Australia must find a new way of taxing road users soon or be unable to fund new infrastructure, according to the boss of toll giant Transurban, who says the inevitable mass adoption of electric vehicles will soon demolish fuel excise revenue.

Transurban chief executive Scott Charlton said on Monday that while electric vehicle sales in Australia had been “anemic” to date, nothing could stop the rise of zero emission vehicles (ZEVs), and connected and automated vehicles (CAVs), which can drive themselves and communicate autonomously with other vehicles on the road.

“We now believe that the mainstream uptake of CAVs will approach some sort of critical mass in the mid to late 2030s, and the ZEVs will be a little bit earlier,” Mr Charlton said.

Electric vehicles would reach price parity with fuel-engine cars by the mid 2020s, which would spur faster adoption, he said.

That would hit government earnings from fuel excise – the 40¢ per litre tax motorists pay when they fill up at the bowser, which contributes about $12 billion to government coffers every year to fund new roads.

“We believe that as the road funding sources decline, the need for road-user charging will significantly increase by the late 2020s,” Mr Charlton said.

“Something will have to change by the end of the next decade. Because all of these trends are going to feed on themselves and that funding pool… is going to dramatically decrease.”

Road-user charging is a user-pays system where motorists are slugged according to the frequency, time and location of their driving.

The federal government is trialling a road-user charging system for heavy vehicles, to test options for alternative revenue models to registration fees and fuel taxes.

“We’re hopeful that can be adopted eventually, with a brave politician, in Australia,” Mr Charlton said.

The other option was to increase the goods and services tax or introduce some other tax that was not directly associated with roads, but that would lead to “misuse or misalignment” between the raising revenue and spending it.

Labor leader Bill Shorten wants to make 50 per cent of new car sales electric by 2030, a goal which the Coalition said was an attack on Australians’ weekends and their ability to tow boats and trailers.

Transurban owns and operates many of the country’s biggest toll roads, including Melbourne’s CityLink and Sydney’s Cross City Tunnel, M2, M5, M4 and M7, plus Brisbane’s Gateway Motorway and Airport Link.

It is also building Melbourne’s West Gate Tunnel and has bought a 51 per cent stake in Sydney’s WestConnex.

The introduction of zero emissions vehicles and automated vehicles – which could operate as a fleet of self-driving, on-demand vehicles – was not a threat to Transurban’s earnings, Mr Charlton said, and in fact would increase the use of its roads.

That is because the next-generation of vehicles would be cheaper to drive, and autonomous vehicles would open up a new category of road users in people who cannot currently drive, like younger people, the elderly or people with disabilities, Mr Charlton said.

Shares in Transurban closed down almost 1 per cent to $13.60 on a weak trading day for the Australian market.

This article was originally published by the Sydney Morning Herald’s business section. Read the original here.

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