South Australia’s State Budget 2020-21 promised an ‘adrenalin hit’, but it also contained a hit the state’s electric car owners and potential EV buyers won’t appreciate.
Last week, the Marshall Government was keen to crow about $18.3 million in the upcoming State Budget 2020-21 to support electric vehicle uptake. Something it didn’t mention at that point can be found on page 26 of the 2020-21 State Budget Overview:
“The government is intending to introduce a road user charge for plug-in electric and zero emission vehicles. The charge will include a fixed component (similar to current registration charging) and a variable charge based on distance travelled.”
SA Treasurer Rob Lucas says the tax on electric vehicles would be introduced as EV owners don’t pay fuel excise and therefore make a lower contribution to the cost of maintaining road networks.
No numbers were provided in terms of how much electric car owners would be slugged. Mr. Lucas said in his budget speech current estimates are that “less than about $1 million per year” will be collected by the charge. For a treasurer, that was a rather vague statement.
There are around 2,000 EVs on the road in SA at present. Using round numbers of $1 million and 2,000 EVs, that would average out to approximately $500 per owner. The charge is unlikely to be that much, but it could still turn out to be quite a slug.
This is not a done deal – Opposition leader Peter Malinauskas wouldn’t rule out blocking the budget measure.
The Marshall Government’s announcement was welcomed by some including the Australian Automobile Association (AAA), which stated last year it supported an electric vehicle usage fee or tax.
“The South Australian Government deserves to be congratulated on taking a position of leadership and for taking on a tax reform that has for too long sat in the too-hard basket,” said AAA Managing Director Michael Bradley. yesterday.
Mr. Bradley said October’s federal Budget indicates Australian motorists will pay $49.3 billion in fuel excise over the next four years, which will fund roads and other land transport infrastructure.
TAI: “A Great Big New Tax on Not Polluting”
The Australia Institute (TAI) points out fuel excise is a federally levied tax that goes into general revenue and is not specifically committed to road funding. SQ’s Ronald mentioned back in 2018 that at that point it worked out to only around 10 cents of the 40 cent per litre fuel excise went towards paying for roads.
TAI says it is “disingenuous” to suggest that roads are funded by the fuel excise.
“Penalising electric car owners because they don’t consume petrol that pollutes the atmosphere and our environment is absurd,” said TAI SA Directory Noah Schultz-Byard. “This is, in essence, a great big new tax on not polluting.”
FCAI: “Simply Beyond Belief”
The Federal Chamber of Automotive Industries’ (FCAI’s) Chief Executive Tony Weber said South Australia would be discouraging the uptake of environmentally friendly motoring and be “turning its back” on climate change.
“These vehicles offer economy wide benefits, including improved health outcomes, and will make a major contribution to improving our environmental scorecard.”
The improvement in health outcomes is an important point – harking back to Ronald’s article, Ronald estimated just the environmental and health costs associated with emissions from petrol and diesel at around 84 cents per litre; which is far more than the fuel excise.
EVEA – One Word Reaction
At the time of writing, the Australian Electric Vehicle Association (AEVA) had just one word to describe the news:
I don’t think they meant speechless from excitement. No doubt they’ll have a bit more to say once they’ve been able to pick their jaws up off the floor.
SQ’s Finn: Dumb Economics, Dumber Politics
SolarQuotes’ founder Finn Peacock is an EV owner. I asked for his views on the proposed electric vehicle tax and after he was done with expletives – some combinations of which I’ve never heard before – he offered this comment:
“This is nuts – and I’m not just saying that because I’ve got 2 EVs on the driveway1. If we’d taxed solar power 10 years ago because ‘someone’s got to pay for the distribution network’ then SA would not be the world leader in solar energy it is now. This is dumb economics and even dumber politics.”
Finn also pointed me to the World Health Organisation’s recommendations on economic instruments to secure better health and environmental outcomes, which include:
“Increasing prices of goods and services that damage health and environment, as well as increasing financial returns in the case of more sustainable approaches that foster more environmentally-friendly production and consumption patterns.”
Given the move by the Marshall Government to whack a tax on electric cars, Finn is now concerned it will also attempt to tax the 8 bicycles in his garage.
