It’s no secret that many trucking operators are reeling after the events of the past few years. Escalating fuel prices, Covid-19, rising cost-of-living, bushfires, floods and heavy rain have all taken their toll.
Big Rigs is constantly publishing stories about long-standing operators who’ve had to shut their doors.
I fear that’s not going to stop anytime soon, especially if the Grattan Institute gets its way.
Earlier this month, the Institute released a report on fuel tax and the fuel tax credits system, Fuelling budget repair. If adopted, the report would dramatically increase the effective fuel tax paid by trucking businesses by 20.5 cents per litre, from 27.2 cents per litre to 47.7 cents per litre.
I don’t need to tell you that this would be a disaster for the transport industry. I can’t see how any transport business would survive. Diesel is the biggest cost for a trucking operator. Fuel prices are steep enough now, but this on top of it would be the end.
At best, the report is misinformed. At worst, it’s utterly irresponsible. Many trucking businesses would fold.
It’s a common misconception that trucking businesses are huge multi-million dollar enterprises.
However, trucking is an industry of small and medium businesses. In June 2022, almost 58,000 of the industry’s 59,100 businesses had fewer than twenty employees. 31,600 trucking businesses had no employees because the only people working in the business were the owners. These businesses operate on the tightest of margins.
Some would say ‘well, the trucking companies would just pass on the cost,’ but let’s examine that.
The ATA’s research shows that only a third of trucking businesses can pass on increased fuel costs (including reductions in fuel tax credits).
The businesses that can raise their charges are rarely able to increase charges by more than CPI.
Of course, there are trucking companies who would pass on the costs…and they would.
This makes a mockery of the Grattan Institute’s claim that its proposal would only have a small impact on consumer prices. Its modelling is misguided because it’s based on an average figure. The tax hike would have a much greater impact on rural and remote communities, where the cost of transport is higher.
I know there will be people who will say I’m just protecting the interests of trucking. I have no problem with that. It’s my job as chair of the Australian Trucking Association.
However, it’s not just about defending the trucking industry. The Grattan Institute’s recommendations would have a flow on effect and the ones who will suffer will be consumers in rural and remote Australia. These are consumers who are already struggling with the rapidly rising cost of living.
Benjamin Franklin once famously said that nothing is certain except death and taxes. In this case, he’s right.
I am certain that the Grattan Institute’s proposed increase to the effective fuel tax would result in the death of so many trucking businesses.
The ATA argues that Australia needs an effective fuel tax. It should recover the cost of the roads we need, and not inflated by extra costs or poor government spending decisions.
The Grattan Institute proposal is not the answer. If the federal government adopted the recommendations, it would plunge the trucking industry into financial crisis.
David Smith is chair of the Australian Trucking Association (ATA)