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Rail lobby slams ‘bias towards road freight’

Rail lobby accuses policy makers of "bias towards road freight", raising the ire of the trucking industry

By Brad Gardner | October 13, 2010

The rail lobby has weighed into the debate on road user charges, accusing policy makers responsible for reforming the system of a “bias towards road freight”.

Australasian Railway Association CEO Bryan Nye has bemoaned the efforts of the National Transport Commission (NTC) and the road reform group of the Council of Australian Governments (COAG).

Both are examining a new charging scheme for the trucking industry, but Nye claims the reform agenda has been characterised by the “superficial treatment and dismissal of externalities”.

Despite COAG agreeing not to look at the external costs of heavy vehicles, Nye says any pricing reforms must include flow-on effects such as urban congestion, safety and road accidents.

“The ARA is extremely disappointed with the direction of the whole road reform agenda to date,” Nye writes in his response to the NTC discussion paper on alternative charging methods.

“It fails to address issues associated with externalities and issues related to the full cost recovery for road infrastructure. This will continue Australia’s bias towards road freight transport.”

Nye says road accidents cost an estimated $35 billion a year, while congestion is estimated to cost $15 billion annually.

According to Nye, rail is the safest, most environmentally friendly and cost effective mode of land transport.

“Yet without addressing the issue of externalities, there is no price signal to encourage the use of transport modes that will ensure a safe, sustainable, environmentally friendly and efficient transport system,” he says.

Nye’s comments have been criticised by the Australian Trucking Association (ATA), which says including externalities such as greenhouse gas emissions in road pricing will sting operators with two sets of charges.

“It advocates a system where the trucking industry would pay twice for externalities such as its greenhouse gas emissions – once through the road pricing system and then again through the cost of economy-wide approaches such as an emission trading scheme or carbon tax,” ATA Government Relations Manager Bill McKinley says.

“The ARA submission is nothing more than special pleading by the rail industry.”

McKinley says the ARA’s submission incorrectly assumes road and rail are competitors and that lumping new charges on the trucking industry will boost rail’s share of the freight task.

“In reality, road and rail freight complement each other. As a result, the main effect of ARA’s proposal would be to push up road freight costs, rather than transferring freight onto rail. That would be bad news for Australian consumers, businesses, and exporters,” he says.

Nye has also criticised the existing road charging scheme because he claims it fails to account for the damage trucks cause to infrastructure.

He claims the costs to maintain and upgrade bridges and roads are currently treated as common costs despite the fact trucks causes disproportionately more damage than cars.

“In effect, passenger vehicles subsidise commercial freight operators for the provision of roads,” Nye writes.

He says the costs associated with local and rural roads are mostly excluded, forcing local governments to subsidise road infrastructure for all users.

Nye wants a detailed feasibility study on mass-distance-location charging and has questioned claims made by the ATA that it will impose a hefty cost burden on business.

The ATA supports a fuel-based charging system so that heavy vehicles that travel further will pay higher fees.

But Nye claims a fuel excise is a poor proxy for determining road usage because trucks travelling on interstate routes with small levels of traffic will use less fuel compared to a vehicle operating on congested urban roads.

The Australian Conservation Foundation has also called for the inclusion of externalities. It wants charges to address health costs associated with air pollution and noise and the costs of land used for roads and parking.

The ACF wants charges to be considered in the context of oil dependency and climate change.

“Australia is at a critical crossroad: we face significant transport and social equity challenges due to rising levels of carbon pollution and depleting oil supplies,” it wrote to the NTC.

In its letter, the ACF calls for the road reform process to be broadened to cover external costs and for the money collected to be funnelled into rail.

Released earlier this year, the NTC discussion paper says the existing charging system built on fixed registration fees and fuel excise is inefficient.

“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.

“As a result, some heavy vehicle operators pay more than the costs that road agencies incur when their vehicles use the road network, while others pay less.”

The NTC will examine the feasibility of five alternative charging methods – fuel-based; kilometre charging; distance and location charging; mass and distance; and mass-distance-location.

The COAG sub-group is due to report its findings late next year on the viability of mass-distance-location pricing.

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