Now here’s a potential reform I can get behind:
Natalie Barr: “High level talks between transport and public service leaders are starting today to discuss a road user charge policy, with Jim Chalmers previously flagging in June that he was working on it with the states and the territories.”
…
Tanya Plibersek: “It’s no secret that as the number of petrol vehicles and diesel vehicles goes down, the take from fuel excise decreases. That means less money for building and maintaining roads. So, the states and territories have been looking at this for some time. I’m sure the Treasurer will be very interested in the discussion today.”
The states and territories have done more than just look at it. Victoria lost a high court case over its planned electric vehicle charge in 2023, paving the road (excuse the pun) for the federal government to eventually replace the fuel excise tax with its own road user charge.
Basically, instead of paying 51.6 cents a litre in tax every time you fill up your car, you could instead track your distance driven and pay accordingly. If it was really serious about efficiency, the government could even adjust the fee per kilometre depending on the weight of the vehicle, with things like Ford Rangers paying top dollar and motorcycles paying near the bottom end of the scale.
Electric vehicles and hybrids would start contributing to the wear and tear they cause the roads. Trucks would pay rates reflecting their disproportionately high road damage, creating a more accurate price signal for transport mode choice, helping rail compete more effectively as a freight option. Farmers and mining companies could be given a rebate—or just flat out exempted—if they can prove their vehicles never drive on public roads. It won’t be a perfectly linear scale because road costs have multiple components beyond vehicle weight, such as capacity (e.g. bridge and pavement strength), maintenance, signage, safety, and space, but existing models will be a good enough starting point.
Now, this shouldn’t be controversial. While the federal government is essentially being forced into action because of the expected decline in fuel excise revenue as more of the nation’s fleet goes electric/hybrid, in this case that’s a good thing: road user charging is a more efficient and equitable funding mechanism than the status quo because it better aligns usage with costs, creating more accurate price signals for transport decisions.
Better yet, a version of road user charging (for diesel vehicles) is already in place in a country that’s about as similar to Australia as you can get: New Zealand. And in around two years from now, the Kiwi government will push that scheme to all vehicles:
“The Government has signed off on the first steps towards scrapping petrol tax and shifting all vehicles onto electronic road user charges, calling it the “biggest change to how we fund our roading network in 50 years”.
Transport Minister Chris Bishop said Cabinet had agreed to legislative reforms that would enable the country’s 3.5 million light vehicles to eventually pay for roads based on distance travelled and vehicle weight, regardless of fuel type.”
There is one important difference between Australia and New Zealand that might prevent a full rollout Down Under: the lack of a carbon price. New Zealand has an emissions trading scheme, so people driving inefficient cars are already paying for it through higher fuel costs. The absence of such a scheme in Australia means some fuel excise might need to be maintained as a politically-acceptable, second-best way to internalise some of the costs of those emissions.
Another issue is privacy concerns. New Zealand’s government currently charges diesel road users through an inefficient logbook/paper scheme, where drivers have to buy vouchers in 1,000km blocks and record their driving manually. To broaden the scheme you would obviously want to automate that, or any efficiency gains would be undermined by the hassle of switching from simply filling your tank to monitoring your odometer and ordering vouchers. But automation also brings fears of Big Brother:
“[Transport Minister] Chris Bishop told Breakfast that the Government would engage with the Privacy Commissioner to ensure data was collected safely. ‘Ultimately, the standards will be set by the Government, and there will be potentially a range of competing providers. And I get the concerns around privacy.’
He said other places, such as Sydney, already used transponder technology in their cars to monitor where they were going and what they were doing.
‘When you go through a toll gantry it gives a little beep, and it charges you to your credit card and you pay at the end of the month, or week, or whatever.’”
I think privacy remains a valid concern, and Bishop has not fully addressed it. Having your trips through a toll road recorded isn’t quite the same as having every single movement tracked. And guarantees of privacy are all well and good until some hacker steals all the data, or the law changes in the future to “protect the children”, or something. Once the mechanism exists, government agencies have strong incentives to expand data collection and access beyond the original purpose.
Nevertheless, with hybrids and electric vehicles increasingly dominating our roads, some form of user charging is probably inevitable in Australia. Now it all comes down to execution.