Electric vehicle drivers could soon be made to pay a new tax | 7.30

Key Concepts

• Fuel Excise: A tax on every liter of fuel purchased (petrol, diesel, aviation fuel).
• Road User Charge: A fee charged to drivers based on the distance they travel, typically measured in cents per kilometer.
• Electric Vehicles (EVs): Vehicles that run on electricity and do not use fuel.
• Fleet: A group of vehicles owned or leased by a business or organization.
• Consolidated Revenue Fund: A government account where all tax revenues are deposited.
• Productivity Meetings: Government discussions focused on improving national productivity.
• Clean Transport: Transportation methods that reduce or eliminate emissions, such as electric vehicles.

Fuel Excise and Declining Revenue

The video begins by explaining the fuel excise, which is currently at 52 cents per liter for petrol and diesel. This tax contributes significantly to the Commonwealth's revenue, with almost $16 billion collected in the 23-24 financial year. These funds are used for road infrastructure, transport infrastructure, and other government priorities. However, fuel excise revenue is declining due to two main factors:

• Increased Vehicle Efficiency: Modern vehicles are becoming more fuel-efficient, leading to lower fuel consumption.
• Electric Vehicle Uptake: The growing adoption of EVs, which do not use fuel, eliminates fuel excise revenue.

The Proposed Road User Charge

To address the declining fuel excise revenue, the government is considering implementing a road user charge. This charge would be based on the distance driven and the vehicle class.

• Charge Structure: EVs might be charged around 2 to 3 cents per kilometer.
• Cost Comparison: An EV driving 15,000 kilometers per year could incur a charge of up to $450, while a petrol car with average consumption (8 liters per 100km) covering the same distance would pay around $630 in fuel excise.

Arguments for and Against the Road User Charge

• Support for Fair Charging: There is support for a fair road user charging system.
• Concerns about EV Transition: The EV Council believes the charge shouldn't be implemented until 30% of car sales are electric, as it could discourage EV adoption. Currently, EVs and hybrids make up less than 2% of car sales.
• Impact on Climate Goals: Concerns are raised that a road user charge could hinder Australia's efforts to achieve stronger climate action by 2035 by reducing the incentive to switch to EVs.

International Examples and Pilot Programs

• New Zealand: New Zealand has a road user charge for diesel vehicles, which has been expanded to include EVs.
• Australian Pilot Trial: A national pilot trial was conducted for heavy vehicles to test the feasibility of a road user charge. Bernard Murphy, a participant in the trial, believes that Australians are generally accepting of user-pays systems as long as they are fair and equitable.

Implementation and Data Collection

• Seamless Rollout: Murphy suggests that the rollout could be seamless, as many vehicles (around 50% since 2015) already have the technology to track distance traveled.
• Data Availability: The data is already being sent to third-party storage units, making it easier for the government to implement the charge.

State vs. Federal Implementation

• State Plans: New South Wales, WA, and South Australia have plans to implement their own road user charges.
• Constitutional Concerns: After the High Court struck down Victoria's scheme as unconstitutional in 2023, these state plans could face similar legal challenges.
• Need for a National Scheme: The onus is on the federal government to create a national scheme to avoid legal issues and ensure consistency.

Next Steps and Discussion

• Open Conversation: The video emphasizes the need for an open and honest conversation between politicians, bureaucrats, the transport industry, and the general public.
• Transparency: Transparency is key to ensuring that the road user charge is accepted by the public.
• Treasurer's Meeting: State and territory treasurers will discuss the issue with Jim Charas at an upcoming meeting.

Notable Quotes

• "We support fair road user charging, but it's critical that when we consider this, we not slam the brakes on Australia's transition to clean transport." - EV Council representative
• "Anyone who knows Australians know that they're all about fairness. They're all about equity as long as you give them the facts." - Bernard Murphy

Technical Terms and Concepts

• Fuel Excise: A tax levied on the sale of fuel.
• Road User Charge: A fee charged based on vehicle usage, typically distance traveled.
• EV Uptake: The rate at which electric vehicles are being adopted by consumers.
• Consolidated Revenue Fund: The main account where government revenue is deposited.

Synthesis/Conclusion

The video highlights the need for a new approach to funding road infrastructure due to declining fuel excise revenue. While a road user charge is being considered as a potential solution, it is crucial to ensure that its implementation does not hinder the transition to electric vehicles and the achievement of climate goals. Open communication, transparency, and a fair and equitable system are essential for public acceptance and successful implementation. The federal government is likely to take the lead in developing a national scheme to avoid constitutional challenges and ensure consistency across states.