Labor is set to overhaul road user charging rules to cover electric vehicles, with Anthony Albanese all but confirming the long-delayed reform will be thrashed out at next week’s productivity roundtable in Canberra.
As data from the Australian Automobile Association showed EVs accounted for nearly one in 10 new car sales in the June quarter – a new record – the prime minister said the new rules would be worked through in this term of parliament.
In recent years the federal budget has been affected by declining fuel excise revenue – collected via petrol prices at a rate of 51.6 cents per litre – as drivers shift to battery-powered vehicles.
But a 2023 high court ruling delayed progress on taxing drivers after it found the Victorian government’s attempt to impose a tax on EVs was unconstitutional – because only the federal government had the power to impose excise taxes on consumption.
Since then, state and federal treasurers have discussed ways to tax EV drivers and maintain budget revenue.
After the treasurer, Jim Chalmers, signalled road user charging was likely to be considered earlier this week, Albanese said on Wednesday a solution to the growing problem was needed.
He said Labor had sought to be constructive when the Morrison government considered introducing new charges, plans which fell through before Labor came to power in 2022.
“What I believe is that we need money to ensure that roads are adequate and that is a long held belief,” Albanese said.
“What we need to do is to work those issues through and to come up with a realistic plan that can be implemented. And we’ll await those discussions.”
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The AAA’s quarterly EV Index showed Australians bought 29,244 new battery electric vehicles in the June quarter – up 63% from the nearly 18,000 registered in the previous three months.
Chalmers said Labor had flagged plans for new EV rules before the 3 May election, working in concert with the states and territories.
“We haven’t settled on a model or on timing when it comes to that change,” he said.
“Clearly a government of either political persuasion will need to make changes there because the excise take on petrol will come down as petrol vehicles exit the fleet and as EVs take up a bigger and bigger proportion in the decades ahead.
Polestar Australia’s managing director, Scott Maynard, said the summit should instead commission a review of the whole transport ecosystem, ensuring it is fit for purpose.
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The Chinese-backed Swedish carmaker has sold about 1,400 vehicles in Australia in 2025.
“Motorists are already paying stamp duty, registration, fuel excise, luxury car tax, fringe benefits tax, and tolls,” Maynard told Guardian Australia.
“You’re going to place this on top, and that doesn’t make sense.
“We would call for a road user charge to be part of a broader review of the current fees and taxes paid by Australian motorists to reconcile that and set it out more sensibly.”
The Productivity Commission has previously called for action on road user charging, saying road infrastructure around the country should be funded through user charges reflecting “the efficient cost of providing and maintaining that infrastructure”.
“By giving drivers a clear signal about the cost of infrastructure, they would have an incentive to use it more efficiently,” the commission said.
“Moreover, there will be a signal to infrastructure providers where changes in road capacity are warranted.”