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2000

 

 

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

INTERSTATE ROAD TRANSPORT CHARGE AMENDMENT BILL 2000

INTERSTATE ROAD TRANSPORT AMENDMENT BILL 2000

 

 

 

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

 

(Circulated by Authority of the Minister for Transport and Regional Services, the Honourable John Anderson MP)

 

 

 



 

 

INTERSTATE ROAD TRANSPORT CHARGE AMENDMENT BILL 2000

INTERSTATE ROAD TRANSPORT AMENDMENT BILL 2000

 

 

 

 

OUTLINE

 

The purpose of the Interstate Road Transport Charge Amendment Bill 2000 andthe Interstate Road Transport Amendment Bill 2000 is to implement updated nationally consistent heavy vehicle registration charges, that have been agreed by the Australian Transport Council, comprising the Commonwealth and State and Territory Ministers responsible for Transport.

 

The Bills form part of a system of nationally consistent road transport laws envisaged under the Inter-governmental Agreements on Road Transport signed by Heads of Government in 1991 (the Heavy Vehicles Agreement) and 1992 (the Light Vehicles Agreement), which are scheduled to the National Road Transport Commission Act 1991 .  In accordance with the Agreements, it is intended that the Road Transport Charges (Australian Capital Territory) Amendment Bill 2000 will amend the substantive law of the Australian Capital Territory in respect of heavy vehicle registration charging.  Victoria and the Northern Territory intend to adopt the Road Transport Charges (Australian Capital Territory) Amendment Bill 2000 unchanged as the law in their respective jurisdictions.  The remaining States intend to adopt the substance of the Bill in their own legislation.  For vehicles registered under the Interstate Road Transport Act 1985 , the Interstate Road Transport Charge Amendment Bill 2000 and the Interstate Road Transport Amendment Bill 2000 implement the nationally agreed provisions.

 

The Bills contain provisions relating to:

 

·          revisions to definitions of classes of heavy vehicles for charging purposes - one of these definitions, that of trailer appears in the Interstate Road Transport Act 1985 , necessitating amendment of that Act; and

 

·             the levels of heavy vehicle registration charges to be levied for 2000/2001 and later years . ; and

 

·          the application of these charges in later years, including a provision to allow the Australian Transport Council to agree, through an annual vote, to these charges being indexed by the Consumer Price Index in 2001/2002 and later years.

 

The charges and definitions in the Bills have been developed by the National Road Transport Commission in consultation with State and Territory registration authorities and transport agencies, the Commonwealth, the transport industry, and other interested parties.

 

FINANCIAL IMPACT STATEMENT

 

There will be no direct financial impact for the Commonwealth, as all charges collected by States and Territories for Federally registered vehicles are returned to the States and Territories in proportion to where road use occurs. 

 

The proposed annual registration charges, when implemented by the Commonwealth and all States and Territories, are estimated to raise around $424 m Australia wide, an increase of 5.5% on the sum collected at the existing rates of charges.  There would be no change in annual charges for around 80% of heavy vehicles.  Charges for the heavier classes of heavy vehicles increase, as current charge levels for these vehicles under-recovers the costs of their road use.

 

REGULATION IMPACT STATEMENT

 

The updated registration charges and definitional changes in the Road Transport Charges (Australian Capital Territory) Amendment Bill 2000 , Interstate Road Transport Charge Amendment Bill 2000 , Interstate Road Transport Amendment Bill 2000 are part of a nationally consistent charging regime, being implemented concurrently by the Commonwealth and all States and Territories.  The current national charges were calculated in 1992 and implemented nationally in 1995/96, and no longer reflect the road use costs of heavy vehicles.

 

Charges do not increase for 80% of heavy vehicles, and increases range from 5 to 15% for most vehicles that do experience an increase.  Increases are for heavier vehicles that updated data shows are paying too little to recover their road use costs - competitive neutrality is improved.

 

Increases represent around 1% of operating costs, and are expected to have little impact in freight costs, particularly due to the much larger expected benefits due to concurrent tax system changes.

 

States and Territories will improve the recovery of road spending from users (although the charges are not hypothecated to roads).

 

Definitional changes align charging definitions with other national legislation, and make the charging system simpler and more easily understood and administered.

 

An extensive consultation process was undertaken in developing the new charges.   The complete Regulation Impact Statement is attached.



 

NOTES ON CLAUSES

 

These notes cover clauses in the Interstate Road Transport Charge Amendment Bill 2000 and the Interstate Road Transport Amendment Bill 2000 .

 

INTERSTATE ROAD TRANSPORT CHARGE AMENDMENT BILL 2000

 

Clause 1 - Short Title

 

This clause provides for the Act to be cited as the Interstate Road Transport Charge Amendment Act 2000.

 

Clause 2 - Commencement

 

Clause 2 provides that the Act commences on a day to be fixed by proclamation, and that it will commence automatically on 1 January 2001 if it has not been proclaimed by that date.  Transport Minsters have agreed to target an implementation date of 1 July 2000 for the implementation of the updated charges.  However, if the amendments are not in place prior to 1 July 2000, it is intended that the Act will be proclaimed to commence immediately it receives Royal Assent.

 

Automatic commencement on 1 January 2001, if the Act has not been proclaimed before that date, allows time for unforseen practical administrative delays, while providing certainty that the new charges will commence no later than the beginning of the calender year 2001.

 

 

Clause 3 - Schedule s

 

This clause explains that the effective provisions of the amendments are contained in the schedule to the Act.

 

Schedule 1 - Amendment of the Interstate Road Transport Charge Act 1985

 

Paragraph 1 - at the end of subsection 4(1)

 

This paragraph adds a reference to Part 2 of the Schedule to the Act, which contains charges that apply to various types of vehicles and trailers.  This is intended to make clear that this Act is not intended to cover charges for vehicles that a do re not   appear in Part 2 of the Schedule.  registrable under the Interstate Road Transport Act 1985 .

 

Paragraph 2 - Subsection 5(1)

 

In the Act, existing section 5(1) provides for the application of the charges that were implemented in 1995.

 

As the existing charges are updated by these amendments, and new section 6 introduces indexation arrangements, this paragraph substitutes a new subsection that provides how charges will be determined when the amendments commence:

 

·             between the commencement of the amendments and 30 June 2001, according to the new charges in Part 2; and

 

·             in the year beginning 1 July 2001 and following years, as calculated under new section 6.

 

Paragraph 3 - Subsection 5(2)

 

Paragraph 3 2 amends this subsection to remove the reference to the table in Part 2 of the Schedule, as the amended Part 2 will contain more than one table.

 

Paragraph 4 - Section 6

 

Paragraph 4 replaces the existing section 6 of the Act, which allows Regulations to be made to increase or decrease charges by up to 5% in any year, with a new provision that provides that heavy vehicle charges for the year starting 1 July 2001 and later years may be indexed by the Consumer Price Index (CPI) for the year ending the previous 30 September. 

 

New subsection 6(3) provides that if the CPI for a year is 1 or less (that is, if there is a zero rate of inflation according to the CPI, or deflation), then charges will remain the same as the previous year.

 

Under new subsection 6(4), however, indexation will only be applied in any year if the Australian Transport Council (ATC - the Council of Commonwealth, State and Territory Transport Ministers) so decides. 

 

The ATC will vote on the application of indexation to charges in particular years in accordance with the voting rules in the Heavy Vehicles Agreement, an intergovernment agreement on cooperative road transport reform signed in 1991 and scheduled to the National Road Transport Commission Act 1991 .  Clause 16(b) of the Heavy Vehicles Agreement requires a majority vote by ATC to change the level of charges.  ATC will take this vote before the start of the year for which they are considering indexation.

 

New subsection 4(6) provides that if registration charges are indexed, they are rounded up to the nearest whole dollar.

 

Paragraph 5 - Section 7

 

As it is no longer intended, under section 6, to make R egulations to vary charges by up to 5%, but rather to apply indexation if the Australian Transport Council votes to do so nationally, the reference to making regulations for section 6 is deleted.

 

Paragraphs 3 6 to 3 0 3 - Part 1 of Schedule

 

These paragraphs amend, repeal or delete a number of definitions in the Act.  The new and amended definitions are of vehicles and vehicle components, and change and clarify how some vehicles are defined for charging purposes, and also to simplify the calculation of charges , and to provide greater consistency between the Act and other legislation developed under the national road transport reform process through the National Road Transport Commission. .

 

There are revised definitions of ‘axle’, ‘axle group’, ‘bus’, ‘bus (type 2)’, ‘dog trailer’, ‘medium combination truck’, ‘pig trailer’, ‘pole type trailer’, ‘semi-trailer’, and ‘short combination truck’.

 

The revised definition of ‘short combination truck’ has the mass of the vehicle as part of the features that distinguishes between this vehicle and a , medium combination truck , for charging purposes.  However, it is not intended that a vehicle will attract a higher charge if its operation at higher mass limits, for which it may be eligible under the Interstate Road Transport Regulations 1985 (if it has road friendly suspension and satisfies certain other conditions), would mean the vehicle which is classified as a , short combination truck , at the normal mass limits under the Interstate Road Transport Regulations 1985 instead falls into the , medium combination truck , charging category, ie for the purposes of calculating charges the normal mass of a vehicle is to be used.

 

There are new definitions inserted for ‘converter dolly’, ‘drawbar’, ‘driver’, ‘fifth wheel coupling’, ‘load carrying trailer’, ‘long combination prime mover’, ‘low loader, low loader dolly’, ‘quad axle group’, ‘single axle’, ‘single axle group’, ‘tandem axle group’, ‘tri-axle group’, and ‘twin-steer axle group'.

 

Paragraph 1 4 establishes a new definition of long combination prime mover in place of the separate definitions for long combination prime mover (type 1) and long combination prime mover (type 2) , which are repealed in Paragraphs 1 5 and 1 6 .  A single charge will now apply to all long combination prime movers, removing the need for operators of these vehicles to distinguish between the two types when they nominate how the vehicle should be registered. 

 

A number of definitions are repealed, because they have been made redundant by new and amended definitions as part of the simplification of the classification of vehicles for charging purposes .  Terms repealed are:  ‘dolly’, ‘long combination vehicle (type 1)’, ‘long combination vehicle (type 2)’, and ‘Registration Authority’.  The term Registration Authority is deleted because it is defined in section 7 of the Interstate Road Transport Act 1985 , and it is intended that the term used in the Act should have the same meaning as Registration Authority in the Interstate Road Transport Act 1985 .

 

Paragraph 3 1 4 - Clause 2 of Part 1 of the Schedule

 

The amendment clarifies the method of determining the number of axles a vehicle has for the purpose of calculating the appropriate charge to ensure that it does not apply to the new definitions of axle groups.

 

Paragraph 3 2 5 - Clause 3 of Part 1 of the Schedule

 

Paragraph 3 2 5 inserts a new amends the existing clause 3 to paragraph 3 which make s clear that where a semi trailer is used with a converter dolly, or where a low loader is used with a low loader dolly, these are to be regarded as a single trailer when determining how many trailers a prime mover may tow.  This is important, as different charges are applied to a short combination prime mover, a medium combination prime mover, and a long combination prime mover, and prime movers may fall into different classes depending on the number of trailers they are nominated to tow.

 

Paragraph 36 - Part 2 of the Schedule

 

Paragraph 36 repeals existing Part 2, which contains the current charges, and inserts a new Part 2 containing the updated charges . .  Under amended subsection 5(1), the charges that apply from the commencement of these amendments for the year commencing 1 July 2000 are simply calculated from Part 2 of the Schedule.  As amended subsection 5(1) specifies, for later years, the indexation provision in new section 6 (see paragraph 4 above) will use the charges in this Part as a base for calculating later year charges.

 

New item 1 outlines the charges for load carrying vehicles in a table by vehicle type and by number of axles.

 

New item 2 explains how to calculate the charge for a load carrying trailer, converter dolly or low loader dolly.

 

New item 3 lays out charges for buses in a table by vehicle type and number of axles.

 

 

It is not intended that vehicles that may be eligible for “higher mass limits” (mass concessions available if certain conditions are met, including road friendly suspensions) would be subject to higher registration charges under these amendments because they operate at the concessional mass.

 

Paragraph 37 - Application of Amendments.

 

This paragraph makes clear that the revised charges apply to heavy vehicle registrations that come into force on or after 1 July 2000, if the Act has commenced by that date, or on or after the date of commencement if it is after 1 July 2000.  This means that a new registration that is paid when these amendments have commenced is charged at the applicable new rate.  Similarly, if a registration is renewed and the date that the renewal comes into force is on or after the date of commencement of these amendments, the applicable new charge will apply.  Under subsection 9(4) of the Interstate Road Transport Act 1985 , a renewal comes into force immediately after the existing registration expires.

 

The new charges in part 2 do not apply to registrations that come into force before 1 July 2000, even if the Act is proclaimed before then.

 

 

 

INTERSTATE ROAD TRANSPORT AMENDMENT BILL 2000

 

Clause 1 - Short Title

 

Clause 1 provides for the Act to be cited as the Interstate Road Transport Amendment Act 2000.

 

Clause 2 - Commencement

 

As the amendment in this Bill is consequential to the amendments in the Interstate Road Transport Charge Amendment Bill 2000 , Clause 2 provides that the Interstate Road Transport Amendment Act 2000 commences immediately after the commencement of the Interstate Road Transport Charge Amendment Act 2000 .

 

Clause 3 - Schedule

 

This clause explains that the effective provisions of the amendments are contained in the Schedule to the Act.

 

Schedule 1 - Amendment of the Interstate Road Transport Act 1985

 

Paragraph 1 - Subsection 3(1) (definition of trailer )

 

This paragraph amends the definition of ‘trailer’.  The amendment is to clarify the definition and make it consistent with the definition used in agreed nationally uniform road transport legislation, and is not intended to change the meaning of the definition.

This paragraph amends the definition of ‘trailer’.  The amendment is to clarify the definition and make it consistent with the definition used in agreed nationally uniform road transport legislation.  It is not intended to change the practical scope of vehicles falling under the definition for the purposes of the Interstate Road Transport Act 1985 or the Interstate Road Transport Regulations , as the Interstate Road Transport Legislation encompasses only goods or passenger carrying vehicles engaged in interstate trade or commerce.

 



 

 

 

UPDATING HEAVY VEHICLE CHARGES

 

Regulation Impact Statement

 

November 1999

 



REPORT OUTLINE

Date :                                      November 1999

ISBN Number :         0 642 54416 6

Title :                                      Updating Heavy Vehicle Charges: Regulatory Impact

Statement

Address:                                 National Road Transport Commission

Level 5/326 William Street

MELBOURNE    VIC     3000

Internet:                                www.nrtc.gov.au

E-mail:                                   nrtc@nrtc.gov.au

Type of Report :       Regulatory Impact Statement

Objectives :               Improve transport efficiency and equity, reduce administration costs, improve road safety and the environment

NRTC Programs :   Charges

Key Milestones :      First Charges Determination accepted by Ministers in August 1992

National charges implemented by October 1996

Discussion paper on updating national charges released for

comment in August 1998.  Extensive public consultations

followed

Abstract :                   This report is a regulatory impact statement on proposals to update national heavy vehicle charges for the use of Australia’s roads.  National road use charges for heavy vehicles were first calculated in 1992 and implemented between July 1995 and October 1996, but have not been updated since they were first calculated.  Since then there have been significant changes in the pattern and amount of road expenditure, better understanding of the link between road use and road expenditure, and changes in use of roads by Australia’s heavy vehicles.  In addition, a number of inconsistencies in the level of charges for some vehicles have been raised, along with concerns about the administration of the charges.  This report updates the charges with new data and addresses the various concerns about the initial set of charges.

