A-Trailers: why isn’t industry asking for fuel-based charging?

Last week I had some surprising conversations with officials from various parts of the country, all of whom are thinking about the A-Trailer problem.

And they all had the same question: ‘all we hear from industry is that you want ‘fuel-based charging’ to be the way you are charged in the future, so how come we aren’t hearing industry argue for that as the solution to A-Trailers?’

My reply (and I was playing for time!) was that perhaps no-one in industry had really imagined that fuel would be an option just yet.

‘You might want to be more ambitious’ was the message I was given in response.

Based on the conviction shown by all Ministers at the recent meeting of the Standing Council on Transport and Infrastructure, it seems some officials are no longer ruling anything in or out.

… don’t we want to get rid of cross-subsidies?

For years now, many people in industry have realised that a problem with the current system is that it charges the same registration fee to (almost) every operator, regardless of what kind of mileage you actually get.

Every small operator, city or rural, has realised that this means their rego is cross-subsidising the high-mileage operators.

There are some States – most notably, WA – that have a history of granting registration discounts to small operators, or operators with special circumstances. While the methods vary, these discounts all aim to reduce costs for operators who are likely to be getting lower laden-mileages from their equipment.

Granting targeted discounts is one way to avoid, or reduce, cross-subsidies from small operators towards high-mileage operators.

But the other way to do this is to move to a more ‘activity-based’ or ‘direct’ charge.

Interestingly, last week the NTC included this statement on its website page about the A-Trailer problem: only a move towards a direct pricing model would provide a long term solution to the issues raised by industry, and the broader problem of cross-subsidisation within a vehicle class”.

… don’t we want to get rid of rego?

Aside from the cross-subsidy problem, most operators in the industry hate high rego fees because they’re a huge hit to cashflow and completely impossible to pass on to customers.

I don’t know a single operator who has a ‘rego levy’ being paid by their customer, but even amongst our rural membership, we have at least some members who can successfully pass a ‘fuel levy’ on to customers.

… it’s good to walk before you run

If industry was pursue fuel as the solution to A-Trailers, I doubt governments would be willing to pursue the full vision of raising fuel prices by more than half a dozen cents and slashing rego to just a few hundred dollars. While that’s an attractive vision for many, asking governments to take such a giant leap in one go is undoubtedly taking it too far.

But if governments adjusted the fuel charge by just enough to fund a solution to A-Trailers, everyone would have a chance to see how a fuel based approach works. That could help us all during the next round of reform negotiations.

… does industry have the lobbying strength?

The biggest hurdles to delivering fuel as a solution are very clear: they’re political.

The States would have to be willing (in effect) to hand some money to the Commonwealth, and the Commonwealth would have to be willing to hand it back without the usual strings attached.

Seeing the cooperation and goodwill on display amongst the Ministers in recent months, you’d have to rate it as a real prospect.

Far more challenging, industry would need to have the strength and the unity to ask the Federal Government to raise the ‘road use charge’ (by reducing the diesel rebate under fuel tax legislation) and to ask the other members of Parliament to support it.

Any adjustment to the diesel rebate can be struck down in either chamber of the Federal Parliament.

Does the industry have the lobbying strength to stop that happening? Every Minister – State and Federal – would need to believe that we have what it takes to deliver, before they endorsed a plan that involves fuel.

As reported in last week’s News, officials have only been given until end February to come up with an answer on A-Trailers. If industry wants to move, it will have to be quick.

The next couple of weeks will be an interesting test of industry’s confidence in its own lobbying strength. As the NTC comes back to consult with us yet again, will the various industry associations be saying anything different this time?

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