A NSW state government financial review panel has recommended that state treasurers design a national road user charging scheme for electric and other zero-emission vehicles, but the idea has been immediately rejected as a “dud” by the Electric Vehicle Council.
The recommendation is included in a draft report delivered to the NSW state treasurer by the panel led by former Telstra CEO and current CSIRO chairman David Thodey.
It doesn’t elaborate much on its recommendations, or why a road user charge should not be broadly applied to all cars and vehicles, rather than just electric and zero emissions vehicles, but it noted that $20 billion of annual fuel excise revenues were under threat from the switch to zero and low emission vehicles.
The call by Thodey’s panel was endorsed by the Australian Automobile Association (AAA), which represents motoring groups such as NRMA, RACV, RACQ, RAA, RAC and RACT. It said that EV drivers do not contribute to the cost of roads.
Another lobby group, Infrastructure Partnerships Australiam has also been a noisy advocate of road user charges for EVs only, even though the flow of fuel excise revenue has been impacted heavily by the introduction of more fuel efficient vehicles in recent years (despite the lack of emissions standards in Australia).
The impact of small number of EVs in the Australian market is negligible.
And many EV advocates say while a switch to road user charges is inevitable over the long term, it should be applied across the board and should not single out the EVs, which get no other incentives from either state or federal governments, apart from stamp duty exemptions in the ACT.
And they argue that fossil fuel cars are not required to pay for the cost of their emissions, both greenhouse gas and particulates.
Behyad Jafari, head of the Electric Vehicle Council, said applying a ‘road user charge’ to electric vehicles, at a time when other wealthy nations are using their tax systems to encourage EVs, would put Australia at odds with the rest of the developed world, and would be foolish when the country lags the rest of the world in the uptake of EVs.
“If government revenue from cigarette sales falls, it’s not logical to just whack a big new tax on nicotine patches,” he said.
“Australia has even more to gain from EVs than most other nations given the fragility of our fuel security. But instead of helping drivers fill up on local electricity, this Review proposes discouraging the use of EVs on NSW roads. It’s a very, very strange recommendation,” Mr Jafari said.
“A road user charge is one of those ideas that seems to make sense until you think about it. If fuel excise revenue is decreasing it might seem logical to start introducing a tax on cleaner vehicles. But just whacking a big new tax on EVs makes no sense.
“Combustion engine vehicles cost our economy billions each year, primarily through the health costs associated with respiratory illness. We kill more people with exhaust pipes than we do with crashes.
“We know from surveys that Australians want to drive cleaner, greener vehicles. But they won’t do so until they know their governments support them. A road user charge would send precisely the wrong message.
The Thodey panel recognises that revenue flowing from fuel excise have already weakened over time as vehicles have become more efficient, falling 20 per cent in the last four years despite a 37 per cent increase in kilometres travelled.
But it does not canvass a switch to road user charges for all vehicles, only for zero emissions.
“Fuel excise is most imminently under threat over the next decade, with the electric vehicle share of new car sales in Australia expected to rise from around 0.34 per cent in 2018 to 8 per cent in 2025,” it says, adding that the Bureau of Infrastructure, Transport and Regional Economics predicts the electric vehicle share jumping to 27 per cent in 2030 and 50 per cent by 2035.
Jafari says such a policy would send a bad signal to international car manufacturers, already reluctant to bring EVs in Australia due to the lack of incentives. Many top selling EVs in the European market, such as the Kia Niro and the VW i-Golf, cannot be bought in Australia.
“What it would mean, in practice, is that even fewer of the world’s best and most affordable EVs would ever reach NSW roads,” Jafari said.
“Car manufacturers are already loathe to bring the best EVs in their range here, because of Australia’s lack of fuel efficiency standards. This kind of tax would exacerbate the problem considerably.”