electric vehicles on to our roads, resulting in cleaner and quieter streets, lower fuel bills, and fewer greenhouse gas emissions. The bill also provides a transparent notification system for increases to road-user charges while safeguarding the revenue that is used to maintain and develop this country’s roading system. This is a good bill, and I commend it to the House.
DARIEN FENTON (Labour) Link to this
Tēnā koe, Mr Assistant Speaker. Tēnā koutou e te Whare. I appreciate the opportunity to make a contribution to the second reading of the Road User Charges Amendment Bill. The Minister alluded to the Transport and Industrial Relations Committee’s consideration of this issue. We did it very sketchily, thus there is a very brief report back to the House. Labour remains concerned about the rushed process, and unconvinced that it was necessary. The report-back period was less than a month, including a 2-week adjournment, and the Minister of Transport has still not provided any explanation or justification as to why the bill had to be dealt with so quickly. The problem with this is that we are not seeing the proper scrutiny of legislation that we would expect to see from our Parliament, because we are constantly being told that bills have to be reported back faster than would ordinarily be the case. This is not good lawmaking. The process means that until today there were still unanswered questions, and we had to wait until today to hear the answers to the questions that both Annette King and I raised in the first reading debate. The answers did not come up in the select committee and I appreciate that the Minister has attempted to address those questions today.
Although Labour is supporting this bill, we will be watching very carefully to see how it plays out, and whether the system as outlined by the Minister actually works. As noted in the select committee report, we are concerned about the issue of the time frame for the exemption of electric vehicles from road-user charges, and again I acknowledge that I was pleased to hear the Minister’s commitment to the 2013 expiry date. My colleague Jeanette Fitzsimons raised this issue in her first reading speech to the House, and it is also alluded to in the select committee’s report. In the short time that we had to deliberate on the bill, Labour and the Greens agreed that the exemption period should not be indefinitely extended, but we also agreed that the time frame for exemption should be in the primary legislation. That is not happening in this bill. We remain concerned about that, because we believe the exemption represents a subsidy from low-income motorists to those who can afford electric vehicles, which are, as the Minister said, very expensive—very expensive. If the time frame for the exemption is not in primary legislation then it remains open to the Minister to decide that time frame, even though he has given a commitment today—and I was pleased to hear it because the exemption becomes a subsidy from those who cannot afford the relatively high cost of an electric vehicle to those who can.
The reason that Labour does not like the bill and is opposed to it is that we believe in lending a helping hand to those most in need. For example, why should a low-income family, managing on a minimum wage, contribute a percentage of their taxes towards other people who would like to buy an electric vehicle. The fact that someone is considering such a purchase suggests that he or she does not need any help from the taxpayer. In addition, we heard from the Minister for ACC, Nick Smith, that he is considering the idea of lower registration fees for safer and more modern vehicles, which, again, would unfairly penalise people on lower incomes. We need to think about these things, as we look towards further technology. Members on this side of the Chamber, and I think across Parliament, recognise there is a problem. We all support doing something about it but we need to take into account the varying situations of the population.
When the Minister for ACC came to the Transport and Industrial Relations Committee a couple of weeks ago he said that one area to look at was the motor vehicle account, where the motor vehicle levy is a flat fee. He said: “I am advised that if we all had 5-star safety vehicles, that would knock 40 or 50 percent off the cost of the motor vehicle account, yet we all pay the same motor vehicle levy. Is there a capacity to provide greater financial incentives in that area?” That said to me that those 5-star safety vehicles would be generally newer, and, like electric vehicles, more expensive. So Labour would have a problem with the idea of supporting cheaper registration fees for those who can afford new cars. It is the same sort of subsidy—that is, from the poor to the rich. The price differentiation might well be acceptable to the Government but Labour believes that it is contrary to the values of fairness and equity—values that most New Zealanders believe in. If we are not careful with these sorts of measures we could be heading for a situation like the information divide, where some families still do not even have a phone. They are absolutely out of the loop in a society that is increasingly reliant on the World Wide Web, yet those people are information poor and continue to be so. That makes them increasingly disadvantaged. So we have to be careful that in creating incentives for changes in the vehicle fleet towards lower emissions and safer vehicles, we do not create a class of people who are unable to access subsidies and better, more efficient cars, or who end up paying more than the better-off, because they are unable to replace their older vehicle.
