Kāinga Ora designs new inner-city community housing developments without carparks, in a nudge to residents to move to active and public transport and shared rides. Yet, it’s among government agencies that reports increasing its vehicle fleet – in Kāinga Ora’s case, by leasing or buying heavily subsidised Hyundai EVs and even six $80,000 Polestars.

The housing agency has increased its fleet from 600 to 909. Overall, the number of light vehicles in the government fleet has increased by 16 percent in the past three years – and extraordinarily, among those additional cars are nearly 1,000 new petrol or diesel cars signed off by public sector bosses.

“You take a lot of punches working in sustainability and this is one of the bigger ones.”
– Nick Morrison, GoWell Consulting

For some in the private sector dipping deep into their bottom lines to transition away from internal combustion engines, it looks like hypocrisy.

Sustainability consultant Nick Morrison is one business owner who’s switched over. He and his fellow director got rid of their cheap runabout petrol vehicles, and replaced them with lease-share EVs for at least four years.

“To learn that at the same time, the government has been increasing their number of internal combustion engine vehicles by nearly a thousand is incredibly disheartening and hard to comprehend,” he says. “You take a lot of punches working in sustainability and this is one of the bigger ones.”

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Every agency will have its stated reasons. Kāinga Ora, established out of the ashes of Housing NZ in 2019, argues it has undergone significant growth and transformation in response to changing Government priorities, customer needs and thousands of older homes that need upgrading.

“The majority of this growth has been in urban construction and providing frontline support to our housing customers,” says sustainability director Alec Tang. 

In 2017 the Government vowed the public sector car fleet would be emissions-free by mid-2025, but that target has slipped and changed. Ministry of Business and Innovation figures reveal that government agencies have not only failed to expedite the phase-out of internal combustion engine cars – but they’ve actually bought more of them.

Rules require that for an agency to buy a petrol or diesel car, the chief executive must give personal sign-off. They must explain why buying or leasing an electric vehicle would “significantly compromise or prevent your agency from undertaking a core agency function”, and prove that all possible EV options have been exhausted.

“Due to technological, infrastructure and supply chain constraints in recent times, some agencies have retained or purchased lower emission petrol hybrid vehicles.” 
– James Shaw, Climate Change Minister

That’s an argument that can be made by a few agencies, such as NZ Police which has yet to successfully trial an EV that can sustain the severe operational demands they place on their cars.

But fleet experts are perplexed that other chief executives across the public sector could sign off so many new petrol and diesel cars, when they should be on a steep downwards trajectory.

In March 2019, MBIE records there were 14,015 petrol and diesel light vehicles in the Crown fleet; that number increased to 15,142 in September 2021, before dipping slightly from that peak to 14,941 on the most recent September 2022 data.

That's still nearly 1,000 more fossil fuel vehicles than there were three years earlier – and that's without including the government-owned heavy vehicles and motorbikes.

Agencies that are moving away from petrol and diesel vehicles are still increasing their fleets, which is equally worrying to sustainability experts. Kāinga Ora, for instance, reported having 600 fleet vehicles in its 2021/22 statement of expectations. Now, it has 909 vehicles.

"The agency has been tasked with, quite simply, doing a whole lot more to better New Zealand’s housing landscape from significantly scaling up our urban development activity to delivering thousands more homes at a time when they are urgently needed," says Tang.

The agency had 365 petrol and diesel vehicles in 2021; now it has eight pure internal combustion cars, and 684 hybrid petrol cars. It has 225 EVs. "Kāinga Ora has a fleet transition plan to support the Government target of a carbon neutral public sector by 2025, and is slightly ahead of target," Tang says. "In addition, we are actively investigating other sustainable alternatives to meet our staff travel for work needs, such as ride sharing and micro mobility solutions."

Six high-end Polestars are among the EVs purchased or leased by Kāinga Ora, the government housing agency.

Polestar NZ boss Bruce Fowler says government and corporate fleets made up half their 819 sales last year. "There's a good old saying that there's a lot of utes that are actually used for the purpose. Lots of companies are proactively moving middle to senior management out of utes, and into EVs."

The standard configuration Polestar sells for $79,900 – just beneath cut-off for the government's clear car rebate What that means is that agencies buying an eligible EV get a $30,000 public sector subsidy, then the $8625 rebate, as well as half-price charging.

He expects the pace at which agencies replace internal combustion engine cars with EVs will pick up, with 14,000 public sector cars coming to the end of their life in the next three years.

"Obviously the whole industry was challenged during Covid with supply constraints, particularly with EVs, so there was very little entry level EVs available. And so the government fleet is aging, and there is definitely a mandate to move as quick as possible to EVs," Fowler says.

There can be a protracted change management process. "A lot of agencies do a trial before committing, because there's people who still have range anxiety and stuff. And there's a bit of a move towards pool vehicles, rather than a one-to-one scenario. And of course there's the business case: the upfront costs are higher but the total cost of ownership is probably slightly better in an EV."

Climate Change Minister James Shaw says agencies are reducing the number of internal combustion engine vehicles in their light fleets and increasing the number of low-emissions vehicles – but not as fast as expected.

"Due to technological, infrastructure and supply chain constraints in recent times, some agencies have retained or purchased lower emission petrol hybrid vehicles." 

He says agencies are required to submit an annual Fleet Optimisation and Transition Plan to MBIE, which must include a strategy for fleet optimisation. The plans provided in late 2022 indicate that the government light fleet is expected to reduce in size by about 5 percent by the end of mid 2026.

It's hoped that 41 percent of the light vehicle fleet will be electric by late 2025, though he acknowledges complex fleets such as NZ Police may take longer to fully transition.

Shaw has previously talked about the importance of government and corporate EVs flowing through into the second-hand market – but he acknowledges that's not yet happening.

"Probably not at this stage," he says. "Agencies say the average turn-over rate for light government fleet vehicles (ICE) is around four to five years. The life cycle or turnover rate of government owned or operated EVs is not yet established but is likely to be similar or slightly longer."

He expects to see government agencies beginning to divest their second-hand EVs around 2024/25. 

Shaw said last year that public sector inertia was to blame for the delays.

"I think inertia in the system is one of the greatest forces that we've been fighting against the entire time," he said.

"But, again, I think that for a lot of agencies, they wouldn't necessarily have had full information available to them. I guess part of the challenge that we've got is to make sure that they actually can see their options. But I wouldn't want to see the 'practicable' phraseology used as an excuse not to do something that they otherwise could."

Nick Morrison agrees – government and business leaders need to push themselves out of their comfort zones. He and his fellow director at GoWell Consulting has been trying to lead by example when they replaced their petrol cars with EVs from Zilch.

The Zilch model is known as electric mobility as a service – Morrison's company has signed up for four years, giving them flexible access to the EVs. When they don't need a car, they can assign their entitlement to a staff member, or to another business or charity.

"It's a big additional cost for a small consultancy like ours, and it's not the most convenient for one of us who cannot park their car close to their house," says Morrison. "But it is the right thing to do. 

"And now we learn that the Government, which has declared a climate emergency and repeatedly called for businesses to transition away from their internal combustion engine vehicles, has increased not just the size of its vehicle fleet but its number of ICE vehicles.

"Give me strength!"

Newsroom Pro managing editor Jonathan Milne covers business, politics and the economy.

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