Going the Distance

Based at the Sydney offices of Holding Redlich, Nathan Cecil specialises in providing commercial and regulatory compliance advice and resolving disputes.

Nathan has represented industry on government and industry panels and has been a director since 2017 of TruckSafe, the ATA’s trucking business and risk management system.

Nathan became involved on behalf of the ATA in the Vanderstock case in the High Court of Australia.

Historically, the Australian Government introduced excise on petrol in 1929, which was extended to diesel in 1957 with the intention of recovering the costs of wear on roads caused by heavy vehicles.

For several reasons, including the improvements in vehicle fuel efficiencies, fuel excise collections have been trending downwards in real terms in recent years and with low- and zero-emission vehicles then starting to appear on the horizon, in 2020 the collective state treasurers agreed upon a charge of 2.5 cents per kilometre travelled for all electric vehicles including cars vans and trucks, and 2.0 cents per kilometre travelled for plug-in hybrid vehicles.

This was mainly intended as a mechanism to recover the costs of wear on roads caused by passenger and heavy vehicles.

Victoria was the only state to actually impose the charge and Victorian couple Christopher Vanderstock and Kathleen Davies challenged the constitutional validity of the Zero and Low Emission Vehicle Distance-based Charge Act 2021 (Vic) (ZLEV Act) in the High Court of Australia and were joined in the action by a number of parties including the ATA.

Under the Victorian legislation owners of electric vehicles were required to record the distances travelled, and although the affected vehicles were registered in Victoria, it did not matter where they were driven in Australia, they still had to pay an annual charge based on the total number of kilometres travelled.

In order to be granted representation at the High Court challenge, the ATA first had to satisfy the Court it had a relevant interest in the issue being fought, and also had to satisfy the court that it was bringing something unique, which the other parties probably weren’t going to raise.

Typically, only a minority of such organisations are given the right to participate in a case like this.

The High Court accepted that, as the peak national body for the trucking industry, the ATA and its members had a vested interest in the outcome and could also provide some insight into the broader implications if the legislation was allowed to remain in effect.

Under the Australian Constitution only the Commonwealth Government can levy what is known as “excise duty”. In order for the Victorian legislation to be struck down the plaintiffs had to prove two things.

First, the ZLEV charge was a tax which was distinguished from a government fee-for-service or a privilege such as driver’s licence.

Secondly, the tax has to be a tax on goods, such as electric vehicles themselves.

The ZLEV Act met these two criteria, and the challenge was successful mainly on these two grounds.

“The legislation didn’t differentiate between passenger and commercial vehicles,” says Nathan.

“The ATA viewpoint was looking at the broader implications of that charge if it was permitted to occur. Specifically, they were concerned about road user charging (RUC) and what form it might take in the future.

“The concern was that each state and territory could impose its own road user charging regime. This could have led to a situation where there would be competing, contrasting, and overlapping schemes within each state and it could result in increased administration as well as double charging.”

The ATA’s main concern was about those broader implications, in particular given that the pay-as-you-go Road User Charge is an issue being re-examined at the moment.

“They wanted to make sure that it went down the proper path rather than what I describe as into Wild West territory,” says Nathan.

“You could actually find yourself in the situation of double charging. If it had been upheld all of the states would be free to add a similar charge for heavy vehicles with either electric or internal combustion engines.”

Nathan and other legal minds had concerns about the intention of the legislation which was being challenged.

“It was something that was problematic from the start,” he says.

“There were ways they might have been able to do it and for it to be effective. It probably wouldn’t have been as targeted as this was on the usage of a particular vehicle on particular roads. But they can certainly include a general increase in the registration charges for electric vehicles in respect of their road usage.

“I guess EV drivers in Victoria were going to face ongoing increased costs for owning and driving EVs and that’s obviously a disincentive for people adopting EVs, whereas the broader policy discussion is that we actually want to encourage people to adopt EVs.”

To make the adoption of EVs as easy as possible and not to penalise people or deter them seems to be what Chris Vanderstock and Kathleen Davies were really fighting for, and as committed environmentalists, the couple were willing plaintiffs and participants as figureheads to run the argument against the legislation.

“Outside of Chris and Kathleen’s position, the broader concern was that we could end up in a situation where each state and territory was making a grab for Road User Charges in inconsistent ways,” says Nathan.

“Any business acting nationally was going to end up with a supreme headache in trying to deal with those overlapping regimes.”

On the matter of why Victoria initiated the now proved invalid legislation in the first place, Nathan remains philosophical.

“I think they [the Victorian Government] were looking at their own position and securing the revenue streams for the state, but not necessarily considering the broader implications if the other states did exactly the same sort of thing,” he adds.

The successful case against the Victorian legislation involved one defendant, two plaintiffs, seven judges, nine “interveners” including the ATA and 26 barristers.

The case ran to 132,339 words across 398 pages with 951 paragraphs and 1,979 footnotes.