Opinion

Incoming government must address RUC fiasco

The federal election campaign is in full swing, with politicians winging around the country making promises and commitments about what they would or wouldn’t do in government.

As an impartial and independent representative group for Victorian and national freight and logistics operators, it’s not the VTA’s job to pick and choose one side or another, but to advocate to all the major parties and stakeholders on policy and regulatory settings that benefit our members and the broader transport industry.

Our door is open to any elected official or candidate for frank and candid advice on issues impacting our members, and we regularly engage with state and federal politicians on issues ranging from transport infrastructure, industrial relations, skills and training, and licencing and heavy vehicle national law reform.

In recent weeks, the VTA has been especially vocal on the need to change the road user charge in view of the disproportionate application of recent changes to the fuel excise, which sees freight operators getting just 4.3 cents per litre fuel relief, compared with the 22.1 cents per litre afforded to other motorists and businesses.

This fuel cost relief in federal treasurer Josh Frydenberg’s budget is now flowing through to the pumps, with the reduction in the fuel excise lowering the cost of petrol.

While welcome news for motorists, commercial freight operators are getting none of this relief because the government did not amend the road user charge they pay for using public roads, according to Victoria’s peak transport advocate. 

In a practical sense, what this means for transport companies is a cost reduction of just 4.3 cents per litre, after factoring in the 26.4 cents a litre road user charge and the loss of the 17.4 cents per litre Fuel Tax Credit (FTC).

The impact of refusing to reduce road user charges makes a mockery of claims by the government that the cost of consumer goods would steady or come down because of its halving of the fuel excise.

After wages, fuel is the second biggest direct expense for transport companies, accounting for around a third of costs. And with freight margins already wafer thin and operators facing higher labour costs because of driver shortages, the 4.3 cents per litre saving cannot be passed on.

Of course, the biggest losers of this lost opportunity for reform are consumers. Prices of food, clothing, medicine and other goods will not reduce one bit, and will continue to rise as the impact of higher inflation and interest rates continue to be felt by retailers.

A meaningful reduction in transport costs through genuine reform of how freight companies pay road user charges may have put downward pressure on consumer prices, but regrettably the government lost this opportunity when it ignored calls for specific industry change.

What we wanted in the short-term was a suspension of the road user charge for six months, in line with the temporary halving of the fuel excise, and the reinstatement of the FTC. This is the only way operators can entertain lowering transport costs, providing customers with the option of reducing what people pay for goods and services.

With parliament prorogued and the election underway, it will be difficult for this change to be made in the short term, so our message to whichever party is elected to govern on May 21 is very simple:

Immediately reinstate the FTC so that freight companies can receive the full financial benefit of the halving of the fuel excise. This is the only way that operators have any possible hope of reducing transport costs for their customers and consumers.

Absent this genuine reform, our message to consumers is clear: do not expect prices for goods to fall because transport costs are continuing to rise. 

The risk of freight companies going under because of higher operating costs and cash flow pressures is real, which is why they must continue to resist absorbing higher fuel and labour costs, and why consumers shouldn’t expect any relief at the stores. 

Peter Anderson is the CEO of the Victorian Transport Association.

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