Sims trains spotlight on freight regulation reform

By: Rob McKay

ACCC backs independent setting of heavy vehicle charges if changes are agreed

Sims trains spotlight on freight regulation reform
Rod Sims


Australian Competition and Consumer Commission (ACCC) chair Rod Sims has skewered the glacial pace of Australian transport reform in a speech to the Australasian Transport Research Forum (ATRF).

Sims kicked off with pointed comments on road funding reform, including charging for heavy vehicles, before moving on to shipping and ports issues while touching on mergers in the transport and logistics space.

Sims views road funding as low-hanging reform fruit that would unlock "billions of dollars of benefits to Australians" if chronic political neglect could be overcome.

"On one hand, it is disappointing that I am still talking about this some decades after the reform journey started, and after reform in other similar sectors has delivered huge benefits," Sims says.

"Having said that, it means that the roads sector still offers a significant opportunity."

The continuing funding problems he identifies include:

  • state road agencies manage assets with long lives, yet have to wait for budget night each year to find out how much funding they will get for the next year
  • revenues collected from road users are not linked to the funding that road agencies receive. Instead, these revenues go into consolidated revenue
  • many road users do not even know that they are already paying for using the roads. This makes it impossible to build the case for change
  • the amount each road user pays has only a weak link to how they specifically use road services. And because payments are made through fuel excise, these revenues are beginning to drop off as vehicles become more fuel efficient and disappear altogether if the car is electric
  • too often the allocation of road spending reflects political imperatives rather than the needs of road users.

Though relatively minor in the greater economic scheme of things, one area could be in line for imminent reform movement is heavy vehicle charging, where changes will include hypothecation – the direct transfer of charges to road infrastructure uses.

"Heavy vehicle operators will know that any payments they make will return to them in the form of better roads. This is vital for ensuring confidence in the reforms," Sims says.

"Another element is that heavy vehicle charges are to be set on an independent basis. It has been suggested that the ACCC takes this role.

"Having an independent agency determine charges can promote confidence in the scheme. Industry will know the charges reflect underlying spending on roads, avoiding the common criticism that the charges reflect a ‘tax grab’.

"Also, part of the proposal is to introduce a form of external scrutiny over where road agencies spend their dollars.

"Any spending on projects judged not to meet national road standards will not be recoverable through heavy vehicle charges.

"I hope that these reforms will be adopted.

"Granted, they represent small steps on the reform journey, particularly as they only relate to heavy vehicles.

"Even then, they don’t extend to replacing today’s fuel-consumption-based charges with more sophisticated charging models that vary by a truck’s mass, distance and location.

"But change in the right direction is extremely welcome. And these proposals lay the essential foundations for further reform."

Read about the ACCC’s appeal on the Acacia Ridge ruling, here

Sims is keen on transport hub regulation, nominating Qube’s Sydney Intermodal Terminal Alliance (Simta)-owned Moorebank Intermodal Terminal, ports in New South Wales and airports as subject most worthy of attention.

At Moorebank, Simta’s "ability and incentive to charge monopoly prices, or frustrate access to Qube’s competitors" is of great concern for the ACCC.

It wants open access via an access undertaking and understands Qube is open to the idea.

Elsewhere, it is appealing a Federal Court decision on ownership of the Acacia Ridge intermodal hub, the reasoning in which it regards as naïve and likely to be monopoly-entrenching.

On airports in general, the commission sees there operation as existing beyond regulation presently, having been removed when they were effectively made privatised monopolies.

Interestingly, the ACCC is looking to the "very light-handed and flexible solution" of "independent arbitration over airport charges if commercial negotiations between the two parties break down".  

The Port of Newcastle exists simultaneously on either side of ACCC views and action.

The competition watchdog has taken up legal cudgels against the NSW government’s financial cap on container numbers Newcastle can handle, with Simms emphasising: "We are taking legal action to remove this barrier to competition in an important market: the supply of port services.

"This has significant implications for the cost of goods across the national economy, not just in New South Wales.

"The impact of any lessening of competition is ultimately borne by consumers."

But it the port is also in ACCC sights as a non-vertically integrated monopoly operator that is also effectively unregulated in the way it charges customers.

This is due to the focus on vertically integrated monopolies under Part IIIA of the Competition and Consumer Act.

"The broader risk now is that other non‑vertically-integrated monopolists will no longer consider declaration as any credible threat. Further, currently regulated monopolies, such as rail tracks, will seek to have their regulation removed. As a society, is this what we want?" Sims asks

"If the Port of Newcastle and others like it cannot be captured by the current test, then the regulatory framework must be changed."

Though he has spoken on the subject, Sims did not address unilateral stevedore infrastructure access charging in the speech, the full transcript of which can be found here.

An ACCC spokesperson advises the issue will be revisited in the watchdog’s annual stevedoring report, due in late October or early November.


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