CILTA responds to NTC charges consultation report

CILTA Chair Dr Kim Hassall gives his view on the current road user charges consultation report debate

The National Transport Commission’s (NTC) consultation paper focusses on a three year recovery period for costs attributable to trucking operations. This is a big step away from the moving average seven year cost recovery period. This is a very dangerous precedent if in the future every three years became the focus for cost recovery.

Why? Because road expenditure is lumpy and when Australia faces its next major recession and road funding dwindles it is very likely that a three year recovery model could see negative registration and negative road user charge increments such as decreases.

As an old purchasing manager once said to me, “the only thing that comes down is the rain”. Could state treasurers handle a dip in revenue? Most unlikely. We need an assurance from the NTC that the seven year moving average will be reinstated after this proposed three year rego and road user charge (RUC) hike.

It was always intended that registrations charges should be capped at CPI. In a twist of fate, inflation over the next three years may remain at six per cent although Australian governments are playing this high inflation, low GDP, (stagflation) scenario down. Other countries are seriously considering this possibility too.

Floods, cyclones and earthquakes

Should trucks pay more when floods, cyclones and destructive weather events happen? What is the destructive weather rehabilitation cost and why should trucks pay a higher than long term attributable cost because of destructive weather events? Is weather induced rehabilitation attributable to trucks? No!

RELATED ARTICLE: Industry responds to heavy vehicle charge proposals

Is the hire and reward industry being subsidised?

The universal averaging of some major inputs is a problem and always has been in the PAYGO model. There is a ‘Hire and Reward’ versus ‘Ancillary’ trucking operator inequity. Because of many key inputs to the charging model being averaged, this means that the ‘not for hire’, the ancillary trucking sector, which does far less kilometres and Gross Tonne kilometres, is actually subsidising the contract ‘for hire’ road transport sector that does transport for money.

This cross subsidy occurring since the first 1995 NRTC pricing determination has never been calculated. Some associations cry out for a far more equitable PAYGO model. As these associations generally represent the ‘contract ‘hire and reward’ sector of the industry, do be careful what you wish for, as you may be paying more! The NTC discussion paper and even previous papers never discuss this significant pricing inequity.

As a test case, a sensitivity scenario ought be run on the ancillary sector regarding the new six per cent proposed increases on the very large Australian farming community that use their own trucks. Farming registration discounts are often available but the three year increase in the RUC for an Australian farmer may have a bit of a sting in the tail, as they cannot pass the RUC increases onto their customers directly.

Now out of left field

I’m looking at cyclists in the common cost attribution formula. This may seem trivial, but in major cities hundreds of millions of dollars of existing road lane assets have been turned into bicycle paths. The cyclists pay nothing directly for this asset. However, when calculating the common cost attribution of traffic lights, kerb and guttering, street lights and pedestrian crossings, a notional attributable dollar amount should be levied against cyclists. This would shrink the common cost pool for the motorised vehicles somewhat and be a little more equitable for the motorised users.

A rebate versus a subsidy

Several authors and transport spokes persons have pilloried the Diesel Fuel Credits scheme as a subsidy. It is in fact a rebate that was established to balance the massive overcharging trucks bore in the run up the formal establishment of the registration and RUC model in 2000 when the GST was also implemented.

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