Calls for a more uniform approach to road user funding have emerged as part of a NSW Government inquiry into its proposed road user levy.

At present, the NSW Government has proposed that electric vehicles (EVs) and plug-in hybrids (PHEVs) should be charged per kilometre to account for the impact on road maintenance.

Currently, fuel excise on petrol and diesel contributes to general revenue collected by the Federal Government and distributed for federally funded infrastructure, including road maintenance. The system, currently, does not directly fund roads based on fuel excise revenue collected.

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With EVs avoiding traditional fuelling, and PHEVs theoretically using liquid fuels at a reduced rate, the NSW government has proposed that new energy vehicles should be charged at 2.974 cents per kilometre for EVs (including hydrogen fuel cell EVs) and a slightly lower 2.379 cents/km for PHEVs.

The Victorian Government trialled a similar user-pays system, introduced in 2021. A two-year legal challenge eventually saw the charge deemed unconstitutional by the High Court of Australia, which found the charge functioned as an excise – a levy that can only be implemented at a federal, not state, level.

In order to avoid a similar outcome, the NSW inquiry is seeking alternatives that would allow the road user charge to come into effect.

Among the proposals, a universal road user charge, which would be based on vehicle weight and charged according to distance driven. This new charge would, however, take the place of fuel excise.

In that instance, fuel – taxed equally across the country – would become markedly cheaper in NSW unless all states and territories agreed to adopt similar systems. The change would then switch the federally collected revenue model to a state-based system.

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The proposal has the support of the NRMA, which sees a road user fee as a way to balance the road funding model without stifling EV adoption.

The Electric Vehicle Council, meanwhile, claims the opposite and has proposed that an EV user charge not be implemented until EVs make up 30 per cent of Australia’s national vehicle fleet. Currently, EVs represent around 2 per cent of vehicles nationally, with the proposed tipping point expected to take another 10 years.

At present, the NSW road user charge is proposed with a start date of July 1, 2027, but the inquiry is ongoing and set to resume from July 29, 2026.