Calls for reforms in infrastructure, EV charges from NSW Productivity Commissioner

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Abolishing motor vehicle duty and replacing it with a road user charge for eligible electric vehicles is among recommendations put forth by the New South Wales Productivity Commissioner in its latest white paper.

The report, titled Rebooting the economy, was prepared over the past three years with extensive consultation and proposes 60 opportunities to increase productivity by focusing on areas including talent, innovation, housing, and infrastructure and natural resources.

With regards to electric vehicles, the report proposes introducing a distance-based road user charge (RUC) for eligible battery electric and plug-in electric hybrid vehicles (eligible EVs) of 1.5 cents per kilometre. At the same time, it suggests abolishing motor vehicle duty for these vehicles.

The paper suggests phasing in the RUC so that it is set at a rate of 6 cents per kilometre in today’s terms so that it addresses the excise and motor vehicle duty revenue shortfall without materially impacting the uptake of eligible EVs.

The recommendation follows the Victorian Parliament’s passing of the ‘Zero and Low Emission Vehicle Distance-based Charge Bill 2021′ last week, which will place a standalone tax on electric vehicles per kilometre rates depending on characteristics of the vehicle, effective from July 1st, 2021.

Proponents of the distance-based charges for electric vehicles, including industry think tank Infrastructure Partnerships Australia, argue that when combined with EV support packages from the state governments,  the charge will provide a sustainable revenue for maintaining the road network.

Others worry it might hamper an already slow uptake of EVs in the country. The 2020 figures  from the Electric Vehicle Council show electric cars accounted for 0.7 per cent of total Australian car sales.

In a statement yesterday, Infrastructure Partnerships Australia Chief Executive Adrian Dwyer welcomed the NSW Productivity Commissioner’s White Paper recommendation.

“The NSW Productivity Commissioner has joined a growing chorus of voices backing the introduction of a road user charge for EVs combined with purchase incentives in NSW,” Dwyer said.

“The White Paper rightly points out the rapid and terminal decline in federal fuel excise revenue and the inefficiency of state Motor Vehicle Duty, and puts forward a pragmatic and sensible reform that will benefit all road users and taxpayers.”

Reforming infrastructure contributions

Implementing reforms in the infrastructure contributions system is another opportunity identified by the report to reboot productivity growth in New South Wales.

Expanding higher density development within transport hubs and developing a portfolio of travel demand choices and measures to reduce congestion on roads and public transport are among key priorities identified doe the infrastructure sector.

A summary of the commissioner’s recommendations for the infrastructure sector include:

  • Plan for greater housing and business activity in areas where there is spare infrastructure capacity.
  • Improve transparency to create the right incentives for good infrastructure investment.
  • Ensure that agencies’ business cases align with Government guidelines and that funding is given to properly evaluate projects.
  • Investigate a package of light-touch options to address road congestion. This should include measures that promote good driving behaviour, encourage off-peak travel, and targeted investments at specific congestion hot spots.
  • Assess how Opal fares and concessions can be used more effectively to manage public transport demand and support those that need it the most.

NSW Treasurer Dominic Perrottet thanked Productivity Commissioner Peter Achterstraat for his work on the White Paper, which followed the release of a Green Paper in August 2020.

“We will carefully consider the ideas in this report and our collective challenge is to debate these opportunities, identify those that we should proceed with, and then find practical pathways that lead to a better New South Wales as a result,” Mr Perrottet said.

NSW Productivity Commissioner Peter Achterstraat said the NSW Government had already accepted some of the draft recommendations proposed in the 2020 Green Paper, with many in their early stages of implementation, such as reducing regulatory restrictions for small businesses.

“This report finalises the work of the Commission over the past three years and lays a pathway to future economic growth and prosperity for New South Wales,” Mr Achterstraat said.

To read the full report, click here.



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