Bills Digest 2654
Policy objectives
The Land Transport (Clean Vehicles) Amendment Bill 2021 (the bill) amends the following:
- Land Transport Act 1998
- Land Transport Management Act 2003
- Energy Efficiency and Conservation Act 2000
- Income Tax Act 2007
- Land Transport (Motor Vehicle Registration and Licensing) Regulations 2011
The single broad policy topic that the bill intends to achieve is a rapid reduction in carbon dioxide emissions from light vehicles imported into New Zealand. [1]
Background
The table below outlines some of the key events leading to the introduction of the bill.
Date | Event | Description |
July 2019 | The Ministry of Transport released a discussion document called “Moving the light vehicle fleet to low-emissions: discussion paper on a Clean Car Standard and Clean Car Discount” | The Ministerial Foreward in the discussion document, by Hon Julie Anne Genter (then Associate Minister of Transport) states: The policies being consulted on in this paper are focused on reducing emissions in the light vehicle fleet (cars, SUVs, utes, vans, light trucks all of 3.5 tonnes gross vehicle mass or less). The Government is focused first on light vehicles as they account for almost two-thirds of transport emissions. Light vehicles have an average life of 19 years which means that the vehicles we import over the next five years will lock in emissions out to 2043 |
January 2021 | According to the Waka Kotahi NZ Transport Agency website, the Government announced its proposed Clean Car Standard in January 2021 | The website states: The Clean Car Standard, which will require legislative changes, will focus on the supply of vehicles coming into New Zealand. It is proposed that vehicles with a high CO2 emission rating would incur a fee, the higher the CO2 rating the greater the fee. For vehicles that are below a set standard, the importer would receive a credit that could be used to offset fees. In this way importers would be encouraged to bring cleaner cars into New Zealand. |
27 January 2021 | Shifting gear: How New Zealand can accelerate the uptake of low emission vehicles, Report 1: Policies to incentivise EV uptake, Concept Consulting & Retyna | While this report is an independent research piece by Concept in association with Retyna, it is described in the bill’s departmental disclosure statement as a report that has informed the bill. Among other things, the report states (at page ii): We think the most effective policy instruments are those which alter the relative purchase price of high and low emissions vehicles – increasing the price of high emissions vehicles and reducing the price of low emissions vehicles. |
31 May 2021 | Ināia tonu nei: a low emissions future for Aotearoa, Climate Change Commission advice to the New Zealand Government on its first three emissions budgets and direction for its emissions reduction plan 2022 to 2025 | Among other things, the Climate Change Commission advice stated (at page 267): Fiscal incentives to lower the upfront costs of EVs should also be introduced as a matter of urgency, to help overcome this cost barrier. Such incentives could include, for example, direct subsidies or a feebate scheme. A feebate scheme has the additional benefit that it disincentivises high-emitting vehicles, while encouraging lower-emissions ones. |
13 June 2021 | Beehive media release announcing the “[c]lean car package to drive down emissions” | In the media release, Transport Minister Hon Michael Wood commented (among other things): “A discount on electric, hybrid and low emission vehicles funded from a fee on higher emitting ones is the best policy to increase low emissions vehicle uptake in New Zealand.” |
July 2021 | According to the Waka Kotahi NZ Transport Agency website, the Clean Car Discount came into effect in July 2021 | The website states that legislative change is needed for the Clean Car Standard and the Clean Car Discount to become law and that: The Clean Car Discount came into effect on 1 July 2021 and until 31 December 2021 will provide rebates (subject to funding limitations) for eligible new and used light electric vehicles (EVs) and plug-in hybrid electric vehicles (PHEVs) after they are registered in New Zealand for the first time. From 1 January 2022 the Clean Car Discount will be based on the CO2 emissions of vehicles. Those with zero or low emissions would qualify for a rebate and those with high emissions would incur a fee. |
8 September 2021 | The bill was introduced |
Main provisions
Part 1 – Amendments to Land Transport Act 1998
Interpretation
Clause 4 of the bill introduces new definitions into the Land Transport Act 1998 (the LTA).
Light vehicle is defined as a motor vehicle that has a gross vehicle mass of not more than 3,500kg.
Regulations
Clause 5 of the bill inserts new sections 167A to 167C into the LTA.
