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Tuesday, 18 March 2008
Page: 2100


Mr TRUSS (Leader of the Nationals) (5:24 PM) —The Interstate Road Transport Charge Amendment Bill 2008 and the Road Transport Charges (Australian Capital Territory) Repeal Bill 2008 make adjustments to the cost recovery charge-setting mechanism that applies to the trucking industry. The two key elements of the charge structure that apply to Australia’s road freight sector are registration fees and the diesel fuel excise system, known as the road user charge. The determination of the appropriate level of these charges occurs through the National Transport Commission, which makes recommendations to the Australian transport ministers at their meeting of the Australian Transport Council to recover road expenditure attributable to heavy vehicles. The principle behind the charge-setting arrangements that apply to the trucking industry is that it should pay its way. The trucking industry accepts this principle. Whilst this does mean that the industry pays higher charges than would otherwise have been the case, it recognises that as an industry it has an obligation to the community to pay its way. It is important for the community to know that, whilst there is substantial community expenditure on roads and other infrastructure, the road transport sector—those big trucks that run up and down the roads day and night—is making a substantial contribution to the cost of maintaining and building that road network.

Specifically, the Interstate Road Transport Charge Amendment Bill 2008 updates definitions contained in the Interstate Road Transport Act 1985 and grants the Australian Transport Council the power to determine the charges that will apply to Commonwealth registered heavy vehicles. The Road Transport Charges (Australian Capital Territory) Repeal Bill 2008 ends a system whereby the Australian Capital Territory sets the reference charge for other jurisdictions to follow, currently based on Commonwealth provided ACT law—the Road Transport Charges (Australian Capital Territory) Act 1993. Members may be aware that on 29 February 2008 Commonwealth, state and territory transport ministers at the Australian Transport Council agreed to a revised set of charges that will apply to Commonwealth registered heavy vehicles. These charges will be used as reference fees by the states and territories on their own heavy vehicles. Essentially, that is what these bills are about: the application of charges agreed to by the Australian Transport Council to heavy vehicles registered under the Commonwealth and the subsequent take-up of those charges to vehicles registered under the states and territories. We are talking, therefore, about what costs are imposed upon Australia’s road freight industry.

The opposition has concerns about the impact of these bills, and I will refer to some of those issues later. But we also have specific concerns about some of the content of the bills. The Interstate Road Transport Charge Amendment Bill 2008, for example, will require the Commonwealth to always impose the charges agreed to by the Australian Transport Council to trucks registered by the Commonwealth, known as the Federal Interstate Registration Scheme or FIRS. This provision may be found in proposed section 5(4) on page 9 of the bill. The relevant clause reads:

Regulations made for the purposes of this section must implement the national charge imposed on the registration of heavy vehicles, and any adjustment process of that charge, that is agreed by the Australian Transport Council.

This provision causes us some serious concern because, under it, the Commonwealth will lose its discretion to dissent from the ministerial council and will be unable to determine in its own right the charges that should apply to Commonwealth registered vehicles. Given that the charges agreed to by the Australian Transport Council are reference fees used by the states and territories, should the Commonwealth wish to apply competitive pressure on the charges imposed by the states and territories on their own heavy vehicles it will be unable to do so. It seems extraordinary that an Australian government would bind itself to decisions made by other governments without giving itself any discretion to be able to make a separate determination in the national interest. Moreover, decisions in the Australian Transport Council are not always by consensus. In the case of a disagreement between jurisdictions it is possible for a majority decision to occur. In theory at least, it would be possible for the Commonwealth to be saddled with a decision which it did not support.

I accept, when it comes to regulatory issues, that the states and the Commonwealth are essentially sovereign, but I am still uncomfortable with a legislative provision that removes the right of the Commonwealth to dissent from a charge regime agreed to amongst the states. In other words, the Commonwealth would be binding itself to a decision made by others. This is something that seems to have escaped the Rudd government. It is the job of the Commonwealth to provide national leadership and to ensure, where possible, that competitive pressure applies to state based charge-setting arrangements. What we are seeing is an abrogation of this role. The Labor-run federal government is letting its state Labor mates have free rein when setting the fees that will have to be carried by a crucial sector of the economy, Australia’s road freight industry. I think this is another example of what is meant by ‘ending the blame game’! The Commonwealth is walking away from any attempt to impose accountability upon the decisions of the states. This is highly regrettable.

