SENATOR THE HON BRIDGET MCKENZIE
SHADOW MINISTER FOR INFRASTRUCTURE AND TRANSPORT
SHADOW MINISTER FOR REGIONAL DEVELOPMENT, LOCAL GOVERNMENT AND TERRITORIES
Transforming Transport – Charging Ahead!
Thursday 7 May 2026
Crown Melbourne
E&OE…
Thank you for the invitation to speak at Transport Australia’s Transforming Transport Summit 2026, with people that are as nerdy as I am about infrastructure investment and road networks and transportation. I really do appreciate the opportunity to speak to you all today.
In this room there are people from – who’s from state government bureaucracies? Hands up high, be proud. There we go. – Okay. Industry? Okay. Okay. The Feds? There we go. I’ll see you in Senate Estimates in a couple of weeks.
But everyone in this room: change agents.
And if we ever needed to see change when it comes to funding our road networks across this country, it’s now.
There’s an old saying in politics, you should never waste a crisis. I think we need to seize that moment right now.
Australians have never been more conscious of fuel excise. They’ve never purchased more electric vehicles, each and every day as a result of the increased cost of fuel. I would argue you don’t have to go very far from where we sit today to find a pop-up. It’s not just Victoria, although I could go on and on about that one – and I will come November – but today is not the day. But across every jurisdiction. And you don’t have to talk to many trucking businesses to understand the increase in maintenance costs that’s actually burdening their business with.
So where we have a crisis, such as we’re going through now, when disruptions hit, long-established expectations of the public are literally blown open. They are then open to new ideas, bold proposals from governments in a way that they wouldn’t usually be.
So to Jim Chalmers, I encourage you to seize the mantle of reform. Because now is a time when you when you can actually do that.
Reform doesn’t mean increasing taxes and cutting productive infrastructure, but it does actually mean that there is an opportunity in the wake of the High Court decision on road user charges here in Victoria a couple of years ago, to really make this system make sense. Not just now for all the plethora of users, but for decades to come.
We have one of the most complicated systems of funding road use in the world. We’ve got the petrol excise, we’ve got diesel excise, we’ve got the heavy vehicle road user charge. Then we’ve got the fuel tax credit system, which breaks every truckie’s heart because you’ve got to pay it forward and in a crisis, that has meant trucks have been parked up rather than getting fueled up. We’ve got state-based registration charges. We’ve diesel fuel tax credits for our miners, fishers and farmers and off-road users.
So, if you want a complicated system of how to fund roads, we’re just about a bigger level of capacity as you would like.
But I am buoyed. Post the Productivity Roundtable by the Treasurer last year, all those months ago, he did say the road user charge was an idea “whose time had come”. And I agree, I absolutely agree.
And I’ve spoken with international conferences on this topic, infrastructure summits, made it clear that as the Shadow Transport Minister of this great country, this is a conversation we need to have, and we need to have state and federal governments that have the courage to have the tough conversation and to not play it safe, because I think we’ve seen too much of that in recent decades from governments, including my own. Because I fear, in the wake of the Productivity Roundtable, that the road user charge is an idea whose time has come, Treasurer, but has gone again. Because last month, when my counterpart, the Minister for Infrastructure and Transport, Catherine King, was on the ABC’s Insiders program, she said about a road user charge,
“… we want to try and not disincentivise electric vehicle uptake, and particularly right at the moment when we’re seeing such a surge … so it may not be the time for it right now.”
I think what Australians wanted to hear from their Infrastructure and Transport Minister is we want a road network that’s not literally crumbling under our tyres because that is what’s happening, and it’s not just in the regions. If you go out to Kooyong, the electorate of Kooyong, roads are degrading because of the heavier mass that they’re having to move and obviously more cars.
Australians, when you talk to them, want a fair system. We’re an egalitarian country.
They want to see a road network where all users from heavy vehicles, petrol and diesel, passenger vehicles, hybrid and EV drivers, are all contributing equitably to the safe road network.
The Minister needs to not be perturbed or concerned about the uptake of electric vehicles, it’s going through the roof, thanks to the crisis in the Middle East, but also, I would argue, the Fringe Benefits Tax that has also literally gone through the roof, and the Treasurer has been a bit upset. Chris Bowen’s happy, but Chalmers is a bit upset about how much that is impacting the budget. But that’s a conversation for another day.
