Road User Charge Reform and the Political Shift in Interest in Australia: Some Thoughts to Contemplate

Abstract

The 2024 electric vehicle distance-based charge introduced in Victoria, Australia, to recognise that such vehicles do not pay fuel excise tax, led to a high court challenge in which it was deemed unconstitutional for a State to introduce such a charge, which is the responsibility of the Federal government (through legislation amendment). This loss of fuel excise as a tax (not a charge) on electric cars whetted the appetite of the Federal Government to place road user charging on a round table in August 2025. We now have elevated the topic right into the political sphere where any change will require such support, and it opens up an opportunity to not only consider the fuel excise issue per se but the broader agenda on road pricing reform. For the first time, we have a political appetite to do something even if it is driven by a loss of fuel excise revenue which has never been earmarked back to roads but is a backbone revenue source for many Federal government initiatives. In this paper, we consider a number of ways in which we can begin the journey to satisfy the political appetite while achieving much broader efficiency and equity objectives.