Petrol and diesel drivers in Australia have effectively subsidized around $500 million in electric vehicle (EV) charging infrastructure, as the government has delayed introducing a road user charge for EVs that would recoup some of the revenue lost from declining fuel excise collections. Currently, petrol and diesel motorists pay an excise of 53.7 cents per litre, a levy not mirrored for electric vehicles, a gap intended to encourage the transition to low-emission transport.
State and federal governments have invested heavily in public EV charging networks, with total incentives reaching approximately $496 million. Victoria has contributed $22 million through various programs including the Zero Emissions Vehicle Roadmap and business and council fleet initiatives, while the Commonwealth has allocated about $164 million nationally. Despite these investments, budget forecasts for fiscal year 2025-26 revealed petrol excise revenue fell $100 million short of expectations, with a 0.5 percent monthly decline recorded in August.
Economists and industry observers warn that the traditional method of funding road infrastructure through fuel excise is becoming unsustainable as EV adoption grows. Economist Chris Richardson emphasized that while supporting EV uptake through taxpayer incentives is justified, such measures should be temporary and carefully managed. He cautioned that delays in addressing the issue could complicate future solutions.
Labor has allocated $7.6 million over three years to develop a road user charge policy, collaborating with states and industry to create an effective framework. However, progress has been slow, hindered by legal challenges at the state level. Victoria’s 2021 attempt to introduce an EV road user charge was struck down by the High Court in 2023, which ruled the charge constituted an unconstitutional excise, a power vested solely in the Commonwealth. This judgment compelled Victoria to abolish the scheme and refund affected motorists.
A recent review by the New South Wales parliament, led by Greens MLC Abigail Boyd, reached similar conclusions about the likely unconstitutionality of state-based road user charges. The review suggested that redesigning such charges as licence fees or service fees might circumvent these legal barriers. Boyd advocated for the development of a national road user charging framework, identifying it as the preferred approach to avoid fragmented state initiatives and legal disputes. Nonetheless, she noted limited progress toward this goal.
Victoria’s experience has prompted motoring and industry groups to call for Commonwealth leadership in establishing a national model, warning that further state-level attempts could result in expensive legal conflicts. Following a treasurers’ meeting in September, Treasurer Jim Chalmers indicated that the Commonwealth would continue working with states and territories to develop policy deliberately rather than rushing a solution. The opposition Coalition has not pressed for expedited action; Shadow Treasurer Tim Wilson described the issue as “a conversation for the current government,” expressing openness to various approaches but refraining from advocating a specific timeline.