Mark today contributed to debate on the Appropriation Bill by outlining the Greens' opposition to the Government's proposed tax on electric vehicles, as part of the 2020 State Budget.
APPROPRIATION BILL 2020
The Hon. M.C. PARNELL: The appropriation process, the state budget process, is, as others have said before me, one of the best indications of a government's priorities. How governments spend our money shows the community where their priorities lie. If governments spend money on things that we value, things that are important to the community, that is generally well received, but one of my eternal frustrations with the budgetary process is that massive amounts of money can be spent on projects with very little justification, and yet hardly a word is said about it.
I want to focus on two issues in my short contribution. One is the proposed expenditure of $8.9 billion on a 10-kilometre stretch of motorway in metropolitan Adelaide, and the second issue is the proposed new tax on electric vehicles. Let me start with the freeway, or motorway as I think it is being called. This debate over the last several years has been frustrating in its narrowness. The debate appears to have been narrowed down to: should we dig tunnels, or should we have a surface freeway?
The questions arise: can we save the Thebarton Theatre? What about the Queen of Angels Church? What will happen to the local businesses along South Road? But the question that very few people are asking is: why are we doing this at all? Why is spending $8.9 billion—that is billion with a 'b'—of taxpayers' money a good idea? I mean, after all, we know that there is no-one homeless, there are no schools crying out for resources and there are no environmental projects that need funding. Yet when the government looks behind the cushions on the couch, they find $8.9 billion for a short, 10-kilometre stretch of freeway. I think that shows how skew-whiff government priorities are.
One thing that has disappointed me over many years in relation to South Australia is that unlike other states we do not actually have an effective civil society movement questioning the building of roads. Certainly, in Melbourne and in Sydney—in Victoria and New South Wales—they have long-established groups that have opposed the construction of massive freeways and in particular private toll roads. Those groups have been active for many years.
In South Australia we have not had such a civil society organisation. In fact, when it comes to public commentators there are very few people who are prepared to put their head over the parapet and question the orthodoxy that building freeways is good for a society. In fact, one of the few critiques I could find was from someone who I had been known to disagree with in the past but I am on the same page with this time, and that is Matthew Abraham. He is well known to all members as a former presenter of the breakfast radio show on the local ABC station. He now writes columns for News Corporation papers, including the Sunday Mail.
I found Matthew Abraham's column from 17 August last year, so 2019. Basically, his article criticises the government process of commissioning business cases for various projects. He criticises that process and then goes on to say, 'Well, here is a business case: don't do it!' in relation to the north-south freeway. He says:
Can we just stop and take a deep breath, please?
This is meant to be a fresh new Government—
remember, he was saying this a year ago—
can't it come up with a fresh plan to fix Adelaide's congested road network before blowing $5.4 billion on just one road?
I mention that that $5.4 billion has now expanded to $8.9 billion. Abraham goes on:
Not only does this section weave past heritage properties such as Thebarton Theatre, it runs like a river of potholed asphalt through a canyon of small and big businesses.
Two big fat lies sit at the heart of the entire South Rd project. The first is that it is a 'congestion buster'—to use the latest mantra...But big new roads don't bust congestion, they attract congestion. Is Sydney any less congested for the untold billions it has spent on motorways and tunnels?
The second lie is it will be a 'non-stop motorway'. Maybe we journalists should stop parroting this line, direct from the Government's spin doctors.
The money might eventually make it a continuous motorway but that’s not the same as non-stop.
The north-south corridor will be about as 'non-stop' as the non-stop South Eastern Freeway, the non-stop Southern Expressway or Sydney's non-stop Cahill Expressway.
Peak-hour truck crashes and multi-car pile-ups on mega-roads are frequent and often lead to tremendous delays.
Besides, the north-south corridor isn't being constructed primarily for motorists. It's a trucking route. That's why the Commonwealth kicks in such big bickies.
Once completed, South Rd will be a B-double magnet. Trucks will roll down the South Eastern Freeway and, rather than turning right on to Portrush Rd, they'll keep on rolling down Cross Rd to tap into all that pristine South Rd tar.
One way to bust congestion is to stop Adelaide from becoming so congested.
I will leave Matthew Abraham's comments there, because the points that he is making have been made many times before. When it comes to freeing up roads for freight, you need to look at what traffic is causing the congestion. We all know, because most of us spend most of our time in Adelaide, that the vast bulk of congestion is single-occupant cars going to work, taking kids to school, going to university—single-occupant cars. That is the bulk of the congestion.
If you were serious about freeing up road space for trucks, you would look at the problem—single-occupant cars in peak hour—and you would look at: how else could we transport people around? What other alternatives might there be? Public transport, for example. There is an idea. But, no, the government has this notion that freeways are the solution to busting congestion.
The Abraham article that I was referring to before goes on to talk about GlobeLink. Other members have referred to that. That is now an abandoned project, but that is not to say that there were not parts of it that had merit. The part of it that had merit, as far as I was concerned, were not the new airport—I mean, that had whiskers on it—but diverting freight around Adelaide rather than through Adelaide made eminent sense.
