The progress of legislated road user charges for owners of zero and low emission vehicles (ZLEVs) in Australia continues down a bumpy road.
States, regardless of the political party in power, continue to adopt differing approaches to balancing policies that, on the one hand, encourage ZLEV take-up, and on the other, maintain State revenues. Meanwhile, the constitutionality of Victoria's ZLEV road user charge is being challenged in the High Court of Australia.
South Australia to reverse position on ZLEV road user charge
With a new Labor government elected in April 2022, South Australia is set to U-turn and repeal the State's Motor Vehicles (Electric Vehicle Levy) Amendment Act 2021 (SA EV Levy Act).
The SA EV Levy Act was only passed by SA's parliament in October 2021 after a 12-month delay and after obtaining cross-bench support. It is scheduled to commence in July 2027, or when the State's battery-powered EV sales exceed 30% of total vehicle sales per annum, whichever is first to occur.
On 18 May 2022, the Motor Vehicles (Electric Vehicle Levy) Amendment Repeal Bill 2022 was introduced to the House of Assembly. Clearly the new Government is not intending to waste time in following through on its election promise.
Western Australia introduces ZLEV road user charge
In contrast, the Western Australian Government has announced plans to introduce a road user charge as part of a $60 million package to accelerate ZLEV use. The package includes rebates for the purchase of electric and hydrogen vehicles and investment in ZLEV infrastructure.
WA will introduce a distance-based road user charge for zero and low emission light vehicles from 1 July 2027. Consistent with the other States, drivers of EVs and hydrogen vehicles will be charged a base rate of 2.5 cents per kilometre, with a rate of two cents per kilometre applying to plug-in hybrid electric vehicles. Both rates will be indexed to the Consumer Price Index, a more significant consideration than was the case when Victoria designed its charging framework in early 2021.
The package represents a substantial policy development by the WA Government, noting that road user charges were not originally foreshadowed in WA's 2020 Electric Vehicle Strategy.
The WA Government’s approach of coupling the introduction of the charge with substantial vehicle purchase rebates and programs to invest in further EV infrastructure, such as charging stations, demonstrates learnings from the experiences of other States, and will go some way to ensuring the ZLEV industry and user groups do not mobilise to resist the charge on the basis that it disincentivises the transition to low-emissions vehicle fleets.
High Court Case — Vanderstock et al v Victoria
The constitutional challenge to the Victorian Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) (ZLEV Act) continues in the High Court. The plaintiffs in Vanderstock & Anor v. The State of Victoria (Vanderstock) are arguing that the ZLEV charge imposes an excise duty which, under the Commonwealth Constitution, can only be imposed by the Commonwealth Government, not the States. We outlined the background to the case in an earlier Insight article.
Another four States (SA, Tasmania, WA and Qld) have now applied to the High Court to intervene in the proceedings to defend the constitutionality of the ZLEV Act. The intervention of these States (not all of which have introduced or signalled an intention to introduce similar ZLEV road user charges) reflects the Australia-wide interest in the outcome of this case, as all States and Territories, and indeed the Commonwealth, grapple with the challenge of designing effective ZLEV policies whilst addressing the ongoing cost of building and maintaining road networks.
The legal reality is that funds raised from road-related revenue sources are not hypothecated to being spent on the road network: recent research by the Australian Automobile Association suggests that on average, just 53% of the Commonwealth tax revenue raised by the federal fuel excise is used to contribute to maintenance or development of road infrastructure.
Under a draft minute of Orders dated 1 June 2022, the parties jointly proposed that a special case filed on 12 May 2022 (not publicly available) will be progressed, with the plaintiffs to file a special case book by 14 June 2022, and subsequent submissions including those by interveners to be completed by early October 2022.