Carbon tax inequality between transport modes
The road/ rail rift has intensified following news that the trucking industry was successful in negotiating with the Government for an exemption from the new carbon tax until July 1, 2014. In contrast, the rail sector will be slugged with the tax from July 1 next year.
Commenting on trucking’s two year tax exemption, Australian Trucking Association (ATA) chairman David Simon said the government’s decision would give small trucking businesses breathing space to increase their fuel efficiency and renegotiate contracts with their customers.
“In the lead-up to the announcement, the ATA argued strongly that trucking operators should be exempt from the carbon tax altogether,” David Simon said. “In a series of meetings, including with Minister Combet’s senior staff, we pointed out that 85 percent of trucking businesses have fewer than five employees, and a limited ability to pass on increases in their costs.
“We also stressed that the industry has reduced its greenhouse gas emissions by 35 percent per billion tonne kilometres since 1990, as well as massively reduced its other emissions, at a cost to the industry of hundreds of millions of dollars.”
On July 1, 2014, the effective fuel tax paid by trucking operators will increase by 6.858 cents per litre, matching the planned 2014-15 carbon price of $25.40. This is expected to cost the industry and its customers $510 million in 2014-15 alone. The industry’s effective fuel tax will then vary every six months as Australia’s carbon price changes.
“I would like to thank the Government for listening,” Simon continued. “The exemption will give trucking operators time to renegotiate long-term contracts with their customers and look at how to improve their fuel efficiency.”
However, he stressed that the Government would need to push ahead with fixing the road transport regulations and charges that prevent trucking operators from using the most efficient equipment.
“The ATA’s recent environmental report shows the industry’s ability to reduce its fuel consumption is restricted by government regulation, poorly thought out charges and a lack of research and development on energy-saving technology,” he concluded.
Far from surprisingly, the announcement of trucking’s exemption has got right up the rail sector’s nose with the Australasian Railway Association (ARA) claiming it “… will essentially punish environmentally friendly rail and reward heavy vehicles.”
According to ARA chief Bryan Nye, the association has been a strong advocate for including the entire transport sector in the carbon price and the exclusion of heavy vehicles from a carbon tax until 2014 is very disappointing.
“While rail supports action on climate change, under this scheme rail, which is considerably less emissions intensive, will have to grapple with significant increases in its costs, while the more polluting road vehicles are exempt,” said Nye. “This carbon tax will essentially make public transport more expensive compared to private road vehicles. I can’t see how this is meant to reduce emissions, it is ludicrous.”
The carbon price is expected to cost the rail industry in excess of $100 million dollars for energy costs alone.
“We’ve recently conducted a comprehensive survey on public transport,” he continued. “Out of 1510 participants surveyed, 72 percent believed that some of the carbon tax revenue should be used for sustainable transport infrastructure such as public transport. It is strange that the carbon price announcement provides little in the way of low-carbon transport options. We urge that funds set aside for clean technologies be extended to the transport sector.”
Brian went on to reiterate that while the rail industry wants to see action on climate change, it objects to the way the carbon price within the transport sector is currently penalising the low-carbon transport options.
“It’s not too late to rectify some of these issues and I urge all parties to rethink the application of the carbon price on the transport sector to ensure a level playing field. As a priority, heavy vehicles must be included from the beginning of the scheme,” he concluded.