Electric car owners in one state will pay a fee for every kilometre they drive within a year unless the federal government intervenes to create a national law.
NSW Treasurer Daniel Mookhey revealed the state’s plans at an inquiry into its proposed road-user charge on Friday, confirming the tax would be introduced despite a similar scheme in Victoria being overruled by the High Court.
But the NSW government had yet to determine how it would collect payments from motorists in July 2027, he said, and it would prefer the federal government introduced a national charge for electric and plug-in hybrid electric vehicles.
The announcement comes after Australians bought a record-breaking number of electric cars in June, representing 23 per cent of all new vehicle sales, and after plug-in hybrid vehicle sales more than doubled in the past year.
The proposed NSW road-user charge is forecast to collect $440 million from motorists in its first three years of operation, with electric vehicle drivers charged more than three cents per kilometre and plug-in hybrid electric car drivers charged 2.4 cents.
The NSW government would prefer electric vehicle drivers to be charged under a federal government scheme, Mr Mookhey told committee members, but the state would press ahead without one.
“We’ve made clear our view that we do think that there is a logic that there be a national system,” he said.
“In the absence of a national system, it remains the intent of the NSW government to enact the law that was passed by the previous parliament.”
A similar road-user charge, introduced in Victoria in 2021, was scrapped in 2023 when the High Court determined it was constitutionally invalid and could only be levied by the federal government.
The Commonwealth could “refer its powers” to NSW to avoid a similar outcome, Mr Mookhey said, and it had obtained legal guidance to prevent successful challenges.
“Of course we sought advice,” he said.
“That advice is obviously confidential because there are people who have declared that they intend to challenge it, so it’s not my intention to detail the advice that the Crown has received.”
A working group had been established within Service NSW to determine the most convenient way for motorists to pay for the distance they travelled, he said, but had yet to deliver its findings.
The Western Australia government has also proposed a road-user charge for July 2027 to collect revenue from motorists paying less fuel excise than petrol or diesel car owners.
The inquiry previously heard from motoring groups that supported the road-user charge including the NRMA and the Electric Vehicle Council, which argued it should be introduced only after EVs represented 30 per cent of Australia’s fleet.