One of the purposes of this bill, as stated in the explanatory note, is to “encourage the uptake of light electric motor vehicles, which are expected to improve the efficiency of the motor vehicle fleet, decrease reliance on imported fossil fuels, improve energy security, and reduce the vehicular emissions affecting air quality and greenhouse gas levels.” That is a very laudable purpose, and Labour supports it, although I have to say the Government’s record so far on these things is pretty patchy. It is interesting that while we are debating this bill there is another process going on. The Government is proposing a rule change to allow heavier trucks on the roads. I want to take a moment to talk about that, because it is causing concern up and down the country. That rule change will encourage a transfer of freight from rail and coastal shipping, which are both very efficient and clean modes of transport, back on to the emission-producing, fossil-fuel guzzling, and very dangerous heavy trucks on our roads. The Government, I have noticed, is running into some trouble with that consultation. The New Zealand Transport Agency’s assessment of the effect of that rule on State highways, local roads, and bridges fails to provide a sensible cost-benefit analysis. In fact, it has looked only at the benefits; it has not looked at the costs. We know that 306 State highway bridges would require strengthening, or detailed investigation, and an estimated $85 million would be required to fund the work over a period of several years. Of those bridges only 13 have already been included on the approved 2009-12 bridge replacement and upgrade programme, due to their current condition. So in the South Island no section of State Highway 1 has bridges that can support 50-tonne trucks. In the North Island no section of State Highway 1 from Taupō to Wellington has bridges that can support 50-tonne trucks. In addition, we heard the other day that the Auckland Harbour Bridge has missed out on the list of highway upgrades needed for heavier trucks. Hamilton—
Hamilton—the city of that member—is concerned about the impact of heavy trucks on its local roads and on road safety, when traffic volumes and levels of heavy freight are set to compound in the coming years. It supports sustainable transport progress, which involves transitioning more of the freight carried by trucks on to rail. So it seems to me that this proposed change somewhat contradicts the efforts of the Government to try to reduce the emissions and the traffic on our roads and to have more efficient vehicles.
The bill is pretty timid, and I think I have said that before. We could be doing so much more. If we look to the UK, it is investing £250 million to promote low carbon transport vehicles over the next 5 years, and it will be offering subsidies of up to £5,000. Now, that would take care of the issue about the low paid not being able to afford more efficient vehicles. Denmark has announced a $135.8 million investment in an electric car charging network in the country. That is very interesting and is worth looking into, because New Zealand has many similarities with Denmark. If that nation can be so adventurous and forward-thinking, particularly in a time of recession, then why not New Zealand? Labour supports this bill. We think it is pretty timid. However, we are going along with it. I have raised concerns today, and, as I said, we will be watching carefully, and we will be watching the “heavy truck” debate as it escalates through the country, because, quite frankly, the Government has botched the issue.
DAVID BENNETT (National—Hamilton East) Link to this
The previous speaker is a member of the Transport and Industrial Relations Committee, which did such a fine job under such fine leadership, in progressing this bill to this stage. I am sure the previous speaker would like to thank her committee for its hard work, and the officials for their support, and the chair as well for the leadership and direction provided in that committee. We need to give special praise to the Minister of Transport.
I was offended in that speech where the speaker tried to say the Government of the day was moving too quickly on environmental issues. Labour feels that the Government of the day should not be advancing the take-up of electric cars in this country. Labour obviously does not believe in having a clean, green New Zealand. It does not believe in environmental issues. It does not believe in taking advantage of technology, which would advantage New Zealanders. The Labour Party is a party of the past. What more would we want to see of a previous century, no less? The last time Labour was elected was in a previous century. That is the reality of the Labour Party. Labour members want to create a “classless society”. Those are the two words that came out of the last speech. They have a problem with people having money and being able to afford clean, green technology. If we think about that, what does it mean for New Zealand? Labour members have a problem with New Zealand being rich enough to have clean, green technology to look after our environment.
Dr Cam CalderThat is what Labour members think. They want to take New Zealand back to some communist State where everything is controlled by the Government, where they know best; where no technology is involved, everybody lives on some great land-based system that does not deliver any technological advances, does not take advantage of a modern economy, and does not deliver the clean, green solutions that this Government wishes to deliver for our people.
Let us just think about a classless society. Did Labour members represent a classless society when they were in Government? I am thinking about Labour initiatives like KiwiSaver. Were initiatives such as that designed for people who could not afford to pay for them? No, they were designed only for those people who could put some of their wages into it. Labour members did not look after the classless society when they had a chance. Labour did not look at creating a level playing field where everybody was the same. Labour members say one thing but do another thing. This bill is a perfect example of when Labour will not acknowledge what is good for this country and good for transport.
That is a great example. It is great to see that we have some Labour members here from the Waikato region. They have been going on about trains in the Waikato. I will give those members one little piece of advice about the trains in Waikato. Labour members want to have a passenger train that goes from Hamilton to Auckland. They want the trains to run in the morning and in the afternoon so that work people can use it. They say that is the best thing we could do for the Waikato.
Let me ask those members one question: where on the main trunk line is there no electrification? It is between Hamilton and Auckland. So if they want to have a train between Hamilton and Auckland, what kind of train will it be? It will be a diesel train, and if it is a diesel train, it is a dirty train. Yet in Hamilton East at the last election Labour fought against our expressway and for a train to Auckland—a train based on diesel technology. I challenge Labour members to go to the people of Hamilton and tell them that they would put a train on that track and make it clean and green. Would they do that? Would Labour members put a clean, green electric train on that track?
