Time to charge drivers for their road use

Infrastructure Australia (IA) recommends a change in the way motorists pay for road use. In the Australian Infrastructure Plan 2016, it says motorists should be charged to reflect their individual use of roads.

Medley of taxes

Currently, motorists pay for roads through a medley of taxes:
  • Fuel excise (46%)
  • Registration fees (20%)
  • Licence fees (2%)
  • Stamp duty (10%)
  • Top-up from other taxes (22%).

IA argues that this system unfairly charges tax payers who do not use the roads very widely or often. It also penalises drivers in the bush, who use poorly maintained roads but still have to pay for roads in the cities, which they do not use.

The system is also unsustainable, because funds raised from fuel excise are reducing as cars become more fuel efficient or fuels become cheaper. Considering Sydney, Melbourne, Brisbane and Perth could be supporting an extra 5.9 million people by 2031, it is unlikely that revenue will keep up with demand.

More equitable system

A better idea, according to IA, is a user-pays system where each motorist pays to reflect their actual, daily use of the road. A more equitable system would consider their individual circumstances, based on:
  • Road user’s location
  • Time and distance of travel
  • Vehicle characteristics, such as weight and environmental impact.

This means that drivers of a heavy vehicle going interstate each week, for example, would pay more to use the roads than somebody who keeps a small, hybrid car in the garage for occasional trips to the shopping centre.

The IA has urged the government to introduce a heavy vehicle road charging structure within 5 years, followed by road charging for all vehicle types within 10 years.

It will be interesting to see whether the government decides to pursue this funding alternative. A user-pays system like the one proposed means the government would have to continually monitor in-car travel. Motorists would have to accept the authorities knowing, at all times, where they are and how far they go, whenever they get in the car.

Insurers currently consider a range of factors when setting greenslip prices. Potentially, one day, they could have access to your personal in-car information when they set the price of your greenslip.

Corrina Baird

Writer and expert

Corrina used to lend her car to her kids and discovered first hand what Ls, Ps and demerits mean for greenslips. After 20 years of writing and research in financial services, she’s an expert in the NSW CTP scheme. Read more about Corrina

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