New South Wales Treasurer Daniel Mookhey is aiming to generate nearly half a billion dollars by 2030 through a proposed road user charge designed to help transition the state’s budget from deficit to surplus. The levy, set to take effect on July 1 next year, targets increasing revenue from the rising number of electric vehicles (EVs) on the road.

Despite this financial objective, the road user charge faces significant legal uncertainty. Critics, including legal experts and industry groups, argue the charge risks being invalidated by the High Court on constitutional grounds. The concern centers around the charge being classified as an “excise,” similar to a nearly identical levy in Victoria that the High Court struck down in 2023.

Mookhey acknowledged the legal risks but emphasized the government’s commitment to implementing the charge if a national alternative is not established. He noted ongoing discussions with the federal government to develop a uniform national road user charge that would avoid such legal challenges. “That remains our preference,” Mookhey said, “but should the federal government not enact a national road user charge by the time this law is due to go into effect, our intention is for this law to go into effect.”

The treasurer framed the charge as a matter of fairness, asserting that all road users should contribute to road maintenance regardless of their vehicle’s fuel source. While he did not disclose specific legal advice underpinning his confidence, Mookhey acknowledged that previous state levies had been overturned by the High Court but stressed the simplicity of the policy’s purpose.

Budget documents outline that the NSW road user charge is forecast to generate approximately $440 million in its first three years, potentially rising to $236 million annually as EV uptake increases. However, the papers also caution that future revenue could be subject to change pending national road user charging reforms and ongoing legal developments.

At the federal level, Energy Minister Chris Bowen has expressed reservations about such charges, fearing they could hinder the adoption of EVs and impede efforts to reduce emissions. The tension highlights differing priorities between the state’s fiscal needs and national environmental goals.

In addition to seeking new revenue streams through the road user charge, New South Wales is confronting a decline in traditional income sources such as stamp duty and land tax. Mookhey revealed these will fall by a further $400 million over forward estimates, bringing the total reduction to $8.4 billion. This shortfall reinforces the government’s urgency in pursuing alternative funding to stabilize the state’s finances moving forward.