Motor Vehicles (Electric Vehicle Levy) Amendment Bill

Second Reading

The Hon. R.I. LUCAS (Treasurer) (12:43): I move:

That this bill be now read a second time.

I seek leave to have the second reading explanation and the detailed explanation of clauses inserted in Hansard without my reading them.

Leave granted.

The Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021 amends the Motor Vehicles Act 1959 to introduce a road user charge for zero and low emission vehicles.

The 2020-21 Budget delivered the largest investment in electric vehicles in the State’s history, delivering $18.3 million to implement South Australia’s Electric Vehicle Action Plan.

The 2020-21 State Budget also announced the Government’s intention to introduce a road user charge for zero and low emission vehicles.

Drivers of internal combustion engine vehicles pay fuel excise when they fill up their vehicles with petrol, diesel or LPG. Drivers of zero and low emission vehicles pay little or no fuel excise. Currently, there are very few zero and low emission vehicles in South Australia, but it is expected that the uptake will increase as the availability of models increases and they reach price parity with comparable internal combustion engine vehicles. As the State transitions towards a higher usage of zero and low emission vehicles, a road user charge will ensure that vehicle owners continue to provide funding for the maintenance and improvement of our road network into the future. This includes supporting infrastructure for electric vehicles.

Recognising that the market for electric vehicles is still being established, the road user charge commences from 1 July 2027 or when the sale of battery electric vehicles reaches 30 per cent of new motor vehicles sale in South Australia, whichever is earlier.

To support the uptake of electric vehicles while the market is being established, the Government will also introduce an $18 million electric vehicle subsidy package subject to the passage of this Bill through Parliament. The package will provide a $3,000 subsidy for up to 6,000 electric vehicles purchased from the date the Bill is approved by Parliament.

Combined with the existing $18.3 million Electric Vehicle Action Plan in South Australia, this package will increase the total level of support for electric vehicles to $36.3 million and should support the uptake of electric vehicles in South Australia while introducing a more sustainable long-term road funding model.

The final package considers feedback received through the consultation process and allows the market for electric vehicles to develop further before commencing new charging arrangements. The design also has regard to the similar arrangements introduced in Victoria and that proposed in New South Wales.

Details of the charge

The Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021 sets out the ability to levy a charge on electric vehicles in South Australia based on the distance travelled. The charge will be an additional levy for the registration of an electric vehicle.

The details of the charge are broadly consistent with similar arrangements in place in Victoria and proposed in New South Wales.

An electric vehicle is defined as a motor vehicle that is powered wholly or partly by electricity from an external source, commonly known as a battery electric vehicle or plug-in hybrid vehicle, or by hydrogen, commonly known as a fuel cell vehicle or fuel cell electric vehicle. The charge will not apply to heavy vehicles or kinds of vehicles outlined in the regulations. The Government intends to exclude motor bikes and special purpose vehicles from the charge as part of the Regulations.

The charge will be calculated based on the number of kilometres travelled by an electric vehicle on roads and road related areas. This includes travel within or outside of the State. It will not apply where travel is undertaken on an area of private land that is not open to or used by the public.

The prescribed rate applying to the number of kilometres travelled by an electric vehicle is in line with that applying in Victoria and proposed in New South Wales at:

2.0 cents per kilometre (indexed) for plug-in hybrid vehicles

2.5 cents per kilometre (indexed) for any other electric vehicles

Consistent with the proposed indexation arrangements in New South Wales, the prescribed rate will be indexed annually, from 2022-23. The prescribed rate will be indexed by movements in the Adelaide consumer price index.

The prescribed rate has been set at rates that are below the average amount of fuel excise paid by owners of internal combustion engine vehicles. The lower per kilometre charge recognises the environmental and health benefits associated with electric and zero emission vehicles.

A lower rate applies to plug-in hybrid vehicles, relative to other electric vehicles, recognising that they pay some existing fuel excise.

Based on the number of kilometres travelled by an average passenger vehicle in South Australia of around 12,200 kilometres (2018 ABS data), a 2.5 cents per kilometre rate will result in an annual charge of around $305 for a battery electric vehicle.

