ABC News Mornings with Joe O'Brien

Interview

PFI021/2018

31 May 2018

Subjects: Fuel efficiency standards in Australia and world-wide.

Joe O'Brien: There are reports today that Australia is examining the fuel efficiency of the national car fleet. Here's National Affairs Correspondent, Greg Jennett, with Cities Minister Paul Fletcher.

Greg Jennet: Yes, Joe, thanks so much. This is a long-term project, part of Australia meeting its climate or emission reduction targets that were agreed to in Paris. We have to reach 26 to 28 per cent. Part of that is going through sector by sector. And Paul Fletcher, when it comes to motor vehicles, you are looking at this new emissions standard. There are reports today the Government might be attracted—without getting too technical—towards a threshold which is called 105 grams of emissions of carbon per kilometre. A) Is that true?

Paul Flectcher: Well, the Government has under way what's called the Ministerial Forum on Vehicle Emissions, so we're looking at the question of Australian regulation of what's called noxious emissions—we have rules in place there, should they be upgraded?; fuel quality standards and also fuel efficiency—essentially how far a vehicle can go on a litre of fuel. Now just about every OECD nation has a fuel efficiency standard and to give you an example in the UK, the most efficient Toyota Corolla uses about 15 per cent less fuel or is 15 per cent more efficient than the most efficient Corolla in Australia. That means that you're paying less in fuel each year to drive if you've got a more fuel-efficient vehicle.

Greg Jennet: But is that vehicle more expensive if we go down that path?

Paul Flectcher: Generally what we have seen when these standards have been introduced around the world is that it does not result in a material change in price. Let me give you an example…

Greg Jennet: Just by way of explanation, Parliament is sitting here and MPs do have buzzers and beepers that go off occasionally.

Paul Flectcher: So when fuel efficiency standards were introduced in the US, the most popular models before introduction stayed the most popular models after introduction. Essentially, what Americans call pickup trucks and what we'd call utes, like the Chevy Silverado. There wasn't a material change in price and we don't expect that there would be a material change in price here. But the question we're interested in asking is there are fuel efficiency standards in most other OECD nations. Does that mean if the global car manufacturers- if the foreign car manufacturers don't provide more fuel-efficient vehicles in Australia, are Australians effectively getting ripped off? Are they paying more in the fuel they use each year for their car or the vehicle than they really need to? So look, no decisions have been made. We're months away from making any decision on this. It would have to go to Cabinet, would have to go to the party room. It's part of a careful long term consultative process, but certainly we are looking at three elements as part of the Ministerial Forum on Vehicle Emissions. But can I make it clear: no carbon tax on cars. There's not going to be a carbon tax on cars I want to make that absolutely clear. What I also want to make clear is what the Turnbull Government is interested in is what does it cost the Australian consumer to run a car or a pick-up truck, a SUV, each year and are there ways we could reduce those costs for Australians? That's what we think is an important question.

Greg Jennet: Alright. Well, the United States which has a similar fleet to us—you've already mentioned some of their models there—have actually abandoned threshold which was a little bit higher in its ambition than the one Australia is apparently examining. What's the interrelationship, I suppose, between the American carmakers and Australia if we don't match up?

Paul Flectcher: Well look, first of all, let's be clear. We've taken no decision on any particular standard. The way these standards have worked around the world is that you start at a particular level and then you gradually reduce. If we were to have a standard, we'd have a similar approach here and we're very conscious that you can't just whack something in then have a sharp drop from current levels. We absolutely would not be doing that. Now, what we're talking about though is the fact that there are standards in place around the world; those do deliver fuel efficiency benefits to consumers and therefore savings, and that's something that we're interested in having a look at. Not having yet made any decision, but bear in mind, foreign carmakers supplying the Australian market are also supplying markets around the world. So they're responsive to those standards around the world. And we do think it's worth asking the question; is the Australian consumer worse off because we're getting less fuel-efficient vehicles? Are we being ripped off by the global carmakers? That's one of the questions we want to have look at.

Greg Jennet: Alright. Now, for Australians who are buying popular models like the Hilux and the Ranger, very popular at the moment. They are apparently way above this standard that you're examining. How would it work, though? Is the standard applied to individual models or averaged across the Ford or the Toyota model range?

Paul Flectcher: Look it's a great question, a really important question, because to start with, let's be clear; Australians love their SUV's, they love their utes, we're a big country. We drive much longer distances than in Europe, for example, and we are absolutely determined that anything we do does not reduce choice to Australians, does not require Australians to move away from SUV's or utes. Australians want those vehicles; the Turnbull Government wants to back the choice of Australians. What you would typically do or at least the way these systems have been designed- so the way the US system has been designed is they've got one set of rules for the pick-up trucks as they call them, or the utes and the SUVs, you start at a certain number in terms of your fuel efficiency and you try and get a gradual improvement over time. Then you've got your passenger cars, which are much more fuel efficient because they're smaller and lighter. They start at a number which is lower and also comes down over time. If we were to do something, it would undoubtedly have that feature. So it's not about forcing people out of SUV's and utes at all. We absolutely respect and back the choices of Australians. So it does come as an average across the fleet that- of new vehicles that a manufacturer sells each year.

Greg Jennet: Alright, understood. So just in wrapping up, Paul Fletcher, a long-range project as you say, hoping to land a decision by when?

Paul Flectcher: Look, it's still many months away. It has to go to Cabinet, has to go to the party room. And let's be clear; no carbon tax on cars. Want to make that absolutely clear. The Turnbull Government is about lower taxes and lower cost of living for Australians. That's why we're looking at this question of what does it cost you each year in fuel to run a vehicle. And that's why fuel efficiency standards are something we're looking at. Are Australian consumers worse off compared to all the other OECD countries where there are fuel efficiency standards?

Greg Jennet: Alright. We'll watch this space. Paul Fletcher, Cites Minister, thank you.

Paul Flectcher: Thanks Greg.