The Australian Government has confirmed it is working with states and territories to introduce a road user charge that will affect owners of electric vehicles (EVs).
Federal Treasurer Jim Chalmers has released a joint statement alongside the treasurers of Australia’s states and territories, providing a rough outline of what a road user charge needs to entail.
“The rapid development of electric vehicle technology is transforming the outlook for both passenger and freight transport, and policies at all levels of government will need to evolve to seize the opportunities and manage the challenges of this new outlook,” reads the joint statement.
“Reforms to road user charging arrangements for electric vehicles have the potential to bolster productivity through more efficient use of the road network and vehicle fleet and ensure fair and sustainable funding for road investment and maintenance. Reforms should be designed to not deter the continued take‑up of electric vehicles.
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“The reforms to the treatment of electric vehicles will ensure more equitable treatment across vehicle types and provide certainty to support investment.
“The design of reforms should be as simple as possible and minimise administration and compliance burden.
“We will ensure any changes are phased to enable the productivity, climate and consumer benefits of increasing electric vehicle uptake over the coming years.”
In a separate release, Mr Chalmers said the Australian Government will work with the states and territories and “take the time to get the policy development right”.
The joint statement doesn’t appear to suggest the governments are looking to change the levies imposed on owners of combustion-powered vehicles, and therefore falls short of what the likes of the Australian Electric Vehicle Association are calling for.
“A universal, mass × distance road user charge, introduced at a low rate, would actually serve the role fuel excise is supposed to play: a user-pays system proportional to impact. EV drivers don’t have a problem with it – we just want an equitable scheme which doesn’t discourage EV uptake,” said AEVA president Dr Chris Jones in a statement, arguing that by taking mass into account, it’ll prioritise smaller and lighter vehicles regardless of propulsion type.
But where some have suggested a road user charge could replace the fuel excise – similar to what New Zealand is planning on doing – Dr Jones argues it should stay.
“An EV and a diesel vehicle of identical weight and annual mileage should pay the same sum for use of the roads. But the diesel vehicle should pay something extra for the noise, harmful pollution, and greenhouse gas emissions,” he said.
“Fortunately, fuel excise captures that perfectly already.”
In contrast, Australian Automotive Dealer Association (AADA), the peak body for car dealers in Australia, has previously called for an “equitable national road-user charging system… [which] does not discourage the uptake of hybrids and EVs” and is done in a “technology-neutral manner across all vehicles regardless of powertrain choice”.
The fuel excise is a flat sales tax levied by the Australian Government on petrol and diesel sold at petrol stations. It’s currently 51.6c for every litre of fuel purchased, and is regularly adjusted in line with inflation.
Total revenue from this excise is expected to decline as more efficient vehicles plus EVs grow in popularity in Australia.
Currently, revenue collected via the excise goes into the Australian Government’s general revenue, before much of it is doled out for road construction and maintenance projects.
That’s precisely why Victoria introduced a road user charge in 2021, to help address an expected future shortfall in fuel excise revenue.
State-based road user charges were struck down by a High Court ruling in 2023, when the Court found that under section 90 of the Constitution, only the Commonwealth can impose customs and excise duties.
This forced Victoria to shutter its scheme and refund all charges to owners of EVs and plug-in hybrids (PHEVs).
Victoria collected $3.9 million in EV and PHEV road user charges during the 2022/23 financial year alone.
The New South Wales and Western Australian state governments previously also pledged to roll out similar taxes around 2027, while South Australia promised to do the same but reversed course following a change in government.
MORE: Australian Government pushes EV road-user charge to top of tax reforms to-do list