Footnotes
- In case you’re curious – a Tesla Model S and an Electric Mini Cooper SE (pictured above), both of which were bravely loaned to Ronald for test-drives for the purpose of writing up reviews. ↩
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If 100% of the fuel excise went to “maintaining road networks” then sure, go for it.
It doesn’t.
Questions that need answering:
If electric transport takes over , where is the government , both state and federal, going to get the lost taxes to replaces fuel taxes? I am all for renewables but these questions have to be asked and if we want to see the the benefits of renewables and improve or social well being and the environment, well?
My comment was based on this paragraph from the article:
“SA Treasurer Rob Lucas says the tax on electric vehicles would be introduced as EV owners don’t pay fuel excise and therefore make a lower contribution to the cost of maintaining road networks.”
How much of the fuel excise actually goes to road maintenance?
This article says that 10 cents of the 40 cents per litre of fuel excise goes to roads meanwhile CarAdvice estimated 40-50% goes to transport infrastructure, the rest to consolidated revenue.
Of the $1million that Mr Lucas hopes to recoup, only $250-500k will go to roads (depending on which stats you look at).
Agreed, however as it says above most of the revenue gained from fuel taxes does not go towards road maintenance. If it all did, no problems.
Jeff,
You state: “…as it says above most of the revenue gained from fuel taxes does not go towards road maintenance. If it all did, no problems.”
But it doesn’t.
Per the Public Transport Users Association (Victoria), dated Jan 2019:
“…we shouldn’t expect all money collected from motorists to be spent on roads. But in any case, the smallest credible estimate for the total cost of the road system in Australia is $69 billion a year, of which $45 billion a year is collected in taxes and charges on motorists, leaving a ‘road deficit’ of at least $24 billion a year. By the most generous measure, motorists only contribute two-thirds of the cost of the road system. More specifically, of what the Federal government collects in fuel tax, around two-thirds is either rebated or handed back to motorists in tax concessions for car use.”
See: https://www.ptua.org.au/myths/petroltax/
But why penalize and discourage the uptake of EVs that assist in reducing GHG emissions, and reduce petroleum dependency in an inevitable post- ‘peak oil’ supply world? I’d suggest SA Treasurer Rob Lucas’ proposed tax on electric vehicles is facilitating civilisation collapse in the longer-term.
See my comment at: https://www.solarquotes.com.au/blog/biden-climate-renewable-energy-mb1753/#comment-865667
See also: https://www.artberman.com/2020/10/11/oil-and-the-changing-world-order/
Dumb & Dumber….SA’s approach to the environment and renewables has been great…what has inspired them to think up this tax that goes against all these values. All the financial benefits of EV’s far outweigh a small income from a Road User Tax. If you are short a million then increase the tax on petrol cars by $1/year (there are 1.1M cars in SA) will raise this revenue and may encourage some owners to move to an EV. Also If you are saying that you will be out of pocket $18M for the charger network then pay for this through the charging revenue like any business would do. And I live in Queensland…
Labor thought they could wedge the LNP on this. Either they go along with it or encourage even more EV’s by not passing the distance tax legislation.
Backfired eh…
It’s not unreasonable to expect EV owners to contribute toward costs of maintaining roads and associated infrastructure such as bridges etc.
At this early stage in the introduction of EV’s though, what’s proposed is somewhat akin to strangling a baby in its crib, and then justifying that action by pointing out that doing so means that huge future outlays on child rearing, education and family allowances are thus completely avoided.
Inevitably, a whole new bureaucracy will eventually be spawned in order to ensure compliance with EV related legislation, along with a whole host of exemptions of one kind or another and a new sub-industry devoted to devising ingenious legal (and illegal) methods of reducing the tax payable or even avoiding it completely will evolve.
When a tax (of any kind) is viewed as ‘unreasonable’ or ‘excessive’ by the population at large, that’s always been the outcome.
The only way that this could be considered remotely fair is if fossil fueled vehicles were directly charged the third party costs of their emmissions, namely:
– Cost to the health system of air pollution due to ICE vehicles
– Cost to other sectors of the economy being forced to bear the brunt of emmissions restrictions because the transport industry refuses to do its share.
