Mixed budget reaction from auto sector

REACTION to the recent federal budget from the automotive sector has been mixed, with approval and criticism from various groups and some with a foot in each camp.

Staunch criticism of the budget will likely come from business vehicle buyers, new car dealers and vehicle importers who will be processing changes to the instant asset write-off program that will only apply to vehicles delivered by June 30 when the benefit comes to an end.

It means any vehicles delivered after that date, even if ordered months ago and subject to widespread production, supply chain and biosecurity disruptions, will not qualify for the instant asset write-off.

The change puts pressure on dealers and importers to prioritise the delivery of vehicles ordered by business customers over private sales, with potential further impacts on delivery times for private buyers.

It is expected to have a significant impact on large fleets, corporates and vehicle brokers,as well as tradies and other small businesses.

While praising the budget’s new spending initiatives, the Australian Automobile Association (AAA), representing state-based motoring clubs, says in a statement that the 2023-24 federal budget will cut road safety programs and give motorists a poorer return on the $65.92 billion they will pay in fuel excise over the next four years.

The AAA cites figures that show total land transport investment of $55.91 billion over the coming four years will be a $681 million increase from the previous budget’s four-year allocation, but that only 85 per cent of the fuel excise collected will be allocated to land transport investments.

It says this represents a reduction from the previous Budget that forecast investing 92 per cent of fuel excise.

The AAA supports other aspects of the budget as they affect the automotive sector including: $43.6 million to establish the National Road Safety Action Grants Program, $14 million for a program to test and report selected new vehicles’ real-world emissions and fuel consumption, $5.2 million to support measures to increase electric vehicle uptake and $16.5 million for car safety ratings programs.

AAA managing director Michael Bradley said: “We’re disappointed that funding from the Road Safety Program – which targets reducing deaths and serious injuries on Australian roads – has been redirected to other areas.

“Australian motorists will next year bring $15.68 billion in fuel excise to the table. They rightly expect every cent of these tax dollars to be spent on projects and programs that make transport safe, affordable, and free of congestion.”

The AAA says the budget does not address the structural reforms needed to make Australia’s motoring taxation and infrastructure spending more equitable, transparent, and sustainable.

Like the AAA, the Electric Vehicle Council (EVC) is a supporter of spending to promote the uptake of electric vehicles, the development of a greener economy, and expansion across the electric vehicle value chain.

Initiatives the EVC is in favour of include reducing transport emissions through the provision of $20.9 million over five years to decarbonise the transport and infrastructure sectors and support achieving the net zero by 2050 target.

The EVC says a key measure as part of this includes the provision of $7.4 million for  the introduction of a fuel efficiency standard which is “needed to drive supply into Australia of more efficient vehicles and EVs”.

Like the AAA, the EVC backs $5.2 million allocated over four years from 2023-24 to help measures announced under the National EV Strategy, including the development of a national charging infrastructure mapping tool, safety guidance and training for emergency service workers.

The EV Council said in a statement: “Funding will also support the evaluation of requirements for retrofitting existing multi-residential buildings with electric vehicle charging infrastructure, and a large format battery recycling, reuse and stewardship initiative in Australia.”

Gaining further approval was the provision of $2.0 billion to accelerate development of Australia’s hydrogen industry, catalyse clean energy industries, and help Australia connect to new global hydrogen supply chains.

However, Motor Traders' Association NSW chief executive Stavros Yallouridis criticised the lack of funding for “training the thousands of auto workers who will need to be upskilled to safely and effectively handle and repair EVs”.

Mr Yallouridis pointed out that the large number of small businesses that make up Australia’s auto repair sector face a “significant amount of capital investment” to keep up with the electrification shift.

“Our industry is currently facing a shortfall of approximately 38,000 skilled professionals, and this shortage is only going to be exacerbated with the rollout of EVs and without the government putting their hand in their pocket, our industry is going to be left severely underprepared to meet 2030 targets,” he said.

Although supportive of budget commitments toward vehicle electrification and improving apprenticeship completion rates in the automotive sector, Mr Yallouridis warned that increasing EV uptake without a focus on the supporting training meant “the transition will simply not work”.

Budget support and criticism came from Heavy Vehicle Industry Australia (HVIA) which stated: “The Labor Government’s first full-year budget presents opportunities for the heavy vehicle industry, however, leaves us wanting in other areas.”

HVIA chief executive Todd Hacking said: “The demand for heavy vehicles has been remarkably resilient, however, between inflation, supply chain issues and the lack of available skilled workers, our manufacturers have struggled to meet demand.

“Bringing the budget back to surplus is great, but there are ongoing challenges with inflation still a pressing concern in terms of denting business confidence.”

Mr Hacking said announcements around skilled migration quotas are vital to replenish and grow dwindling stocks of tradespeople.

“We welcome an increased focus on skilled migration in the Permanent Migration program, which HVIA called for in the last election; this is a key promise being delivered by the Albanese government.

“Other positive announcements include investment and programs encouraging women to take up trades, plus plans to expand the number of fee-free TAFE and vocational education training packages

The Government will increase the Heavy Vehicle Road User Charge rate from 27.2 cents per litre of diesel to 32.4 cents per litre in 2025-26.

Overshadowing automotive-related budget initiatives was the federal government’s National Electric Vehicle’s Strategy and fuel efficiency standard, which were signed off shortly before the 2023-24 budget was delivered.