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STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORT
10/11/2008
Interstate Road Transport Charge Amendment Bill (No. 2) 2008 Road Charges Legislation Repeal and Amendment Bill 2008

CHAIR —I welcome Mr Bremner from the Australian Road Train Association. Do you wish to make a brief opening statement?

Mr Bremner —I will. I may be able to answer a number of questions that I have heard raised already and possibly generate a few more.

The Australian Road Train Association represents the road train and multi-combination sector of the Australian trucking industry. Our members are largely remote area operators who operate in a diverse environment, catering to an even more diverse client base, extending from primary production in mining, as was touched on before, through to community services, such as outback Aboriginal communities.

The association is a member of the Australian Trucking Association, along with a number of my colleagues here today, national bodies such as NatRoad, the TWU and the state and industry representative groups. As such, we provided input and endorsed the Australian Trucking Association’s written submission as a summary to the industry’s position on this issue. As has been raised, our key concern is the automatic indexation of the road-user charge. Our belief is that it can really only be seen as a stealth tax. We are concerned that the indexation is being opposed as a means of not having to contend with the rigorous examination that tax rightful deserves. A core principle of the new charges regime was to eliminate cross-subsidisation. It is difficult to support this argument if the transparency is removed. Indeed, the indexation almost promotes a perception of an aversion to transparency.

I will touch on other issues that were raised. We fully support paying our way. We believe it is only fair. However, arbitrary or automatic indexation has the potential to radically overrecover, therefore going against the principles that were raised before in regard to paying our way. More importantly, it also has the potential of escalating the road-user charge to a point where it would virtually render the fuel tax credits scheme null and void.

The NTC discussed how they made extensive consultation, and they should be given due recognition in that regard. One of their initial policy proposals was that the charges be put on to the prime-mover. We put forward a case where we have one prime-mover operator whose truck in a 24-hour period operates as a semi-trailer, a tri-axle trailer, a B-double and a road train. As such, it was moved across. The issue now, however, is how moving the charges on to the trailers will impact upon the trailer combination use, given that a B-double now costs two and a half times more to register than a standard tri-axle trailer for only half the payload benefit.

The implications of how this may influence the market are obvious, particularly beyond dedicated line haul operators, to those who utilise trucking as an integral part of their larger business, such as has been touched on in the agricultural sector. The fundamental issue is that rather than incentives being implemented to encourage productivity the current charging model provides a compelling argument for the fleet to actually increase prime-movers and reduce carrying capacity rather than encouraging the use of higher productivity multi-combination vehicles, which obviously is our primary interest as the Road Train Association. Indeed, a double road train operator may well consider running two separate single-trailer semi-trailers given the saving in registration and the flexibility this would allow. However, given the industry has already had to contend with the implementation of these charges, as was discussed through the states, the greater demand now is very much on creating uniformity across the industry.

Of course our members oppose paying more taxes, such as in the road fuel charges user tax. However, they do recognise and endorse the principle of paying their way. However, in turn they also expect the principle to apply both ways and for their work environment to be maintained and improved to a safe level that allows them to comply with the law.

We have reservations regarding the proposed $70 million heavy vehicle safety and productivity plan insofar as we do not see how it is going to be able to address the issues that it proposes to address. This applies not just to rest areas for drivers to rest adequately, but merely to comply with the new fatigue laws. The rest area issue is compounded specifically for our industry, given that many of our road trains do not operate off the federally funded networks. Hopefully I may have answered some questions and can answer some more.

Senator McGAURAN —Could you give us a breakdown of the structure of your members? Are they single owner operators or what?

Mr Bremner —Our primary membership would probably be in the six- to 10-truck range. We have members who have up to 100 trucks. We have many members who are single truck operators, but to get to the position where they can operate and be viable they have managed to obtain enough business to generate running six to 10 trucks and any impact on them taxation wise is quite significant.

Senator McGAURAN —Are they pastoralists?

Mr Bremner —No, but there are obvious links back to primary production. Road trains are obviously completely unsuitable for urban areas. Essentially in New South Wales they cannot run east of the Newell Highway, which is coincidentally a good geographical division.

CHAIR —We have them running in the metropolitan area in Perth.

Mr Bremner —You do, indeed.

Senator McGAURAN —Livestock?

Mr Bremner —Livestock and bulk-in. Perth is a particularly well designed town for road trains.

Senator McGAURAN —You mentioned indexation. I have before me the second reading speech of the minister’s on the Road Charges Legislation Repeal and Amendment Bill 2008. He stresses on two occasions that:

… this measure does not reintroduce the indexation of the fuel excise tax. Nor does this bill implement indexation of the road user charge.

  • What is your response to that, given that you said they have introduced indexation?

Mr Bremner —Our understanding is a slightly different interpretation of that. I will defer to my colleague from the ATA to clarify that further. However, we do interpret it as being a blanket indexation.

Senator McGAURAN —This is a very key point. Can you expand on your understanding of how you see it as indexation?

Senator MILNE —I might assist with this issue.

CHAIR —I have read it, too. It might help because our interpretation is quite different from yours and to Senator McGauran’s.

Senator MILNE —The issue is that none of us is quite sure what this automatic indexation of the fuel excise means, compared with the way the fuel excise was formerly calculated. You heard before the explanation on the transparency issue. Can you explain to us how you think it is going to be calculated differently and how that impacts? Is that more or less what you were asking, Senator McGauran?