I would like to see Sue Moroney say that, because it would mean that David Cunliffe would have to find another couple of billion bucks to pay for it. That is the reality of what Labour members are dealing with. If they want to have clean, green technology in the Waikato then they should go out there and say it. They will not do that, because they know they are dealing with the only bit of track that is not electrified, and that they would have to put a dirty train on that track to be able to deliver that. That is the farce that the Labour Party is. Labour members do not go out there and tell people the true story. They just go out there and say: “Let’s have a train. The trains are clean and green.” What kind of emotional detachment is that from the reality that it would be a dirty diesel train?
National members have a much better plan. Firstly, we have a plan that the people of Hamilton actually voted for. That is the first thing. And it is a plan that will actually work. We will build the expressway that Labour was not going to build—
Sue MoroneyLabour was going to build it. It had 9 years in which to put it in the 10-year plan. In fact it took it out of the 10-year plan; it took out the Te Rapa Bypass. We will make sure that that road is built. That road will allow electric cars to drive from Hamilton to the outskirts of Auckland, to hop on to a good public transport network that will be electrified and will take people into and out of Auckland at a fast rate using electric, clean, green technology. It will be clean, green transport from Hamilton to Auckland.
What is Labour’s alternative? It is to tell people to hop on to a dirty old train that cannot even get into central Auckland because the Auckland Regional Transport Authority says that it is full now. So the train would not even get into downtown Auckland, but Labour members do not tell the good people of Hamilton that. They do not tell the good people of Hamilton that the report that came out from the Auckland Regional Transport Authority said that this train could not get into Britomart transport centre because it is full.
No, it will not be allowed into Newmarket, either. So that train would not get into central Auckland. So where does Labour expect it to go? The train could get into Papakura—that is where it can go. You might as well drive there in an electric car on our new motorway—
Mr DEPUTY SPEAKER Link to this
Two things: first, the member keeps bringing me into the debate; second, this bill is about road-user charges and we are on a second reading speech, not a first reading speech. The member has 2 minutes 40 seconds left and I would actually like to hear about road-user charges. I ask the member to continue.
Thank you, Mr Deputy Speaker. One of the big parts of this bill is to bring in electric cars. We are reducing the cost of electric cars. Electric cars will be the main things running on the Waikato Expressway in 30 or 40 years’ time. That is the nature of this bill. This bill is very relevant to the people of Waikato because it shows vision, it shows direction, and it shows leadership. More important than that, and more important than all of those things, it shows one thing that Labour members did not show to the good people of the Waikato—it shows action. We will build a road. We will not just campaign and say we are advocating for a rail network; we will build the road, which is more than the Opposition has done.
Labour members are trying to break up this fine speech.
If we look at electric vehicles, they are very important. We are not looking at having a classless society, which is what Labour wants to create. We are looking at a society where we want to take advantage of the technology of the world. We want to be a country where people can go out and buy the technology. We are not looking at a pre-industrial State, which is something Labour wants to see the rebirth of. We want a country where there is nothing wrong with people succeeding and achieving and there is nothing wrong with people wanting to spend their money on electric cars. That is an important avenue for New Zealand to go down if we want to have a clean, green economy.
This bill is very important in that respect. It is the first step in recognising that we can have a clean, green transport environment on our roads. That flies in the face of the rhetoric we have heard about rail as an alternative to roading. Roads will be the clean, green alternative in the future. The big economies of the world are investing in that technology. They have a reason to want to have that technology, and they will make that technology economically available not only to those who can afford it now but to the masses. People will find in time that everybody will be driving electric cars, because that is the future of transport. It is just of matter of time, and it will happen.
CAROL BEAUMONT (Labour) Link to this
Tēnā koe, Mr Deputy Speaker. I offer my apologies to the previous speaker, David Bennett, for interrupting his speech, but he was supposedly speaking on the Road User Charges Amendment Bill, and I intend to look at that bill in a bit of detail. But before I do that, I note that the previous speaker, the chair of the Transport and Industrial Relations Committee, which I am a member of, has just given the most bizarre speech I have heard in my parliamentary career so far. I honestly do not quite know how he managed to get the topic of communism into that speech, but let me stand here with some pride and say that, yes, Labour is the party that believes in fairness, social justice, and sustainability. Frankly, if that is in comparison with a Government that gives tax cuts to the rich and increases funding for private schools at the same time as reducing funding for very important things like adult and community education, then I really do wonder.
Contrary to what the previous speaker said, the Labour Party did invest a significant amount in both roads and public transport. The previous Labour Government did a lot in the transport area. As much as the previous speaker may try to rewrite history, he will find, if he looks at funding for roading in Auckland, for example—which was absolutely ignored by the previous National Government—he will see that significant changes were made under the previous Government. The current National Government has, of course, moved the emphasis in transport funding away from public transport and on to roads. And that gets me back to road-user charges. The Transport and Industrial Relations Committee read submissions on the Road User Charges Amendment Bill, and that was because there was not enough time for anybody to actually come and present their submissions to the committee so that we could debate the issues and ask questions.
