ATA incensed by decision to increase rates higher than inflation
Australia’s infrastructure and transport ministers propose heavy vehicle charges increase by 2.5 per cent in 2021-22.
The Transport and Infrastructure Council’s (TIC’s) latest communique notes that, having considered the latest estimates from the National Transport Commission (NTC), “following recent growth in government investment in roads, there was a growing gap between road expenditure and revenue from charges”.
“National heavy vehicle charges are designed to recover the heavy vehicle share of road expenditure,” it reads.
“Having considered the submissions of industry representatives, Ministers agreed charges should rise by 2.5 per cent in 2021-22, to contribute to the construction and maintenance of roads.”
Western Australia and Northern Territory will separately consider their heavy vehicle registration fees for 2021-22.
As part of the response to Covid-19 in 2020, an increase was deferred “to ensure road transport operators could continue the vital task of getting freight delivered all over Australia despite the pandemic”, the TIC notes.
“Ministers noted the charge increase for 2021-22 would be significantly less than the amount of 13.4 per cent estimated by the NTC as necessary to recover the heavy vehicle share of recent road construction and maintenance costs.
“These are set independently of national decisions taken by Ministers.”
The 2.5 per cent figure has caused some ruptures within industry.
While initially accepted by the Australian Livestock and Rural Transporters Association (ALRTA), the Australian Trucking Association (ATA) rejects TIC’s approach to increase charges by more than the rate of inflation.
In a strongly worded response, ATA says Australia’s truck charging system is “broken and must be fixed”.
Read ATA’s original submission on truck charges, here
“Treasury’s inflation forecast for 2021-22 is 1.5 per cent, but governments have decided to increase the charges paid by Australia’s hard working trucking businesses by 2.5 per cent,” ATA CEO Andrew McKellar says.
“The decision will increase the registration charge for a workhorse prime mover and semitrailer by $144 a year, and the effective rate of fuel tax by 0.6 cents per litre.
“This increase is more than many trucking businesses can afford.
“In a recent survey we ran, more than a third of the trucking businesses that participated told us their business activity was still down compared to immediately before the bushfires and the start of the pandemic.
“Trucking businesses also have great difficulty passing charge increases on to their customers.
“Only 13 per cent of the businesses in the survey said they were able to pass on both registration and fuel price changes.
“Small businesses had the greatest difficulty passing on charge increases, but even larger businesses found it difficult to pass on cost increases more than the inflation rate.
McKellar says the decision could have been much worse, given the NTC’s charging model, PAYGO [pay as you go], recommending a 13.4 per cent increase.
“The PAYGO output highlights the serious and growing problems with model.
“Under the model, charges are driven entirely by governments’ spending plans, even if those priorities are inconsistent with the industry’s requirements or ability to pay.
“Charges can increase sharply from year to year, which makes it very difficult for businesses to make decisions about their own prices, particularly when they sign multi-year contracts.
“The model is broken and must be fixed.”
McKellar says governments need to implement measures to improve the cashflow of trucking businesses.
“We need restrictions on payment times longer than 30 days, the extension of price regulation to truck tolls and port access charges and changes to allow businesses to pay truck registration charges by monthly direct debit,” he adds.
Meanwhile, similar to the ALRTA, the Victorian Transport Association (VTA) has taken a more conciliatory tone.
It has welcomed what it calls ‘restraint’ shown by TIC in its charge update.
“We commend transport ministers for taking into consideration the submissions from the VTA and other state-based transport bodies to cap increases in the Road User Charge to 2.5%, which is consistent with the recommendation we put to them prior to COVID taking hold last year,” VTA CEO Peter Anderson says.
“The TIC also deferred any increase in the RUC during the current 2020-21 financial year in recognition of the financial hardship experienced by many transport operators, which has assisted them during what we hope was the worst of the downturn.
“It is important that operators adjust their cost index so that the increase flows through the supply chain and is ultimately worn by consumers.”