Ministers Michael Wood and James Shaw’s Budget 2022 funding includes “$20 million for a vehicle social leasing scheme trial, which will lease low-emission vehicles to low-income New Zealanders, making it more affordable to transition to cleaner options”.
It doesn’t mention the name, but the announcement clearly refers to a car leasing pilot project, spearheaded by social enterprise organisaion Ākina Foundation, and due to be formally launched next week.
The scheme, known as Waka Aronui, aims to provide safe, reliable, low emissions vehicles to low income families and whānau. For $95 a week, households get a car with a WOF, registration, insurance, servicing repairs and a new set of tyres each year.
Initially the cars will be hybrid electric vehicles – petrol cars with an electric motor and battery which can run the car when it’s going slowly. While these aren’t technically electric vehicles, the hybrid petrol/battery model reduces the amount of fuel the car needs, and therefore the cost of petrol and the CO2 emissions.
As the electric vehicle charging network ramps up, Ākina wants to move to plug-in hybrid cars and eventually pure electric vehicles.
The car leasing scheme has been in the works since 2019, and was initially geared towards getting low income families out of debt and into safe cars.
Budgeting services report ‘car poverty’ is a very real problem for many families, with people taking out high-interest loans to buy or repair their car. Because they can’t afford insurance they end up driving unsafe, unreliable cars and they get into trouble with loan sharks if the car goes wrong or if they get a fine for driving without a warrant or registration.
As Porirua-based Salvation Army financial mentor Damien Hazlewood told Newsroom when we first wrote about the scheme: “People need a car, but can’t afford it. They often have to take out a loan to buy the car but they get a cheap car that needs things done to it, so they are taking on a liability. They can’t afford insurance, so if something happens, they lose the car.”
Ākina chief executive Nicola Nation estimates the hybrid cars could save the average household $800-$1000 in fuel costs – more if the petrol price goes up more. Meanwhile, many families are paying at least $95 a week in vehicle financing “but the cars they are driving are not insured, not warranted, not regularly serviced, don’t get new tyres, and do not meet the same safety standards.”
Because of the Waka Aronui scheme, Nation says Ākina was asked to be part of the Government’s clean car sector leadership programme, so the $20 million funding was likely not a total surprise.
“We cannot be sure that Ākina will be selected as the implementation partner due to the Government’s own rules around procurement,” she told Newsroom after the announcement. “But we are sure this is our programme.”
The Waka Aronui project is being run by MUMA, the Manukau Urban Māori Authority, with start-up and pilot funding provided by Toyota (which supplies discounted vehicles), the Tindall Foundation (which provided a $200,000 low interest impact investment loan), MBIE, Waka Kotahi and Auckland Council.
So far, six families have received cars, Nicola Nation says, with 20 due to be taking part by the launch date next week. The plan was originally for the scheme to be self-funding and to allow at least 250 low income families access to cars over the next three years.
The $20m funding might allow the programme to scale up faster, although this will also be dependent on variables like vehicle supply, Nation says. The programme could also be tested with other parts of the market, and potentially different community partners in different parts of the country.
“Ultimately, it will mean more families have safer, lower emissions vehicles more quickly, meaning fewer higher emitting cars on the road and increased financial resilience for families.”
MUMA’s group operations manager, John Cameron, says the additional funding should also see the programme able to move from hybrids to electric vehicles more quickly.
“It gives us the opportunity to scale it up to create a community more driven towards sustainability, as well as improving whānau financial security.
“As EVs become more affordable, I’d like to think we would move to update some of those vehicles to electric. I think everybody, including low decile families, want to look after the planet, and being in an EV would mean whānau would be so much better off in terms of day-to-day costs.”
The pilot will run for three years, Cameron says, and he would like to see electric vehicles being introduced into the scheme in the second wave of the programme.