The bill amends the Road User Charges Act 1977 in order to achieve two outcomes. The first is the exemption of light electric motor vehicles from the requirement to pay road user charges, as my colleague Darien Fenton outlined previously, and the second is the provision of notice of increases to road-user charges, with the road-user licences for heavy motor vehicles expiring 1 month after an increase comes into effect. The select committee examined the bill and recommended that it be passed, and it did not recommend any amendments to the House. Advice was taken from Ministry of Transport officials during that process. A number of issues were raised by submitters in written submissions. The Motor Industry Association suggested that if the road-user charges system continued in its present form, consideration would need to be given to either an exemption or a modified rate for plug-in hybrid vehicles. That is something Labour agreed with. Secondly, committee members had some concerns around the drafting of new section 21(2), inserted by clause 6. Again, we agreed that the wording was a little bit unclear in respect of whether licences issued before the increase took effect are subject to expiry, and we dealt with that. The third area was, as Ms Fenton has already outlined, the time frame for exemption of electric vehicles.
Why is this legislation being rushed through? That is one of the questions we need to ask ourselves, as Darien Fenton mentioned previously. The report-back period was just under 1 month, with a 2-week adjournment included in that, and still there has been no explanation for it. It is all very well for Government members to jump up and down and say the Government is an action-orientated Government. Only in very limited circumstances does the Government need to rush through legislation, it seems to me. During my relatively short period in this House, my experience of the select committee process has been a very positive one. I think it is a very fine feature of our system. The submissions that are made to select committees, the opportunity for people to come along and make oral submissions to a committee, and the ability of select committees to then question those submitters are very important parts of our parliamentary process in New Zealand. It is a process that provides the people of this country with confidence in the system. It gives them the right to be heard on legislation that is being put through the House. I have no understanding at all about why this bill is being rushed through, and why people have not been able to make oral submissions. That means we do not get the proper scrutiny of legislation that one would expect to see from this Parliament. There has been a bit of a common practice, it seems, of rushing things through under this National Government. So I sincerely urge members across the House to make every effort to ensure that legislation is given proper scrutiny.
I will focus the rest of my speech on the road-user charges part of this bill. Labour instigated the road-user charges review, because there had not been a review for 18 years. During that period of time, as members might expect, the ratio of trucks to cars had changed enormously, as had the weights being carried by those trucks. The upshot of that was a greater inequity between trucking firms and private vehicle motorists over who should pay for road maintenance. Darien Fenton outlined to us that more is happening in that space, that the Government is looking at allowing further heavier trucks on our roads, increasing the damage that trucks do. The Government also looked at initiatives like Sea Change, which provided a strategy for moving heavy freight by sea using clean technology—unlike what the previous speaker, David Bennett, was talking about—and completely wiped its hands of them. The Government said it was not going to have a bar of that strategy. So the Government will get rid of strategies like Sea Change, which would potentially take really heavy freight off the roads, and it will instead put heavier trucks on our roads.
I will go back to the history of the road-user charges review. When Labour was in Government we faced the situation where truck drivers got extremely agitated about the putting up of road-user charges with no notice. But that was done for a very important reason: on the previous occasion when notice had been given, there was a great deal of purchasing of road-user charge certificates. A large amount of Crown revenue was lost through forward-purchasing. This bill clearly tries to put in place some sort of middle ground. I think that is appropriate. I think it is appropriate that there is notice. I think it is appropriate that a real effort is made to ensure that there is no bleeding out of Government revenue. Goodness knows, we all know it is important, in these hard economic times, that Government revenue is maintained. The previous Minister of Transport, Annette King, met with Road Transport Forum New Zealand over that whole process. She said that the Government would work with them to put in place a process that was fair. The objective, as I mentioned, was not only to increase road-user charges without a great loss of revenue to the Crown, but also to give sufficient notice to truckies. This bill has finally come in, and it has arisen from the inquiry initiated by the Hon Annette King. I will make a side point. There was a lot of huff and puff before about this Government being action-orientated. Well, in fact, this is yet another bill that is effectively the result of the previous Government.
I will just finish up by talking about the fact that people who purchase, under the provisions of this bill, their road-user charge certificate in the notice period allowed prior to the price increase will have only 1 month to use them. The bill will close the loophole whereby people could go out and pre-purchase a lot of road-user charges at the old rate, use them indefinitely and thereby save themselves money. I think it is a good, common-sense provision. It provides some fairness and equity all round, and, of course, that is what Labour is about. It is not about the Communist Manifesto, I say to Mr David Bennett; it is about fairness, equity, and sustainability.
SUE KEDGLEY (Green) Link to this
Tēnā koe, Mr Deputy Speaker. The Green Party is pleased to join in the consensus of this House in supporting the Road User Charges Amendment Bill. We are particularly pleased about the incentive it provides to use the new technology of electric cars by waiving road-user charges for the next 4 years. Why would we—why would anyone—not support electric cars? They do not have emissions, they improve the efficiency of the fleet, and they are a tiny step towards energy independence. They are, as an earlier speaker said, a form of clean, green transport.
