Plan to replace fuel tax with user charges

Phillip Coorey
Nov 24 2016
AFR

The federal government will investigate dumping fuel tax and instead charge motorists for every kilometre they drive , as part of its 15-year infrastructure plan announced Thursday.
The road-user charge has long been suggested by motoring groups and tax experts as a way to maintain revenue to build and fix roads as vehicles become more fuel efficient and eventually move away from petrol and diesel altogether.
It is a politically risky move and Major Projects Minister Paul Fletcher said any change, subject to the findings of a review to be commissioned today, would be 10-to-15 years away and would require the approval of state and federal governments.
“Of course, any move to implement change, including road user charging, would be a ten to fifteen-year journey and would only go ahead if governments are confident that the benefits to the community of any new arrangements outweigh the costs,” he said.
But as vehicle technology changed, fuel tax of about 40¢ per litre was becoming less efficient and more inequitable.
He cited examples of someone who drove an old gas guzzling Commodore compared with somebody who drove a hybrid or even a Tesla electronic vehicle. The latter pays no fuel tax at all.
It would also mean a more direct connection between what people pay and how the money is spent.
“It would also more directly reflect where people are travelling so that decisions about which roads got upgraded when the investments were made would be more directly responsive to travel patterns.”
The infrastructure plan, which aims to freshen the government’s policy agenda for next year, will adopt 69 of the 78 recommendations made by Infrastructure Australia in a report to government in February.
That comprehensive document included a wide range of recommended policy changes and funding reforms such as a public inquiry into a road user charge.
It also recommended a heavy vehicle road charging structure within five years, to shift more freight to rail, followed by the extension of road charging across all vehicle types within 10 years.
The government will also announce an inquiry in to overhauling the nation’s road, rail and port systems to cope with burgeoning freight demands.
Mr Fletcher also wants to work with state governments to develop urban rail plans for Australia’s five largest cities and surrounding regions, progress next steps for heavy vehicle reform with states and territories.
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