With 15 percent of Australia’s greenhouse emissions coming from transport, we’ll need to make some urgent and drastic changes to how we drive. Unfortunately, it’s easy to summarise Australia’s policy on electric cars: we don’t have one.
To be precise, two states have just announced changes. They’re going to impose extra taxes on electric vehicles. The theory is that we need to prepare for an all-electric future by having charges per kilometer, like the petrol excise, because otherwise we’ll be accidentally subsidising people to drive more, and it’s easier to impose new charges now than when electric vehicles are widely adopted. It’s curious, though, that those governments are expecting the all-electric future to happen by itself, while they stand back and wait.
The bogroll crisis
This stagnation reminds me of some details from the early days of the 2020 pandemic. When people started panic-buying essential groceries, the federal government didn’t do anything about it. At the time, David Sligar of the WSW Institute remarked that they could solve the problem straight away with rationing (meaning, in practice, per-customer purchase limits), which would have been appropriate for the quasi-wartime situation we found ourselves in. Instead, they waited for the CEOs of the major grocery chains to take action, which eventually happened after a few weeks of chaos.
It was clear to everyone, around the same time, that some form of lockdown would be needed. Many offices drifted along in a strange twilight state, waiting for a work-from-home policy to begin. It would have been nearly costless for the government to announce that everyone who could work from home should start doing so. But they dragged their feet, as if waiting for the private sector to somehow take care of things.
I am their leader, I must follow them
During the Great Moderation, after the reforms of the 1980s, we got used to thinking of government policy as mainly about changing system parameters. Tax rates adjusted, subsidies added or removed, the level of regulation eased or tightened; the ship of state went faster or slower in the water as sails were trimmed or the tiller was moved. But there’s something important missing from this picture, namely the coordinating function of telling everyone to do something, or simply announcing what should happen. In a word, leadership.
Governments became so used to getting out of the private sector’s way that they let their leadership skills atrophy. Central planning can’t solve everything, and in normal times they should be careful about how they use state power. But the pandemic, and the climate crisis, are nothing like normal times.
Taxes and subsidies can make small changes to electric vehicle use, “at the margin” as economists like to say. Big changes will only come through coordination. Imagine if the government announced that petrol engines will be banned from sale by, say, 2030; that hybrids will be phased out by 2035; and that public and corporate fleets should be all-electric by 2025. This would let everyone—households, car owners, public transit planners, shopping centre managers, developers, large companies, battery manufacturers, charging networks …—make long-term decisions with a clear picture of what’s about to happen. Everyone knows that pollution-free transport has to begin soon. But with the current level of uncertainty, no individual can prepare properly.
Here in my car
In addition to mandatory changes, some amount of system-tweaking would make sense, mainly because EV running costs are very low. Using the market rate for fully renewable electricity, weekly refueling is roughly half the price of petrol per kilometer. And because electric motors have roughly 20 moving parts, as opposed to 2000 or so in a combustion system, the maintenance bills are negligible. That all means that their lifetime costs are lower than their upfront sticker price would suggest. Since many households are liquidity constrained, it would make economic sense to add a financial incentive to help them buy one.
(Incidentally, if you’re not liquidity constrained, consider joining the future early and get an electric car. Modern electric vehicles, including the Tesla Model 3 and and the Hyundai Kona, have ranges of around 500km—more than enough even for a large country like Australia. I’ve had a Kona for the last year. It’s great.)
Australia already has research scientists who work at the cutting edge of battery technology, as well as many people with previous experience building cars. That’s interesting to think about. Could our ambition to become the Saudi Arabia of renewable energy extend as far as designing new electric vehicles? But that’s a whole other conversation. Relying on imports would be more than enough to get us to emission-free transport.
Enjoy your weekend
Our current PM saw a chance to curry favour with voters in the mortgage belt during the last election by claiming that the Opposition’s tentative pro-EV policies would require ‘confiscating someone’s ute’, and would ‘end the weekend’. It was a cute line, but then he surprised everyone by winning, and is now stuck with it.
Perhaps he’ll figure out a way to reverse his position while saving face, and will perhaps even manage to break the federal Liberal Party out of its domination by hard-right climate deniers. Until he does, state governments like NSW and Victoria will be setting the agenda. They currently have more than enough influence to coordinate a transition to electric vehicles, which would drag other states along too. In 2021, perhaps, national leadership will be coming from Macquarie Street.