In the absence of national leadership from the Australian government on electric vehicle (EV) policy, state and territory governments have been left to their own devices to fill this policy void.
This is not all bad. The New South Wales Coalition government announced an EV strategy this week, including:
- The permanent abolition of stamp duty for EVs (in exchange for introducing a per kilometre tax for EVs by 2027, or earlier if EV sales reach 30 per cent);
- About $171M in funding for public charging infrastructure;
- A $3000 subsidy for the purchase of 25,000 EVs;
- Access to transit lanes for EVs;
- A commitment to fully electrify the government’s 12,000 fleet vehicles by 2030;
- A further commitment for more than 50 per cent of new car sales to be electric by 2030/31.
These moves largely bring NSW in line with the ACT Labor-Greens government, which is also offering a waiver on vehicle stamp duty and access to transit lanes for EV owners, in addition to two years free vehicle registration and 10-year interest-free loans up to $15,000 (estimated to be worth $3000-$4000 in avoided interest costs).
Wisely though, the ACT Government has avoided the temptation to establish a counter-productive EV tax.
Proactive actions by state and territory governments have been necessitated by a persistent and illogical effort by the Australian government to spread misinformation about EVs, and purposefully not commit to a national EV strategy.
Unfortunately, this dearth of EV policy at a national level has also led to some states going rogue.
These new taxes charge EV owners for every kilometre they travel, at the same rate regardless of where they live.
Unlike the NSW policy, this is in addition to the vehicle registration and stamp duty taxes that EV owners already pay.
This policy approach does not account for the major economic benefits that EV owners provide, including:
- Removing carcinogenic vehicle pollution from communities, and in turn reducing public health costs;
- Redirecting spending from imported foreign fuel, to Australian-made electricity, supporting Australian jobs;
- Reducing transport costs to free up household and business income to be spent elsewhere in the economy;
- All of the above while reducing greenhouse gas emissions, and helping to deliver a net zero economy by 2050.
The Victorian Government claims their EV tax is necessary to plug-a-hole in fuel excise revenue to support road maintenance.
However, fuel excise is collected by the federal government, not Victoria, and it is also not directly linked to funding road maintenance.
The policy void
This suggests Victoria’s EV tax is nothing more than an opportunistic tax grab. However, it has only been made possible through the irresponsible inaction of the federal Coalition government on national EV policy.
Ironically, the reason that EV owners don’t pay fuel excise is because they instead purchase Australian-made electricity, instead of imported, foreign petrol and diesel.
The Victorian government has belatedly introduced a $3000 subsidy for 4,000 EV purchases, an unknown subsidy amount for a further 16,000 vehicles, set a 50 per cent EV sales target by 2030, and announced a plan to establish an expert advisory panel (after already setting their EV policy agenda).
While these initiatives are welcomed, the $3000 subsidy is unlikely to offset the negative impact that this government’s EV tax will have on the market.
Even if the subsidy is extended to 20,000 purchases, this stands in stark contrast to the 500,000 to 700,000 EVs that will need to be sold in Victoria by 2030 to reach their 50 per cent sales target.
If Australia is to reach 50 per cent EV sales by 2030 – which is broadly recognised as a necessary prerequisite to achieving net zero emissions by 2050 – around 2.5 million EVs will need to sold nationally in less than 10 years.
While not all of these EVs will need to subsidised, we most definitely will need a comprehensive suite of serious policies that incentivise the adoption of at least 1 million EVs by 2027.
This should be a national goal, with incentives gradually phased out as we approach 50 per cent EV sales by 2030, or around 15 per cent of the national car fleet.
This goal can only be achieved through nationally-consistent EV policies.
Our current patchwork approach has led to inconsistent plans to introduce EV taxes.
We should instead be focusing on the necessary national road tax reform that could support the adoption of EVs while ensuring that we capture the significant net economic benefits that this technology can deliver, even after accounting for a shift away from paying for foreign fuel excise.
Slap in the face
Governments with foresight, and strong leadership should instead be planning to phase out many of the existing road taxes in exchange for a fairer road pricing scheme, centred around charging vehicles that travel through city areas, during peak hour periods.
Per kilometre fees, applied only to EVs, are a slap in the face to regional Australians who naturally must travel the furthest – often out of necessity to access employment, healthcare and education services.
Any government adopting this approach is saying they do not want regional Australians to be able to own EVs, powered by cheap, Australian-made energy, and should instead continue to pay high fuel costs for imported, foreign petrol and diesel.
A 50 per cent EV sales target by 2030 can only be achieved through national leadership and cooperation across all three levels of government.
Without this we are bound to follow the numerous mistakes of years gone-by in ad-hoc, inept policy, by individual governments.
This will not put us on a trajectory towards net zero emissions by 2050, it will most certainly mean we miss out on the major net economic benefits that EVs can deliver to the nation, and even more concerningly, the current, uncoordinated approach presents a major threat to the future national security, and economic prosperity of our country.
It’s time for the federal government to just get on with it and support a nationally-consistent EV policy agenda that sets an initial target of at least 1 million EVs in Australia by 2027, while pursuing the introduction of a fairer, national road tax framework.
Dr Jake Whitehead holds the Tritium E-Mobility Fellow position at the Dow Centre for Sustainable Engineering Innovation at The University of Queensland and an Advance Queensland Industry Research Fellowship focussed on how electric vehicles can deliver co-benefits to the energy sector.
He is a Member of the International Electric Vehicle Policy Council, and a Lead Author for The Intergovernmental Panel on Climate Change (IPCC).