Four steps to tackle global warming right now

• Reid Sexton
• Sunday Age, August 3, 2008
• http://www.theage.com.au/national/four-steps-to-tackle-global-warming-right-now-20080802-3p0c.html?page=-1

Two-wheeled fleet offers hospitality to restaurant staff

WHEN boutique beer label Little Creatures launched its Fitzroy restaurant last month, the managers realised that its inner-city location could pose problems.

Traffic congestion around the Brunswick Street address, a lack of parking and the company's commitment to the unconventional meant cars were low on the list of transport solutions.

So it bought 20 bicycles from Melbourne supplier Tony John, eight for the Melbourne store and the others for the flagship bar and brewery in Fremantle and a planned site in Healesville.

The Kronan bikes - originally made by the Swedish Army and designed for inner-city commuting - now form a fleet for staff members to use to get to and from work and to run errands.

While the company was happy to pay for the bikes, which retail for around $1000 and are available to customers for short trips, a new tax proposal from Bicycle Victoria would mean that employees could be given a huge incentive to ride to work.

Under the scheme, workers could claim up to $1500 of the cost of a bike and riding equipment as a tax-free income, provided they log at least 25 kilometres a week commuting.

To qualify, they would need to log this distance for at least 12 weeks and could claim the break once every two years.

Current tax law prevents tax deduction claims for travelling to work, but Bicycle Victoria chief Harry Barber said congestion in capital cities would drop enormously if just a small number of commuters switched to bikes.

"The Government would lose out on tax revenue but would benefit in many other ways," he said.

"This project would give the Government a carbon benefit, an infrastructure saving and a health benefit in one stroke.

"It's the closest thing we have to a silver bullet."

Little Creatures hospitality manager Miles Hull said the brewery was putting its bikes to good use. "The staff love them … they are already working for us," he said. "We don't really see any benefits coming back financially. The recoup is really what you're doing for the community."

State Government spokesman Stephen Moynihan said the Government would announce a comprehensive transport plan later this year that would include cycling and walking programs. A spokesman for federal assistant treasurer Chris Bowen said there were no plans to change tax regulations around bicycles.

End special deals for 4WDs

ALL cars imported into Australia are slapped with an import tariff of 10%, except fuel-guzzling four-wheel-drives, which only attract 5%. So, for example, an environmentally friendly Toyota Prius, which uses 4.4 litres of petrol for every 100 kilometres, attracts a 10% tariff. A Toyota RAV4 four-wheel-drive, which uses more than twice as much petrol at 9.6 litres per 100 kilometres, only attracts 5%. Consequently, the Prius is more expensive.

Why? In 1975, the Whitlam government decided to impose lighter tariffs on four-wheel-drives and light trucks to assist farmers.

The Productivity Commission is pushing the Federal Government to reduce tariffs on cars to 5% by 2010, meaning four-wheel drives would not be favoured any more. But the car industry is resisting any lowering of tariffs.

"When the import duties were first put in place it was a very different situation," said Tony Mohr, manager of the Australian Conservation Foundation's climate change program. "We need to turn the tables so we're giving consumers incentives to buy more efficient, lower-cost cars than gas guzzlers."

But surely altering tariff levels on four-wheel-drives isn't going to save the planet? That's the whole point about climate change, said John Quiggin, of the school of economics at the University of Queensland.

"That's the notion of climate change. Everything is like that. There's a great many things that have to change. There isn't one big magic bullet."

Professor Quiggin supported equalising tariffs for cars and four-wheel-drives but said this "probably won't happen" by 2010 due to resistance from the automotive industry.

Insist on fuel efficient cars

THE previous federal government had a voluntary agreement with the car industry for vehicles made in Australia to achieve an average fuel efficiency of 6.8 litres per 100 kilometres by 2010. But almost no progress has been made, with only one Australian-made car having an efficiency of less than 10 litres per 100 kilometres in 2006. The vehicle industry failed to meet similar non-binding efficiency targets in 1983, 1987 and 2000.

China's binding standards mean cars sold there will most likely be about 17% more efficient in 2010 than the Australian average, unless we improve our standards. The US has also announced that standards for its cars will become mandatory.

The National Roads and Motorists Association and the Australian Conservation Foundation have both backed mandatory fuel efficiency targets.

But mandatory targets have critics, especially in the vehicle industry. And, in terms of carbon emissions, the targets tend to be self-defeating. If a car is cheaper to drive, consumers are encouraged to drive more - and, therefore, pollute more.

"If petrol is cheap, no policy aimed at imposing fuel efficiency is going to go anywhere," Queensland academic John Quiggin said. "We need to make sure we don't cave in to populism on the petrol price front, and let the price mechanism do its work. Once you've got the incentives there, people will switch to a more efficient vehicle."

The ACF's Tony Mohr suggested governments "walk the talk" by choosing economical car fleets.

Abolish fringe benefits tax anomaly

WORKERS who have a car included in their salary package must pay fringe benefits tax. But the further they drive, the less tax they pay. For example, a car driving 14,900 kilometres is slugged a statutory rate of 26%. But at 15,000 kilometres, the rate drops to 20%. Above 40,000 kilometres, it is just [7%]. *see below

"Reform of the FBT is of much greater importance than import duty," the ACF's Tony Mohr said. "The Government must remove the incentive to do that June run up the coast when people get in the car and do that few hundred kilometres to get it over the next threshold. It's a very strange and perverse way of structuring a tax incentive."

Indeed, said Mr Mohr, the Government should go further and structure the tax to actively encourage fuel efficiency. This would include not only distance travelled, but the fuel efficiency of the vehicle purchased.

Queensland academic John Quiggin agreed that the FBT was a bigger issue than import duty and an "obvious candidate for removal".

The Federal Government says the FBT system needs to be reviewed and has asked the Henry review of taxation to look at the complicated nature of fringe benefits arrangements.

* The original article reads "Above 40,000 kilometres, it is just 40%." I believe this is a typo. Steve