The real impact of these bills will be felt in the associated regulations that are to be tabled in parliament after the passage of the bills. The regulation will schedule the details of the heavy vehicle registration charges. These charges will contain significant increases to be implemented over three years from 1 July 2008. The basis of these increases is the view of the Rudd government that the trucking sector is somehow not paying its way—which is by no means clear, with independent research commissioned by the trucking industry suggesting that the sector is already overcharged by around $100 million per year. Even if you accept the figures of the National Transport Commission, there is still only a relatively minor under-recovery of the costs that are imposed by the industry. There are arguments about whether the charges are being evenly collected across the industry and whether one sector is subsidising another. Those sorts of issues are the key elements of work done by the National Transport Commission.

In spite of the case for these increases in charges being unclear, the Rudd government has decided to press ahead anyway. It will determine these charges by applying an annual road cost adjustment formula. This formula is largely based on expenditure costs associated with the impact of trucks on our road system. It will be a particularly expensive formula for Australia’s road freight industry since, as is common knowledge, costs associated with road construction and maintenance—such as steel, concrete, asphalt, oil products et cetera—are skyrocketing. So the registration costs are going to go up at a higher rate than the CPI. What does this mean? It means that close to 70 per cent of Australia’s truckies—and, in particular, all of those at the heavier end of the industry—are going to be paying more. This will mean that there will be rising costs associated with road expenditure that are completely out of their control.

The structure of the charges penalises productivity, since the costs agreed to by the Australian Transport Council fall heavily on the highly productive multicombination vehicles, such as B-doubles and B-triples. For example, the registration charges for B-doubles will increase from $8,041 to $14,340, including a multicombination prime mover charge of $7,050. B-triple charges will skyrocket to $20,340, including the multicombination prime mover charge of $7,050. Smaller vehicles will not have increases and, in a small number of cases, will actually pay less. The reality is these are very substantial increases in charges on the most efficient sector of the industry. Indeed, previous meetings of ministers at the Australian Transport Council had agreed that there ought to be encouragement to move the sector towards the more productive units. There was a conscious decision made to cross-subsidise these larger units to encourage their take-up. I think that this was sound policy. These larger units have road-friendly suspensions. The evidence suggests that they are more friendly to roads and less likely to cause damage than the smaller units. The result of this fee structure will reduce the incentive for operators to use high-productivity vehicles. Operators will be inclined to stick with semitrailers instead. For a government that has got a long-proclaimed greenhouse agenda, it seems extraordinary that it has agreed to a charge arrangement that will actually encourage more greenhouse emitting vehicles on our roads.

But there is more. As the second part of the fee structure imposed on heavy vehicles, the Australian Transport Council decided to increase the road user charge, or diesel excise, from 19.633c per litre to 21c per litre. This will be achieved by reducing the amount of rebate that on-road diesel users will receive in the trucking sector. Most importantly, this fuel excise increase will be indexed on the same formula that is used for the heavy vehicle registration charges. This regulation under the Fuel Tax Bill 2006 was tabled by Labor on the sly in the House on 13 March, before this legislation had even been brought into the parliament. It will take effect from 1 January 2009. We will be moving to disallow this instrument. This instrument brings back fuel excise indexation. It brings back something that has been written out of the Australian agenda for quite a few years now. The indexation of fuel excise, members will recall, was introduced by the Keating government and then abolished by the Howard government in early 2001. After a seven-year absence, it is back for trucks and pegged to a formula that will lock in a greater tax take than you would get under the CPI. Not only do we have indexation but it is indexed to a formula that will deliver very much higher tax rates than would occur under the CPI.

This is a highly significant decision by the new Labor government. In one of its first acts in office, it has introduced a new tax—a tax that will increase at a rate greater than the cost of living. Who will pay for it? Initially, the sector responsible for moving 75 per cent of Australia’s domestic freight will pay. Those who drive the nation’s 365,000 trucks, many of whom are struggling small business operators, will have to pay. So much for defending working families. Here is a group of very small businesses, most with high debt and many of them single unit operators—people who battle to win contracts and who keep their trucks on the road for long hours just to make a living. These are the people that are going to have pay a new indexed tax, introduced compliments of Labor.

In the end, of course, all Australians will pay. The increased costs will be passed on to the consumer and there will be a rise in prices for everyone. From cornflakes to building materials, from medicine to school shoes—the everyday items that working families need—all of these prices will go up as a result of the new tax Labor is proposing to introduce today. For the Rudd government to increase taxes when so many Australians are hurting due to interest rate rises exposes the emptiness of his claim to be serious about fighting inflation.

Many of the smaller operators will have particular difficulties in passing on these taxes, but the larger operators who move groceries and some of the big-volume items for regular customers will of course pass these increases straight on to the shopkeepers, the retailers, who will in turn put them straight onto the price of every item in every store. Remember the Prime Minister’s promise in the election about putting downward pressure on grocery prices—he has done precisely the opposite. What is the good of an ACCC inquiry into grocery prices and pretending it is going to have some kind of downward impact, when on the other hand you are putting up taxes in a way that will guarantee that, no matter what the findings of the inquiry might be, groceries will be dearer after the election of the Rudd Labor government than they were previously?