Based on the average fuel consumption and distance travelled by passenger vehicles in South Australia (2018 ABS data), a non-electric vehicle pays around $565 in fuel excise each year, on average, at the current fuel excise rates. This is around $260 higher than the charge that will be payable by a battery electric vehicle.

The charge will be calculated and applied as part of the vehicle registration process. When a relevant owner registers their vehicle, they will be required to provide an odometer reading as part of the registration process. This approach is intended to minimise the administration burden associated with the new charging arrangements by leveraging off the existing registration arrangements.

Amendments to the Highways Act 1926

Under the Highways Act 1926 the Treasurer must pay into the Highways Fund money collected or received in respect of registration fees under the Motor Vehicles Act 1959. This will include the additional levy for the registration of an electric vehicle.

The Bill amends the Highways Act 1926 to expand the use of the Highways Fund to include the cost of installing, maintaining, altering, operating or removing charging facilities for the electric vehicles and refuelling facilities for hydrogen powered vehicles.

Electric vehicle subsidy package

Subject to the passage of the Motor Vehicles (Electric Vehicle Levy) Amendment Bill 2021, the Government intends to introduce an $18 million subsidy package to support the uptake of electric vehicles in South Australia.

A $3,000 subsidy will be available for the first 6,000 battery electric vehicles purchased in South Australia, below a price cap of $68,750 (inclusive of GST). A price cap is considered important to provide an incentive to bring lower priced electric vehicles to the market and avoid subsidising expensive electric vehicles. The subsidy will not be available for plug-in hybrid vehicles, consistent with arrangements in other jurisdictions.

Subsidies will be limited initially to one per individual person residing in South Australia and two per business located in South Australia. The vehicles will be required to be registered in South Australia.

I commend this Bill to the House.

I seek leave to have the detailed explanation of clauses inserted into Hansard without my reading them.

Explanation of Clauses

Part 1—Preliminary

1—Short title

This clause is formal.

2—Commencement

Commencement will be on the day on which the Treasurer publishes a notice in the Gazette specifying that the Treasurer is reasonably satisfied that sales of battery electric vehicles in South Australia will be 30% of new motor vehicle sales in South Australia or 1 July 2027, whichever occurs first.

3—Amendment provisions

This clause is formal.

Part 2—Amendment of Motor Vehicles Act 1959

4—Amendment of section 5—Interpretation

This clause inserts a definition of ‘electric vehicle’ for the purposes of the measure.

5—Amendment of section 20—Application for registration

This clause provides for an odometer reading to be submitted in relation to an application for registration of an electric vehicle and makes a minor consequential change to some wording to ensure the language would include the new levy.

6—Amendment of section 24—Duty to grant registration

This clause makes a minor consequential change to some wording to ensure the language would include the new levy.

7—Amendment of section 24A—Registrar may accept periodic renewal payments

This clause ensures that the periodic payment scheme can address the issue of odometer readings for electric vehicles.

8—Insertion of section 37AA

This clause inserts a new provision requiring payment of an electric vehicles levy of an amount calculated at the prescribed rate per kilometre travelled on roads and road related areas (whether within or outside the State) by an electric vehicle and provides for recovery of the levy and indexing of the prescribed rate.

9—Amendment of section 41—Misuse of vehicles registered at reduced fees or without fees

This clause provides for an odometer reading to be submitted when a person is required to pay the Registrar an amount pursuant to an order under the section relating to an electric vehicle and to ensure that the ‘prescribed registration fee’ is taken to include any levy payable.

10—Amendment of section 57—Duty of transferee on transfer of vehicle

This clause provides for an odometer reading to be submitted in relation to an application for transfer of registration of an electric vehicle and makes a minor consequential change to some wording to ensure the language would include the new levy.

11—Amendment of section 58—Transfer of registration

This clause makes a minor consequential change to some wording to ensure the language would include the new levy.

Schedule 1—Related amendment of Highways Act 1926

1—Amendment of section 32—Application of Highways Fund

This clause ensures that the Highways Fund can be used for defraying the cost of installing, maintaining, altering, operating or removing charging facilities for electric vehicles and refuelling facilities for hydrogen powered vehicles.

Debate adjourned on motion of Hon. T.T. Ngo.