Australian fleets transitioning to electric vehicles should expect the way governments collect road funding to change over the next few years.
The exact model remains unsettled, but the direction is becoming clearer: as electric vehicle numbers increase and fuel excise revenue declines, governments will need to develop another mechanism for collecting revenue from vehicles that no longer regularly visit a petrol station.
For Fleet Managers, the issue is unlikely to be whether fleets ultimately pay a road user charge (RUC). The more important question may be how the charge is administered.
That is where some of the hidden costs could emerge.
NSW proposal points to what is coming
The NSW Legislative Council’s Public Accountability and Works Committee has completed its review of the Electric Vehicle (Revenue Arrangements) Act 2021.
The legislation currently provides for a distance-based road user charge for electric vehicle owners in NSW from 1 July 2027.
However, there is considerable uncertainty around the current legislation following the High Court’s 2023 decision in Vanderstock v The State of Victoria, which struck down Victoria’s EV road user charge.
The NSW committee concluded that the NSW legislation, in its current form, would likely face a similar constitutional challenge and recommended reframing the charge.
That means the final mechanism may look different from the scheme originally proposed.
It doesn’t necessarily mean the broader idea of road user charging is going away.
Fleets already pay for road use
For fleet operators, it is important to put the debate into perspective.
Petrol and diesel vehicles already contribute significant road-related revenue through fuel excise embedded in the price paid at the pump. As fleets progressively move to battery electric vehicles, that revenue source will decline.
The NSW committee explicitly acknowledged this issue, noting that with increasing EV uptake, revenue collected through the existing fuel excise regime will trend down.
So a future RUC should not automatically be viewed as an entirely new fleet operating cost.
For organisations replacing an internal combustion engine vehicle with an EV, a well-designed national system would effectively change the mechanism through which road-related revenue is collected.
That distinction will be important when Finance Managers and Fleet Managers develop whole-of-life cost models for future vehicle replacements.
The hidden cost could be administration
The bigger concern for fleets may be administration.
Fuel excise is relatively invisible from an operational perspective. A driver purchases fuel, the tax is incorporated into the pump price and the transaction flows through the organisation’s normal fuel card, expense or fleet management processes.
A distance-based RUC potentially requires another process.
Depending on how a future system is designed, organisations could need to record kilometres travelled, provide odometer readings, reconcile vehicles entering and leaving the fleet, manage exceptions and validate charges.
For an organisation operating hundreds or thousands of vehicles, even a small additional administrative requirement can create a significant internal cost.
Fleet Managers should therefore pay close attention not only to the cents-per-kilometre rate proposed under future RUC models, but also to the systems and reporting requirements sitting behind them.
Another reason to improve fleet data
There is no need for organisations to wait for the final RUC model before preparing.
Good fleet management practices already require organisations to understand annual kilometres travelled, utilisation, fuel and energy consumption, vehicle location or operating environment, replacement cycles and whole-of-life costs.
These are also likely to be useful foundations for managing any future distance-based charging system.
Organisations with mature fleet management systems and reliable utilisation data should therefore be better positioned to accommodate a RUC than fleets still relying heavily on spreadsheets, manual odometer collection and fragmented information.
It provides another reason for Fleet Managers to improve data quality while developing their transition plans for low and zero emission vehicles.
Don’t let RUC derail the EV business case
The possibility of road user charging should also be incorporated into EV business cases rather than ignored.
That doesn’t mean applying an arbitrary future charge and assuming EVs will become significantly more expensive.
Instead, organisations should recognise that the tax treatment of petrol, diesel and electricity-powered vehicles is likely to evolve as the vehicle market changes.
The NSW committee itself warned against designing a system that disproportionately burdens particular road users or makes electric vehicles less attractive.
Committee Chair Abigail Boyd MLC said governments had a legitimate reason to address declining revenue, while also arguing that policy settings should not undermine transport electrification.
“Given the environmental and emissions-related health benefits of electrification, the last thing we want to do is introduce policy settings that, inadvertently or otherwise, pull in the opposite direction to the broadly supported strategy of electrifying the State’s fleet,” Boyd said.
Start planning, not worrying
For Fleet Managers, Sustainability Managers and Finance Managers, the message is relatively straightforward.
Road user charging is likely to become part of the fleet operating environment as Australia moves away from petrol and diesel vehicles, although the timing, structure and jurisdiction responsible for collecting it remain unresolved.
The challenge for fleets is therefore less about avoiding the charge and more about being ready to manage it efficiently.
When developing EV transition plans and whole-of-life cost models, organisations should start considering how a future RUC could be recorded, allocated and reconciled.
For mature fleets with good systems and reliable utilisation data, it may simply become another operating cost to manage.
For fleets without those foundations, the administrative burden could prove to be the bigger hidden cost.
