Treasurer Jim Chalmers has confirmed that the question of a road user charge on electric vehicles to replace fuel excise and pay for road upgrades remains a live option that will be considered by future governments.
Experts have called for a debate on a road user charge for years warning that the rapid take up of electric vehicles will decimate fuel revenues.
But because electric vehicles are heavier, some studies suggest they deliver twice as much stress on roads compared to petrol vehicles, potentially increasing the expense of upgrading roads in the future.
Speaking today at the national press club to launch the Intergenerational Report, Dr Chalmers conceded that the predictions on fuel excise were stark and would naturally lead to further debate about road user charges.
“Is it something your government is even considering or are you worried about it being seen as a tax on motorists or are you prepared to cop a hole in the budget and find the money elsewhere?,’’ he was asked.
“I think in the next few years, an increasing focus, certainly of our Government and most likely governments will follow us, will be this public policy challenge, this revenue challenge, this challenge to the revenue base,’’ Dr Chalmers said.
“You’re right that a big part of this is states’ related. There’s a court case underway right now which goes to the core of this.
“Our focus for the time being is a couple of strategies that Catherine King and Chris Bowen are working up when it comes to the broader environment and infrastructure for electric vehicles.
“No doubt at some point probably relatively soon by which I mean in the next few years, a government, our Government, or our successor, will turn our mind to it.”
Australian Automobile Association managing director Michael Bradley has previously warned that “the big shift to electric vehicles is great for the planet.”
“But we need a fair way to pay for the roads they drive on that don’t build themselves,’’ he said.
“Electric vehicles are the way of the future. Their emergence is welcome and, with prices expected to fall in coming years, unstoppable.
“However, the shift away from the internal combustion engine (ICE) comes with serious revenue consequences for the federal government.
“As things stand Treasurer Jim Chalmers rakes in about $13.7 billion a year from fuel excise, which ICE motorists pay to the tune of 47.7 cents for every litre of fuel they buy. Motorists expect this money to be used to build and maintain the nation’s roads and, as things stand, it mostly is.
Mr Bradley also warned that there could be a “collapse” without proper due diligence.
“In the coming years, as more people buy EVs, the fuel excise take will collapse. Unless we want to watch our roads fall into disrepair, we must reform the way we tax transport.”
The IGR report warns that “structural changes to the economy are projected to put pressure on the revenue base over the coming decades.”
“Indirect sources of revenue are expected to decline as the decarbonisation of the transport industry and changing consumer preferences erode fuel and tobacco excise bases,’’ the IGR report states.
The report also warns that rising temperatures will change the way tradies work, particularly in Western Australia and some regional areas as temperatures rise.
“It’s one of the big shifts that we are anticipating in our economy and it will have consequences for all of us,’’ Dr Chalmers told Sunrise.
“The report tries to come at this in two ways – first of all, to recognise that if we don’t act collectively around the world and here in Australia to limit the impact of climate change then we put our industries and our people and our communities at risk.”