But let us get real and remind ourselves that electric cars are not an immediate panacea; they do not provide a great panacea for New Zealand’s serious transport problems. We need only to contemplate that an electric car costs double to quadruple the cost of a conventional car—that is, $40,000 to $80,000. The Ministry of Transport estimates that in 2010—next year—there will be 30 electric cars, and by 2020 there may be 30,000 electric cars on the road. So we are not talking about a panacea. The chair of the Transport and Industrial Relations Committee, David Bennett, waxed on as though electric cars were going to solve New Zealand’s transport problems. Let us get real. As Rahui Katene said in an earlier speech, because of the cost of these cars, particularly in the first few years, it will be a revolution for the rich. Unfortunately, ordinary New Zealanders will not be able to fork out $40,000 to $80,000 for an electric car.
Nevertheless, it is good that we are encouraging the use of electric cars. I do not know how many members saw the film Who Killed the Electric Car?, which was a very interesting film. Many decades ago the technology for the electric car was developed, and it started to be rolled out all over America. The film points out that all of the main car companies colluded to kill the electric car, because it provided such competition to the diesel-powered car. That was why they killed the electric car. It is great that finally, decades later, we now support the electric car, and some of the main car companies are supporting and getting behind it instead of trying to kill it. That is indeed progress.
I wonder whether the road-user charge exemption will also extend to electric buses. The Green Party had a huge fight, put forward a major petition, and was instrumental in saving the electric trolley bus in Wellington. The electric trolley bus was about to disappear from New Zealand. We hope that this incentive for electric cars will also extend to electric buses, and that this Government will support the use of electric buses being extended in New Zealand—particularly here in Wellington, with the doubling of our fleet. I very much doubt it, as this Government has slashed public transport funding and is pouring all the money into roads. Now, $7 goes into roads for every $1 that goes into public transport.
David Bennett was raving on about the train between Hamilton and Auckland, which an earlier Labour speaker had suggested the Government should be supporting. He went on about the fact that the train runs on diesel. Well, we all know that, but I ask why this Government, if it is so enthusiastic about electric, clean, green transport, does not look at electrifying the remaining parts of the main trunk line—the line between Hamilton and Auckland, and the small part of the line between Ōtaki and Palmerston North. Why are we not doing that? David Bennett said that this bill showed that the Government is giving direction, vision, and leadership on clean, green transport, but I ask what about electrifying the rail line between Hamilton and Auckland, and between Ōtaki and Palmerston North. That would show real leadership. That would show real vision.
The second issue in this bill that I will mention is who will pay for the maintenance of our roads—the road-user charges. Of course, all of this came about because truckies were up in arms about their road-user charges. That brings me to the issue, which others have mentioned, of the huge, juggernaut trucks that are about to be unleashed on our roads. The Government is fast-tracking a proposal that, sadly, was initiated by the Labour Government, which did the pilot to allow 72-feet long, 53-tonne trucks on our roads. Has anybody heard of anything so stupid?
First of all, these huge, juggernaut trucks will destroy our roads. I am quite sure that the truckies’ road-user charges will not pay for that destruction of the roads. Already questions are being asked about some of the Minister’s estimates of the huge cost of upgrading numerous bridges as well as the roads.
The second issue is that roads in New Zealand are narrow. They are windy. They are hilly. They are utterly ill-suited to heavy, juggernaut trucks. What will happen when heavy, juggernaut trucks are unleashed on our roads? We will have more deaths on our roads. Trucks are only 4 percent of our vehicle fleet, but they represent 18 percent of the deaths on our roads. We will see more crashes and more serious accidents. Why? Because these huge, juggernaut trucks will take longer to brake; it will take much longer for people to pass them; and they will be 6½ feet longer, so when they go round corners they will go over the centre line. Already, there are numerous corners on the State highway over the Rimutaka hill where trucks go over the centre line. If we drive between Napier and Gisborne, we find numerous corners where trucks go over the centre line. They are a hazard to anyone who is trying to go round the corner at the same time.
New Zealanders are only just becoming aware of this Government’s unleashing of this new proposal for juggernaut trucks. I can tell members that people whom I speak to are horrified. They cannot understand why these trucks are being proposed. They are worried about the destruction that juggernaut trucks will cause to roads and bridges. They know that the road-user charges that the truck industry pays will not begin to pay for the destruction to roads, much less pay for the cost of the deaths and the serious injuries that will be caused on our roads. Will the industry pay for the cost of those deaths and serious injuries? I do not think so.
Let us be real: although this bill is a great step to encourage electric cars for those who can afford them, it is not a panacea for the problems of transport in New Zealand. If the Government is serious, as David Bennett claims it is, about trying to introduce clean, green transport into New Zealand, why would it not be investing in public transport and in upgrading our rail infrastructure? We can look at what is happening with the trains in Wellington. Because of years of deferred maintenance, thousands of commuters have been stuck for hours in trains. Our whole train network in Wellington is falling apart because of deferred maintenance. Surely, that should be the priority. That is what the Government should be doing.
What about electrifying the rail network in Auckland? I am assured by people in Auckland that there is still no Government commitment to fund electric locomotives in Auckland. I ask the Government to please tell us whether its enthusiasm for electric transport extends only to the electric car. What about the electric train and the electric bus? Is the Government committed to electrification of Auckland rail? I ask the next National speaker to confirm when the Government will make a commitment to buy electric locomotives to enable the electrification of the Auckland rail network. Why is this Government slashing public transport funding at the very time when we know that our public transport system is collapsing?
