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Introduced by the previous government, the Clean Vehicle Standard sets annual CO₂ targets for vehicle importers, who must balance higher-emitting models with enough low-emission vehicles to meet their overall target. Falling short of that target incurs charges, exceeding the target earns credits.
The intention is to make it cheaper and easier to import vehicles meeting the clean vehicle standards which in turn makes it easier to buy cars that use less fuel and are cheaper to run. It will also help meet emissions reduction targets.
Amendments were made in 2024 but the Government says further changes are needed to make sure the scheme is working as it should.
To make those changes, the Land Transport (Clean Vehicle Standard) Amendment Bill (No 2) was introduced and at its first reading debate in August, the Minister of Transport Chris Bishop said the standard isn't working as intended.
"Currently, many importers are not achieving their targets and are attracting charges because of unfavourable supply-and-demand conditions. For example, there is currently a shortage of used EVs available for importers to supply to our market, so the bill makes it easier for importers to offset charges with credits."
A first reading debate allows the MP in charge to set out why the bill is needed and what it will do. Other MPs then speak indicating their support or opposition to the bill and what changes they might propose at the next stages.
Speaking at the same debate Labour's spokesperson for climate change, Dr Deborah Russell said the Bill simply changes targets.
"It says that current vehicle importers were not going to meet the target for importing clean vehicles, so they've changed the targets. They've just simply changed the targets. Well, that's not going to get emissions down, is it?" she said.
"But we still need to get emissions down. Climate change is a pressing, pressing need for us to address. What are they doing? They're consulting vehicle importers about how to avoid getting emissions down. It's a shocking bill, and it demonstrates, yet again, that this Government is not-is not-committed to addressing climate change. The Labour Party does not support this bill."
The Bill passed its first reading and was referred to the Transport and Infrastructure Select Committee for four months and one day.
Clearing stages under urgency
In the last sitting week for November the House met under urgency which allows for a speedier passage of bills to law.
This Bill went through its second reading, committee of the whole House stage, and third reading in succession.
At a second reading it's common for MPs to talk about the select committee process.
Minister Bishop said the committee did not receive a lot of submissions but the views submitted were wide and varied.
"It is fair to say that this bill and the changes that that Government intends to move during the committee of the whole House stage reflect the submissions that industry have made to the Government and the select committee around meeting the clean vehicle standard. With that in mind, I want to acknowledge the input of the Motor Industry Association and the Imported Motor Vehicle Industry Association. The feedback has made it clear that there are changes required to the standard if it is going to work and lower the cost of living for New Zealanders and, ultimately, green our fleet over time, "Bishop said.
The committee of the whole House stage is the final stage for changes to be made to a bill. MPs work through each part or clause of a bill and debate the details, asking questions of the MP in charge, and proposing changes (amendments).
Minister Bishop's amendment will lower the carbon dioxide amounts that are charged.
During the committee stage Green MP Julie Anne Genter asked how the change compares to the equivalent policy settings in Australia.
"What will the difference be between the penalties faced by importers who are bringing in higher emissions vehicles above the target in Australia, and how will that compare to New Zealand's should this Amendment Paper 444 be passed today?"
At a committee stage, the Speaker leaves the House and the MP in charge sits at the table with presiding officers and support staff on hand. At the table on behalf of Minister Bishop was Associate Transport Minister James Meager who answered Genter's question.
"Oh, and I've actually had a last-minute run of advice provided to me. I'm advised, in terms of the question around penalties, the equivalent Australian penalty is AUD$50. Ours will be NZD$15. Apparently, it's $50 imposed by the regulatory and $100 imposed by the courts for Australia. So that's the answer to that one there."
The last part for a bill to go through is its third reading debate where MPs sum up their views.
Minister Meager said the Bill will bring the standards back to what it was supposed to do and
will reduce the risk of high charges for imports being passed on to New Zealanders.
Almost 86 percent of importers are in a net charge position, and the average net charge per vehicle for those importers is $1,226. These charges risk being passed on to consumers-ultimately, those who are consuming vehicles most likely in the lower end of the market," he said.
"This is happening because under market conditions, importers simply aren't earning enough credits to offset charges. The system isn't working as intended, and we risk consumers paying the price."
Maintaining opposition to the Bill, the Labour Party's Tangi Utikere said the Bill diluted down policies that make a difference.
"It's a really sad day when the Parliament has to progress through urgency a bill that has gone through a select committee and then had a very truncated process in the Parliament. The Labour Party will continue to oppose this piece of legislation, as we have done up to this point and through the committee stage, because it is yet another example of the Government stepping away from leadership in this space and doing the right thing."
The bill passed with National, ACT and New Zealand first voting in favour, and Labour, Greens, Te Pāti Māori and two independent MPs voting no.
The changes will come into effect from 1 January 2026. The Government will also fully review the scheme, with recommendations to Cabinet due by June 2026.
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