The Commission proposes that for most vehicles, registration charges would not change. Increases of between 5 and 15 per cent are proposed for six-axle articulated trucks, B-doubles and road trains, to match the higher costs attributed to them.

 

Key words :                           charges, heavy vehicles, road cost recovery, pricing, roads

Comments by :          9 October 1998

Comments to be addressed to :

Chief Executive

National Road Transport Commission

PO Box 13105

LAW COURTS    VIC     8010



 



SUMMARY

WHO SETS THE CHARGES AND WHAT IS THE PROCESS?

The National Road Transport Commission is responsible for regularly reviewing the level of charges as part of its role to improve road transport’s efficiency and safety and reduce its environmental impacts.  It is required to use a method set by governments, and to make assessments as to whether charges are at the right levels.  These include taking into account the likely safety and environmental effects.

These assessments are contained in a “Determination”, which is recommended to Australia’s Transport Ministers for decision.  Heavy vehicle charges have not been updated since the First Determination in 1992.

This Regulatory Impact Statement relates to the Second Determination, which included taking into account the effects of the GST.

How ARE The charges calculated?

Charges ensure that the road transport sector ‘pays its way’ for the costs heavy vehicles cause roads and bridges and are calculated by recovering the share of road spending (construction and maintenance) resulting from the use of heavy vehicles.  This is estimated at $1,280 million a year.

There are two parts to national heavy vehicle charges: a fuel charge (part of diesel excise) which comprises around two thirds of the total charge, and a fixed annual registration charge.

In the First Determination, the lighter trucks subsidised the heaviest vehicles, which meant that charges for semi-trailers and other articulated vehicles were less than their share of road expenditure.

Charges are determined nationally because it is important that they are consistent throughout Australia.

What has Changed Since 1992?

Since the First Determination was approved in 1992:

·          road spending has increased by 37% for arterial roads and by 15% for costs attributed to heavy vehicles; and

·          there is less use of rigid trucks and significantly more use of articulated trucks.

The changes to road spending and other factors detailed above mean that in total, road spending related to heavy vehicles has increased by approximately 15% (or around $470 million).  Consequently, the updated charges must recover this amount.

HOW HAVE THE CHARGES BEEN UPDATED?

The charges have been updated to recover the additional road spending by:

·          the fuel (diesel) charge being increased from 18 cents per litre to 20 cents per litre (in line with increases in the general price level); and

·          increasing registration charges for some vehicle types to recover the remaining costs.

Increasing the fuel charge does not mean that the diesel excise increases but that a higher percentage of the existing diesel excise is regarded as part of the road transport industry’s contribution towards paying for its costs.

WHAT ARE THE MAIN ASPECTS OF THE UPDATED CHARGES?

The main features of the updated charges are:

·          over 80 percent of charges (those for most rigid trucks and all buses) will not change because the charges are at the right level for these vehicles;

·          higher registration charges for articulated trucks, B-doubles and road trains because:

§   of the large increase in the use of bigger trucks (and therefore increased costs for roads and bridges); and

§   the cross-subsidy by lighter trucks has been removed as this is no longer defensible under the taxation reforms, which will significantly reduce how much the industry pays in taxation.

·          the need to nominate the use of road train prime movers for double or triple work has been abolished; and

·          a consistent approach to charges for specialist vehicles (eg mobile machinery, cranes and plant) will be introduced.

WHY IS THE INCREASE IN THE B-DOUBLE CHARGE HIGHER THAN FOR OTHER VEHICLES?

There are two reasons why this is the case:

·          because B-doubles are highly utilised in that they are more often fully loaded and travel twice as far as six-axle semi-trailers; and

·          because B-doubles are relatively fuel efficient, the same fuel charge recovers a smaller amount of road costs than other vehicles, which means that a higher percentage of costs must be recovered from the registration charge.

WHY THE HIGH INCREASE FOR THREE AXLE TRUCK AND DOGS OVER 42.5 t?

When the First Determination was done, truck-trailers were almost always restricted to 42.5 tonnes.  Since then, several States have permitted them to operate at higher mass limits. This increases road costs that must be recovered in higher charges.

WHEN WILL THE NEW CHARGES COME INTO EFFECT?

Subject to their approval, State and Territory governments are aiming to introduce the charges from 1 July 2000, although some governments may implement them several months later due to the time needed to update computer systems, etc.  Once introduced, any new charge will only apply from the next date of registration renewal.

WILL CONCESSIONS STILL APPLY?

It is expected that governments will continue concessions for certain operators (in particular, for primary producers), as concessions are the best way to take into account vehicles that travel low kilometres.

 



Current and 2 nd Determination Charges

Vehicle Type

Size

Current Charge

2 nd Determination Charge

Up to 12.0t

Over 12.0t

$300

$500

$300

$500

Under 42.5t

$600 + $500 = $1 100

$550 + $600 = $1 150

Up to 16.5t

Over 16.5t

$600

$800

$600

$800

Under 42.5t

Over 42.5t

$2 100 + 750 = $2 850

$2 100 + 750 = $2 850

$2 000 + $900 = $2 900

$3 800 + $900 = $4 700

Under 42.5t

Over 42.5t

$4 000 + 1 000 = $5 000

$4 000 + 1 000 = $5 000

$3 800 + $1 200 = $5 000

$3 800 + $1 200 = $5 000

Up to 20.0t

Over 20.0t

$900

$2 000

$900

$2 000

Up to 12.0t

Over 12.0t

$300

$500

$300

$500

 

$1 250

$1 250

 

$3 750

$3 400 + 600 = $4 000

 

 $3 250 + 750 = $4 000

$3 400 + $900 = $4 300

 

  4 250 + 1 500 = $5 750

$5 000 + $1 800 = $6 800

 

 $4 750 + 2 000 = $6 750

$5 000 + $2 400 = $7 400

 

 $5 250 + 3 250 = $8 500

$5 000 + $3 900 = $8 900



HOW FREQUENTLY WILL THE CHARGES BE UPDATED IN FUTURE?

Transport Ministers are considering a proposal that the charges be indexed in line with the Consumer Price Index to apply in the years between updates to the charges, commencing in July 2001. If approved by Ministers, Ministers would need to approve indexation applying in each year, based on recommendations by the NRTC.

WHAT CONSULTATION WAS THERE WITH INDUSTRY?

The charges were developed after extensive consultation with Transport Ministers (at the November 1999 meeting), the road transport and bus passenger industries, transport agencies and other organisations.  This included release of a discussion paper for comment, meetings in every capital city and consideration of written submissions. 

As a result of these discussions:

·          the NRTC reviewed fuel use figures for road trains in conjunction with the Northern Territory Trucking Association, and for buses with the Australian Bus and Coach Association; and

·          reviewed the expenditure allocated to road trains, which are almost exclusively used in remote areas.

As well, a workshop was held with interested parties to discuss the approach to special purpose vehicles and vehicles travelling low kilometres.

FOR MORE INFORMATION

For more information you can contact the Commission as follows:

National Road Transport Commission

PO Box 13105

LAW COURTS    VIC    8010

 

Level 5/326 William Street

MELBOURNE   VIC   3000

 

Tel:                            (03) 9321 8444

Fax:                           (03) 9326 8964   

E-mail                       nrtc@nrtc.gov.au



TABLE OF CONTENTS

REPORT OUTLINE................................................................................................................. i

SUMMARY.............................................................................................................................. iii

TABLE OF CONTENTS...................................................................................................... vii

LIST OF TABLES.................................................................................................................. ix

LIST OF FIGURES.................................................................................................................. x

1        STATEMENT OF THE PROBLEM............................................................................ 1

1.1     Summary.................................................................................................................. 1

1.2     Changes Since 1992................................................................................................. 2

1.2.1 Road Expenditure........................................................................................... 4

1.2.2 Expenditure Allocation Parameters................................................................ 4

1.2.3 Road Use........................................................................................................ 5

1.2.4 Fuel Use......................................................................................................... 7

1.3     Implications............................................................................................................. 8

2        DESIRED OBJECTIVE(S)........................................................................................... 9

3        STATEMENT OF THE PROPOSED REGULATION AND ALTERNATIVES 11

3.1     Introduction........................................................................................................... 11

3.2     Description............................................................................................................. 11

3.2.1 Fuel-based Charge....................................................................................... 11

3.2.2 Charging Schedule....................................................................................... 11

3.2.3 Changes in Structure.................................................................................... 14

3.2.4 Definitions..................................................................................................... 15

3.2.5 Concessions.................................................................................................. 16

3.2.6 Indexation..................................................................................................... 21

3.3     Alternatives............................................................................................................ 21

3.3.1 Fundamental approach................................................................................ 21

3.3.2 Structural and Legislative Issues................................................................... 23

3.3.3 Variations for Specific Vehicle Classes......................................................... 25

3.3.4 Indexation Options........................................................................................ 26

4        COSTS AND BENEFITS............................................................................................ 30

4.1     Basis of the proposals............................................................................................ 30

4.1.1 Taxation reforms........................................................................................... 30

4.1.2 Environmental concerns............................................................................... 31

4.1.3 Road safety................................................................................................... 31

4.2     Impacts on Operating Costs and Freight Rates..................................................... 31

4.3     Costs and benefits of improved cost recovery...................................................... 32

4.3.1 Cost recovery................................................................................................ 32

4.3.2 Pricing Signals.............................................................................................. 34

4.4     Consolidation of Charging Categories.................................................................. 34

4.4.1 Long Combination Vehicles.......................................................................... 34

4.4.2 Alternative Truck-trailer Charges................................................................. 35

4.5     Implications of Other Issues.................................................................................. 35

4.5.1 Special Purpose Vehicles.............................................................................. 35

4.5.2 Low Kilometre Vehicles................................................................................ 36

4.5.3 Light trailers................................................................................................. 36

4.5.4 Other definitions........................................................................................... 36

4.6     Indexation.............................................................................................................. 37

4.7     Summary of Impacts.............................................................................................. 38

4.8     Competition Assessment....................................................................................... 38

4.8.1 Restrictions on Competition.......................................................................... 38

4.8.2 Effects on Small Business.............................................................................. 40

4.8.3 Effects on Trade............................................................................................ 40

5        CONSULTATION........................................................................................................ 41

5.1      Consultative Process .............................................................................................. 41

5.2     Summary of Comments......................................................................................... 42

5.2.1 General Comments....................................................................................... 42

5.2.2 Special Purpose Vehicles.............................................................................. 42

5.2.3 Low Kilometre Vehicle Charges................................................................... 42

5.2.4 General Definitions....................................................................................... 42

5.2.5 Truck Trailer Charges.................................................................................. 42

5.2.6 Light Trailer Charges................................................................................... 43

5.3     Additional Data Sought........................................................................................ 43

6        EVALUATION............................................................................................................. 45

6.1     Resource Implications/Administrative Costs......................................................... 45

6.2     Impacts on Charge Levels..................................................................................... 45

6.3     Revenue implications............................................................................................. 45

6.3.1 Estimated Revenue from Alternative Charges.............................................. 45

6.4     Impacts of Indexation........................................................................................... 46

7        REVIEW........................................................................................................................ 47

8        REFERENCES............................................................................................................. 49

APPENDIX A:  EXPENDITURE ALLOCATIONS......................................................... 51

APPENDIX B:  SUMMARY OF CONSULTATIONS...................................................... 53

Special Purpose Vehicles................................................................................................. 59

Eligible Vehicles..................................................................................................... 59

Definition............................................................................................................... 60

Primary Purpose.................................................................................................... 61

Structural Modifications......................................................................................... 63

Charge Levels........................................................................................................ 63

Jurisdiction Comments........................................................................................... 64

Low Kilometre Vehicle Charges..................................................................................... 69

Who Would Qualify?.............................................................................................. 69

How Would Low Kilometre Vehicles be Identified?............................................... 69

Charge Levels........................................................................................................ 70

General Definitions......................................................................................................... 70

Proposals to Amend Definitions............................................................................. 70

Truck-Trailer Charges...................................................................................................... 75

Short Combination Category................................................................................. 75

Identifying Heavy Truck-Trailers........................................................................... 76

Light Trailer Charges....................................................................................................... 78

Outcomes from the Workshop on Administration Issues (April 1999)................... 78

Proposals to Amend Definitions............................................................................. 78

APPENDIX C:  ROAD TRAIN SURVEY: SUMMARY OF RESULTS....................... 80

Purpose............................................................................................................................ 80

Survey Results........................................................................................................ 80

Implications for the Proposed National Heavy Vehicles Charges.................................. 81

APPENDIX D:  ESTIMATED CHANGES IN REVENUE BY STATE........................ 83

 

 

LIST OF TABLES

Table 1.1:   Comparison of Allocated Expenditure and Revenues: 1992 and 1998................... 1

Table 1.2:   Expenditure Allocations by Road Type................................................................... 3

Table 1.3:   Current and Previous Arterial Road Expenditure Estimates................................... 6

Table 1.4:   Fuel Consumption Rates for Buses and Road Trains.............................................. 7

Table 1.5:   Allocated Costs by Vehicle Type............................................................................ 8

Table 3.1:   The First National Heavy Vehicle Charges............................................................ 14

Table 3.2:   Proposed Annual Charges for Heavy Vehicles...................................................... 15

Table 3.3:   Summary of Definition Changes........................................................................... 17

Table 3.4:   Alternative Truck-Trailer Charges.......................................................................... 24

Table 3.5:   Annual Registration Charges for Vehicles Under 4.5 tonnes GVM..................... 27

Table 3.6:   Technical and “Corrected” Results of Heavy Vehicle Charges Calculations: Selected Vehicles........................................................................................................ 29

Table 4.1:   Estimated Implications of Taxation Reforms: Selected Vehicle Classes.............. 31

Table 4.2:   Estimated Expenditure Recovery.......................................................................... 32

Table 4.3:   Allocated Unit Expenditure................................................................................... 33

Table 4.4:   Proportion of Revenue Obtained from Fuel Charge: Selected Vehicles............... 34

Table 4.5:   Charges for a Hypothetical Fleet (Ten Rigid Trucks and Three Trailers).............. 35

Table 4.6:   Summary of Impacts.............................................................................................. 38

Table 4.7:   Comparison of Indexed and Recalculated Charges: Selected Vehicles................ 39

Table 6.1:   Estimated Change in Registration Revenues......................................................... 45

Table 6.2:   Comparison of Alternative (Removal of Short Combination Truck Category) Charges...................................................................................................................... 46

Table A. 1:.......... Detailed Expenditure Allocation Results..................................................... 51

Table B. 1:.......... Summary of Comments from August Discussion Paper.............................. 53

Table B. 2:.......... Revised Proposals for Special Purpose Vehicle Definitions......................... 67

Table B. 3:.......... Summary of Differences............................................................................... 71

Table B. 4:.......... Jurisdiction Comments Regarding General Definitions............................... 75

Table B. 5:.......... Changes in Response to Comments.............................................................. 75

Table B. 6:.......... Jurisdiction Comments Regarding Truck-Trailers........................................ 77

Table B. 7:.......... Jurisdiction Comments Regarding Light Trailers......................................... 79

Table C. 1:.......... Reported Proportions of Travel by Majority Use......................................... 80

Table D. 1:           Estimated Change in Registration Revenue for NSW................................. 83

Table D. 2:           Estimated Change in Registration for Victoria............................................ 83

Table D. 3:           Estimated Change in Registration Revenue for Queensland....................... 84

Table D. 4:           Estimated Change in Registration Revenue for South Australia................. 84

Table D. 5:           Estimated Change in Registration Revenue for Western Australia.............. 85

Table D. 6:           Estimated Change in Registration Revenue for Tasmania........................... 85

Table D. 7:           Estimated Change in Registration Revenue for the Northern Territory....... 86

Table D. 8:           Estimated Change in Registration Revenue for the ACT............................ 86

 

 

LIST OF FIGURES

Figure 1.1:.......... Separable and Non-separable Expenditure: All Roads................................... 3

Figure 1.2:.......... Costs Allocated for Arterial and Local Roads............................................... 4

Figure 1.3:.......... Comparison of Vehicle Use between 1992 and 1997.................................... 7

Figure 1.4:.......... Comparison of Vehicle Fleets between 1992 and 1997................................. 7

Figure 3.1:.......... Current and Proposed Charges (Selected Vehicles)..................................... 13

Figure C. 1:         Proportion of Road Train Travel by Load Level and Road Condition........ 81

 

 



STATEMENT OF THE PROBLEM

1.1          Summary

Roads in Australia have features of public goods.  Any member of the public can use roads provided they abide by the rules and standards of road use.  With the exception of a small number of toll roads, there are no direct fees for road use.  Instead, a national system of heavy vehicle charges has been agreed by all the State, Territory and Federal governments to recover the costs of providing and maintaining national highways, arterial and local roads for heavy vehicles.  Heavy vehicles are responsible for a greater proportion of the road maintenance costs than light vehicles, and governments have decided that that cost should not be borne by tax payers, but rather by the operators of the heavy vehicles who cause these costs.  Recovering an appropriate share of these costs from heavy vehicle operators is seen as important in ensuring that operators take account of the costs to road authorities of heavy vehicles using roads when deciding on what type of vehicle to operate and what trips to undertake.