Dr JACKIE BLUE (National) Link to this
I am pleased to speak on the second reading of the Road User Charges Amendment Bill. The bill amends the Road User Charges Act 1977 to enable regulations to be made exempting light electric motor vehicles from road-user charges. The Government sees the bill, which will exempt owners of light electric vehicles from paying road-user charges for 4 years, as a first step towards encouraging the uptake of such cars.
At present, light electric vehicles weighing up to 3.5 tonnes are classed as diesel vehicles for the purpose of road-user charges. That results in a cost of approximately 3.6c to 4c per kilometre, money that is used largely to develop and maintain the roading system.
The Government sees private vehicles continuing to be the most significant mode of transportation for most New Zealanders. The statistics are that 84 percent of people go to work by car, truck, or motorbike, and that 70 percent of all freight in New Zealand goes by road. The environmental impact of the widespread use of private vehicles needs to be taken into account. Therefore, it is important that the Government encourages the use of alternative fuel technologies in order to help meet our environmental obligations over time. The Government considers that the bill will encourage the uptake of electric vehicles.
Alternative fuel technologies can make a significant contribution to improving the efficiency of our vehicle fleet. Importantly, electric cars can also decrease our reliance on imported fossil fuels and improve our energy security. Combining highly efficient electric motors with our competitive advantage in renewable electricity generation will reduce the greenhouse gases produced by the transport sector, as well as the harmful emissions affecting air quality.
The road-user charge exemption will come into effect on 1 October 2009 and will apply until 2013. The Government will reassess the initiative at that time. The initiative will have the effect of aligning the treatment of electric vehicles with that of biofuels. The bill is about the Government supporting a new fuel technology and encouraging a change to it.
The bill also provides for 42 days’ notice of a road-user charge increase. That has been done to minimise potential revenue loss caused by pre-purchasing of the road-user charge by the heavy motor vehicle industry following notification of a road-user charge increase. The bill provides that heavy vehicle road-user charge licences will expire 1 month after an increase comes into effect.
The history of that particular issue is that in 2008 road-user charge rates were increased without notice to operators at a time that coincided with high fuel prices. Operators were unable to pass on the increases to customers straight away and publicly demonstrated against the increases. For heavy motor vehicle operators, the road-user charge represents a major cost of doing business. Changes in road-user charge rates that cannot be passed on to consumers in a timely manner will significantly decrease marginal profitability. Notification will improve businesses’ liability to operate, by providing them with time to pass on the costs of road-user charge increases.
It is important to note that notification carries a risk of revenue leakage through large-scale pre-purchasing of the road-user charge. The level of anticipated revenue leakage from notification of the next road-user charge increases for light motor vehicles scheduled for 1 October this year is not known. On the one hand the road-user charge is a pre-purchase system, and there is a benefit associated with paying the Government money ahead of time, but on the other hand light motor vehicle owners have also historically not pre-purchased significant quantities of the road-user charge. Although notification of road-user charge increases will also be given to light motor vehicle owners, pre-purchasing is expected to have little impact on revenue.
The Ministry of Transport has assessed the bill and says that the bill’s two distinct outcomes will not have a significant effect on economic growth. The two distinct outcomes are to enable the exemption of light electric motor vehicles from their requirement to pay the road-user charge, and to provide notice of increases to the road-user charge to all diesel motor vehicle owners.
There is no doubt that electric motor vehicle technology can make a significant contribution to improving the efficiency of the motor vehicle fleet. Increasing the proportion of light electric motor vehicles in the fleet decreases reliance on imported fossil fuels and improves energy security. Combining highly efficient electric motors with New Zealand’s competitive advantage in renewable electricity generation will reduce the greenhouse gases produced by the transport sector, as well as the harmful emissions affecting air quality. Light electric motor vehicles are also much cheaper to operate per kilometre than conventional motor vehicles.
The global market for electric motor vehicles is already severely constrained. It is expected to remain that way over the next decade due to the low production volumes of first-generation electric motor vehicles. Until economies of scale start to reduce prohibitive battery costs, early electric motor vehicles will have a price premium of roughly double to quadruple that of a conventional motor vehicle. For example, a $20,000 conventional motor vehicle becomes a $40,000 to $80,000 electric motor vehicle.
New Zealand is not initially viewed as a priority market, with manufacturers focusing on large subsidised markets that can absorb the technology premium, so hastening the transition to large-scale production and a more accessible product is something we need to do. Although New Zealand is not a light electric motor vehicle manufacturer, the Government plays an important role in the uptake of electric motor vehicle technology. Part of that role is to remove barriers that could prevent or delay the uptake of a market for light electric motor vehicles in New Zealand. One barrier is the requirement to pay the road-user charge. That view was reinforced by the Energy Efficiency and Conservation Authority market research in 2008, in which 52 percent of 524 respondents stated that having to pay the road-user charge would affect their decision to purchase a light electric motor vehicle.
