New heavy vehicle charge puts undue pressure on operators

supply chain

Australia’s truck charging system is broken and must be fixed, the CEO of the Australian Trucking Association, Andrew McKellar, said today.

McKellar was responding to the decision by transport ministers last night to increase truck fuel and registration charges by substantially more than inflation from June 2021.

“Treasury’s inflation forecast for 2021-22 is 1.5 per cent, but governments have decided to increase the charges paid by Australia’s hard working trucking businesses by 2.5 per cent,” McKellar said.

“The decision will increase the registration charge for a workhorse prime mover and semi-trailer by $144 a year, and the effective rate of fuel tax by 0.6 cents per litre.

“This increase is more than many trucking businesses can afford. In a recent survey we ran, more than a third of the trucking businesses that participated told us their business activity was still down compared to immediately before the bushfires and the start of the pandemic.”

McKellar said trucking businesses also have great difficulty passing charge increases on to their customers.

“Only 13 per cent of the businesses in the survey said they were able to pass on both registration and fuel price changes.

“Small businesses had the greatest difficulty passing on charge increases, but even larger businesses found it difficult to pass on cost increases more than the inflation rate.

McKellar said the decision could have been much worse, with the National Transport Commission’s (NTC) charging model, PAYGO, recommending a 13.4 per cent increase in charges.

“The PAYGO output highlights the serious and growing problems with model. Under the model, charges are driven entirely by governments’ spending plans, even if those priorities are inconsistent with the industry’s requirements or ability to pay,” he said.

“Charges can increase sharply from year to year, which makes it very difficult for businesses to make decisions about their own prices, particularly when they sign multi-year contracts.

“The model is broken and must be fixed.

“In addition, governments need to put in place measures to improve the cashflow of trucking businesses.

“We need restrictions on payment times longer than 30 days, the extension of price regulation to truck tolls and port access charges and changes to allow businesses to pay truck registration charges by monthly direct debit.”

In a communique explaining their decision to increase charges, the ministers said that following recent growth in government investment in roads, there was a growing gap between road expenditure and revenue from charges.

Having considered the submissions of industry representatives, ministers agreed charges should rise by 2.5 per cent in 2021-22, to contribute to the construction and maintenance of roads.

“As part of the response to Covid in 2020, this increase was held back to ensure road transport operators could continue the vital task of getting freight delivered all over Australia despite the pandemic,” said the statement.

Ministers noted the charge increase for 2021-22 would be significantly less than the amount of 13.4 per cent estimated by the NTC as necessary to recover the heavy vehicle share of recent road construction and maintenance costs.

Western Australia and Northern Territory will separately consider their heavy vehicle registration fees for 2021-22. These are set independently of national decisions taken by ministers.

Read the ATA submission on the original charging proposal

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