Costs of providing and maintaining roads for use by light vehicles are not subject to a national cost-recovery charging system.  Expenditure that does not relate to road construction and maintenance is not recovered by the charges, nor is expenditure on toll roads.  Taxes and charges applying to light vehicles are the province of individual State and Territory governments.

The National Road Transport Commission is given responsibility for recommending national heavy vehicle charges to the Australian Transport Council under the National Road Transport Commission Act 1992.

The current set of national heavy vehicle charges was set in 1992, when the National Road Transport Commission was first established.  While the charges were not fully implemented until October 1996, they have not been updated since they were set in 1992.

As a result, they are now out of date and do not fully recover the costs of road use attributable to classes of heavy vehicles. The heavy vehicle share of road expenditure has increased significantly since 1992.  This is because:

·          Road expenditure has increased, particularly for repair of pavements due to use of heavy vehicles; and

·          Vehicle use has also increased with much greater use of the larger heavy vehicles.

Table 0.1 Table 0.1 compares the heavy vehicle share of road expenditure and revenue obtained from charges in 1992 with estimates for 1998.  In aggregate the under recovery of revenue is not large.  However, the degree of under-recovery of some vehicles, due to their use and certain characteristics, is more significant.  For example around 10 per cent of road costs for 6-axle articulated trucks and twenty per cent for road trains are not recovered by current charges.

As the productivity of heavy vehicles improves and the road expenditure increases, the heavy vehicle share of road construction and maintenance will increase further.  Consequently, under-recovery (in particular for the largest vehicles), can be expected to increase over time.  Therefore it is important that the charge levels are regularly updated.

 

Table 0 . 1 :       Comparison of Allocated Expenditure and Revenues: 1992 and 1998

($ million)

Heavy Vehicle Share

1992 Estimates

1998 Estimates

 

 

Current Charges

Proposed Charges

Expenditure

 

 

 

Total Allocated Expenditure

1 023

1 283

1 283

Revenue

 

 

 

Fuel Revenue

660

871

968

Registration Revenue

367

399

425

Total Revenue

1 027

1 270

1 393

 

Further, since the national heavy vehicle charges were implemented, a number of inequities have emerged for some types of heavy vehicles, where charges do not reflect their share of costs.  Charges do not appear to be sufficient to recover the costs of larger heavy vehicles, such as articulated trucks, road trains and B-doubles.  For some other heavy vehicles (likely to be a relatively small number of vehicles), charges may be out of step with their share of costs in comparison to other vehicles.  This may be the case for vehicles travelling low annual kilometres, light trailers with multiple axles and smaller truck-trailers.  These inequities may lead to inappropriate road-use incentives.

While the implementation of national heavy vehicle charges proceeded relatively smoothly and the system has generally worked well, some difficulties in administering the existing charges have also arisen.  These difficulties relate to the way vehicles are defined and the structure of charges, which requires the way in which vehicles towing trailers will be used to be nominated by the operator when the vehicle is registered or registration renewed.  Minor definitional problems relate to:

§   inconsistencies between definitions used in the heavy vehicle charges and definitions of vehicles for other purposes under other nationally developed legislation; and

§   the way Special Purpose Vehicles (that is, a vehicle which is built or permanently modified for a primary purpose that is not the carriage of passengers or goods) are classified. 

Some jurisdictions have reported difficulties sometimes occur with the system of operators nominating whether they will tow trailers (and how many trailers they will tow).  The greatest problems experienced relate to nominating prime movers for use in different road train configurations, and nominating whether rigid trucks will tow trailers.  Despite these problems, the system of national charges has worked quite effectively without imposing a significant additional administrative burden on registration authorities.

1.2          Changes Since 1992

The levels of heavy vehicle charges are calculated using a expenditure allocation process that depends on road expenditure, road use, and expenditure allocation parameters [1] .  The process shares expenditure on different types of road works between classes of road users, in proportion to their use of the road system.  Different measures of road use are used to allocate different types of expenditure, depending on what drives the need for each type of road work.  Once the share of costs allocated to each class of road user has been determined, the two part charging system can be applied.  The charging system comprises a variable charge based on a notional fuel charge (a notional part of diesel excise) and a fixed charge levied as an annual registration charge.

As a result of this system, the level of annual registration charges depend on the following:

§   Road expenditure in each of the 13 categories of expenditure shown in Table 0.4 Table 0.3 ;

§   Road use measured by:

-           Average annual kilometres travelled;

-           Passenger car equivalent units;

-           Average gross mass; and

-           Equivalent standard axles.

§   The share of each category of expenditure believed to relate to the level of road use (that is, the expenditure allocation parameters); and

§   The rate of fuel consumption for each type of vehicle.

Since 1992 when the current national heavy vehicle charges were calculated, all of these things have changed, some significantly.

The current method of cost allocation involves making estimates of road expenditure, developing a cost allocation template and estimating road usage, then combining the three data sets to arrive at estimates of expenditure allocated by vehicle class.

Instead of separately costing past efforts to construct roads and future maintenance requirements (and converting the results to an annualised value), it is assumed that current expenditure provides a reasonable proxy for annualised costs of providing and maintaining roads for the current vehicle fleet.  This approach is known as the PAYGO, or pay-as-you-go, approach to setting cost-allocation targets [2]

Table 0.2 Table 0.2 , Figure 0.1 Figure 0.1 and Figure 0.3 Figure 0.2 show estimates of the share of separable and non-separable road expenditure for both light and heavy vehicles by road type.  Around 30 percent of the allocated costs are attributed to heavy vehicles, and of this, 26 percent are separable costs and therefore vary with road use.  The proportion of costs allocated to light vehicles is around 70 percent, with 15 percent of this varying with road use.

Details of the methodology used to determine the shares of expenditure attributable to different heavy vehicles are explained in the report Updating Heavy Vehicle Charges: Technical Report (NRTC 1998).

Table 0 . 2 :       Expenditure Allocations by Road Type

($ million)

Road Type

Type of Expenditure

Light Vehicles

Heavy Vehicles

Total

Arterial Roads

 

 

 

 

 

Separable

540

920

1 460

 

Non-separable

1 970

190

2 160

 

Total

2 510

1 110

3 620

Local Roads

 

 

 

 

 

Separable

140

260

400

 

Non-separable

530

20

550

 

Total

670

280

950

All Roads

 

 

 

 

 

Separable

680

1 180

1 860

 

Non-separable

2 500

210

2 710

Total

 

3 180

1 390

4 570

 

Figure 0.1 Figure 0.1 illustrates that the expenditure allocated to heavy vehicles is about half that allocated to light vehicles, despite the fact that there are more than three light vehicles for every heavy vehicle.  The figure also shows that most of the expenditure allocated to heavy vehicles varies directly with the amount of road use (that is, they are separable costs).

Figure 0 . 1 :     Separable and Non-separable Expenditure: All Roads (1995/96 to 1997/98)

Figure 0.3 Figure 0.2 emphasises the fact that a large proportion of the expenditure allocated to heavy vehicles are separable costs (that is, directly related to road use) for both arterial and local roads.  The opposite is the case with light vehicles.

 

 
                                                                                               Non-separable

 

 

 
                                                                                               Separable

 

Figure 0 . 3 2 :   Costs Allocated for Arterial and Local Roads (1995/6 to 1997/98)

Road Expenditure

Arterial road expenditure has been estimated from data provided by State and Territory road authorities. Local road expenditure was neither directly estimated nor allocated to vehicles in the 1992 charging calculations.  This has been rectified in the proposals to update heavy vehicle charges discussed in this Regulatory Impact Statement.  Nevertheless, further research is required in order to more accurately assess the shares of local road expenditure that are the responsibilities of different types of vehicles.  The local road expenditure used in the analyses reported here was estimated from data reported by the Bureau of Transport Economics, along with various other sources such as the Australian Local Government Association.  However, only part of total expenditure on local roads is included in the expenditure allocation process as a significant proportion of local road expenditure is not directly related to road use, being attributable to the social cost of providing a minimum level of access and related amenity services.

Current and previous arterial road expenditure estimates can be found in Table 0.4 Table 0.3 .  It is estimated that arterial road expenditure has increased in total by around 37 per cent, compared to the estimates used in the initial set of heavy vehicle charges.  There have been large increases in categories such as bridge maintenance and rehabilitation, pavement expenditure, safety/traffic improvements and earthworks.  There have been significant reductions in land acquisition, corporate services and miscellaneous expenditure.  Some of these changes are due to improvements in the way expenditure is estimated, while others reflect changes in how the budget for roads is spent.  The large increase in pavement-related expenditure has a significant impact on the costs attributed to heavy vehicles.

Expenditure Allocation Parameters

The expenditure allocation parameters establish what proportion of expenditure in each category is related to road use (that is, what proportion of expenditure is a separable cost, akin to marginal costs).  They also establish what measure of road use will be used to share these use-related costs among different groups of road users.  For example, 50 per cent of road rehabilitation costs (on average across the network) are believed to vary with road use and are shared between road users on the basis of Equivalent Standard Axle kilometres (a measure of the relative road wear responsibilities of different vehicles).

The expenditure allocation parameters used in the assessment of cost responsibilities for this update of heavy vehicle charges are set out in the report Updating Heavy Vehicle Charges: Technical Report (NRTC 1998).  They differ from those used in the First Charges Determination in 1992, based on research undertaken by ARRB Transport Research, as required in the Heavy Vehicles Agreement.  The revised expenditure allocation parameters allocate a smaller share of costs to the heaviest vehicles, as shown in the Technical Paper (NRTC 1998).

Road Use

The estimates of road usage that were used to allocated expenditure between classes of vehicles were developed by updating the 1995 Survey of Motor Vehicle Use.  These estimates included the number of vehicles, vehicle kilometres of travel, average gross mass-kilometres and fuel consumption - all of which are all used in the expenditure allocation process.  The methods used for developing road usage estimates are detailed in the report Updating Heavy Vehicle Charges: Technical Report (NRTC 1998).

The first determination work was based on 1988 SMVU figures that had been updated to 1992.  Information obtained from this Survey did not differentiate between the different vehicle classes in sufficient detail to allow vehicles towing trailers to be categorised fully, resulting in various inaccuracies.  A summary of these differences in vehicle categories follows;

B-doubles and Road Trains

-           B-doubles and Road Trains were not separated from other articulated vehicles in the 1988 SMVU figures used in the 1992 charging calculations.  However, in the estimates of road use for 1997 used to update expenditure allocation estimates, the data for these categories could be separated from other prime mover/semi-trailer combinations.  This had a significant impact on the averages for these classes.

-           A strong growth in these vehicle types is reflected in later updates, as more of the road network is opened up to them.

-           The estimates of road use presented in the Technical Paper indicate that B-doubles and Road Trains are highly utilised when compared to other articulated trucks.  This is due to their high productivity, greater load capacity and capital costs.

Truck-trailers

-           Large rigid truck and trailer combinations were separately identified in the Technical Paper analyses.  This allowed the heavier truck-trailer combinations to be separated from lighter combinations with lower load capacities.

-           By separately identifying heavier truck-trailer combinations, higher utilisation of these vehicles will not dominate the averages for smaller, lighter truck-trailers as occurred in the First Determination.

Special Purpose Vehicles

-           This category of vehicles is intended to include all vehicles that are not primarily used to carry passengers or freight.  The types of vehicles involved are widely varied, but relatively small in number, and the information from the SMVU was not very reliable.  NRTC commissioned a survey of special purpose vehicles, which now forms the basis for the refined estimates of use of these vehicles.

 

Table 0 . 4 3 :     Current and Previous Arterial Road Expenditure Estimates

Expenditure Category

Previous 1 ($ million, 91/92)

Current 2   ($ million, 97/98)

Change 3   (per cent)

Estimated Local Road Expenditure

A Servicing and Operating Expenses

240

300

            25

180

B Road Pavement and Shoulder Maintenance

 

 

 

 

B1       Routine Maintenance

         310

260

          -16

160

B2       Periodic Surface Maintenance of Sealed Roads

         200

240

            20

150

C Bridge Maintenance and Rehabilitation

            40

100

         150

60

D Road Rehabilitation

         210

510

         140

300

E Low Cost Safety/Traffic Improvements

         100

200

         100

110

F Asset Extension/Improvements

 

 

 

 

F1        Pavement Components

         390

550

            41

390

F2        Bridges

         210

240

            14

160

F3        Land Acquisition

         420

190

          -55

120

F4        Earthworks

         150

280

            87

160

F5        Other Extension/Improvement Expenditure

         290

530

            83

380

G Other Miscellaneous Activities

 

 

 

 

G1       Miscellaneous Works Expenditure

         130

50

          -61

30

G2       Corporate Services

         450

170

          -62

0

G3       Enforcement of Heavy Vehicle Regulations

          na 4

70

              ..

0

G4       Vehicle Registration

           Na

190

              ..

0

G5       Driver Licensing

           Na

160

              ..

0

G6       Loan Interest

           Na

160

              ..

0

Total

3 160

4 310

            37

2 200

Total allocated to vehicle use 5

      3 160

3 630

            15

950 6

na  Not available

..  Not applicable

Notes:    Figures may not add to totals due to rounding

1.        Average of 1995/96, 1996/97 and 1997/98 (budget) expenditure in 1997/98 prices

2.        Average of 1989/90, 1990/91 and 1991/92 - in 1992/93 prices (used to calculate July 1995 charges), and in 1997/98 prices (based on RCPI)  for comparison with current

3.        Percentage change in current estimates compared to previous estimates in 1997/98 dollar values

4.        Generally included in G2

5.        Total allocated to vehicle use does not include G3, G4, G5 and G6

6.        This figure assumes that 75 per cent of urban local road expenditure and 50 per cent of rural local road expenditure is solely to provide access and has not been included in cost allocated to vehicle use.

 

Figure 0.5 Figure 0.3 emphasises the large increase in the use of articulated vehicles, B-Doubles and Road Trains (which increased in total by around 32 per cent), and the shift away from rigid trucks (which decreased by 21 per cent) between 1992 and 1997.

Figure 0.7 Figure 0.4 shows the shift away from rigid trucks towards articulated trucks, road trains and B-doubles, with numbers of rigid trucks falling between the 1992 estimates and 1997 estimates.  This may be partly associated with more accurate identification of vehicle types that has been possible as a result of the introduction of the national heavy vehicle charges.

