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COAG Road Reform Plan

21 June 2011

The ATA has been heavily involved in public policy on charges and has had major successes including securing fuel excise rebate and the policy of the industry paying its fair share of road costs. In the PayGo system the freight industry pays its fair share, and while this is not perfect, it is not broken beyond repair.

The PayGo system recovers the marginal cost of maintenance and a portion of funding of capital investments that reflect heavy vehicle use. However, there is a problem in calculating the charge to recover those costs. We believe that the National Transport Commission (NTC) is not autonomous enough to act independently of the states in terms of changing the fixed registration charges that go directly to the states; and are not committed to increase the variable fuel proportion of charges (which the ATA is suggesting). The current system’s heavy reliance on registration (fixed) charges overcharges some operators depending on the type of vehicle. “A” trailers are of particular concern, as these safer combinations are disadvantaged for being fuel efficient.

The ATA concurs with what the COAG Road Reform Plan (CRRP) is setting out to do in principle, that is, improve the efficiency of the road freight system. The trucking industry is currently paying more than its fair share of the burden of road costs. However, the ATA does not accept the current recommendations from the CRRP.

The CRRP report suggests that a change is needed to address the efficiency problem. Its main goal is to improve road provision and to promote funding reform. A direct link between revenue generated from heavy vehicles and road provision, including maintenance, is sought by CRRP.

The ATA proposed in some detail a fuel-based model for reform of charging and revenue distribution with incentive based freight road provision. The CRRP report does not mention this proposal, instead it focuses on four other options; a combination of the mass-distance and location models. These models seem favoured without sound justification but are the least feasible and most complicated methods.

The ATA suggests that further road pricing reform offers little relative to large economic benefits from significant reform in the road supply arena. This submission makes comment on CRRP proposals to reform road charge into prices and promote minor manipulation of road supply. The ATA submission calls for additional reform in the road supply arena to be completed prior to advancing any proposals to modify substantially the PayGo cost recovery heavy vehicle charging model. While the PayGo system includes some averaging, we feel that a total removal of the principles of PayGo is a step backwards from an efficient road reform policy in terms of productivity, accountability and sustainability.

The ATA believes that the best outcome for the Australian community is that the road transport industry should pay its fair share of its impact on the roads but no more. The projected doubling in freight demand in 20 years should be given greater gravitas to the issue of road supply reform than it appears to be given in the published report.

Specifically, there cannot be inappropriate policies that discriminatively impose costs of on road freight transport. The road freight industry is hypercompetitive and operates with very low profit margins. Caution needs to be exercised to ensure additional financial pressures are not imposed on the industry, as this would have detrimental effects on the whole economy. Road freight transport supports the Australian economy and lifestyle.