Delivering the Goods on Fair and Transparent Charges

delivering the goods on fair and transparent charges

I bet you enjoy driving on those smooth golden pavements delivered by all levels of government over the past two years after the governments’ delivering the goods on fair and transparent charges? says the Australian Livestock and Rural Transporters Association. It will make you feel a lot better about the 11.8 per cent increase in registration and road user charges proposed by the National Transport Commission (NTC) and considered by Australian Transport Minsters on 22 November 2019.

The proposed charging increase would have hit you over three successive years in compounding instalments of 6.0 per cent, 3.0 per cent and 2.4 per cent from 1 July 2020.

In calculating the new charges, Australian Governments have told the NTC that there has been a 70 per cent increased spend on ‘pavement improvements’ and a 39 per cent increased on spend ‘periodic surface maintenance of sealed roads’ in the two years between 2016-17 and 2018-19. I can’t help but wonder why ALRTA member operators continue to report that the state of rural roads is appalling and only getting worse.

 

delivering the goods on fair and transparent charges

 

So where is all the money going?

Well, it is not going into bridges. Governments have spent just 2.0 per cent more on ‘bridge improvements’ in the past two years, even though in many cases this is the critical infrastructure upgrade needed to open up new parts of the road network to higher productivity vehicles. Money spent on strategic bridge improvements are a good investment because they have an economic multiplier effect by reducing transport costs for the entire rural economy. 

It would be the height of hypocrisy for government to increase charges by 6.0 per cent when back in 2014 they flatly refused to accept a 6.3 per cent decrease determined by the NTC after a thorough review of the charging model.

If they can’t accept it, why should you?

Instead of continuing the fair and transparent cost-recovery principles that the PAYGO system is supposedly based on, Ministers just changed the rules and froze charges so their revenue stream would continue while expenditure caught up. Since 2014, the trucking industry has been over-charged around $1.6 billion. That is money you have paid without receiving better roads in return, and there is no guarantee that any of the money you pay in future will be spent on roads. 

Only last year, the NTC was forecasting that current heavy vehicle charges would over-recover $190m from industry in 2018-19. We are now told that the charges actually under-recovered around $350m. That is a half a billion dollars turn-around in a single year. You have to wonder how the model could get it so wrong.

Well, one of the major problems with the PAYGO charging model is that the NTC has absolutely no power to scrutinise the amount states claim to have spent on roads. At any time, a state could just change the way they calculate road spending and there is nothing the NTC can do about it. ‘Garbage in, garbage out’ as they say.

Over the past few years, I have heard frighteningly similar stories from ALRTA members from all around Australia about the way in which states are approaching road maintenance. Repair jobs are given to the lowest cost bidder, the lowest quality work is then undertaken, and another lowest cost repairer is back in a couple of years having to fix the shoddy job done first time around. Journeys are regularly interrupted while repairs are being undertaken and the roads are rougher than ever when riddled with a patchwork of band aids that never fix the underlying quality problem.

The short-term fixation with ‘lowest cost’ is actually inflating road maintenance costs over the longer term. You end up with an inferior product and higher truck charges to boot.

Not surprisingly, the trucking industry has strongly opposed the NTC’s proposed charging increases.

 

delivering the goods on fair and transparent charges

ALRTA and our State Member Associations, as well as the Australian Trucking Association and other affiliated associations made urgent representations to all Federal and State transport Ministers ahead of their meeting on 22 November 2019.

We argued that the charging increases would have a severe negative impact on rural and regional Australia that is already struggling with a depressed national economy, fires and widespread drought conditions. 

The NTC and Federal Government had not consulted industry about the proposed increases as legally required, and it would appear that no account has been taken of the $1.6 billion that the trucking industry has already been over-charged.

ALRTA Immediate Past President, Kevin Keenan, was part of an industry delegation invited to speak directly with Ministers prior to their decision. Later that day, it was announced that Ministers had agreed on a preference for increases of 2.5 per cent each year for the next two years. Within two business days, NTC was in Canberra consulting with ALRTA and other industry peak bodies about the charging model and options for reform.

It is times like these when the value of strong industry associations really shines through. Trucking is a powerful lobby when we work together. Road freight transport underpins the entire Australian economy with 200,000 people working in more 50,000 transport businesses.  

We contribute around $122.3b to the economy annually accounting for 7.4 per cent of GDP. Governments can ill-afford to ignore our peak associations. As a result of our combined efforts leading into 22 November 2019, the heavy vehicle charge increase for 2020-21 will be less than half what it would otherwise have been.

 

ensuring compliance throughout the business