Australia is preparing to introduce a distance-based road-user charge, initially targeted at electric vehicle owners, but discussions are underway about broader application. The change aims to restore revenue lost as drivers switch away from petrol and diesel, and could shift who pays more or less to use the road network.
Why the government is considering a road-user charge
Today Australian motorists contribute to road funding mainly through a fuel excise of 51.6 cents per litre every time they refuel. That mechanism automatically links road funding to the volume of liquid fuel sold. As uptake of low- and zero-emission vehicles increases, excise receipts are forecast to fall, creating pressure on a roughly $12 billion a year pool used for roads.
Policymakers argue that a distance-based charge would make contributions fairer across different powertrains, because EVs currently do not pay excise at the pump. The Productivity Commission has highlighted the long-term decline in fuel excise as a structural problem, and the Treasurer has signalled the measure as a possible reform to be pursued after the next election period.
Prime Minister Anthony Albanese has said there will be no new taxes this parliamentary term, which places a clear earliest start date beyond the current term, and means the plan is being positioned for a second term if the government is returned.
How a road-user charge would work in practice
Under a RUC, drivers would pay for each kilometre they travel. Victoria trialled a model that set a flat per-kilometre fee for electric cars and plug-in hybrids, with reported rates in the low single cents per kilometre. Distance could be verified using odometer readings, photos or a smartphone app, and revenue would be directed to road maintenance and construction.
That Victorian scheme was legally challenged and later overturned, highlighting implementation and legal risks. The government is consulting with states and industry to design a workable system. Key design questions include whether the charge would apply only to EVs at first, what the per-kilometre rates should be, how to measure distance reliably, and whether regional motorists should receive concessions.