 

Figure 0 . 5 3 :   Comparison of Vehicle Use between 1992 and 1997

Figure 0 . 7 4 :   Comparison of Vehicle Fleets between 1992 and 1997

Fuel Use

Heavy vehicle charges are comprised of two components: the majority of costs are recovered through a fuel charge and the remainder through annual registration charges.  This means that the rate of fuel consumption for each vehicle class has a significant impact on the amount that must be obtained through annual registration charges.

Following the Heavy Vehicle Charges consultations held with each State and Territory in 1998, the NRTC collected additional data on fuel consumed by road trains and buses in order to validate the data used in updating charges.

The road train survey found that fuel rates used for road trains included in the sample differ from those used in the Technical Paper.  A summary of the results of this survey is included as Appendix C.  Similarly, the survey of buses found that fuel consumption rates were higher than the estimates used in the Technical Paper.

The table below presents the revised fuel consumption rates for road trains and buses.  These revised estimates have now been taken into consideration.

Table 0 . 5 4 :     Fuel Consumption Rates for Buses and Road Trains

 (litres/100 km)

Vehicle Class

August 1998 Discussion Paper

Revised Estimates

 

Buses (3 axle rigid)

24.6

36.8

Road Trains (3 trailers)

75.4

86.2

 

1.3          Implications

A summary of the expenditure allocation results by broad vehicle type is set out in Table 0.6 Table 0.5 . Separable costs form around 90 percent of the total allocated costs for articulated trucks and road trains, and about 70 percent of the total allocated costs for rigid trucks and buses.  On the other hand, for light vehicles only 20 percent of the total allocated costs form separable expenditure. Passenger Car Equivalent Units (PCU) are a measure of the relative effects on traffic service levels of vehicles of different sizes.  Less than 5 per cent of total allocated costs are allocated to PCU-km for all heavy vehicles.

Equivalent Standard Axle (ESA) loads are a measure of the relative road wear responsibilities of different loads on different axles.  The ESA-km for rigid trucks, articulated trucks, road trains and buses range from 38 to 54 percent of the total allocated cost for each of the vehicle classes.  Around 16 percent of total costs form the vehicle kilometres travelled for light vehicles, while for heavy vehicles the costs range between 2 and 6 percent.

Average Gross Mass (AGM) includes the weight of the truck itself, the loads it carries and the amount of travel empty and laden.  The AGM-km for road trains and special purpose vehicles form 35 and 37 percent respectively, of total allocated costs.

In order to recover the shares of expenditures allocated to different types of heavy vehicles, higher charges are necessary for some vehicles.  Detailed results of the expenditure allocations (by more disaggregate vehicle types) are shown in Appendix A.  These estimates update those presented in the Technical Paper with revised expenditure and fuel consumption estimates.

Table 0 . 6 5 :     Allocated Costs by Vehicle Type

Vehicle Class

Non-separable Costs

Separable Costs

Total

 

($ million)

($ million)

($ million)

Light vehicles (under 4.5t)

2 584

704

3 288

Rigid trucks

94

258

352

Articulated trucks

79

504

584

B-doubles

11

73

84

Road trains

15

174

190

Buses

16

38

55

Special purpose vehicles

2

17

19

Total

2 802

1 769

4 571

Total heavy vehicles (over 4.5t)

218

1 065

1 283

 

 



DESIRED OBJECTIVE(S)

The NRTC’s mission is to contribute to Australia’s economic, social and environmental future by playing the lead role in developing and coordinating road transport reform in Australia.  The Commission works in close partnership with road freight and passenger transport industries, governments with their agencies, police, community interest groups, safety and other organisations to develop and implement policies, practices and laws which:

·          make road transport and road use safer, more innovative and efficient;

·          introduce greater national transport uniformity and consistency;

·          reduce the environmental impact of road transport; and

·          reduce the costs of administration of road transport.

The process of setting charges for heavy vehicles is guided by the NRTC’s brief, contained in the Heavy Vehicles Agreement, which arose from work undertaken by the Commonwealth-State Overarching Group on Land Transport (OAG) as part of the Special Premiers’ Conference process (OAG, 1991) [3] .  The Commission is obliged to follow this process under the National Road Transport Commission Act 1991 .  The process can only be varied by agreement of all Premiers, Chief Ministers and the Prime Minister.  The process of setting charges is based on recovery of actual expenditure on roads on the basis of road wear, by vehicle class.

The Heavy Vehicle Agreement defines five Charging Principles that require NRTC to set charges:

      i.         to fully recover distributed road costs while minimising over-recovery from any vehicle class, thereby achieving full recovery of all road costs;

    ii.         adopting a common methodology;

  iii.         to determine and collect charges in a way that achieves a reasonable balance between administrative simplicity, efficiency and equity in the charging structure;

   iv.         to improve pricing, leading to a better allocation of resources, with investment decisions on equipment and infrastructure being based on more relevant demand signals; and

     v.         to minimise the incentive for operators to ‘shop around’ for lower charges and undermine the integrity of the national charging system.

These five principles form the over-riding objectives of the national heavy vehicle charges.  Within these objectives, the National Road Transport Commission takes into account the full social costs of road use, to the extent to which it is possible given the information available.  For example, in considering an objective of improving pricing signals, environmental and safety implications are taken into account in addition to the costs of providing and maintaining roads for heavy vehicles.  This is to ensure that the pricing system of itself does not encourage the use of less safe or more environmentally damaging vehicles.

A constraint on applying the principles set out above is the need to ensure that there is consistency between annual charges applying to light vehicles (especially those just under 4.5 tonnes) and charges for heavy vehicles (especially those just over 4.5 tonnes).

The Heavy Vehicles Agreement specifies that five instruments can be used as charges to recover the costs identified:

       i.         road use charge (component of diesel fuel excise);

     ii.         access charge;

    iii.         mass-distance charge;

   iv.         permit fees for over-dimension or overweight vehicles in higher mass or distance categories; and

     v.         so far as constitutionally possible, a fee for travel between zones that reflects full cost recovery and is administratively simple and enforceable.

The First Determination combined the access charge and the mass-distance charge into a fixed annual charge (annual registration charges).  This annual charge applied in conjunction with a fuel-based charge (the ‘road use charge’), forming a two-part charging system.  The First Determination also set permit fees for over-dimension or overweight vehicles, but did not use different zonal charges, nor did it use a fee for travel between zones.

The Agreement sets out that the Commonwealth should ensure that diesel fuel excise is no less than the fuel charge agreed to by Ministers.  It states:

the Commonwealth shall take all reasonable steps to ensure that there is levied and collected a tax on diesel fuel, being a tax at no less a rate than that of the Road Use Charge recommended by the National Commission and not disapproved by a simple majority of all the members of the Ministerial Council within two months after that recommendation.

In practice, diesel fuel excise (currently at around 43 cents/litre) is much larger than the current fuel charge (of 18 cents/litre) [4] .  The effective level of diesel excise will fall for heavy vehicles under taxation reforms.  The amount by which it falls will depend on the size of vehicle and where it is operated.  The full diesel excise has been subject to indexation in the period since the charges were introduced.

The Agreement allows the Commission to examine charges on a zonal basis.  In the First Charges Determination, the Commission proposed that the same charges apply in both zones. There are some concerns regarding the constitutional validity (which are also noted in the Heavy Vehicles Agreement) and the technical validity of calculating charges on a zonal basis, given the data available.

Voting arrangements within the Ministerial Council in respect to charges depend on these Zones.  The Zones were initially established as:

(A)                 The area within the States of New South Wales; Victoria; Tasmania and the Australian Capital Territory and the Jervis Bay Territory; and

(B)                 The area within the States of Queensland, Western Australia and South Australia and the Northern Territory

Membership of these Zones can be varied, but special voting arrangements apply.



STATEMENT OF THE PROPOSED REGULATION AND ALTERNATIVES

1.4          Introduction

Proposed changes to charge levels, structure and associated definitions are set out in section 3.2.  Alternative proposals were also considered (see Section 1.6 ).  These were;

1.        Development of a more equitable and efficient system of charging (Section 0 );

2.        Simplifications to the structure of charges for various combination vehicles (Section 0 );

3.        Maintain the existing charging approach, but alter the level of charges for some vehicles to improve the efficiency, equity, effectiveness and administrative simplicity of the scheme (Section 0 );

4.        Options for different approaches to updating charges through indexation arrangements (Section 0 ).

1.5          Description

The National Road Transport Commission proposes to simplify the existing system of charges for road trains.  Further simplifications for trucks towing trailers have also been canvassed, as discussed in Section 1.6 , but are not proposed.  In addition, the Commission is proposing that charges reflect the changes that have occurred since 1992, and that some charges be increased.

The proposed charges are illustrated for selected vehicles in Figure 0.1 Figure 0.1 .  This figure also illustrates current charges so that the changes proposed can be shown.

Fuel-based Charge

As noted in section 1.1.4, there are two components to the heavy vehicle charging system;

·          A fuel based charge which forms a notional component of diesel excise payments; and

·          Fixed annual registration charges.

Under the proposed changes, the fuel charge will increase from 18 c/l to 20 c/l. This figure was chosen for two reasons:

1.        indexing the 18 c/l upwards produces a figure of around 20 c/l, using either the consumer price index or Road Construction Price Index for indexation purposes;

2.        separately calculating the road use charge as the rate of diesel excise that would fully recover allocated costs for the lightest heavy vehicle type (within the rigid category) produces an estimate of 20 c/l [5]

These two results are almost identical and support use of the 20 c/l fuel based charge.

The current 18 c/l charge is notional as it does not affect the price of fuel paid at the pump and is only a small component of total federal excise.  Under taxation reforms to be introduced on 1 July 2000, the level of diesel excise will fall to an effective level of 20 c/l for many heavy vehicles (all vehicles over 20 tonnes gross mass and all heavy vehicles used in rural Australia).

Charging Schedule

The first set of national heavy vehicle charges are detailed in Table 0.1 Table 0.1 while the proposed updates to annual heavy vehicle charges are in Table 0.3 Table 0.2 . The proposed charges involve increases for some vehicle types, however most vehicles will have no change in annual registration charges.  The proposals would result in increases in charges for around 64,000 vehicles (including trailers), and no change in charges for around 280,000 vehicles. Comparison of the figures in the two tables reveals that there is no change in the charges for rigid trucks and buses.  On the other hand, charges for short combination and B-double prime have increased for all axle configurations.  The charge for load carrying trailers has also increased from $250 per axle to $300 per axle.  This charge also applies to low-loader and converter dollies.  The definition of short and medium combination trucks has also changed.  See Section 0 .

Instead of two separate categories of long combination prime movers (prime movers used in road trains), there is now a single category.  The categorisation of special purpose vehicles has also changed. Previously SPVs  were categorised into those within axle/axle group mass limits (type 1) and those exceeding these limits (type 2).  These categories have been replaced by 3 new categories:

·          T ype P refers to “plant-based vehicles” - a special purpose vehicle that is not a modified truck, but rather a specialised piece of plant such as (for example) a backhoe or agricultural harvester. 

·          Type O and type T refer to “truck-based vehicles” - a special purpose vehicle based on a modified truck or truck design.  The distinction between type T and type O depends on whether or not the vehicle exceeds mass limits specified by regulation.  “Truck-based” special purpose vehicles that have at least one axle or axle group which exceeds these mass limits are “overmass vehicles”, that is type O.  “Truck-based” special purpose vehicles that do not have any axle or axle group that exceeds these limits are categorised as type T. 

 

Table 0.3 Table 0.2 presents charges for individual vehicles and components (trucks and trailers separately).  However, these vehicles are used in combinations on the road system.  Figure 0.1 Figure 0.1 illustrates the changes in charges for these combinations as a total, as they are used on the road system.  For example, a 3-axle B-double prime mover with two 3-axle semi trailers would have been paying annual charges of $5 750 ($4 250 for the prime mover and $1 500 for the trailers) under the First National Heavy Vehicle Charges.  Under the 2 nd Determination Charges, the same configuration will be paying $6 800 ($5 000 for the prime mover and $1 800 for the trailers).

 



Figure 0 . 1 :     Current and Proposed Charges (Selected Vehicles)

Vehicle Type

Size

Current charge

Proposed charge

Up to 12.0t

Over 12.0t

$300

$500

$300

$500

Under 42.5t

$600 + $500 = $1 100

$550 + $600 = $1 150

Up to 16.5t

Over 16.5t

$600

$800

$600

$800

Under 42.5t

Over 42.5t

$2 100 + 750 = $2 850

$2 100 + 750 = $2 850

$2 000 + $900 = $2 900

$3 800 + $900 = $4 700

Under 42.5t

Over 42.5t

$4 000 + 1 000 = $5 000

$4 000 + 1 000 = $5 000

$3 800 + $1 200 = $5 000

$3 800 + $1 200 = $5 000

Up to 20.0t

Over 20.0t

$900

$2 000

$900

$2 000

Up to 12.0t

Over 12.0t

$300

$500

$300

$500

 

$1 250

$1 250

 

 $3 250 + 750 = $4 000

$3 400 + $900 = $4 300

 

  4 250 + 1 500 = $5 750

$5 000 + $1 800 = $6 800

 

 $4 750 + 2 000 = $6 750

$5 000 + $2 400 = $7 400

 

 $5 250 + 3 250 = $8 500

$5 000 + $3 900 = $8 900



Table 0 . 1 :       The First National Heavy Vehicle Charges

DIVISION 1 - LOAD CARRYING VEHICLES

Vehicle Type

2-axle

3-axle

4-axle

5-axle

Trucks

 

 

 

 

- Truck (type 1)

       $300

      $600

        $900

       $900

- Truck (type 2)

       $500

      $800

     $2 000

    $2 000

- Short combination truck

       $600

   $2 100

     $2 100

    $2 100

- Medium combination truck

    $4 000

   $4 000

     $4 250

    $4 250

- Long combination truck

    $5 250

   $5 250

     $5 250

    $5 250

Prime Movers

 

 

 

 

- Short combination prime mover

       $800

   $3 250

     $4 250

    $4 250

- Medium combination prime mover

(B-Double)

    $3 250

   $4 250

     $4 500

    $4 500

- Long combination prime mover   (type 1)

    $4 750

   $4 750

     $4 750

    $4 750

- Long combination prime mover   (type 2)

    $5 250

   $5 250

     $5 500

    $5 500

DIVISION 2 - LOAD CARRYING TRAILERS

The amount calculated using the formula:       $250 x Number of axles

DIVISION 3 - BUSES

Bus Type

2-axle

3-axle

- Bus (type 1)

                   $300

                           -

- Bus (type 2)

                   $500

                 $1 250

- Articulated bus

                          -

                    $500

DIVISION 4 - SPECIAL PURPOSE VEHICLES

- Special purpose vehicle (type 1)

No charge

- Special purpose vehicle (type 2)

The amount calculated using the formula:

$250 + $250 x Number of axles in excess of 2

 

 

Changes in Structure

These proposed charges incorporate three major improvements to the structure of the charging system.  They are:

1.        Simplification of road train charges so that operators are not required to nominate whether the prime mover will be used in a double-trailer or triple-trailer combination when the vehicle is registered and therefore can vary the use of the prime mover without penalty;

2.        Introducing a new category of Special Purpose Vehicles that are based on a truck-chassis design and have greater road use than plant-based vehicles (but are less intensively used than freight-carrying vehicles) while at the same time preparing a more practicable set of definitions for these vehicles; and

3.        Shifting the balance of charges between motor vehicles and trailers slightly more towards trailers, to allow road train charges to be simplified and to provide a more equitable share of imposts between trailer fleet operators and operators of motor vehicles.

