Distance-based road charging: Victoria introduces new Bill for electric vehicles

By Peter Holcombe Henley
01 Apr 2021
Victorian zero and low emission vehicle owners could soon be required to pay a charge based on the total kilometres travelled by the vehicle.

A new law would require Victorian zero and low emission vehicle (ZLEV) owners to declare odometer readings and pay additional registration fees, or risk deregistration of their vehicles.

The measure was announced as part of the Victorian State Budget in November 2020. The Zero and Low Emission Vehicle Distance-based Charge Bill 2021 is the first of its kind in Australia (although South Australia has announced a similar intention).

Treasurer Tim Pallas indicated in his second reading speech that the Bill is needed to "ensure all motorists contribute their fair share to the cost of funding road and road-related infrastructure", in light of falling Commonwealth fuel excise revenues due to improved vehicle fuel efficiency and the market shift to ZLEV ownership.

The Bill aims to limit access to the Victorian road network to those who have paid fees designed to cover the cost of maintaining the road network and administering road safety.

What's the obligation?

From 1 July 2021 existing ZLEV owners would have 14 days to lodge an initial odometer reading. Any new ZLEV registrations thereafter would also require an initial declaration.

On renewing a ZLEV's registration (which in Victoria can be done quarterly, six-monthly or annually), an owner would need to declare an updated odometer reading.

Declarations must be supported by evidence. Evidentiary requirements are not defined in the Bill, and will be set out in future Regulations. Other international jurisdictions permit data generated by an on-board unit or through a ZLEV's internal computer system, as well as more conventional evidence (e.g. photos).

Owners must keep relevant travel and odometer records for 5 years, and there are offences for failing to do so or for maintaining fraudulent records.

Motorcycles, mobile plant and heavy vehicles are excluded from the Bill, and the Minister could also exempt other classes of vehicle.

What are the charges?

ZLEV owners would be required to pay a charge based on the total kilometres travelled by the ZLEV in the previous registration period, based on odometer declarations, to renew their registration

Starting fees would be 2.5 cents per kilometre for electric or hydrogen vehicles, and 2.0 cents per kilometre for plug-in / fuel hybrid vehicles, increasing annually by CPI at the Minister's discretion (like public transport charges).

Kilometres travelled on most roads — whether in Victoria or inter-State — would be charged, as would travel on any toll roads. However, owners could assert that some of their travel was not on roads covered by the Bill (i.e. that are not declared public roads or common law highways).

Fees are to be paid within 14 days of the end of the previous registration period, or when a ZLEV is sold or registration is cancelled.

The Government expects average owner charges to be approximately $330 per annum for electric / hydrogen vehicles and $260 for plug-in hybrids, based on average annual travel of 13,100 km.

The Bill permits all declarations, invoices and other notices to be issued and processed electronically. This new volume of transactions may also influence the Government's proposed plan to use a joint venture model to develop the State's registration, licensing and custom plates currently run by VicRoads, as well as any required legislative changes.

What if an owner fails to comply?

If an owner failed to (properly) declare an odometer reading, an estimated fee would be charged. The onus would then shift to the owner to demonstrate that the estimate was inaccurate.

Owners can also be required to present the ZLEV for inspection at a notified time and place, in order to confirm odometer readings and Vehicle Identification Numbers. Owners may request a rescheduled inspection at least 24 hours in advance. Failure to present for inspection without reasonable excuse would incur a fine of more than $800.

Further, failure to make a proper declaration, or pay a charge invoice, may result in the ZLEV's registration being suspended or ultimately cancelled. The time between the Secretary issuing a suspension notice and the cancellation of registration could be as little as 28 days, if no objection is lodged by the owner.

The Bill's extensive enforcement powers go beyond powers under existing tolling legislation, which does not permit compulsory vehicle inspections or allow cancellation of registration for non-payment of tolls.

Objections and appeals

Owners could appeal an invoice, or a suspension or cancellation order, to the Secretary. However, the onus would be on the owner to demonstrate any errors in the evidence tendered by the Secretary.

Objections must be made within 60 days regarding invoices, and within 28 days of any suspension or cancellation notice.

Comparisons and responses

Each kilometre travelled incurs the same change under the Bill, irrespective of the time or location of travel. This model is therefore quite unlike the congestion zone regimes used in London or Singapore. Further, similar laws in overseas jurisdictions, including many US States, generally charge fees based on a ZLEV's mass or horsepower, rather than on distance-based usage (although Oregon is an exception).

A private member's bill, the COAG Reform Fund Amendment (No Electric Vehicle Taxes) Bill 2020, was introduced into Federal Parliament following last year's Victorian budget announcement. This would make Commonwealth road funding conditional on States and Territories not imposing an electric vehicle tax, potentially adding further complexity to how States and the Commonwealth raise and spend road-related taxes.

Where to from here

There are only 12 scheduled sitting days left before 1 July, so the Bill requires swift passage to achieve its proposed implementation date.

The next sitting day for the Legislative Assembly is on 4 May 2021.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.