So the rapid increase in electric vehicle uptake, combined with high petrol prices, the conventional logic would say that now is the time to drive and implement a reform such as an equitable road user charge.
But why do we need it?
What does it mean for our nation if we have half a million EVs on the road and rapidly growing over coming decades?
What does that mean for funding the repair and maintenance of our roads?
And what does it actually mean about the equity of transport policy?
What does it mean for our freight task? Not just the movement of freight, but the sustainability of our transport sector. We’ve got two trucking businesses going bust every day in this country. That’s actually what’s happening out there. So they are under so much pressure and part of it is the cash flow issue around the road user charge.
How fair is it that most wealthier EV drivers don’t pay to upkeep the roads, and that is a fact.
So it means that families in the suburbs and the regions who drive petrol diesel cars are effectively paying the excise to the tune of $25 billion per annum. We do give about $10 billion of that back to the truckies through the tax credit scheme. But that’s a lot of money per year that petrol and diesel car drivers are paying, that EVs aren’t.
The revenue loss of half a million electric vehicles avoiding fuel excise could be up to $350 million a year, and that’s going to be obviously on an increasing trajectory over time.
Similarly, the changes to vehicle efficiency standards, subsidises electric vehicle purchases against petrol and diesel, so again that is going to have immediate impact over time on the fuel excise take.
So I have long expressed in principle support for an equitable system of road user charging as a means of addressing revenue leakage from fuel excise, the complexity of our system and road funding.
So you might hear a lot of people running around loving a road user charge, but they want to invest it in EV chargers. I think Australians know where they want their fuel excise tax to go. They want it to go in road upkeep and maintenance. They want great roads. They’re happy to pay it as long as they’re driving on safe, productive roads.
And they also recognise that everyone should contribute to that.
The compounding nature of inflation has seen fuel excise and revenue grow rapidly, estimated an extra $8.3 billion this year as compared to our last year. This isn’t a good thing because inflation throughout the economy is also driving up the cost of building and fixing our roads.
Over nine years the Coalition fuel excise rose 6.06 cents per litre.
In less than four years under Labor, the excise rate has increased by 8.4 cents a litre.
This rate of increase is absolutely unsustainable. Motorists aren’t going to reward governments that allow a fuel excise to grow to a third of the cost on the litre of fuel when it reaches about 60 to 70 cents a litre.
If motorists saw the cost of excise listed on their dockets, there’d be an outrage. Talk about transparency in taxes. This is the dirty little secret that no treasurer wants to talk about. And that is, I believe, wrong.
So when Transport Australia actually tests support for replacing fuel excise with a per kilometre road user charge, an extraordinary 60 per cent of respondents said that sounds like a good idea. Two thirds of people living in the cities said great idea. And interestingly enough, 71 per cent of electric vehicle drivers, who currently aren’t paying any fuel excise, said, yeah, that sounds fair.
So that actually says a lot about Australians knowing how important great road networks are for their community, for our nation and for safety. And they’re prepared to stump up for it.
Of those who didn’t support the introduction of a road user charge, one in four said they would support it if abolishing the excise meant the cost of petrol and diesel went down.
So it seems like we might be pushing on an open door almost, with this idea.
And this research that they did was before the fuel crisis. So I would argue that those numbers would even increase at the moment.
While encouraging, the results show that there is more work to do for rural and regional Australians, that a move to a per kilometre road user charge would be better than fuel excise. That’s understandable.
A per-kilometre based charge in and of itself would not be equitable for regional Australians, who have little choice but to drive long distances on poorly maintained roads.
You just need to talk to a truckie who’s hauling his load 100 km down a gravel road whether he should be paying the same amount as somebody that’s swanning it between Melbourne and Albury where I live on a dual carriage Hume Highway. And that’s not to mention their maintenance.
Before Secretary Jim Betts gets too excited and runs off to Catherine King saying that we’ve got potential bipartisanship on a road user charge Minister, I have some very hard lines on principles from where I sit having thought about this for a long, long time.