Senator McGAURAN —Given that the minister went out of his way twice.

Senator MILNE —I do not understand now what it does.

Mr Bremner —There was a minor misinterpretation on my behalf. I was talking about the road-user charge as opposed to the fuel indexation. My apologies.

Senator McGAURAN —The minister also states:

Nor does this bill implement indexation of the road user charge.

  • That is in the second reading speech.

CHAIR —It allows it to be done through the regs.

Mr Bremner —I will defer to my colleagues from the ATA. It is certainly not the fuel excise, but the road-user charge. That is our fundamental concern, because if it is to be applied the proposed increase already could possibly occur within 12 months, and so over a period of five years it could be seen to rise as much as 6c per litre. Whilst that might sound relatively minor, it could have a significant distortion/impact on the market.

Senator McGAURAN —The minister also states in his second reading speech, in regard to the Fuel Tax Act and increase, ‘This is not a tax.’ You called it a tax. Would you like to comment on that?

Mr Bremner —It is referred to as a road-user charge. It is up to the individual to decide whether a charge is a tax.

Senator McGAURAN —Do you feel as though it is a tax?

Mr Bremner —We believe that it is a tax.

Senator McGAURAN —So do I.

Senator MILNE —Isn’t it cost recovery?

Mr Bremner —We are not opposed to the idea of the road-user charge. We are opposed to indexation. Therefore, we very much agree in paying as we go. Certainly we would prefer not to pay the road-user charge. Our key concern is in how it is calculated going forward. We do not believe that the proposed indexation allows for the transparency and examination. To be quite honest, the NTC was put through a rather gruelling process by an industry that was profoundly aware of what they were doing. We feel there was some great resistance by the NTC to be completely transparent with a number of the figures for us to do a full analysis of the process. Indexing the process essentially removes any obligation for it to be a fully transparent process.

Senator McGAURAN —I know we are getting our regos mixed up with our fuel excise. I cannot recall that the previous witnesses were talking about what was the effect, but the inflationary effect is a concern, the knock-on effect down to the supermarket shelves. They spoke of 13c in the $100. I assume it was rego and fuel excise together. I should have had that clarified. Have you done any calculations and would you say that the 13c in the $100 is near enough to the correct figure? You were sitting in the back when they said it.

Mr Bremner —Unfortunately, we were not provided with the figures by the NTC that they made those calculations on. We are not really in a position to be able to make those judgements because we were not provided access to the figures that they based those judgements on.

Senator McGAURAN —That is fair enough. Do you have any understanding, even within your own sphere, of the knock-on effect?

Mr Bremner —The knock-on effect is significant, almost regardless of what it is. It will have major implications on the industry insofar as being able to pass on the expenses in the first place. Our industry traditionally, unfortunately, has a habit of absorbing prices rather than passing them on purely through competition within the industry itself. It is a concern of ours and it is an expense that we will have to pass on. It will necessarily have inflationary impacts.

Senator McGAURAN —Have you done any calculations on what pass-on effect there would be?

Mr Bremner —Not specifically, purely because we have not had access to the figures. However, my colleague from the ATA will be able to provide that.

Senator McGAURAN —I wonder if we cannot clarify that figure.

CHAIR —I can help you here. Every trucking business will be different in terms of the commodity they cart, the contracts they have entered into and, most importantly, the kilometres they travel per year. I appreciate that you want to dig down and get some figures, but I have to support Mr Bremner here; no-one will be able to give you that. Every truck would be different, as would every trucking operation and every run.

Senator McGAURAN —Absolutely. I will ask the secretary to clarify what the 13c in the $100 was related to when he writes his report.

CHAIR —You might want to write a letter to the NTC. I have a couple of questions. I confess; I am an ex-truckie, an ex-owner driver. Anyone who had done their homework would have already worked that out. You are right; this industry is shocking for trying to absorb. There is some thickness in the heads of most transport operators who think they cannot pass it on because the maggot down the road will pinch their load. I understand that.

Now I have got that off my chest, we were talking about automatic indexation. Just to clarify this, my reading of the bill very clearly says that it can be allowed through the regs—not the bill, but through the regs—of the automatic indexation. You have been around since 1989, when you formed your association, and you obviously have a lot of experience tied up there out in the back of New South Wales and beyond. I am an ex-road train operator, too, so I do know the hassles. I would have thought indexation would have been the best way to go. We get ourselves in a pickle in this industry because we turn everything into a political hot potato. When there is an election we all scream that we are all going to go broke. Wouldn’t this give some certainty?

Mr Bremner —That is a very good point that you make. Our problem with the indexation is not being made aware of precisely how the charges are going up. More importantly, though, our concerns relate to the overrecovery. Our industry does not want to be charged more than it should be. Our fear is that through indexation, as opposed to individual analysis each time, it may allow the industry to be overtaxed.

CHAIR —We talk about $70 million that the government is going to put back into truck stops, black boxes, road maintenance and so on. To cut a long story short, I do not have to tell you the damage that is has done through the lack of upgrades to our roads over the years. One tyre is $600 or $700, let alone cracked windscreens and the damage you do to the rest of your truck. I could talk to you all day on trucking issues, but there being no further questions, I thank you for making the effort to come along today.

 [4.41 pm]