 

Table 0 . 3 2 :     Proposed Annual Charges for Heavy Vehicles

LOAD CARRYING VEHICLES

Vehicle Type

2-axle

3-axle

4-axle

5-axle

Trucks

 

 

 

 

- Truck (type 1)

       $300

      $600

        $900

       $900

- Truck (type 2)

       $500

      $800

     $2 000

    $2 000

- Short combination truck

        $550

     $2 000

      $2 000

     $2 000

- Medium combination truck

    $3 800

   $3 800

     $4 100

    $4 100

- Long combination truck

    $5 250

   $5 250

     $5 250

    $5 250

Prime Movers

 

 

 

 

- Short combination prime mover

    $1 300

   $3 400

     $4 400

    $4 400

- B-double prime mover

    $4 000

   $5 000

     $5 500

    $5 500

- Road train prime mover

    $5 000

   $5 000

     $5 500

    $5 500

LOAD CARRYING TRAILERS

The amount calculated using the formula:       $300 x Number of axles

BUSES

Bus Type

2-axle

3-axle

- Bus (type 1)

                   $300

                           -

- Bus (type 2)

                   $500

                 $1 250

- Articulated bus

                          -

                    $500

SPECIAL PURPOSE VEHICLES

- Special purpose vehicle (type P)

No charge

- Special purpose vehicle (type T)

$200

- Special purpose vehicle (type O)

The amount calculated using the formula: 

$250 + $250 x Number of axles in excess of 2

PERMIT FEES

The charge for the grant of permit to operate a vehicle over 125 tonnes carrying an indivisible load is to be calculated as:

4 cents x ESA-km

Notes:    In summary:

Truck Type 1 is a rigid truck under12.0t (2 axles), 16.5t (3 axles) or 20.0t (4 axles) GVM.  A Truck Type 2 is over 12.0t (2 axles), 16.5t (3 axles) or 20.0t (4 axles) GVM

A Short Combination Truck is a rigid truck operating under 42.5 tonnes with a single trailer and less than 7 axles in total on the combination.  A Medium Combination Truck is a truck that operates over 42.5 tonnes with a single trailer or 7 or more axles in total on the combination.  A Long Combination Truck operates with more than one trailer.

A Short Combination Prime Mover operates with a single semi-trailer.  A Road Train Prime Mover is used in a double-trailer or triple-trailer road train.

A Bus Type 1 is under 12.0t, and a Bus Type 2 over 12.0t. 

A Special Purpose Vehicle Type P is a plant-based special purpose vehicle.  A Special Purpose Vehicle Type T is a truck-based special purpose vehicle that operates within axle mass limits.  A Special Purpose Vehicle Type O is a truck-based special purpose vehicle that operates in excess of axle mass limits.

 

 

Definitions

In association with changes in the levels of charges themselves, the Commission is also proposing amendments to some of the related definitions.  These amendments fall into three categories:

1.        Amendments required to match the proposed charges (eg the definitions of road train prime movers and heavy truck-trailers);

2.        Amendments to provide greater administrative simplicity and improved consistency in the treatment of unusual vehicles in the Special Purpose Vehicle category; and

3.        Amendments related to establishing greater consistency with other national reforms.

The proposed amendments are set out in Table 0.5 Table 0.3 .  The amendments have been developed in close consultation with registration authorities and representatives of specialist vehicle operators.

Concessions

It is proposed that individual jurisdictions should consider whether concessions on the levels of charges are allowed for three groups of vehicles.  They are:

1)        Vehicles travelling low annual kilometres, including:

a)        farm vehicles;

b)       vehicles operated by the civil construction industry;

c)        vehicles used to transport amusement rides and other showmen’s vehicles;

d)        vehicles operated by driver trainers; and

e)        other low usage vehicles,

2)        Light trailers with multiple axles and an aggregate trailer mass (ATM) less than 9 tonnes, so that these trailers pay no more than single axle trailers which have the same carrying capacity, including:

a)        Horse floats;

b)        Boat trailers; and

c)        Other specialist trailers, generally in private use, and

3)        Caravans, mobile homes, mobile libraries, mobile workshops and mobile laboratories that have ready access to the road system and may be considered to carry goods and/or passengers, but are not used as intensively as commercial freight and passenger vehicles.

Whether or not concessions are provided, the size of any concessions and administrative arrangements for putting them in place will be matters left to the discretion of individual jurisdictions.  Provision is made in the Road Transport Charges (Australian Capital Territory) Act 1993 for the Australian Capital Territory to provide concessions.



Table 0 . 5 3 :     Summary of Definition Changes

Term

Current Definition

Proposed Definition

Axle

 

The axis of rotation of a row of tyres across a vehicle

One or more shafts positioned in a line across a vehicle, on which one or more wheels intended to support the vehicle, turn.

Axle Group

One axle or consecutive axles connected by a load-sharing suspension system or steering system

A single axle group, tandem-axle group, twin steer axle group, tri-axle group or quad-axle group

Bus

 

A motor vehicle principally constructed to carry more than 12 seated adult persons

A motor  vehicle: (a) built mainly to carry people; and (b) that seats more than 9 adults (including the driver)

Converter Dolly

A specially designed pig trailer used to convert a semi-trailer into a dog trailer

A trailer with one axle group or single axle and a fifth wheel coupling, designed to convert a semi-trailer into a dog trailer

Dog Trailer

A trailer that has 2 axle groups of which the front axle group is steered by connection to the hauling vehicle

A trailer (including a trailer consisting of a semi-trailer and converter dolly) with: (a) one axle group or single axle at the front that is steered by connection to the towing vehicle by a drawbar; and (b) one axle group or single axle at the rear.

Drawbar

Not currently defined

A part of a trailer (other than a semi trailer) that connects the trailer body to a coupling for towing purposes.

Driver

Not currently defined

The person driving or in control of a motor vehicle.

Fifth wheel coupling

Not currently defined

A device, other than the upper rotating element and the kingpin (which are parts of a semi trailer), used with a prime mover, semi trailer or a converter dolly to permit quick coupling and uncoupling and to provide for articulation.

Load carrying trailer

Not currently defined

A trailer that is carrying a load or that is built to carry a load.

Long combination prime mover

Long combination prime mover (type 1) : a prime mover nominated to haul 2 trailers, but does not include a medium combination prime mover;

Long combination prime mover (type 2) : a prime mover nominated to haul more than 2 trailers.

A prime mover nominated to haul 2 or more trailers, but does not include a medium combination prime mover.

Low loader

Not currently defined

A gooseneck semi trailer with a loading deck no more than 1 metre above the ground.

Low loader dolly

Not currently defined

A mass-distributing device that: (a) is usually coupled between a prime mover and low loader, and (b) consists of a gooseneck rigid frame; and (c) does not directly carry any load on itself; and (d) is equipped with one or more axles, a kingpin and a fifth wheel coupling.

Medium Combination Truck

A truck nominated to haul one trailer where the combination has more than 6 axles.

A truck , other than a short combination truck, nominated to haul one trailer.

Pig Trailer

A trailer with one axle group near the middle of its load carrying surface and connected to the towing vehicle by a drawbar.

A trailer with one axle group or single axle near the middle of its load-carrying surface, and connected to the towing vehicle by a drawbar.

 

Pole Type Trailer

A trailer that is attached to a towing vehicle by a pole or an attachment fitted to a pole and that is used for transporting loads such as logs, pipes, structural members or other things that are capable of supporting themselves as beams between supporting connections.

A trailer that (a) is attached to a towing vehicle by means of a pole or an attachment fitted to the pole; and (b) is ordinarily used for transporting loads, such as logs, pipes, structural members or other long objects, that are generally capable of supporting themselves like beams between supports.

 

Quad-axle group

Not currently defined.

A group of axles in which the horizontal distance between the centre-lines of the outermost axles is more than 3.2 metres but not more than 4.9 metres.

Road

Not currently defined.

An area that is open to or used by the public and is developed for, or has as one of its main uses, the driving or riding of motor vehicles.

Road related area

Not currently defined.

(a) an area that divides a road; or (b) a footpath or nature strip adjacent to a road; or (c) an area that is open to the public and is designated for use by cyclists or animals; or (d) an area that is not a road and that is open to or used by the public for driving, riding or parking motor vehicles.

Semi-trailer

A trailer that has: (a) one axle group towards the rear; and (b) a means of attachment to a prime mover that results in some of the load being imposed on the prime mover, and includes a pole type trailer.

A trailer (including a pole-type trailer) that has: (a) one axle group or single axle towards the rear; and (b) a means of attachment to a prime mover that would result in some of the load being imposed on the prime mover.

Short combination truck

A truck nominated to haul one trailer

A truck nominated to haul one trailer where the combination: (a) has 6 axles or fewer; and (b) has a total mass that is 42.5 tonnes or less

Single axle

Not currently defined

An axle not forming part of an axle group.

Single axle group

Not currently defined.

A group of 2 or more axles, in which the horizontal distance between the centre-lines of the outermost axles is less than 1 metre.

Special Purpose Vehicle

A vehicle: (a) that does not carry passengers or goods, or (b) whose primary purpose is not the carriage of passengers or goods.

(a) a vehicle (other than one that the regulations declare not to be a special purpose vehicle for the purposes of this definition), where the primary purpose for which it was built, or permanently modified, was not the carriage of goods or passengers; or (b) a vehicle declared by the regulations to be a special purpose vehicle for the purposes of this definition.

Goods : does not include fuel, water, lubricants, tools and any other equipment or accessories necessary for the normal operation of the vehicle.

(Note: For example, in the case of a crane, goods would not include any chains on the crane necessary to operate the crane).

Passengers : does not include the driver, a trainee driver or any person necessary for the normal operation of the vehicle.

Special Purpose Vehicle (type 1)

 

 

Special Purpose Vehicle (type 2)

Special Purpose Vehicle (type 1) : A special purpose vehicle that has no axle or axle group loaded in excess of the limits specified in the regulations for the purposes of this definition

Special Purpose Vehicle (type 2) : A special purpose vehicle that has at least one axle or axle group that is loaded in excess of the limits specified in the regulations for the purposes of this definition.

Special Purpose Vehicle (Type P-Plant) : A special purpose vehicle built, or permanently modified, primarily for: (a) off-road use; or (b) use on a road related area; or (c) use on an area of road that is  under construction.

 

Special Purpose Vehicle (Type T-Truck) : A special purpose vehicle (other than a special purpose vehicle (Type P)): (a) built, or permanently modified, primarily for use on roads; and (b) has no axle or axle group loaded in excess of the mass limits specified in the regulations for the purposes of this definition.

 

Special Purpose Vehicle (Type O-Over-mass) : A special purpose vehicle (other than a special purpose vehicle (Type P): (a) built, or permanently modified, primarily for use on roads; and (b) that has at least one axle group loaded in excess of the limits specified in the regulations for the purposes of this definition.

Tandem axle group

Not currently defined.

A group of at least 2 axles, in which the horizontal distance between the centre-lines of the outermost axles is at least 1 metre but not more than 2 metres.

Trailer

A load-carrying vehicle without motive power designed to be hauled by another vehicle.

A vehicle that is built to be towed, or is towed, by a motor vehicle, but does not include a motor vehicle that is being towed.

 

Tri Axle Group

Not currently defined

A group of at least 3 axles, in which the horizontal distance between the centre-lines of the outermost axles is more than 2 metres, but not more than 3.2 metres.

Truck

A rigid motor vehicle that is principally constructed as a load carrying vehicle.

This definition is likely to remain unchanged

Twinsteer axle group

Not currently defined

A group of 2 axles: (a) with single tyres; and (b) fitted to a motor vehicle; and (c) connected to the same steering mechanism; and (d) the horizontal distance between the centre-lines of which is at least 1 metre, but not more than 2 metres.



Indexation

Recalculating charges using the methodology set out in the Heavy Vehicles Agreement is resource-intensive.  For this reason, it is likely that updates to charges will occur infrequently.  Heavy vehicle charges are currently being updated for the first time since 1992.  The initial charges were implemented in 1995-96.

Indexation to match changes in the Consumer Price Index (CPI) has been suggested as a means of ensuring that charges maintain their value in real terms over time between periods when they are re-calculated and to avoid large gaps developing between attributable road costs and charges.  The National Road Transport Commission sought the guidance of the Australian Transport Council on this issue, and based on the broad support expressed by the Council for introducing indexation, is recommending that heavy vehicle charges be indexed in line with annual changes in the CPI.  In order for this to occur, however, Ministers will be asked to vote each year on whether charges for the 12 months commencing in July should be indexed in accordance with changes in CPI as of the previous September quarter.

1.6          Alternatives

Three main types of alternatives have been considered in this regulatory impact statement:

1.        Fundamental differences in approach;

2.        Variations for specific classes of vehicles; and

3.        Alternative approaches to structural and legislative issues.

The implications of these alternatives (particularly in relation to variations for specific classes and alternative approaches to structural and legislative issues) are considered below.

Fundamental approach

Relative weighting of different charging principles

No guidance is given in the NRTC’s legislation on the relative importance to be placed on different aspects of the charging principles the NRTC is required to follow.  For example, no indication is given of:

·          The relative importance to be placed on achieving exact cost recovery by class of vehicle versus exact cost recovery in aggregate across all heavy vehicles;

·          The relative weighting to be given to efficiency concerns versus equity issues versus implications for administrative costs;

·          The relative importance of achieving exact cost recovery versus providing appropriate pricing signals; and

·          The relative importance of avoiding shopping around versus achieving efficient prices which exactly reflect costs for a specific vehicle or group of vehicles.

Consequently, the NRTC has made judgements on these issues, in consultation with transport Ministers, transport agencies, heavy vehicle operators, other road users and other interested parties.  As a result, the Commission has determined that the proposed charges will:

·          over-recover expenditure in total from the smaller heavy vehicles (as at present) which means that larger heavy vehicles pay their share of costs (current charges do not meet the costs of these larger heavy vehicles).  This means that all classes of heavy vehicles can meet their share of costs.

·          not be reduced for most smaller trucks and buses due to the need for continuity with light vehicle charges and environmental concerns about smaller heavy vehicles that are predominantly used in urban areas.

·          Provide appropriate pricing signals for vehicle combinations that might be considered less ‘safe’, due to differences in their physical performance such as tracking and stability.

Zonal charges

Provision is made for the National Road Transport Commission to consider recommending different charges for two zones of Australia.

Zone A comprises:

·          New South Wales;

·          Victoria;

·          Tasmania; and

·          The Australian Capital Territory

Zone B comprises:

·          Queensland;

·          Western Australia;

·          South Australia; and

·          The Northern Territory.

 

Voting within the Australian Transport Council (the Council of Australia’s Transport Ministers) in relation to recommendations on the levels of charges is on the basis of these Zones.

For the following reasons, the Commission has not recommended differences in the levels of charges for the same types of vehicles between the two zones:

·          Practical concerns about the administrative costs and difficulties of charging fees for vehicles crossing from one zone to another;

·          Legal concerns about the constitutional validity of differentiating charges between vehicles on the basis of location;

·          Concerns about shopping around between the two zones for lower levels of charges; and

·          Difficulties in accurately assessing differences in costs between the two zones given the data available.

More sophisticated charging systems

Alternative charging systems that might be considered include:

1.       New Zealand system of charges that vary with the mass and distance traveled of individual vehicles.

Under this system, distance traveled by individual vehicles is measured by hubodometers, and operators nominate the maximum mass at which they will operate.  Anecdotal reports suggest there may be a high level of evasion of appropriate levels of charges in New Zealand, by falsifying claims and tampering with hubodometers.  It has been suggested that evasion might be worse if the same system applied in Australia as the smaller size of New Zealand means that enforcement is simpler.  A system relying on nominated maximum mass does not reflect differences in actual loads carried, and therefore pavement wear responsibilities.  Clearly the New Zealand approach involves greater administrative costs (estimated to be at least 4 per cent of revenue [6] ) than a simpler system based on a fixed annual charge.  At this stage, sufficient benefits to justify the additional costs have not been demonstrated for Australia [7] .

