Few industry bouquets for Commission of Audit

Report slammed for lack of consistency with other priorities and ignorance of likely impacts

Few industry bouquets for Commission of Audit
The ATA’s Bill McKinley questions red tape and cost


The trucking industry’s peak body has questioned the strength of the Commission of Audit’s grasp of Federal Government policy and logic on policy development structure following the release of its Towards Responsible Government report.

While arguing that the National Transport Commission (NTC) was necessary as a stand-alone policy formulation, the Australian Trucking Association (ATA) took up the cudgels again against mass-distance-location pricing.

"The trucking industry rejects the National Commission of Audit recommendation to introduce mass-distance-location pricing, because it would increase red tape and the compliance costs faced by trucking operators," National Government Relations Manager Bill McKinley says.

"This would be utterly inconsistent with the Australian Government’s commitment to reducing red tape and the regulatory burden on small businesses.

"The recommendation would also increase the cost of transporting freight in rural and regional areas, because roads in these areas are built to a lighter standard than major highways.

"To meet the cost of road wear, charges for local roads in rural areas would need to be 25 times higher than the charges for freeways.

"The Government would need to put in place an elaborate system of on-budget community service obligation payments, which would make the whole exercise pointless.

"The trucking industry is already overcharged for its use of the roads. If the Government wants to get started on improving road charging, it should implement the NTC recommendation that the industry’s fuel tax credits should increase 1.04 cents per litre from 1 July.

"The Commission of Audit has recommended that the national land transport regulatory reforms should be fully and consistently implemented as soon as practicable. At the same time, the Commission has recommended that the Government should review the NTC with a view to abolishing it, merging it or transferring its functions somewhere else.

"You can’t have a regulatory reform program without a body to develop the necessary policies. The Commission has let its enthusiasm for cutting away at government to get in the way of its support for economic reform. That’s why the ATA supports retaining the National Transport Commission."

The rail industry peak body took the opposite view, calling on the Council of Australian Governments (COAG) to commit to the structural reforms when it meets in Canberra today.

Australasian Rail Association (ARA) Chief Executive Bryan Nye says the reforms should be applied only to national highways and major State-owned arterial roads and vehicles over 4.5 tonnes, discounting light vehicles.

"We are in support of the National Commission of Audit Report recommendation to expand road user charges for heavy vehicles in the form of mass-distance-location charging reforms, however whilst there is clearly a case for heavy vehicles in terms of the direct commercial benefit they gain from roads, the reforms should not be a precedent for light vehicles," Nye says.

"This model ensures that heavy vehicles are charged for the true impact they place on the road network, this is the standard model of regulated utility pricing, the same model that is currently applied to the industries of rail, water, gas and electricity.

"These reforms, if implemented in a timely and appropriate manner, would assist in reducing congestion, improving the efficiency of the freight supply chain, drive productivity growth and give State Governments greater control over funding which would be based on future infrastructure requirements needed by industry to improve productivity."

Nye also supported the Commission’s recommendation for the Federal Government’s support of national interstate projects, such as the Inland Rail, and to invest in state infrastructure projects after a rigorous and transparent cost benefit analysis that indicates substantial net benefits to the community.

"We agree that all road and rail state based projects should undergo a rigorous cost benefit analysis, so that where appropriate the Commonwealth government can step in and assist the State’s with funding for their much needed infrastructure projects," Nye says.

"The ARA agrees that State and Local Governments are best placed to identify their infrastructure requirements and also welcomes the acknowledgment that States and Local Governments will, at times, require Commonwealth assistance in funding.

"The Audit recognises that State and Local Governments do not have the budgets to support all required infrastructure investment. The recommendation that the Commonwealth Government only invests in infrastructure projects that provide the most benefit to the community are supported rather than the Commonwealth picking favourites.

"Hopefully this will lend a much needed helping hand for rail which is proven to provide broad economic, environmental and social benefits beyond commercial returns."

Meanwhile, the NTC is preparing for a review that had been mandated by the Act that set it up.

"Under the NTC Act, the NTC is subject to regular, periodic reviews by the Commonwealth and State/Territory Governments to ensure the Commission continues to deliver the surface transport reform outcomes required by Australian governments in an efficient and effective manner," NTC CEO Paul Retter tells ATN.

"The next review is likely to commence in 2015."

The relevant section of the National Transport Commission Act 2003 states:

51 Review of operation of Act and Agreement

 (1) The Australian Transport Council must:

 (a) no later than the sixth anniversary of the commencement of this Act; and

 (b) no later than the end of each succeeding period of 6 years after that anniversary; review the operation of this Act and the Agreement, and on each occasion give a written report of the review to the Prime Minister, the Premier of each State, the Chief Minister for the Australian Capital Territory and the Chief Minister of the Northern Territory.

 (2) The report of each review must include:

 (a) a recommendation as to whether the National Transport Commission should continue; and

 (b) a recommendation as to whether this Act should be repealed or amended; and

 (c) the reasons for the recommendations

On the shipping side, the Australian Shipowners Association (ASA) was horrified, labelling the recommendation on coastal shipping "shockingly simplistic, one dimensional and reckless".

Recommendation 4 of phase 2 of the report recommends that Australia’s cabotage policy be abolished.

"It is unclear how the National Audit Commission came to this conclusion as there seems to be absolutely no analysis of the impact of this proposal," Acting Executive Director Angela Gillham says.

Cabotage is the global practice whereby domestic ships are given preference over foreign ships to carry domestic cargo, the peak body points out.

Where a local ship is not available to engage in coastal trade, a foreign ship undertakes the work.

Australia has had a system of cabotage since the beginning of maritime regulation in this country.

"Cabotage regimes are not unusual − many countries recognise that having a domestic shipping industry helps to ensure stability in shipping services and price and provides an important source of the strategic skills necessary for a country to be able to participate in international trade," Gillham says.

"Australia, as a large exporter and island nation relies heavily on the strategic maritime skills developed by our local shipping industry, such as maritime safety inspectors, port pilots, harbour masters and tug operators to name a few.

"The report is completely devoid of any consideration of the strategic impacts of what is recommended and ignores any national benefit of having a local shipping industry, which is most disappointing."

In a separate process, the existing coastal shipping regime is being reviewed by the Government.

"The Australian shipping industry is fully engaged in the policy discussion on improving coastal shipping regulation and we are confident that the government has the capacity to understand the big picture of which coastal trade is only one part," Gillham says.

"We need to move beyond the overly simplistic, one dimensional and reckless attitude towards coastal shipping and work toward improving the policy settings to achieve a vibrant, sustainable and competitive Australian shipping industry for the long term benefit of the nation."

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