02 Sep 2021

South Australia follows Victoria and introduces bill for a distance-based electric vehicle levy

By Peter Holcombe Henley

The SA Government has given a clear and early indication to vehicle owners and manufacturers of the proposed distance-based electric vehicle levy, and also demonstrated general consistency with the Victorian regime in terms of model, rate and scope of application of the SA levy.

Following vigorous public debate after the proposed Victorian model was introduced in March 2021, SA Treasurer Rob Lucas had delayed the introduction of legislation originally flagged in his November 2020 budget speech, stating the extra time would allow for further industry consultations and monitoring of developments in other states, to ensure a degree of "national consistency".

The bill, introduced on 26 August 2021, would 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.

Unlike the Zero and Low Emission Vehicle Distance Based Charge Act 2021 (Vic) (ZLEV Act), the Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021 (SA) is not a standalone piece of legislation. Instead, it would:

  • add the distance-based charging regime to the existing Motor Vehicles Act 1959 (SA); and
  • amend the Highways Act 1926 (SA) to enable the Highways Fund to be used for the installation and maintenance of charging facilities for electric vehicles, and refuelling facilities for hydrogen vehicles.

According to the second reading speech, this approach is intended to minimise the administration burden associated with the new charging arrangements by leveraging off the existing registration arrangements.

The SA Government has also announced uptake incentives and rebates prior to introducing the Bill, which may counter the types of concerns raised in early sector responses to the ZLEV Act.

The NSW Government has also introduced a distance-based charging bill for low emissions vehicles, again with some notable differences from both SA and Victoria, which will be summarised in a future Insight article.

Is it similar to the ZLEV Act?

There are a number of similarities between the Victorian and South Australian regimes:

  • Vehicle types: Both regimes apply to electric, plug-in hybrid and hydrogen vehicles, and exclude heavy vehicles (within the meaning of the Heavy Vehicle National Law).
  • Odometer readings: Odometer readings are used to calculate the charge, and there is a presumption that all kilometres travelled are subject to the charge unless the registered owner establishes otherwise. No technology is prescribed to take readings.
  • Rates: The rate of the charge is 2 cents per km for plug-in hybrids and for 2.5 cents per km for electric and hydrogen vehicles (indexed using local CPI, although the indexation regime in Victoria commences earlier).
  • Periodical registration: Both regimes allow the charge to be paid at the same time as regular periodic renewal periods.
  • Inspections: Vehicle inspections can be required to validate information provided by registered owners.
  • Consequences: Ultimately, if a charge is not paid, a vehicle will cease to be registered.

However, there are also some significant differences:

Commencement

The ZLEV Act commenced on 1 July 2021, without being tied to any specific level of EV take-up by registered owners.

By contrast, SA's Act would only commence on 1 July 2027, unless the SA Treasurer is reasonably satisfied that "sales of battery electric vehicles in South Australia will be 30% of new motor vehicle sales in South Australia". This trigger condition is noteworthy because:

  • "battery electric vehicles" means vehicles that use "only an electric motor for propulsion" (even though the levy itself would also be applied to plug-in hybrids and hydrogen fuel cell vehicles); and
  • no specified time period is stipulated for the assessment of whether the target level of 30% of new sales is met, potentially widening the Treasurer"s discretion to gazette an earlier commencement date.

Estimates

  • In Victoria, the Secretary can estimate the kilometres travelled by a ZLEV if the registered owner does not provide an odometer reading.
  • In SA, reliance is placed on the Registrar's existing powers to request additional information prior to re-registering a vehicle.

Joint and several liability

  • The SA Registrar can recover levied amounts owing as a debt due from either the registered owner at the time the levy accrued, or from the current registered owner, and both owners are jointly and severally liable for the debt.
  • The ZLEV Act has no equivalent provision.

Transitional provisions

  • Unlike the ZLEV Act, the SA Bill has no transitional provisions (e.g. no requirement for existing registered owners to submit a starting odometer reading against which subsequent readings are compared).
  • As a result, it is unclear how the levy amount for the first registration period following commencement will be assessed.

What does this mean for hydrogen?

The SA and Victorian regimes have each necessarily and expressly steered clear of catching heavy vehicles — which are regulated, and registered, at the national level — from the scope of their levies. This exception is significant: in some transport quarters, the prevailing wisdom is that electric vehicles substitute well for conventional fuel passenger vehicles, while hydrogen vehicles function as better replacements for diesel vehicles.

As a result, it is open to the Commonwealth to potentially shift the current petroleum-based fuel excise revenue base to hydrogen over time. The most recent national policy statement on the topic (from relevant State and Commonwealth ministers, through COAG) is in Australia's National Hydrogen Strategy:

"Hydrogen is not explicitly considered as an energy source in [existing excise] regimes. As hydrogen production and use grows, appropriate taxation, excises, fees or levies could help ensure that the community shares in the economic benefits from developing a hydrogen industry…. Governments will continue with the revenue arrangements that now apply to hydrogen, but may review them in the future."

Where to from here?

The SA Government has given a clear and early indication to vehicle owners and manufacturers of the proposed regime, and also demonstrated general consistency with the Victorian regime in terms of model, rate and scope of application of the SA levy.

Given the new levy may not come into force until as late as 2027, the passage of the SA Bill through Parliament may not be as swift as the three-month gestation period of the ZLEV Act.

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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.