We know that the vast bulk of rail traffic and freight, for example, which winds its way through the narrow Hills alignment, is not actually bound for Adelaide, it is bound for places further on. Yet, because there is no way around Adelaide, all that traffic goes through our city. It is similar for road traffic as well, so much of it goes through Adelaide that does not need to.
What Matthew Abraham and others have said for a very long time is that traffic expands to fill the available space. Just like empty cupboards in your home soon fill—I do not know anyone who has an empty cupboard at home—the junk expands to fill the available cupboard space you have. It is almost a law of physics: traffic expands to fill the available space. What is my evidence for that claim? Travel to any major city with your eyes open and you will see that congestion is a live issue regardless of how much jurisdictions have spent on freeways and on so-called traffic solutions.
But if members are not prepared to take the anecdotal evidence acquired through their own experiences, I will give you a report. People like to see authoritative reports. One that I have quoted in the past is a very influential report. It is now 26 years old. It is the United Kingdom royal commission into transport and environment, and its chief recommendation was: stop building new freeways; they do not work. Twenty-six years ago, the royal commission in the UK said, 'Stop it! Just stop building these new roads. There is no evidence that they reduce congestion.' The New Scientist magazine at the time, back in 1994, said the following:
The (royal) commission derisively refers to the department of Transport's philosophy on roadbuilding as 'predict and provide'. Present forecasts are that road traffic will roughly double over the next thirty years. The [Department of Transport] argues that this justifies its £19 billion roadbuilding programme. The commission says that no practical programme of road construction can cope with this scale of growth, a fact that 'destroys the rationale of the predict and provide perspective'. Congestion will get worse however many roads are built.
The (royal) commission points out that building roads itself generates traffic. One estimate is that 40 per cent of the traffic on the M25, London's orbital road, was generated by the new road.
That experience is universal in cities, whether it is Los Angeles or Sydney or anywhere else, cities that have tried to fix congestion problems by simply building bigger and more roads.
I appreciate that I am a little bit on the outer as one of the very few critics. Obviously, I do not include my colleague the Hon. Tammy Franks, who coined the phrase 'South Road super waste' for another part of the project. I do despair sometimes in politics that there are so few members who are prepared to actually look at the bigger picture of our urban environment and how we can make it better. Freeways do not make urban environments better.
That segues into the second issue that I wanted to talk about very briefly, and that is the Treasurer's proposed new road user charge on electric vehicles. This is an item that did not have a very big number written next to it in the budget. It was a very small budget item that was not proposed to raise very much money at all. I do not think the Treasurer predicted it would get quite the backlash that it has, not just in this state but around the nation.
The Treasurer, at the time, whilst he did not name the other jurisdictions, predicted that other states would get on board with this idea and we know that New South Wales and Victoria are now talking about it as well. But the reaction in the community has been quite remarkable because I think the community is smarter than a lot of the policymakers in government. That is, most Australians recognise that if we are serious about climate change, the future of transport will not be the internal combustion engine. Petrol and diesel vehicles are on their way out.
I refer to that radical greenie Boris Johnson in London who has, just in the last few weeks, announced they are going to ban the sale of internal combustion engine cars from 2030. That is only 10 years away. You are not going to be able to buy a new internal combustion engine light vehicle (cars and small trucks) in the United Kingdom—ban them. Most jurisdictions now realise that the writing is on the wall and that the future will be electric.
That has a number of implications. The first implication, obviously, is in relation to climate change, the second is in relation to local air quality, and they are probably the main two aspects that conservationists in particular get excited about when we talk about electric cars. An electric car powered from a grid that is primarily renewable energy sourced will have a much smaller carbon footprint. People often say, 'But if all your electricity is coming from burning coal and you fuel your electric cars that way, well, there is still a benefit rather than burning petrol and diesel.'
We know that the electricity grid is slowly becoming a renewable energy grid, which means that all the appliances, including cars powered from that grid, will have a lower carbon footprint. We know also that there are no localised emissions from an electric vehicle, no particulate pollution, no sulphur dioxide or nitrous oxides or any of those other pollutants that we associate with air quality problems, so electric cars are recognised as a good thing. The question people are asking is: if that is a direction we need to head in, why is it that we are putting a new tax on something we want more of?
I have to say that I first studied economics in high school in 1976. I have a degree in economics from the late 1970s, early 1980s, at Melbourne University, and one thing I learnt very early on in my career is that the idea of taxing things we want less of and subsidising and promoting things we want more of was actually a really sound way to manage an economy. Why do we tax things we want more of? If we want more electric cars, why do we not yet have a proper system of subsidies and incentives for people to take up this technology? Why are we taxing it instead?
I know that the government and others who support an electric vehicle tax say, 'It will be at a fairly low rate and it won't actually raise that much money, but we'll get in early while there are hardly any electric cars around,' and somehow that makes it okay. What they have missed is the disincentive that that will impose on the market, because the market is not necessarily rational in terms of counting every dollar and people are not thinking, 'Yes, there is this new electric car tax, but it's probably less than other taxes I'll have to pay; therefore I'll still buy the electric car.'
