AUSTRALIA is almost certain to get a road-user charge with an announcement by the federal government set for the May budget, raising the cost of running an EV to that of a small diesel car.

But analysts believe that the road-user charge (RUC), still in its embryonic stage, won’t stop people considering an electric vehicle.

“We all knew it (RUC) was coming,” said Steve Bragg of advisory firm Pitcher Partners.

Steve Bragg, lead partner at the motor industry services group at Pitcher Partners told GoAutoNews Premium: “This was always going to be something that was going to eventuate. As fuel consumption reduces, the government either has to put the price of fuel up by increasing excise tax or they have to do a road user charge.”

Mr Bragg suggested that the fairest way of levying the tax would be to put all vehicles on the same road user charge, which is a calculation based on the weight of the vehicle and the distance traveled.

“It would be paid on registration. 

“So, for example, when you register the vehicle, you would have to give the kilometers with some sort of verification like a photo. When renewed after 12 months the distance travelled is calculated and the fee calculated with a loading based on the weight of the vehicle.  The same would happen on transfer of registration.

Mr Bragg said that accounting for weight was necessary because heavier vehicles are more likely to damage roads and that EVs are generally 10 per cent to 30 per cent heavier than ICE vehicles and in some cases are 50 per cent heavier.

Steven Bragg

Mr Bragg said that EV owners in New Zealand pay a road user charger  based on distance travelled of $76 per 1000 kilometres. He said this was an equivalent cost of a light diesel vehicle. 

He told The Australian that NZ drivers pre-purchase the RUC in blocks and can, for example, pay $760 for 10,000km for a year of driving.

Mr Bragg said he was aware Australia was working on something similar, but suggested it could be modified with a vehicle weight classification aligned with the greater wear on roads produced by bigger vehicles. Lighter vehicles would therefore pay less RUC than heavier vehicles.

“It would work in Australia if it replaced the fuel excise tax – that is, the RUC would be applied for EVs (including hybrids, BEVs and PHEVs) and ICEs equally,” he said.“It really shouldn’t change the dynamics of an EV buyer. If the RUC is $760 for 10,000km, that’s $14..60 a week. Charging an EV is still a lot cheaper than fueling an ICE, so buying an EV still produces a big transport saving for owners.”

Owners of ICEs (petrol and diesel vehicles) currently pay a fuel excise of 51.6 cents a litre. The funds are used to support road infrastructure. EV owners don’t pay that charge.

Mr Bragg said that not paying the fuel excise tax was a “free kick” for EV owners.

Treasurer Jim Chalmers, speaking ahead of the May budget, said in The Australian newspaper report that the current fuel excise would not be sustainable “over the next decade or two.”

“As more and more people get off petrol cars and into EVs, we’ve got to make sure that the tax arrangements support investment in roads,” he said.

“But we’re in no rush, changes of this nature will be made, because the status quo won’t work in 10 or 20 years.”

The RUC is a federal tax. Victoria introduced a state RUC for EVs and PHEVs in 2021 but it was ruled out by a High Court in 2023.

By Neil Dowling