It seems to me the elephant in the room that all Australian state, territory and federal governments are ignoring are:
1) the precarious situation with domestic petroleum refinery capacity; and
2) long-term liquid fuel security in an inevitable post- ‘peak oil’ supply world.
On Oct 30, BP Australia announced the shutdown of the WA Kwinana refinery over the next six months. The site will be converted to an import terminal. It currently employs around 650 workers, reducing to around 60 once the import terminal is completed.
Federal Energy Minister Angus Taylor reportedly said that the closure of the refinery would not impact Australian fuel supplies.
See: https://www.abc.net.au/news/2020-10-30/bp-shuts-down-kwinana-refinery-hundreds-of-job-losses-expected/12832372
In 2019, Kwinana refinery capacity was 8,830 mega-litres. Australia’s only other remaining operating oil refineries are:
* Altona, Victoria, operated by ExxonMobil, employs about 350 staff, 2019 output 5,220 mega-litres of refined products;
* Geelong, Victoria, operated by Viva Energy Australia, employs about 700 people, 2019 output 7,470 mega-litres of refined products; AND
* Lytton, Queensland, operated by Ampol Ltd (formerly Caltex), employs about 500 workers, 2019 output 6,300 mega-litres of refined products.
See: https://www.aip.com.au/sites/default/files/download-files/2020-04/Downstream%20Petroleum.pdf
The three remaining Australian refineries have all dramatically slowed their fuel output in the face of severe oversupply. All three are bleeding multimillion-dollar losses, with their refining margins under enormous strain.
“Frankly, it’s a very challenged industry, full-stop,” says Mark Samter, an energy analyst with MST Marquee.
See: https://www.smh.com.au/business/companies/running-on-empty-oil-refineries-at-breaking-point-as-world-grinds-to-a-halt-20201113-p56ecd.html
Global oil markets are also in turmoil.
“Global demand for oil is running about 5 million to 6 million barrels per day (bpd) below pre-coronavirus crisis levels and OPEC with its allies is likely to prolong its existing cuts, the head of trading house Gunvor said on Monday [Nov 9].”
See: https://www.reuters.com/article/commodities-summit-gunvor-tornqvist/reuters-summit-oil-demand-likely-to-take-at-least-a-year-to-hit-2019-levels-gunvor-head-idUSKBN27P2F6
US petroleum geologist Art Berman recently tweeted re US crude + condensate production forecast:
Worst-case scenario: Fall from a peak of 12.86 million barrels per day (Mb/d) in Nov 2019 to 5.14 Mb/d in Sep 2021;
See: https://twitter.com/aeberman12/status/1323286423349481472
Likely-case scenario: Fall from 12.86 Mb/d in Nov 2019 to 7.0 Mb/d in Sep 2021;
See: https://twitter.com/aeberman12/status/1323727582085451777
The writing is on the wall – Australia needs to transition as fast as possible away from petroleum-based liquid fuels. IMO, penalizing and discouraging the uptake of EV’s is undeniable idiocy, and threatens Australia’s longer-term energy security.
See: https://crudeoilpeak.info/australias-bp-kwinana-refinery-closure-peak-oil-context
Whilst having an imported oil fuelled economy is incredibly risky, those companies are big political donors and will do whatever they can to ensure our reliance on fossil fuelled cars is retained.
Ben Dawson,
You state: “…having an imported oil fuelled economy is incredibly risky…”
Yep. It gets much more risky for Australia’s (or any other oil importing country’s) energy security as global petroleum fuel supplies will inevitably decline in a post- ‘peak oil’ supply world. It’s likely we will never see global petroleum production at or near Nov 2018 peak levels – probably that’s the all-time peak.
See: https://www.greenpeace.org/international/story/29458/peak-oil-decline-coronavirus-economy/
I’d suggest the longer Australia delays the transition away from petroleum fuel dependency, the more precarious our energy security becomes. Diesel is the critical liquid fuel for Australia’s currently configured transport infrastructure.
Who do our governments work in the best interests for? The citizenry or “big political donors”? If it’s the later, then I’d suggest the citizenry need to rectify the situation.
Meanwhile, UK Prime Minister Boris Johnson has announced a 10-point green plan that includes a ban on combustion engine sales by 2030, with grants for electric cars, and funding for charge points. The sale of some hybrid cars and vans will continue until 2035.
