EV road-user charge flagged before election, Jim Chalmers says

Jim Chalmers says he flagged his intention to implement a road-user charge for electric vehicles before the federal election.

Jim Chalmers says the need for a road-user charge was a ‘longer term issue’ facing the federal budget. Picture: istock

Jim Chalmers says he flagged his intention to implement a road-user charge for electric vehicles before the federal election, circumventing Anthony Albanese’s pledge not to implement any new taxes in his second term.

Promising to continue working with the states and territories to formulate a modest tax for EV drivers to offset plunging fuel ­excise revenue, the Treasurer said the need for a road-user charge was a “longer term issue” facing the federal budget.

Dr Chalmers said he expected state and territory treasurers to raise the need for an EV tax to maintain roads and boost productivity on Friday, at their final meeting before Labor’s economic reform roundtable next week.

Ahead of the productivity summit, the Prime Minister ruled out introducing any new taxes that Labor had not announced before the May 3 election amid speculation the government might need to increase taxes to plug holes in the budget.

“We said before the last ­election that this was an area we’re working on with the states and ­territories,” Dr Chalmers said on Tuesday.

“And in parts of our political opposition, there’s a sense of ­bipartisanship as well on dealing with this challenge.

“Really, for at least a year or two, we have said publicly that this is on the agenda, and so we’ll continue that work with the states and territories.”

Dr Chalmers’s remarks come after The Australian revealed the Treasurer had met with motoring industry leaders on Monday to discuss the policy design for a road-user tax that would feed into next week’s three-day economic roundtable. On Friday, Dr Chalmers will meet with state and territory treasures, including Daniel Mookhey of NSW who, as chair of the Board of Treasurers, will represent state and territory ­governments at the economic reform summit.

Treasurer Jim Chalmers. Picture: NewsWire / Martin Ollman

“I assume it will get raised even this Friday, certainly over the course of the next couple of meetings,” Dr Chalmers said.

“The states and territories will raise this as an issue, and we’ll keep working on it.

“We’ve said that we’ve got an interest in fixing this. There is a longer term issue in the budget that we need to address, and we’ll take the time to get it right.”

Dr Chalmers said the government would consider how a road-user tax could be applied to hybrid cars, which consume considerably less petrol than traditional combustion engine vehicles.

“These are the sorts of issues that we’re grappling with,” Dr Chalmers said. “The tax base is changing over time.

“As more and more people move away from internal combustion engines and cars, and more people will go towards hybrids or fully electric cars, the tax base is changing as a consequence of that.

“We’ve been upfront about that. We’ve been upfront about our intention to address it.

“We’ll go about that in a considered way, a consultative way, and we’ll take the time to get it right.” The meeting of motoring industry leaders on Monday was also attended by former Victorian Labor treasurer Tim Pallas and former Liberal urban infrastructure minister Paul Fletcher, who were considered early movers in ­establishing road-user charges to plug a shortfall in revenue from the declining fuel excise.

The Victorian model introduced by Mr Pallas, which was torpedoed by a High Court decision in 2023, had imposed a modest per-kilometre charge of up to 2.6c, which equated to about $300 a year.