As light electric motor vehicles are not exempted under Section 4 of the principal Act, their owners are required to pay the road-user charge. The current road-user charge rate for a light electric motor vehicle weighing 3.5 tonnes or less is $36 per 1,000 kilometres. It costs the owner of a light electric motor vehicle approximately $432 per annum, based on an average travelling distance of 12,000 kilometres per year. In comparison with the upfront capital cost of early electric motor vehicle technology, the road-user charge would appear to have a very minor influence on the purchasing decision of an individual or a business. However, the general negative perception about the road-user charge, particularly of owners of petrol motor vehicles who have not previously paid the charge, make it a barrier to the uptake of electric motor vehicle technology.
The National Party promised in the lead-up to the 2008 general election that owners of light electric motor vehicles would be exempt from paying the road-user charge. The proposed exemption is transitional and limited in scope, and is not intended to set a precedent for road-user charge exemptions. The objective of the amendments proposed in the bill is to mitigate a perceived barrier to light electric motor vehicle uptake that is imposed by the requirement to pay the road-user charge. Exemption from the road-user charge will provide light electric motor vehicles with a comparative advantage in operating costs, and also signals the Government’s broad support of electric motor vehicle technology to the emerging market.
In summary, with the bill we are delivering on an election promise to exempt light electric motor vehicles from the road-user charge. Exempting electric cars from road-user charges for 4 years is a first step towards encouraging their uptake. The Government is keen to encourage the uptake of electric vehicles, though we see the use of private vehicles continuing to be the most significant mode of transport for most New Zealanders. Therefore, it is important that we encourage the use of alternative fuel technologies to help meet our environmental obligation over time. We believe that alternative fuel technologies will bring a big contribution to improving the efficiency of our vehicle fleet. I commend the bill to the House.
Hon DAMIEN O’CONNOR (Labour) Link to this
I might have the last say today, which would be quite an honour. I say that we should congratulate National for this legislation. I think it is good legislation for a couple of reasons. One of them deals with the dilemma that whenever a Government announces an increase in road-user charges with any lead-in time, there is a rush to buy those road-user charges, with the corresponding loss of potential revenue to the Crown. That has always been a bit of a dilemma. When my colleague the Hon Annette King attempted to increase road-user charges—in a way, it was necessary, to pay for road funding across this country—without any notice, we had a massive uproar up and down the country.
This Road User Charges Amendment Bill establishes a compromise situation whereby the maximum period for which road-user charges may be purchased from the time of notice will be 42 days. There is a lead-in time, people have the warning, and if they have not used the charges, then they can apply for a refund. The Government should be congratulated on doing that.
The next thing the Government should be congratulated on is its new wisdom. It has finally accepted that there is an issue of climate change in this country. That is quite amazing, really. We must acknowledge educational progress whenever it occurs, because in May 2005, National’s learned leader, John Key, said about climate change: “This is a complete and utter hoax, if I may say so. The impact of the Kyoto Protocol, even if one believes in global warming—and I am somewhat suspicious of it—is that we will see billons and billions of dollars poured into fixing something that we are not even sure is a problem.” Of course, he did learn, and in 2006, in one of the classic Key flip-flops, he said: “I firmly believe in climate change and always have.” That was a revelation to the country, I would have to say. So in the spirit—
Michael WoodhouseHon DAMIEN O’CONNOR Link to this
That is exactly what he said, and that member should go and read history. That flip-flop has allowed the introduction of this bill and I congratulate the Government, because it is one step down the path to recognising not only that we have an issue internationally but also that we should do smart things to try to reduce our emissions.
What the Government is doing is reducing the road-user charges on electric vehicles. That seems like a great idea. I believe that the Minister for the Environment, Nick Smith, has an electric vehicle; I am not sure how many other Ministers do. I am not sure whether that means he should declare a conflict of interest when passing this bill; it should, perhaps, be stated upfront. I am not sure whether any other members in this House have an electric vehicle. If they have, then they should say so when they are speaking on this legislation. That Minister has; I do not know whether he has stated it. Anyway, we move on.
It is a principled issue and I acknowledge that this is smart legislation. But it is not perfect, at all. The thing about the business people in the National Party, of course, is that they will often, and with some justification, say: “We want the Government out of our business. We just want to get on with the job of business. We do not want subsidies. We do not want handouts.” Well, what we see in this legislation is indeed a cross-subsidy. It is a cross-subsidy from those people who pay for the roads to those people who are in a position to assist with climate change. I think we accept that it is a reasonable cross-subsidy, because we have to do something about climate change. But the reality, of course, is that we are doing it only for those people who can afford to pay twice as much for an electric vehicle. We have to be mindful of that.
The points made by my colleagues were very sound ones. This bill will mean cross-subsidisation, because the poorer people who will have to drive petrol cars—and indeed hybrid cars, which is an issue I will come back to—will be paying full road-user charges and paying for the roading network in this country. Those who can afford to have an electric car will not have to pay for the roading network. We all need it, we all utilise it, and we all benefit from it, so there is a question of whether that subsidy should apply. I say that perhaps it should, for the greater good of reducing our overall carbon emissions.
