The trucking industry will need to be prepared for the introduction of government charging trucks for mass, distance and location, with a new fee coming in to replace the current vehicle registration and fuel duty charges.
It was perfect timing at the NatRoad conference, just a few days after the Federal Government announced that the National Heavy Vehicle Charging Pilot Trial would be testing alternative ways of charging trucks. The Executive Director of the Queensland Trucking Association, Gary Mahon, brought delegates up to speed with the potential issues. Operators have been asked to join in and assess the viability of this major change in road charging policy.
“The government is committed to this approach and we are getting the same kind of advocacy from the other side of politics as well,” said Gary. “There is no suggestion that there is any less enthusiasm on either side of the house.
“Currently, when you operate your vehicles on a day-to-day basis, if you pay for a prime mover and trailer this works out to be about $7500 per year. About four dollars in every $10 paid by operators for registration is available to go into road infrastructure. Registration has a pretty high administrative cost. Whenever we talk about a new regime, we are asking about getting those administration costs down.”
The new government trial into heavy vehicle charging is being bundled in with the idea that if an operator wants to access new roads they will have to pay. They will be getting that access on the basis of paying an additional amount. Notionally, the conceit is this money will pay for upgrades to the infrastructure. The government is conflating two issues, this is not what mass/distance/location (MDL) charging is all about. According to Gary, it’s a Trojan horse for managing access issues. In fact, MDL charging is there to replace both state and federal charges.
“As an industry, we are not necessarily arguing against or for,” said Gary. “What we are trying to do is to understand what exactly the proposal is. What is the policy content? How far are you going to take it? How much are they going to price it? What are the fundamental elements about it, which will change the way we go about our business.
“If you strip mass/distance/location charging down to its purist form it is fundamentally a GST. It is about applying a tax for every tonne that you carry. One of the problems I see, when they apply this system to the road transport industry, is they tend to see us as generic, we are not.
“The road transport industry is a conglomeration of a bunch of niche businesses. Most operators are in niches that are quite specialised. Some run short distances, some run long distance , some cart different types of commodities, use different types of trailers, different combinations. We are a extraordinary diverse country, with a low population and high mileages to get product to market.
“The trucking industry has to be as efficient as it can possibly be. The fundamental purpose of our industry is to move freight safely and efficiency from A to B. The MDL approach is about putting a tax on that journey. Whether you spend two hours on the road or 10, whether you are carrying it efficiently or not, each tonne of freight will have a price.”
Winners and Losers
The concept can work, but it has winners and losers. The information the trucking industry is seeking is the policy context in trying to make the charging as fair and equitable as possible. The reality is, this form of road charging will come. The current model is unsustainable and the idea that only 40 per cent of the funds make it to the infrastructure needs to change.
“The new system will be a forward-looking cost base,” explained Gary. “That means that they will run your credit card up and promise that they will spend the money wisely and well. We are currently being post-charged, as in where they have spent the money, we then pay it back.
“An independent price regulator is an area that we see as being opportunistic for the industry. Then you have people at arm’s-length from government who are seeking the most efficient pricing model for the industry. Then you have the structures of direct and indirect pricing.
“In the current model you pay the same whether you do 1,000,000 or 50,000km each year. The MDL model is about every tonne of freight which you move, how far you took it, and what type of roads you take it along. There are opportunities about pricing to the job, the configuration and the load you are carrying. There is opportunity, but there are also downsides.”