Charges: won the battle … but decisively losing the war!

At 4pm on Wednesday 21 March, the nation’s road and transport Ministers quietly came together to set the registration and fuel charges that industry will pay during the next financial year – 2012-13. (Well, it was mostly Ministers; bureaucrats had to stand in for two States).

The result? Even if we put on the very strongest rose-tinted glasses, it’s bitter-sweet news for the nation’s road transport industry.

We’ve had an outstanding win on an issue that’s been a burning concern for many of our members: the outrageous cost of A-Trailer registration.

Our two year campaign has been a success. Across the Eastern and Southern States, the charge on A-Trailers is about to come a long way down.

But, at that very moment, your business is going to see a huge hit on fuel and other charges.

While we’ve won on A-Trailers, Ministers have waved through a stunningly high set of fee increases.
I have no doubt that our members are going to be very disappointed by the large increases that Ministers have approved, in registration charges and, critically, for the fuel tax.

The official announcement of the Ministers’ decision is here. The figures they endorsed aren’t published in that announcement and haven’t been made public at the time that we go to press.

However, we’re pretty sure we have the final numbers, so here it is … the News that you, our members, need to know but will undoubtedly wish wasn’t true.

… a win on A-Trailers

First, the good news: we’ve had a great win on A-Trailers.

Ministers have agreed to cut the registration on A-Trailers almost by half.

In National Office, we believe the new national figure will be $3,300 per annum. That’s a very solid cut, down from around $6,525 today (State administrative surcharges and inspection fees will make the number in each State a little different).

The new fee of $3,300 doesn’t place A-Trailers at the same level as B-Trailers, but it cuts the current fee by just over 49%.

To the very best of my knowledge and memory, there has never been a cut to a national registration fee that’s been anything like this. It’s the biggest single cut to a registration fee since the current charging system was introduced. It’s a big thing for Ministers to deliver that, and we need to be very clear that we welcome this.

And, of course, that win on A-Trailers is going to flow on to B-Triples. It will result in B-Triples being much less disadvantaged when compared to the cost of registering a double road train.

But while this is a very welcome victory, that’s it. That’s the end of the good news.

Brace yourself for what comes next.

… a wipeout on other charges: fuel leaps by 2.4 cpl; rego soars by 11 to 21%

On 1 July 2012, the road use charge (the real rate of diesel tax) will leap from 23.1 cents per litre to 25.5 cpl.  That’s a jump of 2.4 cpl or 10.39% in a single year.

Put another way, in just four months from now, you will lose 2.4 cents per litre from your fuel tax credit.

And in rego:

  • the costs of registering a six axle semi-trailer combination will climb by 11%, to $6,394 per annum;
  • registration for a full double or triple road train will climb by 21%, to $13,857 and $16,607 respectively.

For B-Doubles and B-Triples, the cut to the A-Trailer charge will means that the total cost of registering these combinations will actually fall – but members running these kinds of vehicles will be hit by the same 2.4 cpl hike in diesel tax that now faces everyone else in the industry.

What you’ll pay in 2012-13 …

Diesel

  Fuel Tax % change from today Fuel Tax Credit % change from today
Road Use Charge

25.5 cpl

+10.39%

12.643 cpl

-15.95%

         

Registration

  Prime Mover

($)

Trailing equipment, all-up

($)

Total

($)

% change from today
6-axle semi

4,744

1,650

6,394

+11%

9-axle B-Double

9,457

4,950

14,407

-8%

12-axle B-Triple

9,457

8,250

17,707

-20%

Double Road Train

9,457

4,400

13,857

+21%

Triple Road Train

9,457

7,150

16,607

+21%

States rush for the extra revenue, and rebuff industry

Over the last three weeks, as the industry became aware that Ministers would be meeting on 21 March, and that the NTC was going to recommend such stunning increases, there has been a rush of lobbying from industry. Every association in the industry has expressed their opposition to the NTC’s recommendation, and most Ministers and their staff had multiple discussions with industry over the past fortnight.

