Senior ministers in New South Wales and the Australian Capital Territory are extinguishing ideas of following other states in adding an electric vehicle (EV) tax, a move that is at odds with other jurisdictions around the world.
The ACT and its chief minister Andrew Barr made it very clear that there will be no EV tax in the ACT – not surprising given that it is the most EV-friendly jurisdiction in Australia with zero interest loans and free rego.
But comments from Liberal NSW minister for energy Matt Kean and minister for transport Andrew Constance on Sunday illustrate the conflicts of interest in state politics that are holding back policy to encourage zero emissions vehicle adoption, and putting the states’ own net zero carbon targets at risk.
NSW treasurer Dominic Perrottet attracted criticism in mid-November for his plan to tout an electric car tax to cabinet in the next 12 months.
It followed news that South Australia and Victoria are looking to impose a road user charge on electric car owners. In Victoria, this would be 2.5 cents per kilometres for electric cars, and 2 cents per kilometre for plug-in hybrids.
Proponents of road user fees say electric cars do not contribute to road maintenance costs, but critics note there is no link between fuel excise and road funding – it is just used as general revenue – and say that EV owners pay more tax on average per car owner because of the higher cost of EVs.
They also note the ability of EVs to reduce the health and societal costs caused by air pollution and carbon emissions from burning fuel.
While the senior NSW ministers agree that electric car owners – which currently only number around 20,000 nationwide – should contribute to roads, they say it is imperative that electric car adoption is encouraged, not discouraged by an additional fee.
Kean – who is the first minister to go electric with a ministerial Tesla Model 3 – and Constance say NSW should instead be a leader of EV uptake in Australia.
“I want to make sure that EV drivers pay their fair share but at the same time we don’t want to stifle innovation, we don’t to disincentivise people taking up these better alternatives,” said Kean, as quoted by the Sun-Herald on Sunday.
“I want to see NSW the leader not only in the country but on the global stage when it comes to that new economy that’s coming whether we like it or not.”
Constance told the Sun-Herald that EV uptake at “scale” was needed and a new EV tax would send the wrong signals to market, a message that has also been highlighted by automotive and environmental experts because it would stifle fleet uptake and drive further adoption via a secondhand market.
“We’ve got to be incredibly bullish on the incentive side, and signals to the market are important in this environment, because we need scale,” said Constance according to the Sun-Herald.
“We should be incentivising the uptake of these things and not go straight into a conversation about tax … I don’t want to see the state be criticised the same way Victoria and South Australia have been.”
Perrottet reportedly agreed that encouraging more environmentally-friendly transport is important, but he is “grappling” with balancing this with the issue declining fuel excise (mostly caused by petrol and diesel cars becoming more efficient).
“It’s a balance between ensuring as fuel excise declines that we have a fair and equitable system where people who use our roads pay for our roads,” Perrottet was quoted as saying.
“At the same time, we don’t want to stifle innovation of more environmentally friendly vehicles and an emerging market, so that’s what I’m grappling with.”
The apparent dichotomy in NSW state politics is further highlighted by the fact that in January, Kean hinted a state strategy to encourage EV uptake was imminent in response to a specific question about incentives to encourage electric vehicle adoption by families in NSW.
NSW in March introduced a net zero plan that includes measures to increase electric vehicle uptake but this included no such financial incentives for uptake.
In the ACT, Barr recognises that tax reform to fund roads is important but if the territory did introduce a road user fee in the next four years, it would be voluntary and include all vehicles.
It would replace flat registration fees, meaning that drivers who don’t drive often might opt for a road user charge instead, or drivers might choose to drive less to avoid greater road usage fees.
”That is, it would be opt-in, open to all vehicles and designed to incentivise less driving, saving households money and reducing congestion on our roads,” Barr was quoted as saying by Riot Act.
”For instance, if the driver is a minimal road user, they may opt for a per kilometre or block kilometre charge that is less than the amount they would otherwise pay on the flat registration fee.”
The ACT currently does not charge stamp duty to buyers of electric vehicles, and from July 2021, all EV buyers would be able to access two years free registration and a zero interest loan.
“This is an industry that we want to see thrive and we know is critical in our action on climate change,” Barr was quoted as saying.
“We have announced an extensive support package for EV uptake and offer the greatest incentives anywhere in Australia.
“EVs are coming fast and, at some point in the not too distant future, manufacturers will no longer make internal combustion engine vehicles.”
Bridie Schmidt is lead reporter for The Driven, sister site of Renew Economy. She has been writing about electric vehicles since 2018, and has a keen interest in the role that zero-emissions transport has to play in sustainability. She has participated in podcasts such as Download This Show with Marc Fennell and Shirtloads of Science with Karl Kruszelnicki and is co-organiser of the Northern Rivers Electric Vehicle Forum. Bridie also owns a Tesla Model 3 and has it available for hire on evee.com.au.