Bowen’s job is to reduce emissions. Getting people into EVs does that. Anything that discourages it, like ending the concessions or introducing road-user charges is not his problem – it is Chalmers’ problem.
The prime minister’s private view is that road-user charges are inevitable, but they must be introduced in concert with the states and that it will be a decision of government in the next two to three years.
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Victoria introduced road-user charges in 2021. The impost was calculated on a per-kilometre basis, with drivers compelled to, once a year, send a photo of their odometers to VicRoads and pay up. That tax was struck down by the High Court in October 2023, after EVs owners took the state government to court (the federal government joined the case on the side of the owners) and the court found it was unconstitutional, as only the Commonwealth could charge such an excise (or tax).
Full disclosure: my family has an EV and old diesel four-wheel drive. We are one of many, many families lucky enough to be able to use Bowen’s tax changes to lease our Tesla (like the bumper sticker says, we got the car before “Elon went crazy”). A couple of months after we got the car, comparing notes with a friend on the cost of their leased petrol Toyota Corolla, we worked out the Tesla was probably cheaper to lease because of the tax concessions.
Indeed, sales of EVs have boomed since 2022, though they’re tapering off a bit now.
A political fight with the federal opposition is certain to flair up over this new tax. Opponents will have to mount a better argument than Scott Morrison’s infamous warning in 2019 that EVs would “end the weekend”.
Australian politics has been split over climate policy since 2009. The fight has mostly centred on the electricity sector – that is, what is the correct mix of coal, gas, nuclear, solar, wind and more in the energy grid? According to the CSIRO, electricity generation is our largest source of emissions, so it makes sense to focus on it, but it is still only 32.6 per cent of Australia’s emissions. The third-highest producer of emissions is transport, at 21.1 per cent. That means your car and mine, trucks, buses and more.
Whatever Australia’s 2035 target is, transport emissions will have to come down. Politically, that is hard work.
Australians love their cars, and we live in one of the largest and most scarcely-populated countries in the world. Electric vehicles don’t always cut it, though you can drive an EV from Sydney to Perth.
But for those of us in the major cities, EVs are a viable and cost-effective alternative. It’s cheaper to charge than it is to fill up a petrol tank.
The Australian Automobile Association has long supported road-user charges (as long as it doesn’t put a handbrake on the uptake of EVs). The AAA wants a prospective NSW government plan – which charges EV users 2.9 cents per kilometre driven – implemented nationally. That would cost the average user somewhere between $270 and $400 per year, not a huge impost.
Whether that NSW scheme gets out of first gear depends on whether Chalmers can do a deal with the states. The courts could also strike down the state plan.
For a Labor government, this is also a matter of economic fairness. Why should someone from a lower socio-economic group, who can’t afford to buy or lease an EV, subsidise road maintenance for EV drivers, who are already enjoying a tax break?
This will require national leadership from Chalmers. Time to step up, treasurer.