Our Association was very actively involved in that process. Using our full network, we’ve raised our concerns with the States and, in Canberra, we were in Parliament so much that the cleaners started vacuuming around us.

It hasn’t mattered a jot. While we got an exceptionally good hearing in Canberra, the States weren’t interested. Budgets are tight, and they’re on the hunt for extra revenue. Simple as that.

This is a grab for cash

On my figures, the Ministers are increasing the total registration revenue and fuel tax that’s raised from the road transport industry, nationwide, by an extra $292 Million per annum.

Against current revenues, that’s an increase of approximately 11% in a single year.

It’s an outstanding result … for governments.

It will have far exceeded the expectations of any State Treasurer who read the consultation paper published by the NTC, just before Christmas, that suggested that the ‘Annual Adjustment’ for 2012-13 would be in the range of 5.4 and 6.7% (see Page 6).

This is not because of A-Trailers

Already, I’ve encountered the first (junior) official trying to soft-soap his way through the industry reaction by telling a member that this was ‘necessary in order to pay for A-Trailers’.

That is misleading, to put it politely.

There are, at the absolute most, say, 20,000 A-Trailers in the whole country. Delivering a cut of $3,300 to each of those trailers would mean that $66 Million dollars would have to be shunted off A-Trailers and put onto other vehicles.

What Ministers agreed to do is shift costs from A-Trailers onto other vehicles and trailers but then, on top of that, they’ve hit industry with that extra $292 Million per annum in charges.

If you run road trains, don’t for a minute be conned into thinking that the campaign for relief on A-Trailers is what’s led to you getting slugged with a 21% hit on rego and 10.4% on fuel.

Do the maths. The extra money that Ministers are taking from industry is four-and-a-half times what had to be shuffled around between different vehicles and trailers.

The rules have changed: large annual increases are now a possibility

Across the country, I doubt that there were more than a dozen operators who were expecting such a large increase to be approved by Ministers.

Ministers hadn’t announced ‘a Determination’. That’s the keyword that ordinary operators watch out for. That’s the phrase they know is likely to mean that governments are lining up to get their hook in.

Across the industry, most operators will have been expecting that they’d be seeing just another Annual Adjustment. Our members have lived with the Annual Adjustment for ten years now. While they aren’t easy to absorb in your business, Annual Adjustments usually produce less than 5% hit on rego and well under 1 cent per litre.

So let’s be very clear. What Ministers have signed out is a set of figures that vastly exceeds any increase that has ever previously been approved in a so-called ‘Annual Adjustment’.

And how have they done this?

Well, Ministers have effectively abandoned the established mathematical formula for calculating Annual Adjustments.

I say ‘effectively abandoned’ because what they’ve decided is that the formula is no longer a limit on what they can take from industry in any given year.

In the paper that was submitted to Ministers for their meeting this week, they were told that the ‘previously agreed Annual Adjustment formula’ would yield an increase to fuel and rego charges of 5.7%.

On my figures, that would have seen the Ministers pick up around $148 Million per annum in extra revenue.

But Ministers were also told that taking just 5.7% would also see $144 Million being ‘under-recovered’ from industry.

The NTC advised them to take the whole lot in one go; and the States leapt at the opportunity.

So, here are the new rules: there are no longer any government-mandated limits on what an Annual Adjustment may possibly produce as a change to the costs facing your business.

An end to business confidence?

In my view, it is unlikely that many of the State Ministers were given adequate advice on what seizing upon such a large increase in charges and fuel tax would do to industry confidence in the current charging scheme.

Here’s a prediction: confidence is going to plunge, and industry is going to demand a complete overhaul, not only of how this charging scheme operates but also a complete transformation  of how industry is consulted during these processes.

Ministers have already announced that they are likely to require the NTC to publish its model and its data when they next meet, on 18 May.

I suspect that those minor changes to the process are no longer going to be enough.

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