In his media conference at the end of the final day of the three day Productivity Roundtable, Treasurer Jim Chalmers said that Road User Charges is “An idea whose time has come.”
The Treasurer has tasked The Hon Catherine King MP, Minister for Infrastructure, Transport, Regional Development and Local Government and New South Wales Treasurer, the Hon Daniel Mookhey to together work on options and details of how this could be implemented. No time frame for the development of a policy framework has been set at this stage.
The Australian government collected approximately $15.71 billion in fuel excise during the 2023-24 financial year.
If the time has come for Road User Charges (RUC), it has been a long time to get here.
The concept of replacing fuel excise with a flat RUC was first floated, long before the emergence of EV’s, in 2009 as part of the Henry Tax Review.
In 2017, the Productivity Commission highlighted that typical revenue streams—fuel excise, registration fees, license and stamp duties, and other taxes—are increasingly inefficient, indirect, and structurally declining, especially due to rising fuel efficiency and the shift toward electric vehicles (EVs)
Then in 2021, Victoria introduced the first formal distance-based road user charge for passenger EVs and plug-in hybrids, at 2.5 cents/km and 2.0 cents/km respectively. This was challenged in the High Court, which in October 2023 ruled the charge unconstitutional, effectively putting national-level reform back on the agenda.
While ACAPMA supports the concept of RUCs, the devil will be in the detail. The risk is that this could simply be a tax applied to EVs, and the fuel excise remains in place and continues to be indexed twice a year. This would be what Treasury would call ‘revenue positive’, that is, an increase in taxation by tapping into a new tax revenue stream. ACAPMA believes the government should proceed in developing a RUC with a remit that it be ‘revenue neutral’.
ACAPMA would encourage the government to look across the ‘ditch’ and study the recently announced New Zealand model where the fuel excise duty will be phased out for petrol vehicles. Instead, all light vehicles (petrol, diesel, hybrid, electric) will pay based on distance travelled and vehicle weight.
The proposed evaluation of RUCs also provides government the opportunity to become imaginative and look at how the tax system can be designed to encourage the uptake of Low Carbon Liquid Fuels (LCLFs) such as renewable diesel.
Comments and feedback can be made to rowan@acapma.com.au
ACAPMA
