It was a tried-and-true saying: the customer is always right. It applied to marketing, it applied to service provision. If the customer is handing over cold hard cash – OK, swiping their phone – then the seller of the product or service should be informative and obliging. Of course, this message has never really applied to some businesses where customers are treated more like contagious lepers.  Take their money and show them the door is their motto. But these businesses often have a degree of market power and customers are not able to simply take their business down the road. And need I note here the treatment of customers – they are often even given this name – by public sector agencies: think Centrelink, public hospitals, road transport departments, local government and the list goes on? In most of these cases, the customers are treated as irritating nuisances or as charity cases who should be thankful for any service that is doled out.

But we are now moving into a new world where the government seeks to influence the private purchases of big-ticket items based on their carbon content by setting up schemes that force the seller’s hand. Sometimes referred to as café schemes, the New Vehicle Efficiency Standard (NVES) being championed by none other than B1, Climate Change and Energy Minister Chris Bowen, is an example. It aims to limit consumer choice by setting carbon content targets for all the vehicles sold by each manufacturer over the course of a year.

In the event that targets are not met, penalties apply depending on the extent of overshoot. Alternatively, manufacturers can buy credits from manufacturers who undershoot, which are mainly the electric vehicle producers. It is estimated that under B1’s scheme, Tesla is going to make a cool $200 million for doing precisely nothing. The company makes well in excess of $2 billion per year in the US from a similar arrangement.

(It is surely a joke for EVs to be given this special treatment and to focus only on tailpipe emissions as opposed to full lifecycle emissions. It is well-known that EVs require 40 per cent more energy to produce than conventional vehicles. It takes greater than 100,000 kilometres of travel for an EV’s aggregate emissions to be lower. EVs also involve greater emissions because of the  extra road repair caused by their weight.)

B1 was in full flight when he first announced the NVES, declaring that Australia and Russia were the only two countries in the world without a vehicle emissions standard. (Maybe the Russians aren’t as dumb as we think they are.) What Australia needed to do was to copy the US scheme just at the point that President Biden was being forced to water it down because of complaints from the unions and car dealers. There is also the real prospect that the US scheme will be completely abandoned should Trump become president again.

But B1 is a man on a mission and his first aim was to ensure that the CO2 content per kilometre driven of cars on Australia roads will be reduced by 60 per cent by the end of the decade. According to his deluded way of thinking, close to 90 per cent of all new car purchases by 2030 would be EVs. Not only would purchasers be saving the planet – or not – they would also be fully convinced of the benefits of EVs because of the incentive of lower prices (because of the scheme) and government handouts.

As is the case with all discussion of public policy issues, the devil is always in the detail. It turns out that the US scheme carries some significant complications, such as the ability to roll over credits from previous schemes as well as the exclusion of our top sellers (Ford Ranger, Toyota Hilux, Isuzu MU-X) from the purview of their scheme.

Add in other credits available for certain types of air conditioning, stop-start motors, height adjustment and it turns out that the US scheme wasn’t that close to what B1 was proposing. After some serious consultation with the industry (and some serious bleating to the Prime Minister by some of the affected parties), B1 has been forced to make some concessions. Let’s be clear, here, B1 has suffered a humiliating backdown. But the Prime Minister effectively twisted his arm lest the unpopularity of the scheme inflict serious political costs on the government. That just couldn’t be allowed to happen.

Everyone knows that Aussies love their cars. And lots of Aussies love to hitch their caravan or trailer to their large dual-cab vehicles and take off. Let’s also not forget that many Aussies use these vehicles for work.

The latest version of Bowen’s scheme is a watered-down version of the original proposal. Notwithstanding, the stalling of the EV market in the US (and elsewhere in the world), B1 is still pressing on with a scheme to ensure that purchasers of new vehicles are forced to take into account their carbon emissions. Forget the customer always being right; the underlying premise of these standards is that the government knows best and will have its way, one way or another.

While Bowen asserts that his new standard will widen the choice of vehicles available for purchase, there is every reason to believe the early complaints of the manufacturers that the range of vehicles would in fact be narrowed because of the need to comply with the (unrealistic) standard and timing as well as the need to avoid costly penalties.

As for his assertion that there would be no impact on prices, this was counter to how these schemes work. By altering relative prices, customers are nudged towards the (government-) preferred purchase rather than the one they would freely make.

Mind you, Bowen’s negotiated scheme isn’t in the locker yet because it has to be passed by the parliament. The Coalition will oppose it, having stupidly toyed with introducing a scheme when in government, and the Greens will oppose it because it doesn’t go far enough for these inner-city soy latte sippers. (Do most of them even have drivers’ licences?) The effective start date has also been deferred because the required IT systems are not in place.

The broader point is that governments around the world are attracted to these café schemes because, on the face it, they retain a degree of consumer choice. In the UK, there is a similar scheme for home heating, with failure by companies to install a certain percentage of heat pumps (the percentage grows each year) attracting a penalty.

One effect is to encourage less informed customers to take up the more expensive heat pump option even though the cheaper and more efficient gas boilers would do the job better. Again, the government has got ahead of itself with its ambitions and this scheme has also been watered down.

It’s not as if the customer is always wrong, it’s just that the government thinks it knows better. And we are just expected to suck it up subject to electoral baseball bats being utilised if it gets out of hand.