As cars become more efficient and electric cars become more prevalent, income from the fuel excise is expected to drop.
Dropping income from the fuel excise is projected to put pressure on our road infrastructure going forward and there’s no clear plan in place to solve the problem.
The latest Infrastructure Australia audit reveals the nation’s growing population is putting “unprecedented” strain on roads, arguing the current development boom will need to become the “new normal” if our infrastructure is to keep up.
At the moment, fuel excise is Australia’s main source of revenue from road use, but income from the excise has dropped 20 per cent since 1999 despite road use increasing during the same period.
The disparity between road use and fuel excise income is expected to grow as fuel efficient cars make up a greater percentage of our fleet, and electrified vehicles become more common.
What’s more, budget forward estimates say the amount of fuel excise revenue being fed back into land infrastructure projects will be dialled back from 61 per cent in 2017/18 to just 32 per cent in 2021/22.
Although it’s collected from motorists the fuel excise flows straight into government coffers, where it can be spent however those in charge see fit.
One proposed solution to the problem is ‘road user network charging’, also known as the user-pays model or a road tax.
Motorists would be charged depending on when, where and how often they drive under such a system, instead of through fuel excise and registration fees as is currently the case.
The charge would be higher during peak times, to encourage drivers to commute when there’s less stress on the road network.
“A national road user charging regime is increasingly regarded as an option for addressing declining fuel excise revenue and a potential future decrease in registration revenue,” the Infrastructure Australia audit says.
“However, in the absence of jurisdictional champions even slow progress in moving towards such a regime has faltered if not stalled.”
Infrastructure Australia has previously lamented the lack of government action on the user pays model, calling for Australia’s leaders to “move forward” with reforming how our roads are funded.
It appears the public is coming around to the idea, too. A recent EastLink survey of 18,000 people found support for a road tax is growing, revealing 40 per cent of people think a road-use charge should be introduced to replace the current system.
The same survey found 47 per cent of people think it’s unfair for electric cars to use the road without funding their maintenance through the excise.
Support for a road tax has won favour with the Australian Competition and Consumer Commission (ACCC) taking to News Corp papers to argue the point.
“Whenever you fill up your car, 41 cents a litre is going (in taxes) to pay for your road use,” said Rod Sims, ACCC chairman, instead calling for a road tax to fund infrastructure development.
“People who buy electric cars are travelling on roads without cost, and that’s really not fair. Why should they have an advantage over people driving petrol cars?”
The EV Council agreed road funding reform is necessary, but argued the benefits of electric vehicles ought to be considered when discussing their economic impacts.
“There’s no doubt a mass transition to electric vehicles will require long-term reform in the way governments collect revenue for roads,” Behyad Jafari, EV Council CEO, said in a statement.
“But as things stand the minority of drivers who are making the switch to EVs are doing vastly more good than harm to the economy and the public good.”
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Fuel excise in the spotlight as calls for ‘road tax’ grow