Federal ministers signal support for long-term plans to introduce a road-user tax for electric vehicle (EV) owners, citing the decline in fuel excise revenue as petrol and diesel cars are phased out. The proposal, which has been discussed for several years, is expected to feature prominently in upcoming economic policy talks.
The debate gained momentum after Treasurer Jim Chalmers confirmed in June that he was working with states and territories “on the future of road-user charging” for EVs. Tanya Plibersek, Minister for Social Services, described the approach as “sensible” and necessary to secure long-term road funding.
Falling Fuel Excise Revenue Prompts Policy Rethink
The fuel excise, which is applied to petrol and diesel sales, has long been a significant source of federal revenue. While it is not directly allocated to road construction, according to official statements, it has historically underpinned infrastructure spending. As the adoption of EVs accelerates, excise receipts are falling, prompting policymakers to search for alternative funding mechanisms.
Speaking to Seven’s Sunrise programme, Ms Plibersek said: “It’s no secret that as the number of petrol vehicles and diesel vehicles goes down, the tax from fuel excise decreases [and] that means less money for building and maintaining roads.” She noted that states and territories had been exploring this issue for some time.
According to Mr Chalmers, discussions with state and territory governments are ongoing, though no immediate policy changes are expected. The matter is set to be revisited at the federal government’s productivity roundtable next week, where transport industry leaders are also participating in consultations.
Victoria’s attempt to introduce a 2 cent per kilometre charge for EVs in 2023 was overturned by the High Court, but similar systems have been implemented abroad. New Zealand has applied road-user charges to EVs for several years and is set to extend them to petrol-powered vehicles.
Broader Road Tax Could Address Infrastructure Needs
Supporters of a national road-user tax argue it could ensure all motorists contribute to road maintenance, regardless of vehicle type. Jane Hume, a Coalition senator, told Sky News that a shrinking fuel excise base has put pressure on road upkeep. “We want to make sure that those EV users are making sure that they’re responsible for road maintenance in the same way that petrol and diesel car users are,” she said.
Motoring groups have previously called for a move towards road pricing as EV uptake rises. While critics warn of administrative complexity and potential barriers to EV adoption, advocates maintain that a distance-based system would be fairer and more sustainable in the long run.
