Taxpayers not ute drivers paid for axed ‘ute tax’ EV scheme, data shows

Utes like this will not incur a fee next year. Photo / George Heard

ANALYSIS

By the end of the year the “ute tax” will be dead.

The Clean Car Discount, to give it its proper name, was a policy that charged a fee on “dirty” cars like utes, that paid out rebates for “clean” cars like Teslas, a popular make of electric vehicle. Labour and the Greens tried to introduce it in their first term, but failed thanks to NZ First.

Labour was able to get it over the line in its second term, creating a scheme that initially levied fees of up to $5175 on the sale of dirty cars, to pay out rebates of up to $8625 on the purchase of clean ones.

An urgent bill to scrap the policy passed through all stages this week, and both the fees and rebates will be gone by the end of the year.

The policy was pilloried as a transfer from country to town, with ute-driving farmers paying to subsidise urban Tesla drivers.

The Herald used data collected by NZ Transport Agency Waka Kotahi on where the vehicles collecting discounts and paying fees were registered to test this assumption. The data runs from the beginning of the scheme to the end of May this year. It excludes a recent period where fees began to outpace rebates.

The data captures $160 million in fees and $406m in rebates collected between July 1, 2021, to May 15, 2023. The most recent data on fees shows they have begun to catch up, with $290m collected to November 30, versus $578m paid out in rebates, showing the gap between rebates and fees began to close month on month.

What we found is that there are aspects of the critique that are true - the policy was a transfer to urbanites, but it was not exactly a huge transfer from town to country.

This is partly because the policy never really washed its own face, and was arguably too successful. Until recently, the amount paid out in rebates dramatically exceeded the amount of money paid out in fees. The scheme was given a taxpayer loan, which was paid out when the scheme was cancelled.

What that means is that the clean car policy was not a “ute tax” to pay for Teslas, but a “tax tax” - with regular taxpayers footing the bill for the EV subsidies, rather than drivers of polluting cars.

Aucklanders were the biggest beneficiaries of the policy, collecting $115 per person in subsidies. Aucklanders were followed by Wellingtonians, who collected $83 per person, and Cantabrians, who collected $80 per person.

For nearly every region, the amount paid out in subsidies was greater than the amount collected in fees - and this amount was roughly similar in each region in the country, ranging from between $22 and $36 per person.

Wellington was the outlier, with its apparently environmentally conscious drivers paying just $18 per person in fees - the lowest of any region in the country.

The Herald has analysed whether provincial parts of a region subsidised the cities, and we found that in general, cities collected more in fees and paid out more in rebates - urban ute drivers subsidised urban Tesla drivers, to borrow the crude language of the debate.

This is almost certainly because there are simply more people living in cities, and does not unpick the argument that people in cities are able to choose between an EV and a fossil fuel-powered vehicle, whereas people requiring a grunty farm vehicle currently have no choice but to pay the fee.

This analysis required some judgment calls. We’ve borrowed Stats NZ’s classification for major urban areas, which includes Auckland, Hamilton, Tauranga, Lower Hutt, Wellington, Christchurch, and Dunedin.

We’ve also counted Stats NZ’s large urban areas towards this total, including Whangārei, Hibiscus Coast, Rotorua, Gisborne, Hastings, Napier, New Plymouth, Whanganui, Palmerston North, Porirua, Upper Hutt, Nelson, and Invercargill.

The data is for where vehicles are registered not where they are purchased, meaning the data is not corrupted by people who live and work in a province buying a vehicle from an urban dealer.

In the Nelson region, 99 per cent of rebates were paid out to people living in the city, this was followed by Gisborne with 89.5 per cent of rebates going to city-dwellers, and Wellington, where 81.7 per cent of rebates were paid out to people living in the city.

For most regions, more than half of rebates went to people living in cities, compared with those living outside of them. The exceptions were Northland, Otago, the Chatham Islands (where just one person collected a rebate), Marlborough, Tasman, and the West Coast.

But these figures don’t mean cities claimed their rebates at the expense of people who lived in the country.

People living in cities also paid the most fees.

In Nelson, 100 per cent of the $1.3m paid in fees were paid by people living in the city, in Gisborne 87.7 per cent of fees were paid by people living in the city, and in Wellington 79 per cent of the $7.9m paid in fees was paid by those living in urban areas.

For most regions, the percentage of fees collected in urban areas was similar to the percentage of rebates paid out in urban areas - suggesting the social impact of the policy might have been overstated. The only big transfer is from income taxpayers to EV-driving motorists.

Nationally, 82.6 per cent of rebates were collected in cities, but cities paid only 74.1 per cent of fees. This means there was a transfer from country to town, however it was less than stated - cities did the bulk of fee paying, and rebate claiming. Not only do cities have more drivers, but they are also home to the country’s largest commercial vehicle fleets. A previous Herald investigation showed that commercial fleet hubs of West and South Auckland were well represented in a list of suburbs where the rebates were popular.

Most regions had a difference of less than 10 percentage points between the share of fees collected in cities and rebates paid out in cities, suggesting there was not a large transfer from country to town.

The biggest difference was in the Southland region, where EV-loving Invercargillites helped the region’s cities notch up 75.3 per cent of rebates, while only paying 55 per cent of the fees in the region.

The key determinant of where that money gets spent and collected is, as critics said, whether someone lives in a provincial or urban setting - however, this works completely differently from what critics of the scheme alleged. The policy was not a transfer from country to town, but from town to town - and taxpayer to driver.

Chris Knox is data editor and head of data journalism at the Herald.

Thomas Coughlan is deputy political editor and covers politics from Parliament. He has worked for the Herald since 2021 and has worked in Parliament’s press gallery since 2018.