Hansard debates

Mr PALLAS (Werribee—Treasurer, Minister for Economic Development, Minister for Industrial Relations) (10:08): I move:

That this bill be now read a second time.

I ask that my second-reading speech be incorporated into Hansard.

Incorporated speech as follows:

Support for zero and low emission vehicles in transitioning to a low-carbon future

Zero and low emission vehicles (ZLEVs) are part of Victoria’s transport future and will play a key role in Victoria’s transition to a low-carbon economy.

The reforms in this Bill establish a fairer and more sustainable framework for road users to contribute to the maintenance and expansion of Victoria’s road network. This Bill balances the need for all vehicles to make a fair contribution to our road network, while recognising the environmental and health benefits of ZLEVs.

The transport sector currently accounts for more than one-fifth of the State’s greenhouse gas emissions. Decarbonising the transport sector is critical to meet Victoria’s legislated Net Zero Emissions by 2050 Target and will require government intervention in the short term to promote the transition to a low-carbon future.

The Andrews Government is committed to accelerating the adoption of ZLEVs and is investing to address perceived barriers to uptake.

In the recent 2020–21 Budget, we announced over $45 million to support ZLEVs. This included:

• rolling out a fast-charging network for motorists across major highways and key tourist destinations in Victoria through targeted infrastructure grants;

• a State-wide trial to investigate solutions to achieve a zero-emission bus fleet and create a pipeline of local job opportunities;

• introducing electric vehicle-ready provisions in new buildings from 2022 to prepare for mainstream uptake of electric vehicles (EVs); and

• funding to develop a strategy to accelerate the take-up of ZLEVs in the Government’s fleet.

We will have more to say on our ambitious plans to support ZLEVs through the upcoming release of Victoria’s Zero Emission Vehicle Roadmap, as well as the Climate Change Strategy and transport sector pledge.

A fairer, more financially sustainable way to fund the road network

The Government is also investing at record levels to maintain and improve Victoria’s road network—investment that is far in excess of the revenue raised from taxes and charges related to road usage. However, this scale of investment is becoming more challenging to sustain as state and territory revenue bases related to road use are being eroded while demand for investment in the road network continues to rise.

Most Australian drivers pay fuel excise when they fill up their vehicle with petrol, diesel or liquified petroleum gas (LPG). Fuel excise is an important source of revenue that contributes to building and maintaining our roads as the Commonwealth redistributes some of this revenue to state and territory governments as infrastructure grants.

In recent years, it has become clear that this funding mechanism is not financially sustainable in the long term. Commonwealth fuel excise revenue is in relative decline due to improvements in fuel efficiency of internal combustion engine vehicles (ICEVs) and the introduction and increasing uptake of alternative-powered vehicles, such as EVs, plug-in hybrid-electric vehicles (PHEVs), and hydrogen vehicles (HVs).

EVs, PHEVs and other alternative-powered vehicles currently face a lower tax burden relative to traditional ICEVs and do not contribute to the costs of road network provision commensurate with the costs they impose on the network. ZLEV owners pay little or no fuel excise but they still use the roads.

The reforms introduced in this Bill ensure all motorists contribute their fair share to the cost of funding Victorian roads and road-related infrastructure. It will support the financial sustainability of Victoria’s road network and ensure we can continue to invest in our transport networks into the future.

While the number of ZLEVs in Australia is currently low, now is the right time to establish a framework that ensures all road users make a fair contribution to the Victorian Government’s record investments in roads. Take-up of these vehicles is expected to increase in the next three to five years, as new ZLEV models enter the market, the purchase price of new ZLEVs falls and network infrastructure rolls out. EVs are destined to dominate our motorways in the future, given they’ll always be more economical and environmentally friendly than petrol, diesel or LPG-powered vehicles.

Introducing a road usage charge for ZLEVs now, before take-up increases substantially, ensures a fair and sustainable revenue base to fund investments in the road network and provides increased certainty to all drivers.

The Government has been keen to lead vital reforms in this policy area ahead of other jurisdictions in Australia. We have been working with the other states and territories to ensure, to the extent possible, a nationally consistent framework for road-user charges for ZLEVs across jurisdictions that choose to adopt them. The Victorian and South Australian Governments join international jurisdictions, including California, Utah, Oregon and Washington states in the United States, in implementing or trialling road-user charging systems that incorporate ZLEVs.

A distance-based charge for ZLEVs

This Bill introduces a distance-based charge on the use of roads for Victorian-registered ZLEVs from 1 July 2021. These charges will apply to vehicles not predominantly powered by a fuel source that is subject to a Commonwealth Government fuel excise, such as petrol, diesel or LPG.