This decision also clarifies another element of this so-called ‘ending the blame game’, which Labor ministers like to say. It means that, now that we have wall-to-wall Labor governments, no Labor transport minister will blame another for raising taxes; they are all in the deal together. The Labor transport ministers have been wanting to increase these taxes for years. The coalition government has blocked this revenue rise. Now it appears that there is no longer any protection for Australia’s hard working truck-ies. We have wall-to-wall Labor transport ministers, so in reality the increases in taxes will come again and again. What about the struggling farmers and the cash-strapped mums and dads who will have to pay more as the increases flow through to them?

It also flies in the face of the reassurances that were given by Labor frontbencher Martin Ferguson, who when he was the spokesman for transport told the trucking industry at the Australian Trucking Convention in Cairns in April last year ‘squeezing profitability of the trucking industry is in no-one’s best interests’. He pretended on that occasion to be a friend of the truckies. He pretended that Labor would stand up for the trucking industry. But now they are in government the story is different. Either the member for Batman was being indifferent to the truth or he got rolled. Regardless, the Rudd government has introduced a new tax that is inflationary and will make life harder for struggling families.

Let us look now at the revenue implications of raising heavy vehicle registration charges and reintroducing fuel indexation via the road user charge. Labor state and territory government revenue will rise substantially as a result of increased fuel tax and registration charges, with the annual revenue stream to Labor governments growing by $168 million. Put another way, the fuel tax take to Labor states and territories will rise from $1.146 billion in 2007-08 to $1.226 billion in 2010-11—an increase of $80 million. The increase in heavy vehicle registration charges will push up the tax take for Labor state and territory governments from $638 million to $727 million in the same period—an increase of $88 million. In terms of the states, Labor-run New South Wales will see its registration tax rise from $150.3 million in 2007-08 to $166.8 million in 2009-10 and Victoria’s registration revenue will rise 15 per cent, from $171.4 million to $197.9 million, in the same period.

Given the poor track record of the Labor states in project management, there are no guarantees that we will actually see any improvement in transport infrastructure arising from these higher charges. One of the fundamental weaknesses of the road user charge scheme is that the money collected from the registration or the fuel excise is not hypothecated, so there is no guarantee that any of this money will actually be spent on roads. There is no guarantee that the states will go out and build extra roads to benefit the trucking industry. There is no guarantee that they will spend more money on maintaining the roads. It will simply go into their revenue and they will do with it as they wish. The minister has said that there will be a program of new road enforcement regulations—building a couple of rest stops and a number of issues like that. Some of those issues may well be worth while, but there is no guarantee that the money raised from this indexed new tax will in fact ever be spent on roads. I think the people of Australia need to be aware when they are paying higher prices for groceries, equipment and transport that the money essentially being collected from them will not necessarily be spent on roads.

Indeed, we have good reason to be concerned about where Labor is going in relation to road funding. I think the softening up process by the Rudd government to drastically reduce road funding around Australia has already begun. Labor used incomplete and old statistics in a crude attempt to downplay the coalition’s funding commitments for land transport, which were at record highs some years before the last election. With less than two months to go before the May budget, it now appears that the Labor government will halve the coalition’s AusLink commitments of $31 billion between now and 2013. Labor could spend as much as $15 billion less than the coalition promised during that period.

The Minister for Infrastructure, Transport, Regional Development and Local Government released a report by the Bureau of Transport and Regional Economics which suggested that, once adjusted for inflation, the coalition spent less annually on road funding than the previous Labor government. Unfortunately for those who expect some transparency and honesty from the government, there were at least three major flaws in that claim. Firstly, the report deals with spending until 2004. It was only in 2004 that the AusLink program was introduced. The big boost in expenditure, up to around $4 billion a year, occurred after the introduction of AusLink—and that occurred outside the time frame for the figures that the minister was quoting. Secondly, a big component of AusLink was the billions of dollars of new funding spent on rail—to get more freight off our roads so that they can last longer, freeing up money for new roads and a more efficient transport system. The minister conveniently forgot the expenditure on rail when criticising the coalition’s performance as an infrastructure builder. Thirdly, and never let this be forgotten, the previous Labor government put its road funding on the bank card. It was part of the $96 billion worth of debt that the coalition government inherited on coming to office. So the coalition government not only had to build new roads but also had to pay for the ones that Labor had built in its earlier term.