See: https://www.theguardian.com/environment/2020/nov/17/boris-johnson-announces-10-point-green-plan-with-250000-jobs
It’s no surprise What SA has suggested will be the new normal.
Austtalia has one of the lowest car “rego” (registration) costs in the world, our roads need to be maintained. This currently comes from the fuel tax at the bowser. EVs, PHEVs and Hybrids are bypassing this.
(I drive a PHEV by they way.)
Actually the current way of collecting this usage toll is unfair, does a V8 sedan user damage the highway much more than a small runabout, while paying that much more at the pump? It’s some 40c per litre.
As we progress towards an all EV future there needs to be a per kilometer charge of some kind.
It could be done with a tiny, sealed, GPS recorder – and an offence if removed or placed in another vehicle.
We need clever ideas, not blind objections!
I’d rather walk than let the government track my GPS location at all times. Just because you nothing to hide doesn’t forfeit your right to privacy.
A little part of me wonders if the only reason you support this nonsense is because SA government has already said that hybrid falls into the too-hard basket and wouldn’t be subject to this tax…
Hehe, good point Mark. But it might come to that, whether we like it or not. By the way, I hope you don’t have a smartphone cos the cell tower you connect to as you move around is already being collected. 🙂
Kind of. Triangulating with cell tower data is a pretty imprecise science. Can only get accuracy to about 500m. Not to mention that data is in private hands, not government. So if I find it’s been shared with government without a valid warrant, I have grounds to sue for invasion of privacy. I think. I’m not a lawyer!
My phone and home wifi is pretty heavily locked down such that no unwanted data leaks out. I use a VPN, a privacy focused browser, a Pi Hole, and a custom Android install. My car has the SIM & antenna removed, and any listening devices around the home (smart speakers etc) have the microphone physically removed.
I know I’m not the typical user, just privacy is a big concern for me, so when a government says it wants to charge by the mile, or track location, it raises my hackles. It’s bad enough that they make us put a face on our licence. Oh geez, I’m a nutjob, aren’t I?
Do I have to answer that? 🙂 Luckily for you don’t like in China!
skriss88: Did you know that a laden semi damages roads at thousands of times the rate of a car? the number varies depending on the estimates, but is generally accepted to be at least 5,000 times, some estimates put it at 30,000 times.
Who should pay? Trucks? ICE owners? EV owners? Cyclists? Hoverboard riders? (Only the last was in jest.)
Cyclists. Definitely blame the cyclists. ?
What about the health benefits that EV owners provide by not spewing noxious carcinogenic unbreathable fumes all over everybody? Will they get a discount for that?
It’s pretty woeful that an apparently forward thinking government can think that it’s appropriate to attempt to destroy a fledgling industry. You can tell it’s not election season…!
Again, a short-term response. What happens when we ALL go with EVs, who pays for using public roads?
skris88,
You ask: “What happens when we ALL go with EVs, who pays for using public roads?”
I’d suggest we have a long way to go before that happens. Electric vehicles make up only 0.2% of the total vehicle fleet in Australia. Perhaps we should be worrying about that a bit later, when the EV numbers are much greater?
See: https://www.budgetdirect.com.au/car-insurance/research/electric-car-sales-australia.html
Professor Hans Joachim Schellnhuber, founder, Potsdam Institute for Climate Impact Research, Germany said:
“If we don’t solve the climate crisis, we can forget about the rest.”
See: https://horizon-magazine.eu/article/i-would-people-panic-top-scientist-unveils-equation-showing-world-climate-emergency.html
It seems at best, motorists only contribute two-thirds of the cost of the road system anyway. In other words, taxpayers are contributing a significant proportion of the road cost, whether they are motorists or not.
See my comment above: https://www.solarquotes.com.au/blog/sa-ev-tax-mb1758/#comment-870504
I repeat my earlier comment above (November 15, 2020 at 11:50 am):
The writing is on the wall – Australia needs to transition as fast as possible away from petroleum-based liquid fuels. IMO, penalizing and discouraging the uptake of EV’s is undeniable idiocy, and threatens Australia’s longer-term energy security.
