UPDATE: The Productivity Commission has just announced urgent reforms for a national road user charge that could revolutionize infrastructure funding across Australia. This proposal, aimed at enhancing major road upgrades, mandates that electric vehicle (EV) drivers also contribute, a significant shift in policy that could reshape the nation’s transport landscape.
In a detailed report released today, the Commission highlights that current laws exempt EV drivers from the 51.6 cents per litre fuel excise that conventional drivers pay. This exemption is under scrutiny as the Commission pushes for a fairer system that includes all vehicle types in infrastructure funding. The report is part of a series of five analyses that will inform Jim Chalmers, the Treasurer, ahead of the Economic Reform Roundtable scheduled for later this month.
The Commission’s report emphasizes the pressing need for national reform, especially after the recent High Court ruling that overturned the Victorian government’s attempt to impose a 2 cents per kilometer charge on EVs in 2023. “This decision necessitates a cohesive national approach to road funding,” the report states, urging governments to design a less fragmented system that accurately reflects the costs of road usage and maintenance.
With the rapid growth in EV adoption, the Commission argues that there is an even stronger impetus for change. “Road infrastructure should be funded through user charges that reflect the efficient cost of maintaining that infrastructure,” it adds. This shift aims to incentivize efficient road usage while signaling to infrastructure providers the need for capacity adjustments.
As the federal government currently has no immediate plans to tax EV users, discussions between the government and the automotive sector continue. “Over time, the use of fossil fuels in our car fleets will decline while EV adoption increases,” Chalmers stated in July, acknowledging the implications for the nation’s tax base.
However, the New South Wales state government has already flagged a distance-based charge for eligible EVs, set to take effect from July 1, 2027, or when EVs constitute 30 percent of all new vehicle sales. This proactive measure highlights a growing recognition of the need for equitable road funding.
The Commission’s report also explored broader implications for Australia’s economy, suggesting that aligning Australian standards with international norms could boost GDP by up to 0.2 percent, translating to a potential increase of $1.9 billion to $3.8 billion annually. Additionally, reforms in occupational licensing could yield an economic boost of between $5 billion and $10 billion, further emphasizing the need for immediate action.
This urgent call from the Productivity Commission signals a pivotal moment for Australia’s infrastructure policy, with potential changes that could affect millions of drivers and the future of road funding in the country. As discussions unfold, all eyes will be on the upcoming Economic Reform Roundtable for further developments on this critical issue.
Stay tuned as we bring you the latest updates on this evolving story, which promises to have lasting implications for transport and infrastructure in Australia.