Clean vehicle discount
Proposed new section 167A provides for regulations imposing fees and charges for the purposes of a clean vehicle discount. Among other things, section 167A empowers the Governor-General, on the recommendation of the Minister, to make regulations for the purpose of promoting the transition of New Zealand’s light vehicle fleet to zero- and low-emission vehicles and reducing vehicle carbon dioxide emissions. This is to be done under the section of the LTA that already empowers the Governor-General to specify the matters for which fees or charges are to be paid under the LTA or any other land transport Act (that is, section 167(1)(j) of the LTA).
Clean vehicle standard
Proposed new section 167B similarly empowers the Governor-General, under section 167(1)(j) of the LTA to make regulations, on the recommendation of the Minister, for the purpose set out in proposed new section 170 (which relates to the clean vehicle standard) setting fees and charges payable by vehicle importers. This is for the situation where vehicle importers do not include, among the vehicles they import in any given year, the minimum proportion of vehicles with zero carbon emissions required under regulations (to be made under proposed new section 167C(1)(m)). Proposed new section 167C(1)(m) requires vehicle importers to include, among the vehicles they import in any given year, a minimum proportion of vehicles with zero carbon dioxide emissions.
Proposed new section 167C empowers the Governor-General to make regulations for the purposes of proposed new Part 13 of the LTA (Part 13 relates to the clean vehicle standard) for the following purposes (among others):
- declaring, for the purposes of the definition of ‘approved test cycle’ in proposed new section 172, the test cycle that must be used to measure vehicle carbon dioxide emission
- prescribing the process for approving a person as a category 1 light vehicle importer
- prescribing formulas for the purposes of converting carbon dioxide emissions calculated using one testing cycle to another testing cycle
- prescribing procedures and requirements for the purposes of banking and transferring carbon dioxide credits.
Part 13 – Clean vehicle standard
Clause 7 of the bill inserts proposed new Part 13 into the LTA which provides for the clean vehicle standard.
Subpart 1 – Preliminary provisions
Subpart 1 of proposed Part 13 provides for preliminary provisions which includes (among other things):
- that the purpose of Part 13 is to achieve a rapid reduction in carbon dioxide emissions from light vehicles imported into New Zealand, to assist New Zealand in meeting its 2050 target and emissions budgets under the Climate Change Response Act 2002 and its domestic and international climate change ambitions and commitments (proposed new section 170)
- that Part 13 applies to light vehicles imported into New Zealand (proposed new section 171)
- a number of key definitions are provided in proposed new section 172 that apply to Part 13 including (among others):
Term | Meaning |
Category 1 light vehicle importer | A person who carries on the business of importing new or used light vehicles and whom the Director of Land Transport (the Director) approves as a category 1 light vehicle importer under the regulations |
Category 2 light vehicle importer | A person who imports a new or used light vehicle and who is not a category 1 light vehicle importer |
Type A vehicle | A light motor vehicle that is constructed primarily for the carriage of passengers and has not more than 9 seating positions (including the driver’s seating position) and either has at least 4 wheels or has 3 wheels and a gross vehicle mass exceeding 1,000kg and is not an excluded vehicle, or, any vehicle or class of vehicle that is declared by the regulations to be a Type A vehicle for the purposes of this Part |
Type B vehicle | A light motor vehicle that is constructed primarily for the carriage of passengers and has more than 9 seating positions (including the driver’s seating position) or is constructed primarily for the carriage of goods and either has at least 4 wheels or has 3 wheels and a gross vehicle mass exceeding 1,000kg and is not an excluded vehicle, or, any vehicle or class of vehicle that is declared by the regulations to be a Type B vehicle for the purposes of this Part. |
- the bill considers that a vehicle is “imported into New Zealand” at the point at which the vehicle is, for the first time, issued with evidence of vehicle inspection under the LTA (proposed new section 173).
Subpart 2 – clean vehicle standard
The explanatory note to the bill at page 3 states that:
This subpart establishes targets for carbon dioxide emissions from imported light vehicles, imposes obligations on vehicle importers to comply with those targets, provides for the ways in which vehicle importers can comply with the targets, and provides for matters relating to carbon dioxide accounts.
