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Charges overhaul puts focus on fuel charging

Planned changes to heavy vehicle charges includes proposal to drastically increase the fuel excise to drive down registration fees

By Brad Gardner | November 26, 2013

The planned shake-up of heavy vehicle charges could include a drastic increase in the fuel excise to give trucking operators a reprieve from high registration fees.

The National Transport Commission (NTC) has released a list of four proposals for a new-look charging system to apply from July 1 next year.

Among the proposals contained in a regulatory impact statement (RIS) and released for public feedback is one to lift the excise to 32 cents per litre in return for governments slashing registration fees.

Under this approach, governments will raise 79.2 per cent of revenue from fuel and 20.8 per cent from registration fees.

The proposal, if introduced, means the price of registering a nine-axle B-double will plummet from $13,537 to $7,600, while the cost of a semi-trailer will drop from $6,554 to $3,242.

Furthermore, double road-train operators will pay $7,706 to register each rig – almost 50 per cent less than the current $14,203 price tag. The cost of registering a triple road-train will fall from $17,022 to $8,703.

The existing charging framework draws 62.1 per cent of revenue from fuel, with 37.9 per cent coming from registration fees. The fuel excise is currently 26.1 cents per litre.

The list of proposals stem from a review to identify ways to improve how charges are determined.

“One of the key recommendations was to explore ways to raise the road user charge above its current level to allow for a reduction in the registration charge,” NTC CEO Paul Retter says

“Industry feedback suggests that this may reduce an operator’s fixed costs and address problems currently being experienced by low mileage operators.”

The NTC also proposes a 71.7/28.3 revenue split that will reduce the price of registering a B-double to $10,223. The registration bill for a double road-train will be $10,350 under this method, with a triple road-train costing $11,705.

Another option involves retaining the status quo with the inclusion of updated expenditure and vehicle usage data.

The final proposal centres on making technical improvements to the charging formula while retaining the existing excise/registration funding split.

The technical improvements, which are part of the options to raise the fuel excise, include axle group charging for trailers, using updated data and improving the accuracy and transparency of heavy vehicle related expenditure reporting.

The NTC believes group axle charging should apply to trailers to recognise that operators may use them in different configurations.

“The current charges system allocates costs and sets charges based on vehicle configuration. While this approach works for the rigid fleet, it creates unintended distortions for articulated vehicles and trailers given their modular nature; that is, trailers and prime movers can be configured in a number of ways to form different combinations,” the RIS says.

“Sections of industry argued that operators who used A-trailers outside of the B-double configuration were being unfairly penalised; in addition, the relatively high A-trailer charge was dis-incentivising the use of safer and more productive vehicles.”

However, the NTC concedes switching to a formula that takes more revenue from fuel may take some time.

It says proposals to alter the funding split will require an inter-governmental agreement to re-distribute the additional revenue raised through the road user charge to the states and territories.

“In terms of implementation pathways, the time that would be required to negotiate and implement a revenue-redistribution agreement suggests that a phased implementation path may be appropriate,” the RIS states.

It has suggested a two-phase approach that would give the industry the status quo proposal from July 1 next year and then one of the fuel-based models from July 1, 2015.

The trucking industry has been given until January 17 to respond to the NTC’s recommendations.

The options for the new charging scheme are:
Updated status quo: uses the current charges methodology with updated road expenditure and vehicle usage data. In addition, this option would use the most recent vehicle numbers from state/territory road agency registration databases to estimate registration revenue, rather than the current method of relying on survey data collected every two years.

Option A: would incorporate the range of technical improvements to the current system resulting from the review, and maintain the current split in revenue between the road user charge (RUC) and registration charges (62.1 per cent raised through RUC, 37.9 per cent raised through registration charges.

Options B and C: include the same technical improvements as Option A, but recover a higher proportion of revenue through RUC than is currently the case. Option B represents a moderate shift (71.7 per cent raised through RUC, 28.3 per cent raised through registration charges) whereas Option C represents the most significant shift (79.2 per cent raised through RUC, 20.8 per cent raised through registration charges).

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