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Wednesday, 19 March 2008
Page: 1324


Senator SCULLION (Leader of the Nationals in the Senate) (5:17 PM) —The Interstate Road Transport Charge Amendment Bill 2008 and the Road Transport Charges (Australian Capital Territory) Repeal Bill 2008 make adjustments to the 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 Australia’s transport ministers, meeting as 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 the industry should pay its way. The trucking sector accepts this. 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 set the reference charge for other jurisdictions to follow, currently based on the Commonwealth provided ACT law, the Road Transport Charges (Australian Capital Territory) Act 1993.

Senators 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 in relation to 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 states and territories. We are talking, therefore, about the costs that are imposed upon Australia’s road freight sector.

The opposition, however, has some specific concerns regarding these 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 under the Commonwealth. This is 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 part 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 is dubious in the extreme, since under it the Commonwealth loses its discretion to dissent from the ministerial council and would be unable to determine in its own right the charges that should apply to Commonwealth registered vehicles. Given 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 its own heavy vehicles it would be unable to do so. Moreover, decisions made in the Australian Transport Council are not always made by consensus. In the case of disagreements between jurisdictions, it is possible for a majority decision to occur and, in theory at least, it could be possible for the Commonwealth to be saddled with a decision it does not like.

While I accept that when it comes to regulatory issues the states and Commonwealth are essentially sovereign, I am still uncomfortable with a legislative provision that removes the right of the Commonwealth to dissent from a charge regime agreed to by the states. 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 the abrogation of this role: the Labor run federal government is letting its state Labor mates have a free rein when setting fees that will have to be carried by a crucial sector of the economy—Australia’s road freight industry. I suspect this is another example of what is meant by ending the blame game: that the Commonwealth is walking away from any attempt to impose accountability upon the decisions of the states. This is, at best, highly regrettable.

The second unpleasant element of these bills is the associated regulation that will be tabled in parliament after the passage of the bills. This 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 for these increases is the view of the Rudd government that the trucking sector is somehow not paying its way. This is by no means clear, with independent research commissioned by the trucking industry suggesting that the sector is already overcharged by $130 million per year.

Yet, 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 the 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 it is common knowledge that costs associated with road maintenance and construction, such as steel, concrete and asphalt, are skyrocketing.

Registration costs will go up higher than the CPI. What does this mean? It means that 69 per cent of Australia’s truckies are going to be paying more, underwriting rising costs associated with road expenditure that are completely outside of their control. Secondly, the structure of the charges penalise productivity, since the costs agreed to by the Australian Transport Council fall heavily on 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 a multicombination prime mover charge of $7,050.

The result of this fee structure will be to remove the incentive for operators to use high-productivity vehicles. Operators will be inclined to use prime movers to pull semitrailers instead. For a government that has long proclaimed its greenhouse credentials, it seems extraordinary that it has now agreed to a charge arrangement that will in fact encourage more greenhouse emitting vehicles on our roads. Shocking though that seems, 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. And, most importantly, this fuel excise will be indexed to the same formula used for heavy vehicle registration charges.

This regulation under the Fuel Tax Act 2006 was tabled by Labor on the quiet, on the sly, in the House on 13 March. It will take effect from 1 January 2009. In other words, the indexation of fuel excise is back. Indexation of fuel excise, people may recall, was introduced by the Keating government and then abolished by the Howard government, thankfully, in early 2001. After a seven-year absence it is back, pegged to a formula that will lock in a tax take greater than the CPI. This is a highly significant decision by the Rudd government. In one of its first acts of office, it has sneaked in a new tax that will increase at a rate greater than the cost of living.

Who will pay for it? Initially, it will be the sector that is responsible for moving 75 per cent of Australia’s domestic freight. Those who drive the nation’s 365,000 trucks, many of whom are struggling small business operators—that is who will pay. So much for defending working families. But Australia will also pay. The increased costs will be passed to the consumer and raise the prices for every one of the everyday items working families need—from cornflakes to building materials, from medicines to school shoes. For the Rudd government to increase taxes when so many Australians are hurting due to interest rate rises exposes the emptiness of its claim to be serious about fighting inflation.

Remember the Prime Minister’s promises in the election campaign about putting downward pressure on grocery prices? He has done exactly the opposite. This is not a Prime Minister; this is a heartless bureaucrat. The decision also clarifies another element of what ending the blame game means. It means that now we have wall-to-wall Labor governments no Labor transport minister will blame another for raising taxes. It is also worth recalling that this increase is similar to the one the coalition government blocked two years ago. Now it appears there is no longer any protection for Australia’s hard-working truckies or, indeed, the struggling farmers and cash-strapped mums and dads who will have to pay more as the increases flow down to them.

It also flies in the face of the reassurance by Labor frontbencher Martin Ferguson who, when shadow spokesman for transport, told the trucking industry at the Australian Trucking Convention in Cairns in April last year that ‘squeezing profitability from the trucking industry is in no-one’s long-term interests’. I am glad one member of those on the other side has got it right, but certainly his view has not persevered. 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 working families.

Let us look at the revenue implications of raising heavy vehicle registration 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 put up the tax take for Labor state and territory governments from $638 million to $727 million in the same period of time, an increase of some $88 million. Labor run New South Wales will see its registration tax take rise from $150.3 million in 2007-08 to $166 million in 2009-10. 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, we do not have any guarantees that we will actually see an improvement in transport infrastructure arising from these higher charges.

These bills support a new fuel tax and an increase in registration charges, the case for which is unclear. 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 just the families of transport operators but all Australians. They include a new tax—an 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 by federal Labor to ensure that the taxes imposed by their state Labor mates are competitive. For these reasons, the opposition will oppose the bills.