Charges: it’s not too late for Ministers to re-think the price-hike on road trains and the fuel tax

In our Newsletter of 29 March, I gave a commitment to our members that your National Council would do everything in its power to take the bite out of the recent national decision on charges.

Since then, your National Councillors and other senior members of each of our State Associations have put in a really great effort, seeking to convince governments to modify their recent decision. Some of our senior members have met or spoken with a Minister, an MP, a political adviser or a senior bureaucrat as many as seven times in the past four weeks.

We’ve given special attention to the road train States that, so far, have not agreed to move away from the planned 21% increase in registration for road trains–Queensland, NSW and South Australia.

Our Queensland Association arranged to meet with the new State Minister, the Hon Scott Emerson, very quickly after he was sworn in.

In fact, when Minister Emerson greeted our delegation, he told us that this was his first-ever official meeting. Our delegation told him that we were sorry that his first-ever meeting had to involve us asking for help to solve his first-ever official national dispute.

Our thanks go to Liz Schmidt for so quickly getting ‘back to work’ after re-joining National Council, and to Ross Fraser for helping to explain how much this issue will hurt the bush.

In NSW, the LBCA is putting in an extraordinary performance, led with truly incredible energy and passion by State President Barney Hayes.

And in South Australia, former National President David Smith and current State President Brian McArdle have done tremendous work.

South Australia’s Minister, the Hon Pat Conlon has now publicly called for the charging decision to be further discussed by all the Ministers.

And that’s an incredibly important announcement. It means that all the Ministers will have a chance to reconsider. 

While it’s great that some Ministers have already realised that the national rego charge on road trains is excessive, simply changing the rego charges within each State is a second-best solution.

By voting ‘yes’ to the NTC’s proposals (even if they then don’t fully implement the NTC’s recommendations), the Ministers from every State – including WA – have voted for a 10.39% increase in the diesel tax. Since 1990-91, every Commonwealth Government has always implemented the rate of diesel tax that is approved by the majority of all Ministers, across the country.

Minister Conlon has committed to ensuring that Ministers will have the chance to reconsider.

We hope they’ll take it.

John Beer

MEDIA RELEASE

(The following material is drawn from a media release issued by President Beer:)

FOI reveals rural transport industry will be over-charged

WA and NT governments’ veto of national plan vindicated

Commonwealth and other States must re-consider

Previously secret figures held by the federal government reveal that the Commonwealth and State governments are planning to overcharge the rural transport industry by as much as 65% from 1 July 2012, the Australian Livestock and Rural Transporters Association has discovered.

In an intensely controversial decision, on 21 March, the Commonwealth and the majority of State governments formally agreed to increase registration charges for road trains by 21%, and to increase the rate of federal diesel tax by 10.39%, from 1 July this year.

“Since governments announced their plan to impose a price-hike on the bush, rural transporters have been in uproar,” said John Beer, National President of the ALRTA.

Freedom of Information laws have now been used to force the National Transport Commission to release its pricing model.

“These previously secret figures show the bush is going to be savagely over-charged” said John.

State and Federal Governments, combined, can expect to earn $34,858 per annum from each ‘Double Road Train’ in Australia, but the direct impact of these vehicles onto the road network is only $21,097. Even allowing for a contribution to all the overheads of the State road networks, the true ‘cost to government’ rises to just $24,894. Double Road Trains are used throughout Western NSW, South Australia, and many parts of Queensland.

For ‘Triple Road Trains’, which are essential to farming, mining and regional communities throughout Queensland, South Australia and the Top End, governments can expect to earn $53,984 per vehicle, but they need to earn only a minimum of $40,982 and, at most, $46,734.

“The so-called national charging system is meant to be a cost-recovery system,” John commented. “These secret government figures show that the planned charges on road trains will go far beyond what’s reasonable.”

“These figures show that governments are about to impose unnecessarily high transport costs on farmers, miners and regional communities. My members, in every State, are outraged.”

“Already, we’ve seen the Western Australian and Northern Territory governments walk away from the decision, saying that they can’t justify the price-hike on road trains. I congratulate Minister Buswell and Minister McCarthy for standing up to defend rural Australia”

“The Queensland election was underway when this decision was taken. Our industry urges the new State Government to join WA and the Territory to protect rural Australia.”

The South Australian Minister, Pat Conlon has already announced that he wants another national meeting of governments to re-examine their recent decision.”

“I congratulate Minister Conlon for that, and I call on the NSW Minister, Duncan Gay, to join him in seeking a reconsideration of the recent decision.”

“If Minister Conlon cannot win agreement from the Commonwealth and Southern and Eastern States, we hope he will join WA and the Territory to veto the increase on road trains.”

Governments’   planned over-charging of road trains

 

Revenue   required from vehicle type:

Forecast   revenue per vehicle

Over-recovery   …

 

Attributable cost per vehicle

Allocated cost per vehicle

 

… against attributable cost per   vehicle

… against allocated cost  per   vehicle

Double Road Train (Prime mover and two trailers)

$21,097

$24,894

$34,858

$13,761

(65%)

$9,964

(40%)

Triple Road Train(Prime mover and three trailers)

$40,982

$46,734

$53,984

$13,001

(32%)

$7,249

(16%)

Source: National Transport Commission, “Model Option 3B”, published following FOI.
(All $ figures are taken direct from Model 3B. Percentages have been added by ALRTA.)

Note: All revenue entries are a combination of State-based registration and federal diesel tax receipts which, together, comprise the national heavy vehicle charging system

 

Background material

What are attributable and allocated costs?

Allocated expenditure: “This is the allocable expenditure distributed across the various classes or groups [of heavy vehicles].” [ie, the direct impact of heavy vehicles onto the roads, plus a contribution to keeping the road system going (ALRTA)]

Attributable expenditure: “This is the expenditure related to the provision and maintenance of roads and which varies depending on the use of the road system by different types of vehicles. It is equivalent to the long run marginal cost and therefore includes capital as well as operational costs. These costs are directly attributable to vehicle types.” [i.e., just the impact of driving on the road system, with no contribution to managing the system]

Source: National Transport Commission, 2007 Heavy Vehicle Charges Determination Regulatory Impact Statement Volume 1, ‘Box B1: Definition of key terms’, p5

(Emphasis and notes added by ALRTA)

ALRTA’s proposals

In various meetings around the country, our National Councillors have asked each Minister to support the following proposals:

  1. Commit to reducing the impact on road train operators;
  2. Defer implementation of any charge increase by six months,
  • That will provide time for Ministers jointly to re-consider the national decision and/or deliver improvements on a State-by-State basis; and

3. Ask the national council of Ministers to re-consider the recent national decision.

  • ALRTA’s national policy position acknowledges that government needs money to keep the road system going. That’s why we’ve said we could respect and tolerate an increase in total charges to industry of up to 5.7% (which also doesn’t have to be a straight 5.7% across each vehicle). That would still be very tough to bear, but it’s a reasonable compromise between the needs of government and keeping industry alive.
  • On 21 March, Ministers accepted advice from the NTC, stating that current charges and fuel tax are ‘under-recovering’ by $144M per annum. The NTC didn’t disclose this problem to industry in the consultation paper issued in December 2011, and the NTC appears to have allowed this ‘under-recovery’ to accumulate since 2009 or even earlier.
  • Industry wasn’t told about this problem, and it’s not industry’s fault that this was allowed to happen. It would be fairer to industry to ‘wind-back’ this under-recovery over a period of, say, three years. That would be much fairer than the current plan, which will deliver the largest single increase to road train rego and to the diesel tax that’s ever been imposed.

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