Nation-wide road user charge confirmed

Climate Change and Energy Minister Chris Bowen has signalled that a road user charge is inevitable, saying the industry is no longer debating whether one should exist, but instead how it should be designed. However, it’s currently unclear whether the new tax will exclusively target EVs or whether it will be a blanket impost for all road users, which could affect how the fuel excise is calculated.

Speaking at the National Press Club last week, Bowen said a road user charge will eventually replace declining fuel excise revenue as Australians continue switching to electric and more fuel-efficient vehicles.

The proposal wasn't included in this year's Federal Budget, with Bowen saying the design and timing need to be right before proceeding.

“I think a road user charge is something that Australia should be working towards. It's got to be done right. It's got to be done carefully, and that includes timing,” he said.

“It's a very big undertaking. It should not be rushed unnecessarily.

“The treasurer and I are of one mind on that. That's why it wasn't in the budget, because it needs more work. It's a conversation that we'll continue to have.”

He added that the discussions he's had with industry are centred on how such a system should operate rather than whether it should exist.

While Bowen stopped short of announcing a formal policy and didn’t go into specifics – such as whether it would target electric vehicles or all vehicles – he said the Government is deliberately taking its time, with further work required before any road user charge is introduced.

He also stated that "No one in the EV industry says 'we oppose a road user charge'," suggesting it could an EV tax.

Bowen argued Australia has passed the point where the transition to electric vehicles can realistically be reversed, but acknowledged governments still need to work through the budget implications before introducing a replacement for fuel excise.

The discussion comes as Australians continue buying electrified vehicles. Plug-in hybrid and battery-electric vehicles accounted for 21.7 per cent of new vehicle sales in July, overtaking petrol-powered vehicles for the first time and trailing only diesel.

Exactly how a future road user charge would work – including which vehicles would be affected, how much drivers would pay and when it could begin – remains undecided.

Whether it would be an annual fee or a per kilometre tax is still being worked out behind closed doors.

Bowen's message, however, is increasingly clear: a road user charge is part of the long-term conversation, even if the policy details are still being worked through.

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