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With fuel excise used to fund critical road infrastructure forecast to decrease by $470 million, the state’s peak motoring body is renewing calls for the Federal Government to fast-track motoring tax reform—to provide a long-term sustainable revenue stream for road funding and support the uptake of fuel-efficient vehicles.
The Federal Government has forecast a $470 million decrease in fuel excise over the next four years as a result of the New Vehicle Efficiency Standard (NVES) which came into effect on 1 January this year.
The fuel excise is a 50.8 cent tax on every litre of fuel purchased by motorists to help fund critical road maintenance and infrastructure.
As the market share of electric vehicles (EVs) and fuel-efficient vehicles continues to grow, less fuel is being purchased leaving a smaller revenue pool to fund road maintenance and upgrades.
RAA says a road user charge is needed to replace the fuel excise to help fund critical road infrastructure and it could also be used to fund initiatives to accelerate EV and PHEV uptake – including extending the Fringe Benefit Tax exemption for PHEVs beyond 1 April this year.
According to an RAA survey:
RAA Chief Executive Officer Nick Reade said the situation is worsening and the Federal Government must show leadership and develop a road user charge to replace declining fuel excise revenue.
“Last year we highlighted this issue through the Advertiser’s Future SA campaign because we knew the fuel excise was going to start going backwards as more EVs and hybrids hit our roads,” Mr Reade said.
“That’s now coming to fruition, which means we’re going to have less money to pay for our roads and South Australia’s $2 billion road maintenance backlog is going to get worse.
“EVs and hybrids use less fossil fuels which is great for the environment and the sustainability of transport – something RAA wholeheartedly supports.
“However, it also means because they’re not paying for fuel, or they’re refuelling far less often, they’re not contributing their fair share to the only existing federal revenue stream to fund our roads: the fuel excise.
“That’s not fair and we believe everyone who uses our roads should help to pay for them.
“If we get this right, some of that revenue can be used to fund initiatives to promote the uptake of EVs and fuel-efficient cars – like extending the FBT exemption for PHEVs which is due to end in April this year.
“Tax reform is tough – we understand that – but it’s necessary and it’s time the Federal Government showed some leadership and put some options forward.
“It shouldn’t be left up to each state or territory to come up with their own motoring tax reform—it’s a national problem that calls for a national solution.
“Victoria tried to introduce a road user charge so EVs and hybrids would pay their fair share, but the High Court effectively said it was invalid.
“NSW and WA have similar schemes set to come into effect in the next few years but the last thing we need is a piecemeal approach where we end up with different rules and charges in each jurisdiction.
“At the moment, the fuel excise is a federal revenue stream and consistent across all states – we think a road user charge should be as well.
“In South Australia alone we have a $2 billion road maintenance backlog, which amounts to more than 2,100 kms of our sealed road network in need of repair.”
Mr Reade said RAA, along with its federal counterpart the Australian Automobile Association (AAA), was urging the Federal Government to use the NSW legislated scheme as a starting point.
The NSW scheme will introduce a road-user charge that will apply to eligible EVs from 1 July 2027 or when EVs make up 30 per cent of new vehicle sales in NSW, whichever comes first. Plug-in hybrid EVs will be charged a fixed 80 per cent proportion of the full road-user charge to reflect their vehicle type. NSW originally set the rate at 2.5 cents per kilometre for EVs, however the charge rate is indexed to the consumer price index (CPI) each financial year.
“There’s a will from the states to introduce a technology-neutral road user charge but we need Federal leadership before it’s too late,” Mr Reade said.
“Other jurisdictions across the world are moving to a road user charge and Australia is falling behind.
“We have the benefit to look at those systems, particularly in the US and New Zealand, and learn from their experience and adapt and refine their models to suit our infrastructure funding needs.”