Farmers fear fallout from new road charging scheme

Farmers urge government to tread cautiously on road pricing reform over fears rural areas will suffer

Farmers fear fallout from new road charging scheme
Farmers fear fallout from new road charging scheme
By Brad Gardner | October 15, 2010

Government is being urged to tread cautiously on plans to overhaul road user charges, with farmers fearing rural communities will suffer from changes to the existing system.

The National Farmers Federation (NFF), the Cattle Council and the NSW Farmers Association have written to the National Transport Commission (NTC) outlining concerns over mass-distance-location charging (MDL).

Along with COAG, the NTC is investigating the feasibility of MDL, which tracks a truck via GPS and charges it based on weight, the distance travelled and the roads used.

NFF CEO Ben Fargher fears rural and local roads will be neglected under the scheme because governments will invest in routes that generate the greatest return.

He says governments must take into account service obligations to rural communities and consider road investment in the context of agriculture’s contribution to society and the economy.

"Without acknowledging such factors, there may be under-investment in the local roads of regional and remote Australia," Fargher writes.

With MDL pricing roads based on the cost to maintain them, the NSW Farmers Association is worried rural businesses will be hit with higher fees.

"A majority of rural roads in NSW consist of a low to medium capital cost structure and capacity. Therefore the marginal costs associated with these roads can be relatively high," the Association writes.

Fargher says companies might divert freight along different routes to avoid higher charges, affecting efficiency and productivity.

"Productivity may suffer if freight is channelled along roads that meet a ‘cheaper’ classification, despite the option of taking a quicker, more direct route," he says.

The Cattle Council is warning its members are not prepared to absorb price increases.

"Due to the nature of farm businesses as price takers in an industry highly exposed to the export market, there is little capacity for beef cattle producers to pass cost increases down the beef cattle industry supply chain."

The group says beef producers in northern Australian on average spent more than they earned in six of the last seven years.

"These producers are not in a position to absorb additional increases to one of the most significant costs of doing business," the Council says.

It might be the same case for rural trucking companies, with the Council claiming they face higher operating costs than their metropolitan counterparts.

According to the Council, rural operators must own and register different trailer configurations to handle bulk materials, spend more on maintenance and repair costs, and are limited in their ability to backload freight.

As well as calling for more modelling to be done on the social and economic impact of MDL, the NSW Farmers Association and the NFF says any scheme should reflect the low use of heavy vehicles by farmers.

While most farmers own trucks, the Fargher says the vehicles are only used on average for 5.4 months of the year.

Treasury Secretary Ken Henry, who supports MDL, recommends an alternative scheme for primary producers which use trucks intermittently.

"It may be better to establish a compliance regime based on self-assessment of distance travelled, licensed rather than actual mass, and a reasonable estimation of the types of roads travelled," he wrote in his review of Australia’s taxation system.

The NTC released a discussion paper earlier this year outlining five possible charging models to replace the current system of registration fees and fuel excise.

"The existing prices do not always accurately reflect the distance travelled, the mass transported or the type of road used by a heavy vehicle," the paper says.

The NTC will examine the feasibility of the five models, which are fuel-based; kilometre charging; distance and location charging; mass and distance; and mass-distance-location.

COAG is due to report its findings late next year on the viability of MDL.

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