2.       Electronic road pricing would allow the use of individual vehicles to be measured and related to the roads on which they are driven.

This could be done either through Global Positioning Systems (GPS) and modern communications systems, or using electronic gantries (systems of transponders placed in the road network and vehicles such as those used on automated toll-ways such as the new CityLink toll-way in Melbourne).  Electronic vehicle tracking using GPS has recently been trialled in Tasmania.  The trial has shown that technology is sufficiently advanced to implement a system of this nature.  However, the administrative costs are not yet fully clear, and may not be justified by the benefits at this time.  In the absence of clear evidence that benefits outweigh the costs, the Commission does not judge it appropriate to recommend a system requiring all heavy vehicle operators to adopt the technology required.  In addition, substantial changes to institutional arrangements for vehicle charging, taxation and road funding would be required to put in place a sophisticated system of this nature.  This cannot be achieved overnight, and would not be practicable in the time frame of the second charges determination.  Nevertheless, these issues are expected to be advanced through the successor project to the Intelligent Vehicle Trial, the Intelligent Access Project that has now been initiated.  This may mean that in future, electronic pricing systems may be more practicable.

3.        Life-cycle costing approaches to estimating costs of road use could be developed in place of the PAYGO (“pay as you go”) assumption that expenditure in the current year reflects the annualised costs of providing and maintaining roads for the existing level of traffic.

While there are concerns about the PAYGO assumption (which requires that a road network not be deteriorating and not subject to significant expansion), no practical alternative is available at the national road network level at this stage.  Consequently it is not possible to adopt this type of approach.  A project to formulate a strategy for improving national heavy vehicle charges has been initiated through the National Road Transport Commission’s processes.  This is one of the issues to be considered as part of that project.

Other issues that will be examined as part of the strategy are the potential for including external costs in the cost recovery target, such as environmental costs associated with noise and air pollution.

A range of options relating to the approach to the existing expenditure allocation process were canvassed in the discussion paper (and associated Technical Paper) released as part of the consultation process in August 1998 (NRTC 1998a and 1998b).  The options canvassed included:

·          whether additional expenditure should be included in the cost recovery target;

·          retaining the expenditure allocation parameters used in 1992 prior to the research on these parameters by ARRB Transport Research; and

·          retaining the method used to take into account local road expenditure in the 1992 calculations (which did not directly allocate local road expenditure as part of the process of allocating expenditure to vehicle classes).

The sensitivity of the results of the calculations to assumptions regarding road use and road expenditure were also explored.

These alternatives do not constitute alternative charging systems, rather they reflect alternative means of estimating the heavy vehicle share of road expenditure.  The principle that charges should reflect marginal costs is not affected.  If this principle is followed, charges will result in appropriate incentives for road use. The question being considered is what are the marginal costs of heavy vehicle road use.  While alternative estimates of these costs may result in different levels of charges, there are no changes in the costs and benefits associated with adopting different levels of charges due to alternative estimates of the share of costs, provided the estimates of marginal costs are realistic [8] .  In practice, this is difficult to determine in the case of road use due to lumpiness in investment, the joint and common nature of many of the costs involved, the multiple outputs produced and lack of detailed data. Once the best estimates of the heavy vehicle share of road expenditure are resolved, the costs and benefits of different approaches to recovering this expenditure can be considered.

On balance, and in light of the comments received during the consultations, the National Road Transport Commission has assessed that the estimates and approaches described in this Statement provide the most reasonable assessment of the costs of providing and maintaining roads for each of the classes of heavy vehicles.

Structural and Legislative Issues

These alternatives relate to the structure of the charging categories, and the potential to consolidate the existing categories into a simpler structure.  That is, removal of the need for many vehicle operators to nominate at the time that the vehicle is registered or registration renewed how their vehicles will be used was considered.  The possible simplifications considered related to:

·          truck-trailers (that is, rigid trucks towing trailers);

·          B-doubles; and

·          Road trains.

In addition, the introduction of additional categories, or concessional charges, was considered for groups of vehicles that are not utilised as greatly as other heavy vehicles.  The types of vehicles involved were vehicles travelling low annual kilometres and light trailers.

Legislative alternatives considered related to alternative approaches to definitions used in the legislation.  The most complex of these was for Special Purpose Vehicles, as detailed in the summaries of comments received.

Removing the Short Combination Truck Category

An alternative approach to charging truck-trailers was considered.  The heavy vehicle charging system could be simplified by removing the Short Combination Truck category.  This would remove the need for rigid truck operators to nominate whether or not they intend to tow a trailer behind a rigid truck (unless the truck and trailer together weigh more than 42.5t).

Registration authorities report the current system of charges for truck-trailers is administratively complex, and therefore costly.  It is also sometimes suggested there may be significant evasion of the higher charges that apply to trucks towing trailers.  Flexibility of operators in truck-trailer use is also significantly restricted.  Removing the need to nominate whether a truck will tow a trailer (unless it is over 42.5t in total) would simplify the system markedly.  However, this would result in lower charges for some lighter truck-trailers.  At the same time, the growth area of truck-trailers operating over 42.5t would be separated, ensuring that heavier truck-trailers meet their share of costs.

This option is spelt out in Table 0.7 Table 0.4 .  In all cases, the alternative set of charges would be sufficient to recover attributable road expenditure, although with varying degrees of over-recovery.  Significant reductions would result for some vehicles and, as noted in Section 1.7 , this is a source of concern, particularly for vehicles such as truck-trailers which are predominantly used in urban areas where emissions are of greatest concern.  Concerns have also been raised about the relativity of the alternative charges for lighter trucks towing trailers and heavier trucks towing trailers.  The large difference between the alternative charges for these groups may result in significant evasion of the higher charges.

Table 0 . 7 4 :     Alternative Truck-Trailer Charges

Vehicle type

Size

Current charge

Proposed charge

Alternative

Truck under 12.0t

$1 100

$1 150

$300 + $600= $900

Truck over 12.0t

$1 100

$1 150

$500 + $600 = $1 100

Under 42.5t in total for truck and trailer:

- Truck under 16.5t

$2 850

$2 900

$600 + $900 = $1 500

- Truck over 16.5t

$2 850

$2 900

$800 + $900 = $1 700

Over 42.5t in total for truck and trailer

$2 850

$4 700

$3 800 + $900 = $4 700

Under 42.5t in total for truck and trailer:

- Truck under 16.5t

$5 000

$5 000

$600 + $1 200 = $1 800

- Truck over 16.5t

$5 000

$5 000

$800 + $1 200 = $2 000

Over 42.5t in total for truck and trailer

$5 000

$5 000

$3 800 + $1 200 = $5 000

 

Revenue effects from this method of charging are discussed in Section 6.3.1.

Low kilometre vehicles

The introduction of lower charges for vehicles travelling significantly less than the average annual distance (on which fixed annual charges are based) was considered.  While the majority of the charges (the fuel-based charge component) varies with distance travelled, around 1/3 rd of the charges are collected through fixed annual charges, payable on registration or renewal of registration.  On the other hand, costs of road use are directly related to the distance a vehicle travelled, but it is difficult to reflect this in a fixed annual charge.  This leads to inequities and inefficiencies for operators of vehicles that travel low annual kilometres.

The types of vehicle operators involved include:

·          Farmers;

·          Civil contractors (who operate in the road building and general construction industries);

·          Operators of amusement rides;

·          Circuses; and

·          Driver trainers

Farmers are by far the largest group of low kilometre vehicle operators.  They generally operate smaller rigid trucks, although a small proportion of farmers and other primary producers also operate larger vehicles.  Farmers already have concessions on registration charges for heavy vehicles in most jurisdictions.

Introduction of lower (concessional) charges for all low kilometre vehicles would allow systems of case-by-case concessions to be replaced with a single approach.  It would lead to more equitable and more efficient charges that bore a closer relationship to the costs of road use attributable to low kilometre vehicles.  The difficulties lie in developing a simple system of identifying vehicles that travel low annual distances, and cost-effective means of verifying the distances they travel.  A supplementary technical paper dealing with these issues was released for public comment as part of the consultation process (NRTC 1998c).

Light trailers

The introduction of a separate category of charges for light trailers (under 9 tonnes aggregate trailer mass) was considered.  This would ensure that light trailers with multiple axles pay no more than single axle trailers with the same carrying capacity.  Light trailers with multiple axles cause less road wear than single axle trailers as the load carried is around the same, but is carried on more axles.  These trailers generally have additional axles in order to protect sensitive loads.  They are generally vehicles such as boat trailers or horse floats, frequently in private rather than commercial use.  As with low kilometre vehicles, the introduction of a separate category with a lower charge for these trailers would provide greater equity and efficiency in the charging system.

On the other hand, the number of vehicles is relatively small and introducing a separate category for them is administratively costly.  As many older trailers do not have aggregate trailer masses identified (on the compliance plate), there would be additional costs in assigning and verifying aggregate trailer masses for some older trailers, if they wished to take advantage of the lower charge for a new category of light trailers.

Variations for Specific Vehicle Classes

The proposed charges differ from the technical results of calculations of annual charges for three vehicle types:

1.        B-doubles;

2.        Road trains; and

3.        Heavy truck-trailers.

In each of these cases, alternatives of the uncorrected technical results were considered.  However, the technical results were considered inappropriate.

Reducing charges for smaller heavy vehicles was also considered, but was not possible due to the need for continuity with light vehicle charges.

Road Train Charges

The technical results suggest charges of $11 500 for double road trains, and $11 700 for triple road trains, as illustrated in Table 0.10 Table 0.6 .  However, when the differences between remote areas and national expenditure are taken into account, much lower charges would fully recover costs for road trains, which are almost exclusively used in remote areas.  Combined with uncertainty about data on the use of road trains, this suggests that lower charges may be appropriate for road trains and could reasonably be expected to meet the costs of road use associated with these vehicles.

At present, road train operators are required to nominate whether they intend to haul two or three trailers.(Refer to 1.10 ).  Removing this requirement by charging all road train prime movers the same amount will provide much greater flexibility for operators and reduce administrative costs for registration authorities.

B-double Charges

The costs allocated to B-doubles are relatively high (compared to 6-axle articulated trucks and road trains) because B-doubles are highly utilised (more often fully loaded and travel almost twice as far on average as 6-axle articulated trucks).  At the same time, B-doubles are relatively fuel-efficient, so the same fuel charge recovers a smaller proportion of costs for B-doubles compared to the other vehicles.  This means more must be recovered from the annual registration charge.

B-doubles and 6-axle articulated trucks are used extensively for medium and long haul inter-capital freight movements and, as such, are in direct competition with rail.  On broad competitive neutrality grounds, it can be argued that it is of particular importance that these vehicle classes achieve full cost recovery.

However, due to the fact that the number of B-doubles is small, data on their use is less reliable.  In addition, B-doubles are generally held to be a “safer” configuration than road trains.  This greater safety results from the improved dynamic characteristics of a roll-coupled vehicle combination linked using B-couplings (5 th wheel/turntable) rather than the A-couplings used to attach additional trailers to road trains.  Consequently a technical result suggesting B-double prime movers should pay more than road trains may be seen as providing an inappropriate signal.

In the light of these considerations, the range of charges (for the 9-axle B-double) that may be seen as defensible can be defined as:

·          a maximum at the modelled charge of $10,200 ($8,400 for the prime mover and $1,800 for the trailers);

·          a minimum of $6,800 ($5,000 for the prime mover and $1,800 for the trailers).

A charge of $5000 for B-double prime movers is proposed.

This raises the possibility of removing the need for operators of multi-trailer combinations to nominate whether they wish to operate their prime movers in B-double or road train configurations.  While this would allow further simplifications of the charging categories, it is believed to be of little practical benefit as there is little interchange of B-double and road train prime movers.  This is because technical requirements (vehicle standards) for prime movers in the two uses differ and because operationally there is less overlap between prime mover and road train operations.  There is clearly far less operational overlap between B-double and road train operations than there is between different types of road train operations, as the different configurations tend to be used in different circumstances.  B-doubles are commonly used in more populous areas of Australia, in either long or short haul distribution.  Road trains, on the other hand are almost exclusively restricted to remote areas of Australia.

Truck-Trailer Charges

The technical results suggest that heavy truck-trailers should pay around $3,700.  This compares to $4,300 for 6-axle articulated trucks.  As heavy truck-trailers are considered less safe than articulated trucks (in terms of dynamic handling), a lower charge for these vehicles than the 6-axle articulated truck would provide a perverse pricing signal.

Some heavy truck-trailers (those with 7 or more axles in the combination) are currently required to pay $5000.  Although the technical results suggest these charges could be reduced, this would be inequitable when other rigid truck charges are not similarly reduced, as the technical results are lower than current charges for both types of vehicle.  Charges for most rigid trucks have not been reduced because of the need for continuity with light vehicle charges and due to environmental concerns about emissions from vehicles predominantly used in urban areas.  It would be consistent with this approach to maintain charges for heavy truck-trailers at the current levels (for those with 7 or more axles).

Light vehicle charges

Although the need for continuity between light vehicle charges and heavy vehicle charges is not directly referenced in the Heavy Vehicles Agreement, it was a major consideration in the discussion that led to the formulation of the Agreement.  It was also one of the major factors underlying the inclusion of an “access charge” as one of the charging mechanisms.  As shown in Table 0.5 Table 0.5 , there is considerable variation in the charges applying to vehicles under 4.5 tonnes GVM.

The Commission’s initial set of road user charges included a minimum charge of $300, to avoid creating a situation where there was no registration charge for the “lightest” heavy vehicles (over 4.5 tonnes) but a charge in place for the “heaviest” light vehicle (under 4.5 tonnes GVM).  The minimum charge was to avoid such boundary problems.  The present analysis has retained the minimum charge of $300, which appears to be a reasonable level given the range of charges for light vehicles applying in different States and Territories.

Consideration was given to reducing charges for smaller heavy vehicles, as there is already over-recovery from most of these vehicles (when the combination of fuel-based charge and fixed annual charges are considered).  However, this was considered inadvisable, as it would:

·          result in significant discontinuities with charges for light vehicles (under 4.5t);

·          may provide inappropriate pricing signals in light of environmental concerns about the emissions from smaller heavy vehicles in urban areas, as discussed in Section 0 ; and

·          would be unlikely to be acceptable (and therefore unlikely to be implemented).

Indexation Options

Introduction

A number of options for indexing heavy vehicle charges have been examined, but these options are constrained by the need to avoid exacerbating over-recovery from some vehicles by indexing charges.  The examination found that little revenue gains could be achieved within the constraint of the PAYGO expenditure allocation and charging principles.

Table 0 . 5 :       Annual Registration Charges for Vehicles Under 4.5 tonnes GVM

State/Territory

Low

High

Basis of Charge

 

($ per annum)

($ per annum)

 

Northern Territory

15.00

301.60

Incremented by engine size within two categories of vehicles:

·          £ 4 cylinders (from 600 ml)

·          > 4 cylinders and rotary engines (to 8000 ml)

Victoria

140.00

140.00

Standard charge for light motor vehicle.

Other standard charges:

·          Motor cycle/light trailer 20% base fee (28.00)

·          Mobile plant 50% base fee (70.00)

Numerous concessions also apply .

South Australia

65.00

245.00

Two categories of vehicles:

·          Commercial (constructed to carry goods) up to 1t unladen mass and all non-commercial, incremented by number of cylinders

·          Commercial > 1t and < 4.5t GVM, incremented by unladen mass up to 1.5t, or greater than 1.5t

Trailers 40.00

Several concessions apply.

Increased by about 4.5% from 1 July 1998.

Western Australia

 

300.00*

Powered vehicles:  $12.00 per 100kg of tare weight .

This is limited to $300.00, *except for prime movers (800.00)

Trailers:  $6.00 per 100kg tare weight.

