Have your say on how heavy vehicle road user charges will be set

road user charge

Submissions are now being called for the best options for setting heavy vehicle charges from 2023-24 onwards.

A 48-page consultation paper just released by the National Transport Commission (NTC) presents three different options for setting charges for a single year, or a three-year period commencing in 2023-24.

Feedback from industry will be provided to infrastructure and transport ministers for their consideration later this year.

Key questions explored in the consultation paper are:

  • Should charges be set for a single year, or for multiple years?
  • On what basis should charges be set?

At the December 2021 Infrastructure and Transport Ministers Meeting (ITMM), ministers identified a preference for increasing heavy vehicle charges by 2.75 per cent in 2022-23.

According to the NTC, the heavy vehicle cost base for 2020-21 which underpins heavy vehicle charges for 2022-23 is $4,302.9 million.

Estimated heavy vehicle charges revenue for 2022-23 is $3,727.1 million. This leaves a revenue gap of $575.8 million.

The heavy vehicle cost base for 2021-22 has increased by approximately 20.7 per cent to $5,193.4 million. This is $1,448.1 million more than estimated heavy vehicle charges revenue in 2023-24, if heavy vehicle charges do not increase above current levels.

The NTC said heavy vehicle charges revenue would need to increase by approximately 38.7 per cent to achieve full cost recovery.

The NTC has developed three options for setting heavy vehicle charges from 2023-24 onwards.

These all apply a series of equal percentage changes to heavy vehicle charges. These options could be used to determine the percentage increases to be applied under both single year or multi-year price setting approaches.

Option 1: Increase heavy vehicle charges by 2.75 per cent per annum: This is the same percentage increase as agreed by ITMM for 2022-23 heavy vehicle charges.

Option 2: Increase heavy vehicle charges by 6 per cent per annum: This is close to the current rate of consumer price inflation. Consumer price inflation was 6.1 per cent in the year ending June 2022.

Option 3: Increase heavy vehicle charges by 10 per cent per annum: This is higher than Option 2 but would still be insufficient to reduce the revenue gap below $1b by Year 3.

Based on the considerations outlined above, the NTC recommends that ministers set heavy vehicle charges for a three-year period beginning in 2023-24.

“Setting charges for multiple years could allow prices to be set to commence a longer-term transition to full cost recovery at a measured pace,” said the commission.

“This needs to recognise both the cost recovery principle underpinning PAYGO and the recognition that moving to full cost recovery immediately would impose an unreasonable burden on heavy vehicle operators.

“Agreeing a multi-year price path would also have the potential to reduce administrative and compliance costs for governments and industry. Recent experience with the need to revisit heavy vehicle charges each year shows this is distracting to both governments and industry and consumes significant administrative resources.”

The NTC said these costs could be avoided, at least in part, with a defined multi-year price path.

“A three-year price path which is set in advance may offer additional advantages in that it would provide industry with certainty about the heavy vehicle charges that would apply in the medium term, allowing vehicle operators to make better pricing decisions and reflect them in contracts.”

For more information, and to make your submission, click here. Submissions close on Wednesday, October 12.

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