Few would argue that Australia’s road system needs attention. But with fuel excise revenue declining as electric vehicle uptake grows, transport investment needs a total overhaul, according to Engineers Australia’s Transport Australia Society (TAs).
“There are three main aspects to consider,” said Chair of TAs, Scott Elaurant. “First, we’re not collecting enough revenue to build and maintain the roads we have now. Second, there are large equity problems, especially when it comes to toll roads. And third, we’re not leveraging a congestion charge to manage travel demand.”
These questions led to TAs to release a discussion paper last month exploring sustainable, long-term funding models for Australia’s roads.
Fairer and financially resilient
The proposed solution is a three-layered approach. By aligning charges with actual road use, vehicle emissions, and congestion levels, the system aims to ensure that those who benefit most from the transport system contribute fairly to its upkeep, while also incentivising more responsible travel behaviour.
“The current system relates to people paying a rego fee on the car, which is generally a flat rate. You pay the same amount whether you drive 1000 km or 20,000 km,” Elaurant said.
“There’s a rule called the fourth power rule, which explains the relationship between what a vehicle does and how much damage it causes. If you look at, say, a Nissan LEAF which is an EV but the batteries are heavy. Compared to a Toyota Prius, it’s more than 10 per cent heavier. So that means, on that fourth power rule, it does 46 per cent more damage to pavement when we drive it, but the rego fee is not 46 per cent more.
“[It’s the] same as if you compare the rego fee of a two and a half ton four-wheel-drive to a four-cylinder Yaris; it might be 20 per cent more but should be 277 per cent more.”
Elaurant said it’s got to the point where if you can afford an EV, you can effectively buy yourself out of the system that pays for road maintenance because those drivers don’t pay fuel excise. Plus, since the early 2000s, when indexation of the fuel tax levy was scrapped, that revenue in terms of percentage of GDP has fallen from around 1.8 per cent to less than 1 per cent, while we still spend about 1.8 per cent of GDP on road construction and maintenance.
“We have a growing population, people are driving more, and buying bigger and heavier cars. So we have all these pressures on the system, but the revenue base that maintains the system is declining. Nobody wants to increase taxes, but they want better infrastructure and the costs are going up.”
TAs’s proposed base layer of road pricing replaces fuel excise with a charge per kilometre travelled, with varying rates for different vehicle weight categories.
This is supplemented by a second layer – an emissions charge – which would increase over time and is intended as an incentive to favour low-emission vehicles (fully-electric vehicles would be exempt).
Toll roads and equity
The third layer is a congestion charge. “If you ask me in two words why we should have a congestion charging system, my answer would be ‘toll roads’. One of the consequences of the shortage of revenue is when governments do need to build more roads as the city grows (and they don’t have a mining tax windfall like Western Australia) they end up building more toll roads.”
Elaurant said toll roads might be a way to finance the road without drawing on the public purse, but often planning prioritises maximum revenue which has resulted in huge equity issues.
“If you live in an outer suburb, near a toll road, you’re going to pay a lot. But if you can afford to buy close to the city, you probably don’t use a toll road to get to work. So even though you [might be] much wealthier and can afford to pay more, you’ll be paying very little. Some people spend more per week on tolls than they do buying groceries.”
A congestion charge collects revenue based on use but also discourages driving in congested areas at busy times.
“In the past, our emphasis has always been, ‘we have to build this road and how do we generate enough revenue to pay for it’. But there are other places that say, ‘We have this demand problem. How do we set the price to manage demand?’” Elaurant said.
“Stockholm is a really interesting example. They have a road cordon around the CBD and to manage congestion they vary the price to cross it by time of day. One of the things they’ve noticed is that people who didn’t have to get there in the middle of peak hour change the time of day they travel, so it evened out the demand and addressed the need to increase road capacity in the first place.”
A sustainable future of transport
TAs’s proposal is designed to encourage people to consider what and how much they drive and suggest more efficient alternatives to traditional road infrastructure projects.