Australian Capital Territory

221.00

821.00+

Two categories, incremented by tare weight :

·          Passenger carrying over 4t - $797 + $40 per additional 250kg

·          Goods carrying over 3t - $821 + $83 per additional 250kg

New charges introduced from 1 July 1998

Tasmania

73.00

228.00

Two categories incremented by number of cylinders :

·          Passenger vehicles

·          Commercial vehicles ³ 3t and £ 4.5t

New South Wales

131.00

419.00

Two categories incremented by tare weight :

·          Vehicles up to 2504kg, private and business categories

·          Trucks, private and business categories

Trailers up to $1215.00 (business use, 4325 to 4500 kg)

Queensland

129.00

414.00

Two categories:

·          Light vehicles up to 4t, incremented by number of cylinders

·          Commercial vehicles between 4t and 4.5t - $396

Note: Figures supplied May 1998

 

 

 

 

Alternative indexes that might be selected to index annual heavy vehicle charges include:

1)        Option A: Consumer Price Index

The Consumer Price Index or CPI has the advantage that it is well known and is used in some jurisdictions to index registration charges for light vehicles (under 4.5 tonnes).  However, indexation on CPI would reflect movements in prices that may bear little relation to road expenditure or road use costs.  Further, indexation based on unrelated price movements is inconsistent with an objective of expenditure recovery, as applies in the case of national heavy vehicle charges.  It is possible that there will be a divergence of CPI from normal trends in the period following July 2000, due to the introduction of federal taxation reforms.

2)        Option B: Road Construction Price Index (RCPI).

This index is produced by the Bureau of Transport Economics and measures changes in the input costs to road construction, such as changes in the costs of bitumen, aggregate, labour and so on.  In principle, it is preferable to the use of CPI, as it is more closely related to road expenditure.  However, it does not take account of changes in the pattern or overall level of expenditure (which have significant implications for heavy vehicle charges).  RCPI is relatively narrowly based, and therefore may be too volatile.

3)        Option C: Changes in Total Road Expenditure

Changes in the total amount of road expenditure would reflect changes in road construction input costs and the total amount of expenditure.  The main drawback is that a large change in those types of expenditure that are not closely related to road use of heavy vehicles could have a large impact on the indexed charges.  On the other hand, an index based on changes in total road expenditure is easy to understand and is consistent with an expenditure recovery objective.

The Commission was also asked to consider including a productivity component in the indexation mechanism.  Whilst this was examined, no technical basis has been determined for modifying indexation to take account of changes in productivity in road transport or road construction/maintenance.  It would also be difficult to establish a mechanism for doing this that would be consistent with the expenditure recovery requirements spelt out in the Heavy Vehicles Agreement.



Table 0 . 10 6 :   Technical and “Corrected” Results of Heavy Vehicle Charges Calculations: Selected Vehicles

Vehicle Type

Size

Current charge

Technical Results

Corrections

 

Full cross-subsidy

No cross-subsidy

Truck Trailers

B-doubles

Road Trains

Under 42.5t - Truck up to 16.5t

Under 42.5t - Truck over 16.5t

Over 42.5t

$2 850

$2 850

$2 850

$1 700

$1 700

$3 660

$1 700

$1 700

$3 660

$600 + $900 = $1 500

$800 + $900 = $1 700

$3 800 + $900 = $4 700

 

 

Under 42.5t - Truck up to 16.5t

Under 42.5t - Truck over 16.5t

Over 42.5t

$5 000

$5 000

$5 000

$2 000

$2 000

$3 660

$2 000

$2 000

$3 660

$600 + $1200 = $1 800

$800 + $1200 = $2 000

$3 800 + $1200 = $5 000

 

 

 

$5 750

$5 200

$10 200

 

$5 000 + $1 800

 = $6 800

 

Rounded Rectangular Callout: • Tolerances on data suggests lower charges than technical results.
 • Expenditure in remote areas suggests lower charges may fully recover road train costs.

 

$6 750

$6 050

$11 500

 

 

$5 000 + $2 400

 = $7 400

 

$8 500

$7 000

$11 700

 

 

$5 000 + $3 900

 = $8 900



COSTS AND BENEFITS

This chapter sets out the basis of the proposals and discusses the impacts.  Section 1.13 summarises the impacts on different segments of the community.

1.7          Basis of the proposals

The proposed charges are logical, simple and soundly based on the principles spelt out in the NRTC’s legislation.  The methodology used to prepare the charges is also spelt out in the National Road Transport Commission’s legislation.  The starting point for the original work on charges was the Inter-State Commission (ISC) model, from which the NRTC developed its first determination.  This is set out in the Heavy Vehicles Agreement (a Schedule to the National Road Transport Commission Act 1992 ), which states that in calculating charges, the NRTC must:

a)        use PAYGO for determining what expenditure is to be recovered until an improved method of cost recovery becomes available;

b)        use a common methodology, initially based on the model employed by the Inter-State Commission in its 1990 Report but enhanced with further research currently being undertaken by the Australian Road Research Board

c)        initially adopt the expenditure allocation template to be endorsed by Austroads in the PAYGO process; and

d)        make use of the Australian Bureau of Statistics Survey on Motor Vehicle Use road task data (with appropriate upgrading) as the source of this data

It goes on to say that:

The National Commission in determining expenditure on roads for the purposes of PAYGO is to:

a)        Use the average of the most recent two years’ actual and the next year’s budgeted expenditure on road construction and maintenance (all indexed), by the Commonwealth, State, Territory and local government road authorities; and

b)        Exclude road expenditure financed by means such as fuel franchise fees and road tolls where so nominated by a State or Territory.

In recommending charges to apply no later than 1 July 1995 the National Commission is to consider whether more refined distance-based charging methods are warranted.  The manner in which this might be done, the classes of vehicles to be covered and when more refined distance-based charges should apply are matters on which the Commission shall report to the Ministerial Council.

Road construction and maintenance expenditure financed by the former fuel franchise fees are currently included in the charge calculations as no State or Territory has nominated that they should be excluded.  Expenditure on toll roads, however, is excluded from the expenditure template.

There are a number of factors that are relevant to applying the charging principles (listed in Chapter 2) as they influence the context in which the charges are set, and therefore have a bearing on factors such as efficiency, equity, pricing signals and so on.  The main ones are:

(i)                    Implications of taxation reforms for total government imposts on vehicle operations;

(ii)                  Environmental concerns about smaller heavy vehicles using diesel in urban areas; and

(iii)                 The levels of light vehicle charges set by individual States and Territories; and

(iv)                The relative safety performance of different vehicle configurations and vehicle types.

Taxation reforms

As requested by Ministers, the options to be discussed will take account of the implications of taxation reforms.  Although the taxation reforms in themselves have no impact on either the proposed charges or any feasible alternatives, they impact on the context in which these charges apply.  This is significant because road charges are only a part of the existing government imposts on road use and it is total imposts that effect overall demand.  Taxation reforms will see reductions in the effective level of diesel fuel excise (by around 7 c/l for most urban vehicles and by 25 c/l for most rural vehicles and all larger heavy vehicles over 20 tonnes) and removal of sales taxes, resulting in lower operating costs.

In the context of taxation reforms that will substantially reduce taxes that have the greatest impact on the largest vehicles travelling the greatest distances, there is little justification for larger heavy vehicles not to fully meet their share of road costs.

The effects of the tax reform proposals are summarised in Table 0.1 Table 0.1 below for selected vehicle classes.  The table shows:

·          For all vehicle classes, the effect of reducing the effective rate of diesel excise from 43 c/l to 20 c/l and the effect of removing sales taxes are substantial.

·          The vehicle classes for which increases in proposed registration charges are likely to be greatest (ie the larger vehicles) will receive the greatest benefit from the excise and sales tax reductions (due to higher capital costs, higher distances driven, greater numbers of tyres and higher fuel consumption rates).

Table 0 . 1 :       Estimated Implications of Taxation Reforms: Selected Vehicle Classes

($ per vehicle per annum)

Vehicle Type

Fuel Tax Savings

Sales Tax Savings

Net Savings

Rigid Trucks

 

 

 

2 axles (7 to 12 tonnes) Rural

800

1,000

1,800

2 axles (7 to 12 tonnes) Urban

0

1,000

1,000

3 axles (over 18 tonnes)

2,600

3,500

6,100

Articulated Trucks (6 axles)

12,700

8,600

21,000

B-doubles (9 axles)

24,700

20,800

41,070

Road Trains (triple trailer)

38,000

18,600

56,200

Buses (3 axle rigid)

4,400

na

4,400

Notes:    Sales tax savings comprise reductions in sales tax on parts, tyres and purchase of new vehicles

The estimates shown are based on the average distance, mass and fuel consumption for each vehicle class.  They do not reflect differences due to variations in use of vehicles.    Vehicles that travel further than the average can be expected to have greater savings in distance-related taxes such as fuel.  Vehicles travelling less than average distance would have lower savings in these taxes

Sources:Fuel Excise Savings:          NRTC estimates of fuel consumption (Updating Heavy Vehicle Charges: Technical Paper, September 1998) based on 1995 ABS Survey of Motor Vehicle Use

Sales Tax Savings:    NRTC estimates based on ARR 248 Survey of Freight Vehicle Operating Costs 1991, updated to current prices using Transeco cost indices

 

Environmental concerns

At present there are significant environmental concerns about vehicle emissions in urban areas.  There are specific concerns about emissions of diesel vehicles, such as most heavy vehicles, in these areas.  These concerns are evidenced by the agreements in relation to reductions in fuel excise between the Australian Democrats and the Federal Government as part of negotiations in relation to the introduction of federal taxation reforms.  At present there is no direct means of taking account of these issues in heavy vehicle charges.  The Commission is concerned that reductions in registration charges for the heavy vehicles which are used most intensively in urban areas would present a perverse message.  It does not believe it is appropriate to lower registration charges for vehicles that are predominantly used in urban distribution and are likely to have high external costs of air and noise pollution.  This is one of two reasons that reductions in fixed annual charges for smaller heavy vehicles are not proposed, even though the current fixed annual charges for these vehicles, in conjunction with the fuel-based charge will lead to over-recovery on average.  This position will be reconsidered when options for directly taking account of environmental costs of heavy vehicles are considered.

Environmental costs cannot be quantified, however they are judged to be significant enough to outweigh the over recovery from smaller heavy vehicles.

Road safety

External costs of crashes involving heavy vehicles are not directly taken into account in heavy vehicle charges, although they are reflected to some extent through the insurance system.  The Commission is required under its legislation to recommend charges that provide appropriate pricing signals (so that appropriate decisions about equipment and investments are made).  Consequently, the proposed charges ensure that vehicles that have greater potential carrying capacity pay more than vehicles with comparable capacity if their performance (in particular dynamic performance) is generally considered to be less safe.  This means that the annual charges in themselves will not encourage the use of less safe vehicles or combinations.

This issue was relevant in considering the appropriate charge levels for B-double prime movers vis a vis road train prime movers, and heavy truck-trailer combinations vis a vis 6-axle articulated trucks.

1.8          Impacts on Operating Costs and Freight Rates

Heavy vehicle charges form only a small component of vehicle operating costs.  Where the proposed charges increase in comparison to existing fixed annual charges, they are expected to represent no more than a 1 per cent change in vehicle operating costs.  The proposals are not expected to impact greatly on freight rates (and therefore costs to consumers) for three reasons:

·          Where there are increases in proposed charges, they are expected to be small in comparison to savings resulting from introduction of taxation reforms, which are to be implemented at the same time.

·          For the majority of heavy vehicles (80%), there will be no change in fixed annual charges as a result of these proposals.

·          Savings in administration costs for operators of road trains will counter the effects of relatively small increases in registration charges to at least a small (although unknown) extent.

1.9          Costs and benefits of improved cost recovery

Under current funding arrangements, benefits are limited.  For areas of road rail competition, full cost recovery (arguably) leads to competitive neutrality.  Arguably, levels of charges are more important under new taxation arrangements as total government imposts are reduced and road charges will form a much larger proportion of the total imposts that effect demand.

Full cost recovery provides a user pays rationale, that is, it provides appropriate price signals to which users may respond.

Cost recovery

Table 0.3 Table 0.2 shows the estimated proportion of expenditure for each vehicle class that was recovered in 1992, with the current charges and with the proposed charges.  There is a marked increase in the estimated expenditure recovery for the heavier vehicles with the proposed charges, which currently under-recover their share of expenditure.  A slight degree of under-recovery remains for a small number of the largest vehicles.  This is primarily due to the need to provide appropriate pricing signals, as discussed in Section 0 .  In addition, some vehicles are used in different combinations that have different shares of road costs (for example a 3-axle prime mover can be used in each of 5-axle, 6-axle and more than 6-axle articulated truck configurations).  As there is no difference between the vehicles, the same charge must apply.  Consequently, exact cost recovery is not precisely achieved for some combination vehicles.

The proposed charges continue to over recover for smaller heavy vehicles because of the fuel charge.  The reasons for this are explained in Section 0 and Section 0 .  These two sections explain that over-recovery for smaller heavy vehicles could not be reduced due to the need for continuity in levels of charges for vehicles above and below 4.5 tonnes.  There is also concern about environmental impacts of the smaller heavy vehicles.

In aggregate, the charges will result in over recovery of the costs of road use.  This is because it is not possible to reduce charges for smaller heavy vehicles.  Previously, charges for larger heavy vehicles were artificially reduced to compensate for the over-recovery from smaller heavy vehicles.  Full cost recovery for larger heavy vehicles is now established as far as is practicable, as there is no justification for this cross-subsidy.

Table 0.2 Table 0.2 shows the estimates of the share of separable and non-separable road expenditure for both light and heavy vehicles by road type.  From these figures one can see that the proportion of separable costs is greater for the larger vehicles.  This means that more of the costs allocated to heavy vehicles are directly related to their use of roads, rather than being their share of fixed or common costs that do not vary directly with use.

Economic theory suggests that it is particularly important for charges to reflect these separable costs, which are akin to marginal costs.  Economic theory also suggests that if additional costs are to be recovered in charges (as required with heavy vehicle charges, which must reflect full cost recovery under the charging principles), they should be recovered in a way that least distorts demand.

In the absence of sound information on demand price elasticities, and in the presence of 2 nd best factors, such as the absence of charges to recover environmental costs, there is no definitive manner of recovering costs beyond marginal costs.  These additional costs are allocated to vehicles arbitrarily on the basis of vehicle kilometres of travel.  This ensures that vehicles travelling further, and likely to utilise a greater part of the road network, meet a greater share of the common costs of providing and maintaining roads (costs such as providing lane markings and traffic signs).

 

Table 0 . 3 2 :     Estimated Expenditure Recovery

(Percentages)

Heavy Vehicle Type

92 Costs recovered

Current charges

Proposed Charges

Rigid trucks

 

 

 

 

2 axles, 4.5 - 7.0 t

163

160

172

 

2axles, 7.0 - 12.0 t

170

155

166

 

2 axles, over 12.0 t

120

98

105

 

2 axles, 1-axle trailer

120

148

156

 

3 axles, 4.5 - 7.0 t

180

136

145

 

3 axles, 7.0 - 12.0 t

180

193

208

 

3 axles, 12.0 - 18.0 t

180

139

148

 

3 axles, over 18.0 t

119

113

122

 

3 axles, 3-axle trailer

106

113

123

 

4 axles, 4.0 - 25.0 t

172

187

203

 

4 axles, over 25.0 t

122

144

153

Articulated Trucks

 

 

 

 

3 axles

133

99

103

 

4 axles

105

94

100

 

5 axles (2-axle prime mover)

137

89

95

 

5 axles (3-axle prime mover)

137

112

118

 

6 axles (3-axle prime mover)

94

91

98

 

more than 6 axles

67

74

79

B-doubles

 

 

 

 

less than 8 axles

67

92

100

 

8 axles

67

87

95

 

more than 8 axles

67

73

79

Road trains

 

 

 

 

2 trailers

67

81

87

 

3 trailers

67

87

94

Buses

 

 

 

 

2 axles, 4.5 - 10.0 t

180

129

140

 

2 axles, more than 10.0 t

126

121

132

 

3 axles, rigid

97

110

120

 

3 axles, articulated

49

99

108

Special Purpose Vehicles

 

 

 

 

light SPVs

Na

134

149

 

heavy SPVs

Na

91

99

 

Table 0.5 Table 0.3 shows the allocated unit expenditure for heavy vehicles.  The amounts shown in this table represent the expenditure directly associated with different measures of road use on a per unit basis.  For example, Equivalent Standard Axles (ESA’s) are a measure of the relative road wear of different axles carrying different loads.  The amount shown in the table for 3.292 cents per ESA-kilometre, is the amount of expenditure that is directly related to ESA-kilometres divided by the number of ESA-kilometres.