It has to be affordable. Choice is critical. We should not be discriminating against those on low incomes in the suburbs and in the regions. It does need to be vehicle agnostic, whether you’re driving a Kenworth, or a Hilux or a Tesla. And it has be to be fair.
The fuel crisis has highlighted the challenge of fuel prices for cash flow, and thus viability of the freight industry, as I said earlier. And just simply taking the easy way of, ‘oh well, we’re not capturing the EV drivers’, that is a lazy approach. Because we have an opportunity, as the data shows, and a crisis has provided us, to really reform a system that is failing all of us.
Liong-term policy that will introduce fairness to road funding and help road managers maintain our road networks to safe standards is something we should all expect.
If we’re able to elevate our ambition, a road user charge should replace fuel excise.
Nat a new tax, but tax reform that addresses revenue leakage from the fuel excise system and the inequity that EV drivers are not contributing to road maintenance.
A road user charge could cover all road transport modes: passenger and light vehicles, heavy vehicles, hybrids, plug-in hybrids, electric vehicles.
This would have one road user charge replacing a plethora of current taxes: the fuel excise for petrol, diesel, LPG, biofuels and ethanol, and a heavy vehicle road user charge and the fuel tax credit scheme for both on and off road.
Everyone knows our roads are stuffed – seriously they are! Like its mad in this day and age, that actually there’s pictures on Facebook in every community around the country about how big is your pothole. People are wild and they’re rightfully wild. There are some basics: pick up the rubbish, safe roads and a great education system for primary and secondary school. Anyway, that’s a whole other state of affairs.
But I fundamentally believe that revenue from a road user charge should be explicitly hypothecated to funding our road network. And could potentially go directly to the managers of our road networks. Seventy-five per cent of our road network is managed by local governments, and in their 2024 State of Our Assets report, they said they had a backlog of $23.1 billion of poor condition roads. That’s only council owned roads, not state government’s, etc.
So to address the deficiencies and inequities of a per kilometre based tax system, road user charging, in my humble opinion, should be designed a model to account for multiple road use characteristics that impact our road network, and they could include, just for thinking about: the road type and the condition, sealed verses unsealed roads, vehicle weight – Kenworth and two big trailers verses your little speedy Corolla – distance, location, ease of access to alternative modes of transport.
I think everyone would agree that the maintenance bill is high enough for our local governments and our road managers. We need to make the tax that people are paying explicitly going to something people want fixed.
I think that transparency would assist in the argument.
So I’ve just got four final caveats. Any reform should not result in shifting increased tax burden onto the heavy vehicle sector, which is responsible for moving the food we eat from paddock to plate, as well as all the goods we buy, sell and export.
Regional Australians must not be worse off under any new system.
To be successful and supported by the public, a scheme should guarantee that regional motorists, those in our most outer suburbs and our truckies, would not contribute more than they currently are in the excise arrangements.
And unlike the present system, there should be no double taxing for the use of toll roads. Another sneaky little state government special. If we did go to a road user charge, for particularly our urban drivers, you shouldn’t be charged excise and again tolled to use the same road.
Critically, given we’re talking about a road user charge, if you don’t use our public road network, you should not be charged. So our diesel rebate system for our miners, for our fishing industry, for our farmers that are driving their vehicles around paddocks harvesting, should absolutely be maintained.
All of these elements are achievable if the government has the political will and the ambition.
There are challenges and this is where you all come in:
• sclerotic and risk averse bureaucracies. Be bold! I’ve been a senior Cabinet minister, be brave. If you are in the public service or you are talking to the public service, don’t be risk averse. Seize the opportunity that is here.
• Greedy state treasurers who want to tax EVs by themselves, who want to have their own little road user charge, so it’s different in every state. How’d that work out for our rail network 120 years later?
• Conflicting priorities of our states, which is often an excuse to not do anything.
• Just fear of not wanting to do something new. It is a great privilege to be a Cabinet minister, and to have the opportunity, the power and the resources to affect change. We should not waste this crisis.
The rest of the globe is on the way.
There’s a lot of tech out there, the learnings from other jurisdictions are out there.
I think we should be up for the challenge and not waste the crisis.
If I had a dream, and I woke up tomorrow and I was your minister, this is exactly what I’d be doing.
Thank you.
ENDS