This interactive helps explain 4 key points. Enter full screen view for best experience.
“We kind of lost ourselves in a system where we build more stuff and generate revenue, but we’re reaching the point where the revenue is not paying for the system as it is, and then in the cities, if you add the toll payments, we have a lot of people paying tolls they can barely afford. It’s just not sustainable.”
Read the full discussion paper here.
Join Scott Elaurent and other members of Transport Australia Society in a webinar this November, and at the Transport 2026 conference in Cairns in June next year.
Generally agree with the sentiment of the article, but would exercise caution in linking the rego fee to vehicle weights. There is a correlation between road pavements costs and vehicle weight, but the Nissan leaf example is misleading because it would indicate that heavy good vehicles should be paying far more for rego than they currently do. If the ill informed start advocating for this and he cost of rego for Heavy vehicles starts rising then the haulage companies will have no option but pass these increased costs along the supply chain leading and we all suffer.
Trucks have been under-paying for the damage that they cause for a long time. Their lack of correct mass-distance charging is the reason that freight trains can’t compete. Over the last 20 years rail freight between Melbourne and Sydney has dropped from above 15% to less that 2%. Electric passenger vehicles are going to force a re-think of mass-distance charging and the priviledged treatment given to trucks will be finally placed in the spotlight.
A use of system charge and cohesion charge are no brained. We do need to consider the effect on the cost of living, as heavy transport and tradesmen will need to recover these additional costs in the cost of goods transported and services provided.
Some great thoughts on the issue, thanks.
is it true that the fuel excise goes into general revenue and is not all spent on roads. is this part of the problem (in the past and current)?
As a pavement designer, it should be noted that cars, even heavier ones, don’t cause any loading damage to road pavements. Trucks do cause damage, but do registration costs reflect this?
Regarding the claim that a Nissan LEAF does 46 per cent more damage to the pavement than a Toyota Prius:
It’s been a while since I worked on pavement design, but I recall that the Austroads formula for design traffic includes the percentage of heavy vehicles as a multiplier, causing light vehicles to drop out of the equation, based on the principle that any damage caused by light vehicles is essentially negligible. On this basis I’m not sure what would be the rationale for including vehicle weight in a road-user charging scheme.
It’s a shame that the author did not address demand management by encouraging other forms of travel. Australia is an incredibly car centric place, where people can only imagine getting around their cities in a car.
Demand on our road network can be reduced by encouraging cycling and by advocating for governments to build a safe and complete city wide bike network, ideally separated from vehicular traffic.
Bike lanes have approx. 7x the through-put of a car lane (7000 bikes/ hr/ lane vs 1300 cars/ hr/ lane). Hence encouraging bike use will reduce congestion due to the higher lane capacities. Also, because bikes are significantly lighter than cars they do not damage the roads, hence a far lower maintenance cost.
Why should road users pay for public roads at all? Should public libraries be user-pay? Public beaches? Public parks? No walking in parks unless the charge is sufficient to cover its maintenance? Should public schools be totally funded by the attendees? Or should a non-school user not pay anything like this road proposal?
What a complex mess that has evolved through three levels of government playing in one outcome which is to fund movement of people and freight by non resilient road networks.
Local government struggling at the bottom of the food chain trying to fund its local road network through funding based on land wealth taxes plus unsustainable grants from other levels of government. State governments which provide their own road networks and also allocate funds to local government from a range of fee collection such as registration. On top of the pile is the federal government which distributes a range of funding mainly through GST, tied and untied grants mostly based on policies not necessarily linked to asset management needs of the infrastructure. However, it does bring in substantial revenue mainly through fuel tax.
Then along comes change to achieve other agendas so it becomes more complex to achieve a range of other outcomes losing sight of the original objective to provide an open accessible road network that meets asset management needs for resilient communities and is fairly funded.
So the evolution continues!