But the question I would then ask is, what about hybrid vehicles? Because hybrid vehicles are lower-emitting vehicles, and so too are small diesel vehicles, should we look at the road-user charges for those vehicles? Why did the Government not include those vehicles in this legislation? I believe that small diesel vehicles should be exempt from road-user charges. In the way that we are trying to incentivise the uptake and purchase of electric vehicles, we should be doing the same for small diesel vehicles and for hybrid vehicles. Why did the Government not go that far?
Hon DAMIEN O’CONNOR Link to this
The member says that small diesel vehicles do not exist. The member should get out there and look around. There are hybrid petrol vehicles and there are small diesel vehicles, both types of which are far more lower-emitting vehicles than the conventional petrol ones that most of us drive. We need to move in that direction, and I think the approximately $400-plus a year subsidy that we will be giving through this legislation, over a 12,000 kilometre a year average, is a reasonable incentive. It is a gesture, and I think it is one that we should make from Parliament, but we should also make the gesture for those people who buy small diesel vehicles. Those vehicles are a little louder and a little noisier, but they are lower-emitting, and many of them now, of course, have outstanding performance. There is little reason not to purchase them. If the change in legislation and the reduction in the road-user charges is the tipping point, then the Government should have looked at that as well.
Part of the problem, of course, is that the Government rushed this legislation through. The Government did not hear submissions on this legislation. Had it done so, it would no doubt have heard some of those sensible and logical points when they were brought to the table. We have to be a little smarter in the way we impose charges, so that we incentivise better behaviour. In fact, the emissions trading scheme is all about that. The member on that side of the Chamber has to learn a lot when he comes to this House—that through Parliament we try to promote good behaviour, but we do not ignore opportunities that are before us.
I say that the Government, in passing this good legislation, could have passed better legislation. The Government could have included light diesel vehicles and hybrid vehicles. Why did it not do that? I think it is an insult to all those people who have made the effort to lower their emissions by purchasing those vehicles, often at greater expense, that the National Government has ignored what they have been attempting to do to lower our national emissions—some of them for many, many years.
I say again that I congratulate the Government on acknowledging that there is a climate change issue. John Key has finally got it, in spite of saying in May 2005 that it is a complete and utter hoax. It is one of many, many flip-flops from the Prime Minister. Thankfully, this one has moved in the right direction.
The flip-flop that says “We will not privatise State assets.” will be one that will take this country down the gurgler. We should wait until that occurs. We are not hoping that it will occur, but I bet that that is what will happen. John Key and the way he has flip-flopped on so many things will mean that he will flip-flop on the privatisation of State assets. The roads and many of the infrastructural assets of this country that the road-user charges have paid for will be privatised for private benefit. I say that the passage of this legislation is a good move, but it could have been so much better.
JOHN BOSCAWEN (ACT) Link to this
I did not intend to participate in this debate; I will probably speak only until 6 p.m. and leave it at that.
It was very interesting to listen for the first time to Damien O’Connor speak in the House. He very proudly declared that John Key has acknowledged that there is an issue of climate change. Let me say to Mr O’Connor that of course the climate is changing. It has been changing for centuries; it has been changing for millennia. The climate is always changing. He thinks it is important to say there is climate change, but that is nonsense. The issue is whether humans impact on climate change or whether it occurs naturally, and it has been occurring naturally on this Earth for many, many millennia. I acknowledge that there is climate change, but since 2001 temperatures on this globe have been going down, so I ask why we would penalise working New Zealanders when we are not certain there is an impact.
Mr Bennett talked about the benefits of this bill and about incentivising people to buy electric cars. I noticed that Mr O’Connor was happy to acknowledge that. Mr O’Connor also talked about cross-subsidisation. He talked about the situation whereby someone who could not afford to buy an electric car, at twice the cost of a regular car, is subsidising someone who could afford it. It was very interesting for that member to raise the issue of cross-subsidisation, because with KiwiSaver poorer people who cannot afford to save are, through their taxes, subsidising those who can afford to save. In particular, people on lower incomes, who do not get as big a subsidy from the Government as others do, are subsidising people who can afford to pay more and who have higher incomes. We have cross-subsidisation in KiwiSaver. One of the first things this Government did, before that member came back into this House, was to reduce the level of that cross-subsidisation from 4c in the dollar to 2c in the dollar.
That is exactly what it was! The Government was subsidising people’s savings at 4c in the dollar, and the subsidy is now 2c in the dollar. In my view, we should take that subsidy down to zero and we should make KiwiSaver compulsory.
I was also interested in Mr Bennett’s comments criticising the Labour Party for wanting a classless society. I say to him that we should have a classless society. In New Zealand we have two classes of people: the haves and the have-nots. We have the privileged and the unprivileged. We have people who can afford to save through KiwiSaver and get a subsidy, and those who cannot. We have people who can afford private medical insurance, and those who cannot. We have people who have access to good health care, and those who do not. Those issues are confronting our society, and we should be ashamed that we have a two-class society. We should be moving towards a classless society. I actually congratulate the Labour Party. I wish its vision was true.