Yes, a phased approach will have to come in to get funding for maintaining our roads. It cannot be a blanket approach one way (“there is no climate change, EVs are a waste of time”) or the other. When it comes to road use, trucks probably are the biggest contributor to CO2 emmisisions, and there is very little discussion about THAT!
If the government doesn’t get enough money from fuel excise, then they need to do something about it. Taxing someone *because* they’re not buying enough petrol is obscene. Like someone else said, it’s like taxing someone because they’re not smoking cigarettes, so no tobacco excise. It’s patently stupid.
I’m all for road maintenance. But don’t think for a second that the fuel excise goes to road maintenance. It all just goes into a big bucket and divvied back out. If you believe what the government tells you about how they spend their money, then, well, I’ve got a bridge to sell you!
An actual fair solution is to remove fuel excise (or remove the component that goes back to road maintenance), and add it all to everyone’s rego, based on vehicle weight or number of tyres, since that’s what actually damages the roads. But that would be a bad PR move, so you can bet that it would never happen!
“rego, based on vehicle weight or number of tyres, since that’s what actually damages the roads”
I agree!
Are our politicians (both on the Left and on the Right) forward thinking and brave enough to do so?
🙂
Not a chance. That’s why they have to hide excises within consumer products.
We use the savings the health system which is no longer having to deal with people who have cancer due to air pollution caused by internal combustion engines.
Many people would regard as not being killed by air pollution as a nice side effect too.
What next? Tax people who walk around in public spaces without smoking cigarettes? They won’t be paying their fair share for footpath maintenance. We must tax them!!!
Hehe, good point!
But how then?? Governments are only giving us back money we pay them. Sure they waste some of it (quite a lot perhaps). But no money no sidewalks. Or roads.
Then ban cigarettes and tax everyone equally. A government should not ever tax someone for NOT doing something bad. That would be crazy.
They tried to bring in a travel tax back in about 2005 in the U.K. where they promised that the price of fuel would be halved and all vehicles would pay a mileage tax depending mainly on the time you travelled, a bit like a trip to work would cost you say $1.00 in tax at 2 am but at 8 am it would cost say $5.00. It was thrown out for a number of reasons, mainly the loss of privacy as every journey was logged and billed for at the end of the month or whenever, a list of every journey would be itemised so whether you were cheating on your wife or cheating with your work car you would be found out for sure, maybe a drug dealer moved in next door or across the street, are his customers going to see him or are the police going to be looking at you as well????? The trouble it could have caused would be just too much I believe. The next question would be, how do you mileage tax a Hybrid car that uses fuel as well as electricity?????? This would lead to even more confusion and anger I would think?????? World coal prices have barely gained much over the last 20 years, our power prices to the consumer have more than doubled, maybe the government should be just happy with the extra money they get from electricity sales?????? Interesting times ahead for sure!!!!!!!
The thing I don’t like is some people whinge when the Government subsidized renewable energy to the tune of $2.8 billion a year. But according to the International Monetary Fund (IMF) working paper from May last year that said Australia spends (A$47 billion) a year to prop up fossil fuel extraction and energy production in Australia. Even when the coal industry is undergoing a steady, precipitous decline around the world as it is not Financial Viability. The governments of China and India and USA have substantial coal resources, have clearly recognized the benefits of phasing out the use of fossil fuels in favour of renewables., Last month the Japanese government announced a plan to retire its fleet of old, inefficient coal-fired generation by 2030. coal power in Japan matters a lot to Australia, could be the reason Scott Morrison went to Japan last week as Japan takes about 49% of our coal and that is going to be cut back to zero in the next 10 years ,so all the investment will show, No long return
The road transport loibby is VERY powerful.
This is why most freight is moved by road when there is rail alternatives.
It dismays me when we see a major road crash involving a lrge transport vehicle and one or two cars. People killed, families traumatised. The aerial camer pans back, and there alongside the scene is a perfectly good, usused railway…
The NRMA many years ago (about 1979 I think) did a road surface damage survey. The damage to an average road surface caused by a (then) semi trailer, was 10,000 times the damage compared to that done by the (then) average 2 axle car. I wonder where that survey is now?
I would far far far rather travel by rail IF it was an alternative. And I am a “car guy”.