Don’t do it Jim! Stupid road user charge will be a disaster for the EV market in Australia | Opinion

All forms of Government operate with a combination of carrots and sticks (in President Trump’s case his approach is to look like a carrot and wield a big stick) which can be utilised to move consumer sentiment. Let’s see if we can work out which one the Federal Government’s proposed national road user tax on electric vehicles would be.

Reports this week insist Treasurer Jim Chalmers told a Business Council of Australia dinner in Canberra last week an EV road user charge is not only on the agenda, it’s a top priority.

When it comes to EVs, subsidies and tax breaks are carrots and places like Norway – and more recently much of Europe – have thrown these carrots around as if their country is run by President Bugs Bunny.

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Or they did. Many of the incentives that Norway used to get to the situation where more than 90 per cent of new cars sold are electric were gradually removed, once they’d achieved momentum. So carrots are things that encourage people to buy EVs and Australia does have a few of these, a list of which you can find here including registration discounts, zero interest loans, stamp duty discounts and even cash rebates of up to $3500 in WA.

It’s fair to say that carrots like this have had some success, but it’s also fair to say that the take up of electric vehicles in Australia could be a lot faster, and that there does seem to have been a bit of a drop off of late as people run towards hybrid alternatives.

With EVs making up less than 10 per cent of the market, a sensible person might question whether this is a good time to hit people thinking about buying one with a stick, which would clearly be a tax that charges people with electric cars for every kilometre they drive.

Sure, it’s going to annoy five kinds of hell out of people who’ve already bought one, but more importantly it’s going to act like a big slamming of the brakes on those deciding whether to buy one or not.

We’ve seen Australian governments try this before, of course, with the Victorian Government’s attempt to introduce such a tax in 2021 later struck down by the High Court, which ruled that it was the kind of levy only the Federal Government could impose. Which now seems likely.

In NSW, the State Government was discussing doing something similar, at least until the High Court made its ruling, but its tax was not going to come in until July 1. 2027, or when EVs made up 30 per cent of all new cars sold, whichever came first.

A spokesman for the Treasurer told the Australian Financial Review late last week: “We will work with the states and territories on policies in this area following the decision in the High Court, but we’ll do it in a considered and consultative way and take the time to get it right.”

It should come as no surprise that the Greens are opposed to the idea, nor that the Coalition is reportedly open to it.

It’s not often than I think governments make a lot of sense, but the Federal Government – the same one that wants us to get to net zero, one day – seems to be hitting itself in the face with a big stick here, while the NSW Government’s policy, which won’t happen now, seemed to actually make some sense.

Yes, you’re going to hear the argument rolled out that we have to pay for roads somehow, and that taxes on petrol are what pay for that, and all these people – well not that many, realistically – driving around in EVs and not paying that tax are getting a free ride (except for their registration fees of course).

But don’t buy it. Petrol taxes do not go directly to paying for roads, they are just as likely to go to saving frogs, or funding hospitals. All taxes go into general revenue, and everything gets paid out from there. The idea that every dollar of petrol tax – or speeding fine revenue for that matter – goes to roads is a furphy.

There will, eventually, be a time when a road-user charge of some kind makes sense, and weirdly, yes, our cousins in NZ already have one, but it’s hard to argue that that time is now. All this will do is discourage people from buying EVs, and slow down the rate at which the market grows.

This is a bad idea. It’s a stick in the mud, when what we need is more carrots.