Under the Bill, from 1 July 2021, a 2.5 cent/km charge will apply to electric and other zero emission light vehicles, including hydrogen vehicles, and a 2.0 cent/km charge will apply to plug-in hybrid-electric light vehicles. Conventional hybrid light vehicles, which are predominantly powered by a petrol or diesel internal combustion engine, will not need to pay the new distanced-based charge.

Just like with fuel excise, a per-kilometre charge ensures vehicle owners who use the roads less pay less in distance-based charges. After all, ensuring motorists’ contributions to our roads is proportional to how much they use the roads is only fair. On average, EV owners will pay an additional $330 a year and PHEV owners will pay an additional $260 a year, based on the average distance travelled for light passenger vehicles of around 13 100 km a year.

These new distance-based charging arrangements and other financial incentives recognise the environmental and health benefits of ZLEVs. Under the distance-based charge for ZLEVs registered in Victoria, ZLEV owners will continue to pay less in road-related taxes and charges than other drivers—around 40 to 50 per cent less than the per-kilometre equivalent that an average driver pays in fuel excise.

Existing incentives to promote the take-up of ZLEVs will continue, such as the motor vehicle stamp duty concession for all low emission passenger vehicles which produce 120 grams or less of carbon dioxide equivalent emissions per kilometre travelled announced in the 2019–20 Budget.

On balance, the Government anticipates the introduction of the distance-based charge will have a negligible impact on electric vehicle uptake in Victoria, particularly as the Government is investing the revenue raised from the first few years of the distance-based charge in vehicle-charging infrastructure that will help address a significant barrier to ZLEV uptake.

The Government will continue to promote the take-up of ZLEVs by ensuring they pay less than conventional petrol and diesel vehicles. Indeed, we commit to review the per-kilometre rates periodically to ensure these more environmentally friendly vehicles continue to pay less in road-related taxes and charges than their fuel-based counterparts. More broadly, we will continue to evaluate zero and low emission transport policies to encourage take-up of zero and low emission technologies, and to ensure Victoria remains on track to meet its 2050 net zero emissions target.

Implementing the ZLEV distance-based charge

Part 2 of the Bill describes the light-touch, low-tech approach to implementing the distance-based charge. Owners of ZLEVs subject to the distance-based charge will need to report their odometer readings to the Secretary of the Department of Transport. They will then be invoiced in arrears based on the distance travelled during the declaration period.

In practice, owners can make the necessary declarations to allow the Secretary to calculate the charge when they pay their vehicle registration using the myVicRoads online portal. The portal will generate a bill based on the reported odometer readings. As with vehicle registration, registered operators can pay ZLEV distance-based charge quarterly, semi-annually or annually, based on what suits their circumstances.

Rules will also apply when the vehicle is transferred between registrations to ensure the registered operator of the ZLEV at the time the distances were travelled remains liable for those charges.

The Bill provides strong incentives to ensure compliance with reporting requirements and ensure registered operators pay their fair share for their use of the roads. Part 3 of the Bill allows the Secretary to suspend or a cancel a vehicle’s registration for failing to adhere to reporting requirements or for failing to pay distance-based charges. Penalty interest may also be charged by the Secretary on the late payment of distance-based charges, with outstanding charges and any interest a debt payable to and recoverable by the Secretary.

ZLEV owners are also required to retain records to substantiate their declarations for five years and provide evidence of their claims upon request to ensure compliance with the scheme. Furthermore, vehicles may be subject to inspection by officers authorised by the Secretary.

The Bill also establishes new criminal offences if a registered operator fails to keep records, fails comply with a notice to inspect a vehicle subject to distance-based charges or knowingly or recklessly providing false or misleading information as part of a declaration to the Secretary.

Refocusing financial incentives on the most environmentally friendly vehicles

Separate from this Bill, light vehicle registration concessions will also be modified to ensure these financial incentives target vehicles powered by environmentally friendly alternatives to fuel. ZLEVs subject to distance-based charges will also continue to receive the $100 registration concession on their annual Victorian registration.

Conventional hybrid vehicles will no longer receive this concession on their annual Victorian vehicle registration. These vehicles, unlike PHEVs, are powered predominantly by a petrol or diesel internal combustion engine. There are now many ICEVs without hybrid capabilities on the market that achieve similar fuel efficiency to conventional hybrid vehicles. It is not fair that, among vehicles with similar fuel efficiency ratings and environmental outcomes, some receive the registration concession while others do not.

The Minister for Roads and Road Safety will be making these changes through amending the Road Safety (Vehicles) Interim Regulations 2020 in due course.

The reforms in this Bill establish a fairer and more financially sustainable framework for road users to contribute to the maintenance and expansion of Victoria’s road network. Critically, they will provide the resources for future governments to continue investing in our transport networks to enhance the State’s productivity and meet the future transport needs of Victorians.

I commend the Bill to the house.