Subpart 2 of proposed new Part 13 provides (among other things):
- targets for reducing carbon dioxide emissions for Type A vehicles and Type B vehicles (proposed new section 175)
- category 1 light vehicle importers: annual, fleet-based compliance regime applies providing that a category light vehicle importer must comply with the targets on an annual basis in relation to the fleet of Type A vehicles, the fleet of Type B vehicles or each of those fleets of vehicles they imported in the relevant obligation year (proposed new section 176)
- charges payable by category 1 light vehicle importer if carbon dioxide emissions targets exceeded (proposed new section 177)
- category 1 light vehicle importer may bank overachievement of carbon dioxide emissions target (proposed new section 178)
- category 1 light vehicle importer may defer obligation (proposed new section 179)
- category 1 light vehicle importer may transfer carbon dioxide credits (proposed new section 180)
- category 2 light vehicle importers: vehicle-by-vehicle compliance regime applies where the importer must ensure that each vehicle they import in an obligation year complies with the category 2 light vehicle importer target that applies in respect of that vehicle. The vehicle emissions targets applicable in respect of Type A and Type B vehicles imported by a category 2 light vehicle importer must be calculated in accordance with the formulas prescribed by the regulations (proposed new section 181)
- charges payable by category 2 light vehicle importer if emissions targets exceeded (proposed new section 182)
- category 2 light vehicle importer may bank overachievement of carbon dioxide emissions (proposed new section 183)
- category 2 light vehicle importer may transfer carbon dioxide credits (proposed new section 184).
General provisions relating to carbon dioxide accounts are provided for in proposed sections 185 to 188. Proposed new section 185 provides that every vehicle importer who imports a light vehicle on or after 1 January 2023 must hold a carbon dioxide account with the Director.
Subpart 3 – Information gathering and enforcement powers
Subpart 3 of proposed new Part 13 contains provisions relating to information gathering and enforcement powers. Among other things subpart 3 provides:
- requirements for vehicle imports to collect and keep information and records for the purposes of the clean vehicle standard (proposed new section 194)
- offences relating to records and information (proposed new sections 195, 196, 197A and 197C).
Part 2 – Amendments to other enactments
Amendments to Land Transport Management Act 2003
Part 2 of the bill amends other enactments. Clauses 14 to 19 of the bill amend the Land Transport Management Act 2003 [2] (LTMA) by (among other things):
- inserting into section 5 of the LTMA (the interpretation section) a definition of ‘clean vehicle discount scheme’ which, among others things, includes the provision of rebates in relation to the carbon dioxide emissions of a vehicle and the imposition of charges under section 167(1)(j) of the LTA for the purpose of section 167A of that Act.
- giving the Crown authority to incur expenses or capital expenditure in a financial year to fund the clean vehicle discount scheme (with a formula provided to calculate the amount the Crown is authorised to spend without further appropriation which takes into account revenue received from charges paid pursuant to regulations made under section 167(1)(j) of the LTA for the purposes of proposed new section 167A of that Act) (proposed new section 9(1E) to 9(1H)).
- the functions of the Land Transport Agency in section 95 of the LTMA is amended to include administering the clean vehicle discount scheme.
Amendments to Income Tax Act 2007
Clauses 23 and 24 of the bill amend the Income Tax Act 2007. Clause 24 amends Schedule 5 of the Income Tax Act which is concerned with the fringe benefit values for motor vehicles. Clause 24 states that, for the purposes of schedule 5, if a person who owns a motor vehicle receives a payment under the clean vehicle discount scheme for the vehicle:
- the cost price of the vehicle to the person on the first acquisition of it by them is net of the amount of the payment; and
- the cost of the vehicle to the person on the first acquisition of it by them is net of the amount of the payment.
Other material
Regulatory impact statements
- https://www.transport.govt.nz//assets/Uploads/RISDemandsideoptionsinclAcceleratedFeebate.pdf
- https://www.transport.govt.nz//assets/Uploads/RIA/LEV-Regulatory-Impact-Statement.pdf
Published: 21 September 2021
by Katrina Melville (LLB Hons) Research Services Analyst.
ISSN 2703-6081 (Online)
- Land Transport (Clean Vehicles) Amendment Bill 2021, Explanatory note, General policy statement, p.1. [back]
- Please note that the bill appears to incorrectly refer to the Land Transport Management Act 2013, rather than the Land Transport Management Act 2003. [back]