Federal Labor promises to slash taxes for electric vehicles, build community batteries

Federal Labor has unveiled some of its first new policies designed to slash greenhouse gas emissions, promising to slash federal taxes for electric vehicles and committing to build hundreds of community batteries.

The package of two policies were announced ahead of debate on a new federal energy and climate platform at Labor’s National Conference on Wednesday, and are targeted at reducing upfront costs to purchase electric vehicles and removing barriers for households to enjoy the benefits of energy storage.

A proposed $200 million ‘Power to the People’ initiative would see a federal Labor government fund the installation of up to 400 medium-scale batteries distributed across the grid, allowing households to enjoy the benefits of battery storage through a community shared battery.

Labor estimates that around 100,000 households could benefit from the deployment of community batteries.

Under the proposal, community batteries providing up to 500kWh of storage – enough to serve an estimated 250 households – would be used to store excess power from homes with solar power and allowing nearby homes to draw upon the stored energy.

The batteries will be funded by the federal government and operated by network providers, who will, in turn, allow households to opt-in to a community battery scheme.

Labor expects the plan will deliver lower electricity prices by better utilising excess solar energy, while also reducing pressures on the rest of the electricity grid during peak periods.

“Labor’s Power to the People will unlock the full potential of rooftop solar for Australian households – lower power bills, cut emissions, and help stabilise the grid,” Labor’s climate and energy spokesperson Chris Bowen said.

Labor has also committed to slashing federal taxes for non-luxury electric vehicles, promising to waive import taxes and fringe benefits taxes that would otherwise be charged on vehicles with a purchase price below the luxury vehicle threshold price (currently $77,565).

Bowen says the plan would deliver a significant discount to the upfront purchase price of electric vehicles.

“Labor’s Electric Car Discount will cut government taxes on electric vehicles, and reduce day-to-day transport costs and emissions for Australian families,” Bowen added.

Import tariffs of 5 per cent are currently charged on some imported electric vehicles, and a fringe benefits tax of 47 per cent is charged on vehicles provided via an employer for private use.

The waiver of the import tariff is expected to reduce the cost of a $50,000 electric vehicle model, which would align with some models of the Nissan Leaf, by around $2,000 – while the waiver of the fringe benefits tax would save employers as much as $9,000 on the purchase of the same vehicle.

Labor said that it was critical that measures were introduced to lower the upfront purchase price of electric vehicles, saying that there currently no new models of electric cars available for purchase for less than $40,000 in Australia, and just five models available under $60,000.

In other countries, such as Norway, the United Kingdom and parts of the United States, government subsidies have substantially reduced the upfront costs of electric vehicles, leading to much higher rates of uptake.

However, Australian governments have lagged behind in their support for electric vehicles, with some even proposing the introduction of new taxes specifically targeted at electric vehicles to account for lost fuel tariffs.

Federal Labor leader Anthony Albanese said the policies, which are some of the first new policies announced by the opposition since the 2019 federal election, were targeted at reducing energy costs for households.

“Only Labor is on your side when it comes to reducing power bills and fuel costs for families,” Albanese said. “Labor’s Power to the People will invest in Australia’s future and help Australia catch up to the rest of the world when it comes to electric vehicles.”

Federal Labor is expected to adopt a new policy platform at its National Conference on Wednesday, that strikes a balance between confirming a commitment to reaching zero net emissions by 2050 while reiterating its support for an ongoing role for the coal and gas industries.

The new national policy platform will inform the specific policies that the Labor party will take to the next federal election.

Bowen told the conference that the new party policy platform would be focused on the economic and job opportunities being created by efforts to reduce emissions.

“Facing up to the realities of climate change isn’t just environmental action, it’s also an economic imperative,” Bowen said. “We can allow workers and communities to be decimated as the global markets decarbonize – that’s the government’s plan – or we can put workers and jobs at the centre of climate action.”

“Only Labor in government will make Australia a renewable energy and manufacturing superpower creating jobs and cutting energy prices as well as reducing emissions.”

The left and right factions within the party are expected to clash over the party’s ongoing support for a prohibition on nuclear power.

Right-aligned unions are seeking to have federal Labor embrace nuclear power as a potential future option for Australia’s energy system, while left-aligned unions want to ensure the party remains committed to a prohibition on a domestic nuclear energy industry – which has been banned under environmental legislation since 1998.