28 Oct 2021

NSW passes Australia's second distance-based EV road user charge legislation

By Peter Holcombe Henley

NSW joins Victoria and South Australia in applying a distance-based levy to each kilometre travelled by low emission electric, dual-power and hydrogen power vehicles, although with some significant differences.

The Electric Vehicles (Revenue Arrangements) Bill 2021 (EVRA Bill), introduced with the State Budget in June 2021, was passed by both Houses of Parliament on 20 October after the Legislative Assembly agreed to adopt amendments moved in the Legislative Council). It was originally cognate to the Appropriation Bill 2021, and they were separated on 24 June 2021.

As with the equivalent Victorian and proposed South Australian legislation, the Act will apply a distance-based levy to each kilometre travelled by low emission electric, dual-power and hydrogen power vehicles, at the point of renewing or transferring registration, based on odometer readings.

However, the Bill also contains a number of notable features that distinguish NSW's regime from the other States, and the amendments proposed by the Legislative Council are also noteworthy.

NSW EV Strategy links stamp duty relief and road user charging

The second reading speech in the Council outlined that the EVRA Bill, as part of the NSW Government's Electric Vehicle Strategy, amends the Duties Act 1997 to phase out vehicle stamp duty on electric vehicles. It applies retrospectively from 1 September 2021 (noting recent COVID-19 related delays to the passage of the Bill), and means the registration of battery and hydrogen fuel cell electric vehicles sold for a dutiable value of up to $78,000 will be exempt from vehicle stamp duty.

Further, a person who is among purchasers of the first 25,000 new eligible vehicles valued at up to $68,750 will also be able to claim a $3,000 rebate, which will also apply retrospectively from 1 September 2021.

The second reading speech also emphasised that EV Strategy commits to phasing in distance-based road user charging to provide a "new and sustainable own source revenue base, which will allow the State greater autonomy and certainty in prioritising road expenditure. By aligning the charge to distance travelled, it will also help to keep revenues in line with the public cost of providing roads." However, Legislative Council amendments also required this inclusion of an express intention provision making it clear that "[i]t is Parliament's intention that the total amount of revenue collected under this Act from road user charges be paid into the Consolidated Fund."

What does the EVRA Act involve?

Like the Victorian Zero and Low Emission Vehicle Distance Based Charge Act 2021 (ZLEV Act), the EVRA Bill is a standalone piece of legislation which:

  • applies to all electric, plug-in hybrid and hydrogen vehicles, and exclude heavy vehicles (within the meaning of the Heavy Vehicle National Law);
  • uses odometer readings to calculate the charge, with a presumption that all kilometres travelled are caught unless proven otherwise;
  • uses a rate of 2c/km for plug-in hybrids and 2.5c/km for electric & hydrogen vehicles, which are also "hard coded" into the legislation (rather than set by regulations, as is often the case with statutory charges), which are subsequently indexed using local CPI;
  • applies the charge at the same time as regular / periodic registration renewal periods;
  • if a charge is not paid, a vehicle will cease to be registered and an offence may arise.

Other unique features of the EVRA Bill

The NSW regime offers both "pre-paid" and "post-paid" payment options. Owners must register a base odometer reading to be permitted to use pre-pay option, and can then pre-pay for travel in 1000km increments (or as the regulations specify). It was originally proposed that it would be an offence to travel further than the pre-paid km 'budget', carrying up to $2,200 fine. However, Council amendments have added a travel overrun exemption to the rule, which permits owners additional travel of up to 500km, as long as any additional charges are paid within 21 days of a notice from Transport for NSW (TfNSW).

The EVRA Bill covers any travel on "public land" in or outside NSW, and owners would need to demonstrate that some travel was on "private land" (or any other excluded category prescribed in regulations) to reduce their odometer readings. Compare this to the more complex test for relevant roads under ZLEV Act ("specified roads" per legislation or common law), or "road or road-related areas" in the SA Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021.

The Legislative Council also required the inclusion of a provision that ensures owners will have at least one manner in which to provide an odometer reading using a device or system that does not transmit information to TfNSW without the owner's intervention. The owner will therefore always be able to control odometer reading updates for charging purposes, even if other technology solutions are deployed that send this data direct to TfNSW.

Deferred commencement of the EVRA Bill

By distinction with Victoria, but similar to the MVA Bill, following assent the charge regime under the EVRA Bill will only commence on either:

  • 1 July 2027; or
  • an earlier date on which the responsible Minister is reasonably satisfied that sales of battery electric vehicles (BEVs) in NSW will be 30% of new motor vehicles sales in NSW.

BEVs have only an electric motor for propulsion, with no alternative power source. As a result, a potential trigger for the commencement of the EVRA Bill relates only to sales of a more limited subset of vehicles that are subject to the charge.

Like the MVA Bill, the EVRA Bill does not prescribe how the 30% sales target is to be assessed, potentially giving discretion to trigger an earlier commencement date using historical or even forecast sales figures.

Amendments included a new section requiring the Minister to make an annual statement to each house of Parliament regarding:

  • the percentage of new vehicles registered during the preceding 1 year period that are battery electric vehicles; and
  • the date by which the Minister reasonably expects registrations of battery electric vehicles in NSW will be 30% of new vehicles registered in NSW.

Note that the commencement trigger refers to "sales" rather than registrations. Care must be taken therefore to identify the data that will to enable the Minister to be reasonably satisfied the target has been reached.

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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.