The Government is moving to replace petrol excise with an electronic road user charges system for all light vehicles, a reform Transport Minister Chris Bishop calls the largest change to road funding in 50 years. The plan, due to be implemented by 2027, removes the current split where petrol users pay a fuel excise at the pump while diesel, electric and heavy vehicles pay distance-based RUCs.
What the change means
Minister Bishop has said the new approach will be fairer and operate like a monthly household bill, for example a power or streaming service. The move ends the existing two-tier arrangement that charges fuel excise at about 70 cents per litre at the pump for petrol, while diesel and non-fuelled light vehicles buy paper-based RUCs based on kilometres travelled.
For drivers, the shift means RUCs will be purchased and recorded electronically rather than using physical permits that must be displayed on the dashboard. Heavy vehicles already use electronic RUC devices that record kilometres and location, so the reform extends a similar model to light vehicles.
Concerns from motoring groups and Labour
The AA has warned that motorists could end up paying more once the universal, electronic RUC is in place. AA policy director Martin Glynn, speaking on the public radio programme Morning Report, said he was uncertain whether the new system would cost drivers more. He said, "We really want to see the administration costs be as low as possible." He also noted the scheme’s operators will be private companies and will need to earn a return, which could add to administration fees.
Under the present system a minimum RUC for light vehicles applies after 1000 kilometres, costing $76 plus an administration fee of around $12 to $13. That arrangement could change under the new model, depending on how charges and administrative fees are structured.
Labour has criticised the coalition’s timing, arguing that a rapid transition to a universal RUC risks "clobbering" motorists with extra costs. The concern is that motorists, particularly those in older, less fuel-efficient cars, and small fleets could face higher bills during the phase-in.
