Victoria’s EV tax labelled unfair by ombudsman

THE VICTORIAN state government’s ZLEV road-user charge – which applies to zero- and low-emissions electrified vehicles including BEVs – has been labelled as “unfair” by the state’s ombudsman, Deborah Glass.

Introduced two years ago to match the contribution made by drivers of liquid-fuel-powered vehicles to road maintenance, the ZLEV road-user charge sees drivers of plug-in hybrid and fully electric vehicles pay for each kilometre they travel on public roads, both in and outside of the state.

According to a report published by the ABC this week, the controversial tax is being challenged in the High Court by two electric vehicle owners who have called for the law to be changed on the basis that the state lacks the power to impose such a charge.

The ombudsman’s report references the unresolved case, saying that while determining the validity of the legislation is “plainly a matter for the High Court”, the Department of Transport and Planning’s regulations are being administered unfairly.

“While this report focuses on the actions of the Department of Transport and Planning, there are broader lessons for the public sector about the dangers of making policy on the run (or not making it at all), and the importance of exercising discretion,” said Ms Glass.

“Imagine buying an electric vehicle, and then being charged for more kilometres than you have driven, because ‘this average calculation is bound by legislation’.

“Or travelling thousands of kilometres on fuel in your plug-in hybrid vehicle in remote parts of Australia with no charging stations and being charged hundreds of dollars for road use, despite having already paid the Commonwealth fuel excise on all those kilometres.”

In the report’s foreword, Ms Glass said “thousands of people have been affected by the charge since it came into effect in 2021, many of them unfairly”.

The investigation commenced following dozens of complaints made to the ombudsman’s office.

Among Ms Glass’ criticisms of the ZLEV road-user charge were its use of average calculations, those using plug-in hybrid vehicles being charged both the electric vehicle charge and fuel excise, and the lack of discretion exercised by those in the department when dealing with complaints.

“Whether or not its validity is successfully challenged, this legislation is being administered unfairly. This needs to change,” she added.

Four recommendations were made in the report, including for the department to review each complaint it had received relating to the electric vehicle charge, to “ensure that the specific circumstances of the complaint are properly considered, and the substance of the complaint is addressed”.

The recommendation was accepted by the department, as was another that said subject to the outcome of the High Court case, it should develop and publish processes to enable drivers of ZLEVs to dispute charges and request a discretionary waiver.

Two other recommendations were accepted by the department with the caveat that the department did “not agree this practise is occurring”.

Both related to penalties the ombudsman’s report asserted were being applied to drivers of electric and plug-in hybrid vehicles (PHEVs).

The ABC report quoted a response from a Victorian government spokesperson who said the Department of Transport and Planning had accepted the recommendations and would take the time to review the ombudsman's findings in full.

“Customers are important to the Department of Transport and Planning and VicRoads and we will always look at ways to improve our service,” the source said.

At the time of publishing, motorists operating zero or low emissions vehicles receive a $100 discount on their registration in Victoria but are charged on a per-kilometre basis that varies with the type of propulsion technology used.

Under the scheme, battery electric vehicle (BEV) and fuel cell electric vehicle (FCEV) users pay between 2.6 and 2.8 cents per kilometre, while plug-in hybrid electric vehicle (PHEV) users pay between 2.1 and 2.3 cents per kilometre – as well as paying the fuel excise.

Conventional hybrid electric vehicles (HEVs) are not recharged by an electrical plug and are therefore not classified as ZLEVs.

At present, Australian drivers pay the commonwealth fuel excise when they purchase liquid fuels including diesel, LPG (liquid petroleum gas), and petrol. For diesel and petrol, the amount of tax paid is 42.3 cents per litre, and 13.8 cents per litre for LPG.

The money raised is used to fund the development and maintenance of Australian roads.

According to the Victorian state government, “The road-user charge scheme requires ZLEV registered operators to make a fair contribution to funding Victorian roads.

The Victorian government uses this revenue to invest in the accelerated adoption of zero- and low-emissions vehicles, including new electric vehicle charging infrastructure and reforms to enable electric vehicle ready new buildings”.

More information on the ZLEV road-user tax is available here.

With ABC