Friday, July 29, 2022

A runaway success

This year the government finally got its clean car feebate scheme into place. But there's a problem: it's been too successful:

Transport Minister Michael Wood will shortly review the cost of the fees and rebates in the Government's "feebate" scheme after the runaway success of the policy has meant it is paying out millions more in rebates each month than it collects in fees.


The clean-car discount is meant to encourage people to buy cleaner cars by offering a discount of up to $8625 from the price of an electric or low-emissions car. These discounts are paid for by fees of up to $5175 on dirtier cars. The Government said it would regularly review fee and discount levels when it announced the scheme.

The scheme is meant to be self-funding, but it could become a victim of its own success, paying out millions more in fees each month than it collects in revenue. This could mean fees going up or discounts going down when the scheme is reviewed in just a year's time.

Firstly, this sounds like the policy has been a huge success at driving the change it was intended to. Which shows just how much difference these sorts of policy pushes can make. Secondly, increasing fees is going to make dirty cars more expensive, discouraging their use even further. The big worry here is that the government will worry too much about making the books balance perfectly, and so undermine the impact of the scheme, when what they should be focusing on is the extremely rapid change they're driving. Because we need to decarbonise as quickly as possible, and transport is one of the big sticking points in this. The faster we can do it, the better off we'll be.