The experts are saying that, once you have gone down this path of an exclusive electric vehicle tax, people will be nervous about the rate at which it will be applied, they will be nervous about its future and they will think, 'Why would I spend $10,000 more on an electric vehicle when it might be safer just to buy a regular petrol vehicle for now and I'll have a look next car. Maybe next car will be an electric car.' That is the way people are thinking. It is not about the amount of money it will raise: it is about the message it is sending to the industry.
I mentioned Boris Johnson before. Some nations are already at a point where electric vehicles are dominating sales. Norway is the classic example: more than half of the new cars being bought in Norway today are electric vehicles. I was in Sweden a few years ago. Government policy there favoured electric vehicles to the point where, if you own a taxi and you want to operate out of the airport, forget it unless you are electric. That was their rule: only electric taxies are allowed to service the airport. Tell you what, the taxi companies got on to that pretty quickly—electric vehicles—because the airports are a very lucrative market. A lot of jurisdictions are promoting electric vehicles; South Australia is proposing to tax them.
The other point I would make about Scandinavian countries like Norway and Sweden is that they do not have anything like the renewable energy potential that we have. They are not the sunniest places year round. They have snow, cold winters, cloudy days. Australia has massive renewal energy potential, yet because of a lack of government incentives and proper government policy you can almost count the number of electric vehicles in South Australia without taking your socks off. There are so few electric vehicles, and that is, I say, entirely a result of the vacuum in government policy.
The other point that the Treasurer and others make is that electric vehicles, because they do not use fossil fuels and therefore do not pay fuel excise, are somehow squibbing their responsibility to contribute to roads. There are a couple of things we have to say about that. The first thing is that it is a convenient myth, which the government and I think other groups like the RAA often portray, that somehow these fuel taxes are hypothecated to road infrastructure, fixing roads or building new roads. They are not: they are part of consolidated revenue.
We also have the situation where the money from fuel excise is raised at the federal level and most of the spending on roads is done at the state level. It is not hypothecated. The body primarily responsible for collecting that tax is not primarily responsible for building roads. Of course I know that the federal government, because it has a greater capacity to raise revenue, is handing large sums of money across to the states, but this is not a hypothecated tax.
I note the Australian Electric Vehicle Association put in a submission to the fuel excise, electric vehicles and federal-state taxation review that was undertaken at the federal level earlier this year. They made the point that, as I have just said, fuel taxes are not hypothecated to roads. They made the point that, as a source of revenue, fuel taxes have been in structural decline for a long time, and that is largely not as a result of fewer cars but cars being more efficient. The state fleet vehicle that I lease I think uses four litres of petrol per 100 kilometres. It is a hybrid.
I think the average six-cylinder car uses probably 11, 12 or 13 litres per 100 kilometres. Cars are more efficient. They are using less fuel and they are paying less fuel excise, even though there are more cars. The Electric Vehicle Association knew that there was going to be a need at some point to address a declining source of revenue from fuel excise. The question is whether, in the case of that declining revenue, it is appropriate to tax one type of vehicle—environmentally clean electric vehicles—to somehow make up the shortfall. Clearly, there are other approaches.
To their credit, a lot of the electric vehicle organisations and a lot of people in the community accept that road user charges may well be a legitimate form of taxation into the future, but what people are not prepared to accept is that it is applied only to electric vehicles. That is the problem. When electric vehicles become the dominant form of road transport, maybe a kilometre-based road user charge might be appropriate. It would apply to all road users. But when it is applied only to electric vehicles, it is seen as unfair and sending the wrong message to an industry that we are trying to grow.
The other obvious point that anyone who has studied transport economics would know is that, if we were serious about recovering from road users the cost of damage that they cause to roads, we would be charging trucks hundreds of times more in fuel excise than they are paying and we would not be giving most of it back, as they do for certain industries that get a rebate on their fuel excise. So it is not hypothecated, it is unfairly applied and, if we were to say that we want electric vehicles to pay a special tax, then that is unfair.
I would be very surprised if it gets through this parliament when the bill is eventually presented to us sometime next year. I think that should be a shot across the bow not just to this government but to the other states that are thinking about going down this regressive path. It is the wrong type of taxation to be introducing now, but it is something that we should keep an eye on into the future.
They are just two issues out of this current state budget and the appropriation of our taxes to projects that the government has deemed worthy. I think that these two example show that the government's priorities do need to be reviewed, and I look forward to seeing further debate, broader debate, about the nature of our cities, the way we think Adelaide should develop and whether as a society we really are happy for what I think is now a third of the physical area of our city to be devoted exclusively to cars.
If we can address that issue, if we can address the proportion of our metropolitan area devoted to cars, we will end up with a more compact and more vibrant community that actually functions better at so many levels, and where infrastructure is not so stretched and ultimately so expensive.