The Victorian Transport Association has welcomed restraint shown by the COAG Transport Industry Council in its recent review of Heavy Vehicle Charges for 2021-22.
The COAG TIC – comprised of state and federal transport ministers – at its recent meeting agreed that the Road User Charge would increase by 2.5 per cent next financial year, with these proceeds contributing to the construction and maintenance of road infrastructure.
In reaching the decision, Infrastructure and Transport Ministers considered the estimates from the National Transport Commission (NTC) and acknowledged that there was a growing gap between road expenditure and revenue from charges.
National heavy vehicle charges are designed to recover the heavy vehicle share of road expenditure, and while the VTA has always advocated for the lowest – and fairest – adjustments possible, we also acknowledge the importance of maintaining transport infrastructure so that the greatest possible productivity and efficiencies can be attained by road freight operators.
We commend transport ministers for taking into consideration the submissions from the VTA and other state-based transport bodies to cap increases in the Road User Charge to 2.5 per cent, which is consistent with the recommendation we put to them prior to Covid taking hold last year.
Notable in the decision was the TIC’s reluctance to accept recommendations by the National Transport Commission for a 13.4 per cent increase, which the VTA consistently opposed.
In November 2019, the VTA joined the QTA and former ATA and ALRTA executives at a meeting of the TIC where we raised the lack of productivity improvements, additional increased costs such as tolls, tighter access to the road system and the fact that regional Australians would be grossly disadvantaged should the road user charge be excessively increased.
At that time, freight volumes were down, and operators were competing on price for lower volumes to obtain contribution to fixed costs.
Our message that excessive increases would create unjustified and intolerable impositions on the road freight industry is just as applicable today as it was then, particularly in the current climate where Australia’s future economic growth depends on productivity reform.
With Covid taking hold and beginning to wreak havoc across the global economy only a few short months after our meeting with the TIC, advocacy groups like the VTA quickly pivoted to calling for any increase to the RUC to be deferred because of the uncertainty in the economy.
The TIC deferred any increase in the RUC during the current 2020-21 financial year in recognition of the financial hardship experienced by many transport operators, which has assisted them during what we hope was the worst of the downturn.
It is important that operators give due consideration to how the increase in the RUC will impact their business and make the necessary adjustments to that margins are maintained, and profitability is not compromised. It is critical that operators adjust their cost index so that the increase flows through the supply chain and is ultimately worn by consumers.
Covid has provided consumers with a new appreciation of how supply chains work, so as an industry we should build on this heightened level of awareness to help consumers also appreciate that cost increases must be factored into higher prices at the cash registers.