Opinion: impractical pump impost is a wrong turn

By: Warren Clark


The fuel tax hike will have a severe impact on road transport

Opinion: impractical pump impost is a wrong turn
Warren Clark

 

With the rise of fuel-efficient and electrified trucks, fuel tax is seen by the government as an unsustainable way to pay for Australia’s infrastructure and road transport system.

This puts in focus a Road User Charges (RUC) system that would impose charges on vehicles based on the kilometres travelled and weight of freight moved.

A major factor driving interest in an RUC system is the concern that, with the expected rise of more fuel efficient vehicles, governments will be unable to obtain adequate revenues to support our infrastructure and transportation maintenance costs.

In 2017-2018, the Commonwealth government agreed to freeze the RUC for the road transport industry. In doing so, the Commonwealth government acknowledged that the road transport industry had been overcharged for years.

However, the recent Transport and Infrastructure Council (TIC) meeting again put the spotlight on an RUC system as a means to reduce the growing gap between road expenditure and revenue from charges.

The Commonwealth government proposed to increase the RUC by a total of 11.4 per cent over the next three years but transport ministers from around the country rejected the proposal.

RUC IMPACT ON ROAD TRANSPORT

Any commercial heavy vehicle weighing more than 4.5tonnes pays the RUC as well as state heavy vehicle registration charges.

These charges are used to fund road construction and maintenance and the federal transport minister can vary the rate and collects the diesel component of the charge which currently is at 25.8 cents per litre of diesel. The charge applies to each litre of diesel used by heavy vehicles on public roads.

However, in light of the existing pressures and challenges faced by road transport businesses, TIC identified a preference for charges to rise by2.5 per cent in 2020-2021 and by a further 2.5 percent in 2021-2022 subject to consideration by governments when necessary. That money goes to the Commonwealth by way of an offset to fuel tax credits and the equivalent 2.5 per cent increase in registration charges goes to the states and territories.

NatRoad believes these government increases are unwarranted in the light of other cost pressures that transport businesses face, including from other government imposts. 


Read Warren Clark’s commentary on workplace relations, here


Businesses are operating on thin margins and these additional costs are difficult if not impossible to pass on to customers in the current, increasingly competitive environment.

Additionally, increasing toll road charges, landside port charges and state-based stamp duty on heavy vehicle purchases are adding to their cost burden.

Large areas of Australia battling drought conditions and bushfire-affected regions are reliant on cost-effective road freight transport. A hike in trucking taxes could result in an increase in the cost of groceries and other goods, affecting these communities.

WAY FORWARD

A BITRE report published earlier this year outlines the beginning of the growth of electric vehicle sales and predicts new electric vehicles will make up eight percent of new Australian car sales by 2025 and 27 percent by 2030.

Even though the pool of electric vehicles is in the early stages, now is the time to focus on road user charging for electric vehicles. As the number of electric vehicles increases, the tax burden for road use will continue to shift to users driving petrol vehicles as well as heavy vehicle operators.

Our roads are critical to our economy and underfunding the road network will hinder the industry’s ability to move freight to markets across Australia. It is high time the government prioritises reforms on how roads are funded.

NatRoad will renew its efforts to engage with politicians and bureaucrats about assisting to control cost pressures on industry rather than adding to them through processes similar to levying taxation.

Warren Clark is CEO of NatRoad

 

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