Low Emission Vehicles
When the government brought in an FBT exemption for EVs, hydrogen fuel cell cars and plug-in hybrids, the intention was to drive up the take-up of low-emission cars. However, as a concession to the Greens, the government also agreed to end the fringe benefits tax on plug-in hybrids in April 2025. The problem is that range anxiety, high costs and inadequate infrastructure have hindered EV adoption, making plug-in hybrids essential for our energy transition. Plug-in hybrids are the choice of Australians who want to do better in reducing their emissions but are not in the position to commit to a fully electric vehicle. What we must not do is make perfect the enemy of the good. More people driving plug-in hybrids means lowered emissions, a key point I believe even the Greens would agree with.
The upcoming expiration of the fringe benefits tax exemption for plug-in hybrid vehicles means we have to act this year to extend the exemption. Extending the FBT exemption until 2030 is essential for several reasons. Plug-in hybrids act as a crucial bridge for businesses, councils and the like to transition from fossil fuels. Extending the FBT exemption provides a stability across these sectors that they need to continue investing in cleaner technologies. Without this extension, we risk market regression where businesses revert to internal combustion engine vehicles due to cost pressures, threatening both economic stability and our progress towards sustainability.
Environmentally, plug-in hybrids offer a pragmatic solution to reducing carbon emissions while our EV infrastructure catches up. They emit significantly less carbon than fossil fuel cars and are feasible in areas where EV adoption isn't yet practical. Most commuters only use the battery to drive their average 40-kilometre daily commute, rarely travelling distances that would engage the petrol engine. The FBT exemption encourages plug-in hybrid uptake, aligning with our climate commitments.
Short sighted policy should not derail our long-term environmental goals. Full EV adoption should be the ultimate goal; however, we must acknowledge the current technological limitations, particularly in rural and remote regions. Plug-in hybrids address range anxiety and infrastructure challenges, providing reduced emissions without needing an immediate comprehensive EV infrastructure overhaul. Extending the FBT exemption allows time for the market and infrastructure to mature, ensuring a smoother transition to fully electric vehicles.
Strong support for this extension is widespread. Key stakeholders across the automotive industry, environmental groups and consumer advocates have voiced their backing. They recognise plug-in hybrids as an integral part of Australia's journey towards a low-carbon economy. Public sentiment echoes this support, with increasing numbers of Australians choosing plug-in hybrids over fossil fuel vehicles—reflecting a growing awareness of their environmental and economic benefits.
Internationally, we have seen the positive outcomes of extending similar tax incentives. Countries that have maintained or extended their tax exemptions for hybrid and electric vehicles have experienced higher adoption rates, reduced emissions and a more stable automotive market. When I introduce the Treasury Laws Amendment (Extending the FBT Exemption for Plug-in Hybrid Electric Vehicles) Bill 2024 in the near future, I call on this chamber to be part of the solution and to support my bill. I call on everyone to consider a policy adjustment to pull down barriers and support the technology that allows more people to drive lower emissions vehicles while the challenges of a fully electrified fleet are resolved.