The reality is that we were left with the bill for the meagre road construction activity that Labor had undertaken during its previous term in office, so it is somewhat disingenuous for the minister to criticise the previous coalition government’s record on road funding. But it is even more dishonest if in fact he intends to drastically slash over the next four years the amount of funding that the coalition committed to roads during the last election campaign. In its last budget the coalition detailed infrastructure spending of $22.3 billion between next year and 2013, and an extra $7.3 billion was announced before the election. And all those promises were independently costed by Treasury. We provided to Treasury an extensive policy document—something like 75 pages—and the policies were fully costed. The policy package detailed the projects across the length and breadth of Australia on which $31 billion would be spent.

Labor’s election promises, we are now told as a result of the press releases that were put out during this last week, amounted to only $15.5 billion—half of what the coalition had promised. This amount would actually take expenditure backwards from what had been achieved in the past. There will be projects right around Australia that will be at risk from Labor’s razor gang. We have already heard about some of those projects. The $1.2 billion F3 to Branxton link road in New South Wales is not going to be built. There will be $500 million slashed from the Bruce Highway funding for work between Cooroy and Curra. What about Roads to Recovery and the $350 million funding that has been so essential for local governments to keep their roads up to date or the $300 million we had committed to spend on development roads around regional Australia? Labor has not committed to either of these essential elements of a road budget.

One has to be deeply concerned about the future of our nation’s road system under this government. Labor has never had much sympathy for the road transport industry. I can recall, as a minister attending meetings of state and territory transport ministers, state Labor ministers one after the other venting their spleen on the evils of having trucks running up and down their roads. Some of them are very much in a ‘get square’ mood at the present time and, sadly, they have a federal government that is only too willing to roll over and to impose these additional taxes on the industry.

A couple of days ago there was a letter to the editor in one of my local newspapers that was signed by Peter Schuback, from the Australian Long Distance Owners and Driver Association. He comes from an area not far from my home town. He wrote:

If the government was serious about tackling inflation then why has it approved the extra charges for the transport industry?

Why has it allowed the near doubling of registration costs of some long distance trucks (up to about $14,400 a year for B-doubles)?

Why has it allowed the horrific fines for truck drivers for minor breaches ($10,000 plus $1,000 for every 15 minutes over on your log book and six demerit points), especially when it has not provided the facilities so truck drivers can do the right thing and abide by the laws?

Members of the public should be made very aware that their household costs are going to double because of the government and National Transport Commission’s actions.

You have been warned.

Well, the consumers of Australia have been warned. This is not a tax that is going to be innocently imposed upon a profitable trucking sector that can simply absorb it and not pass the costs on to consumers; this is a tax that will be felt by every shopper every day that they go to a supermarket. Every time a struggling family goes to buy the week’s groceries, they will pay more as a result of this tax. And the minister admitted as much. He acknowledged that the effect of this would be of the order of $16 or $18 a year on the average grocery bill.

But it will not only be groceries for which there will be higher costs; there will be higher costs for everything that we buy every day. There will be higher costs on the sorts of things that people, particularly those who live outside the capital cities, use in their daily lives. People who live outside the capital cities will pay a higher share of this cost because transport is more important to them. Everything has to travel a distance to get to many of the small country towns in your electorate, Mr Deputy Speaker Schultz, and in my own electorate. This will also affect a manufacturing industry in a regional area. Because of the way in which parts are moved to put together various items of manufactured goods these days, there will be multiple times when this particular increase will be paid on the construction or manufacture of an item in a factory. As parts are moved in and out and are moved on a truck from one place to another to be assembled, the truck will pay higher fuel costs and higher registration charges each time as a result of this legislation.

This is not legislation that people can simply put aside and say has nothing to do with them. They will feel the effects of this every day. When the government comes into this place or goes on television and talks about how it cares about the higher costs of groceries for struggling families, people should be reminded that part of the reason that groceries are more expensive is that this government has indexed the diesel fuel that the truck uses to travel around the roads. Of course, the fuel itself has to be transported to service stations around the country by diesel trucks—diesel trucks that will cost more to register and for which there will be a higher level of tax on the fuel that they use to complete their journeys.

These bills support a new tax and an increase in registration charges, for which the case is not clear. The fees will discourage the use of efficient vehicle combinations and will increase truck traffic on our roads. The taxes and charges are inflationary and will make worse the financial struggle of not only the families of transport operators but all Australians. They include a new indexed fuel excise that will rise faster than the CPI. The taxes fly in the face of the Rudd government’s statements about fighting inflation. The decision represents an abrogation of federal Labor’s responsibility to ensure that the taxes imposed by their state Labor mates are competitive. It is for these reasons, and indeed many others, that the opposition will oppose these bills.