 

Table 0 . 5 3 :     Allocated Unit Expenditure

Unit cost

Non-separable

Separable

 

c/VKT

c/PCU-km

c/tonne-km

c/ESA-km

c/VKT

Heavy Vehicles

1.809

0.126

0.121

3.292

0.37

 

Table 0.7 Table 0.4 indicates that the proportion of total charges collected through the fuel-based charge remains approximately the same between the current charges and the proposed charges.  Overall, approximately 2/3rds of the road use charges are derived from the fuel-based charge.  This proportion varies from class to class as shown in Table 0.7 Table 0.4 , where the proportions range from 69 per cent for small, 2-axle, rigid trucks to 82 per cent for 3-axle buses and coaches.

Table 0 . 7 4 :     Proportion of Revenue Obtained from Fuel Charge: Selected Vehicles

Vehicle Type

Revenue from Current Charges

Fuel as a Proportion of Current Charges

Revenue from Proposed Charges

Fuel as a Proportion of Proposed Charges

 

Fuel Charges

Registration Charges

Fuel Charges

Registration Charges

 

($ million)

($ million)

(per cent)

($ million)

($ million)

(per cent)

Rigid Trucks

 

 

 

 

 

 

2 axles

(7 to 12 tonnes)

48

24

69

54

24

69

3 axles

(over 18 tonnes)

49

20

73

55

20

73

Articulated Trucks (6 axles)

299

128

72

333

139

71

B-doubles

(9 axles)

14

4

78

15

5

74

Road Trains

(triple trailer)

55

17

78

61

19

77

Buses

(3 axle rigid)

13

3

82

14

3

82

Total (all vehicles)

871

399

69

968

425

70

 

Pricing Signals

The NRTC is required to recommend charges that provide appropriate pricing signals.  This means that charges must reflect the share of costs while not providing any incentive to use less appropriate vehicles for the task, for example, less safe vehicles.  The issues regarding road train, B-double and truck-trailer charges is covered in Section 0 .

1.10      Consolidation of Charging Categories

Long Combination Vehicles

Simplifying the structure of heavy vehicle charges by consolidating the charging categories is expected to reduce the costs of administering the charging system.  The proposals to update heavy vehicle charges include a proposal to consolidate the Long Combination Vehicle Type 1 and Long Combination Vehicle Type 2 categories into a single category.  The current categories apply to prime movers used in double trailer and triple trailer road trains, respectively).  This will mean that vehicle operators will no longer need to nominate when they register a road train prime mover (or renew its registration) whether or not they intend to haul two or three trailers.

The impacts of this proposal are:

·          Removing the need to determine the number of trailers a road train prime mover will be hauling will reduce registration authorities’ administration costs.  In addition, administrative costs associated with varying the charging category of a vehicle for short periods will be reduced because of fewer short term variations in registration categories.

·          Administration costs for operators will also be reduced.  Road train fleet operators will no longer need to determine which prime movers will be used in double trailer configurations and which will be used in triple trailer configurations.  Double trailer road train operators who occasionally operate in triple trailer configurations will not need to vary the category in which their vehicle is registered for short periods.

It isn’t possible to quantify administrative cost savings due to the lack of data on the number and size of road train fleets.  They are however expected to be small, possibly in the order of about 2 million dollars per annum. [9]

Alternative Truck-trailer Charges

Simplifying the heavy vehicle charging system by the removal of the Short Combination Truck category was rejected.  This is due to significant public concern about the reductions in charges for heavy vehicles.

Table 0.9 Table 0.5 represents a hypothetical fleet of rigid trucks and trailers.  The operator of this fleet possesses 10 rigid trucks (5 of which are 2 axle rigid trucks and the other 5 are 3 axle rigid trucks), and 3 trailers (one has 2 axles and the other two have 3 axles).  This table shows the total amount that this operator would have to pay in registration charges each year under the three different possible charging systems for truck-trailers:

1.        proposed charges, assuming the operator wishes to operate each of the trucks with a trailer at some time during the year;

2.        proposed charges, assuming only two trucks are registered to tow the two trailers; and

3.        alternative charges (see Table 0.7 Table 0.4 ).

Under the current and proposed charging systems, the operator must register enough trucks to tow each of the 3 trailers - leaving 7 of the fleet unable to tow a trailer at all.  A truck left idle at a depot purely because it is unregistered to tow a trailer represents a high dollar value loss to the operator.  The operator could, of course, choose to register all trucks to tow trailers, even though they would not do so for much of the time.  This would cost the operator in the example an additional $4 700 in annual registration charges, but each of the ten trucks could tow any of the three trailers. If the constraints imposed by limiting which trucks in the fleet can operate with trailers are a greater than this amount, the operator can be expected to opt for registering all trucks to tow trailers, regardless of how often they will do so. This would occur under both the current and proposed charges.

Table 0 . 9 5 :     Charges for a Hypothetical Fleet (Ten Rigid Trucks and Three Trailers)

 

Proposed Charges

 

Truck

All trucks registered to tow trailers

Two trucks registered to tow trailers

Alternative Charge

2-axle trailer

600

600

600

2-axle rigid truck

550

550

500

2-axle rigid truck

550

500

500

2-axle rigid truck

550

500

500

2-axle rigid truck

550

500

500

2-axle rigid truck

550

500

500

3-axle trailers

2 x 900

2 x 900

2 x 900

3-axle rigid truck

2 000

2 000

800

3-axle rigid truck

2 000

2 000

800

3-axle rigid truck

2 000

800

800

3-axle rigid truck

2 000

800

800

3-axle rigid truck

2 000

800

800

Total

15 150

10 450

8 900

 

With the alternative charging system, the operator no longer has to nominate whether or not they intend to tow a trailer behind each truck, in other words, all of the fleet trucks can tow any one of the trailers.  This leads to lower annual revenue in the total registration payments for the operator, along with greater fleet flexibility - each one of the ten trucks is able to tow any of the three trailers.  The operator will register the ten trucks with the higher category and productivity gains are guaranteed for the entire fleet.

The alternative charging system increases flexibility for truck-trailer use and simplifies the registration system markedly.  However, it involves reducing charges for the vehicles affected, leading to concerns about continuity with light vehicle charges and concerns about pricing signals in light of environmental concerns about vehicle emissions.

1.11      Implications of Other Issues

Special Purpose Vehicles

The proposed new definitions represent a significant departure from the current definitions relating to Special Purpose Vehicles (SPVs).  This is due to the fact that they now recognise the significantly different roles of truck-based (on-road) and plant-based (off-road) special purpose vehicles.  By basing the definition of Special Purpose Vehicles on how vehicles are built or constructed, the revised definitions would simply recognise, and give legal backing to what is already a reality in the administration of SPV’s in most jurisdictions.  Unnecessary operational restrictions are avoided by not restricting SPVs from carrying what might reasonably be defined as goods, but is necessary for them to perform their primary purpose (eg harvesting in the case of farm machinery, road construction in the case of road construction machinery, lifting heavy items in the case of cranes and so on).

The introduction of a workable definition of SPVs, along with administrative guidelines to assist registration officers in interpreting them, will ensure that SPVs are consistently defined in all registration offices (both within and between States or Territories).  It will provide greater certainty for registration officers and vehicle operators alike, hopefully reducing the time involved in assessing whether a vehicle rightly belongs in the SPV category.

The replacement of Special Purpose Vehicle Type 1 and Type 2 with three new sub-categories (Type P - plant based, Type T - truck based, and Type O - overmass) will provide a better continuum of charges for the wide variety of vehicles and levels of road use covered by this category.  This is intended to reduce the incentives for operators to attempt to misclassify vehicles in order to attract a lower charge.

Low Kilometre Vehicles

The option of introducing separate charges for vehicles travelling has not proceeded due to the administrative costs associated with identifying low kilometre vehicles and verifying their travel.

Instead it has been agreed that individual States and Territories would provide concessions to low kilometre vehicle operators at their own discretion.  Some jurisdictions have indicated that they do not consider the administrative effort required would be worthwhile for the small number of operators potentially involved.  Concerns were also expressed that:

·          relying on membership of associations to gain access to concessions is inequitable for those who do not want to be members of associations;

·          registration authorities would be continually requested to extend concessions to other groups;

·          variations in existing primary producer concessions were significant and were unlikely to be able to be set at a common level; and

·          extensive concessions would reduce revenues significantly.

Light trailers

The impacts associated with the introduction of the low mass trailer category would be:

Registration Authorities

-           Computer system changes would be needed to change the current calculation method for trailer charges.  These changes would almost certainly be conducted in conjunction with other system changes, which will need to be made when the whole updated charges package is implemented, and therefore are unlikely to add significant cost.

-           There will be printing and mailing costs associated with advising trailer operators of the new charging arrangements.  However, these may also be part of an overall campaign to advise operators about a variety of changes to the charging system.

-           Re-assessment costs associated with changing the registration status of trailers whose operators can demonstrate that they have a GVM/ATM of 9 tonnes or less.

-           There will be some revenue loss, as trailers are moved to the lower cost category.

The costs of providing this information are expected to be minimal as it is likely that information will simply be distributed as part of normal renewal notification.

Trailer Operators

Operators with multi-axle heavy trailers under 9 tonnes GVM/ATM will have the benefit of lower and more equitable registration charges than those that currently apply.

Other definitions

General Definitions

The recommended changes to the general definitions should considerably improve the intent and meaning of the Charges Act.  With the exception of those changes that are the subject of separate Papers, there should be little or no impact on registration authorities or heavy vehicle operators.

Truck-trailer Definitions

The truck-trailer definitional changes will:

Registration Authorities

-           Remove the need for most nominated use change transaction, and result in administrative savings.

-           Require computer system changes to:

-           re-assign all trucks currently registered in the Short and Medium Combination categories to the Truck type 1 and 2 categories

-           replace the 6-axle criteria with the greater than 42.5 tonne GCM criteria

-           Require all operators of trucks with a GCM of 42.5 tonnes or more, (and in particular, those operators of current Medium Combination Trucks which will be automatically downgraded to truck type 1 or 2) to be advised of the change in the category, and the option of nominating and paying a higher charge for operation above 42.5 tonnes.

-           Issue new registration labels to affected operators.

-           Require the processing of a relatively small number of requests for re-classification from Truck Type 2 to Medium Combination Truck.

-           Consider revised enforcement measures to prevent/curtail misuse of Trucks type 2 at GCMs over 42.5 tonnes.

Vehicle Operators

-           Provide benefits to most truck operators, who have an occasional need to haul a trailer, by removing the need to apply for the Short Combination Truck category. This will save operators the time and administrative costs currently associated with these changes.

-           Require a small number of operators, who wish to operate above 42.5 tonnes, to apply for a re-classification to the new Medium Combination Category.

1.12      Indexation

Indexation of annual charges for all heavy vehicles is not straightforward.  Indexation would not apply to a large component of the cost recovery mechanism, the notional fuel charge.  This means that indexing annual registration charges would not result in sufficient additional revenues for full recovery of total increases in road expenditure.  In addition, smaller heavy vehicles already pay more than their share of costs and indexing their charges will tend to maintain relative over-recovery.  Also, a simple indexation approach would not take account of factors such as changes in vehicle numbers and vehicle use.  Changes in patterns of vehicle use can have a significant impact on the share of road expenditure attributed to different heavy vehicles, but will not be reflected in CPI movements.

These difficulties suggest that any indexation approach may need to be carefully applied, if it is to be consistent with the cost allocation and charging principles.  If this were not done, when charge levels were reconsidered more fully, significant distortions may become apparent for some classes of vehicles.

Nevertheless, indexation would have the advantage of de-sensitising increases in charges to at least some extent.  It would also help drive home the message that charges fixed in one year will not achieve full cost recovery indefinitely, and that charge levels should not therefore be fixed in stone.  A further advantage of indexation is that it allows charges to keep pace with costs, so that when charges are recalculated the size of any increases required is smaller.

Several jurisdictions already index the comparable charges for light vehicles.  Indexing annual heavy vehicle charges will help to ensure that, in those States and Territories, the level of charges for smaller heavy vehicles does not diverge over time from charges for lighter vehicles just under 4.5 tonnes, leading to inappropriate pricing signals.

If indexation is applied, the Commission is obliged by the cost recovery requirements set out in the Heavy Vehicles Agreement to review the factors that influence the costs attributed to each type of vehicle, and the factors influencing calculation of their annual charges.  Where indexation is out of step with these factors, the Commission may need to examine whether indexation should not be applied or whether charges should be recalculated fully.

This requirement is necessary to satisfy the obligations placed on the Commission by the Heavy Vehicles Agreement, which forms a Schedule to the National Road Transport Commission Act 1991 .  The Agreement sets out a series of Charging Principles that the Commission must follow in recommending heavy vehicle charges to Ministers.  It also spells out how charges are to be calculated.  The overriding theme carrying through these requirements is that heavy vehicle charges are intended to recover the costs of road use attributed to heavy vehicles, both in total across all heavy vehicles and by vehicle class, while at the same time minimising over-recovery from any class.  If indexation were to be introduced, the Commission would be obliged to monitor the extent to which indexation is inconsistent with these requirements.

The implications of each of the options presented in Section 3.2.4 have been assessed by indexing current charges (as of July 1995 when they were first implemented) to July 1998 (the date applying to updated cost allocation and charging results).  Between 1995 and 1998, the possible indices changed as follows:

1.        Option A Consumer Price Index

3.8 per cent

2.        Option B Road Construction Price Index

4.7 per cent

3.        Option C Change in Total Road Expenditure

3.5 per cent

By applying these indices, the effects on charge levels, revenues and cost recovery levels were assessed.  The results of this assessment were:

·          Options A, B and C result in similar charges, revenue and cost recovery levels.  The results for Option A are shown in Table 1, and can be compared with the proposed recalculated charges.

·          The assessment indicates that if the current national heavy vehicle charges had been indexed in this way since they were implemented, additional revenue for States and Territories would have resulted.  However, the extra amount would have been less than the additional revenue that would result from a full review of cost allocation and charging results.

The National Road Transport Commission recommended that charges for only some of the vehicle types be subject to indexation.  However, it was agreed that charges for all vehicles  be indexed and that this process would be reviewed annually by ministers.

The resources required to annually determine charges are excessive and not always available. Through indexation, these costs are reduced.  It is necessary that charges keep pace with vehicle use and road expenditure, therefore the ATC has agreed to decide each year whether to apply indexation.  This will than take into account discrepancies between the CPI and the heavy vehicle share of expenditures which are to be recovered.

1.13      Summary of Impacts

Table 0.11 Table 0.6 summarises the analyses from the previous sections to provide an ready indication of the impacts on different segments of the community for both resource and financial implications.

Table 0 . 11 6 :   Summary of Impacts

Segment of the Community

Resource Implications

Financial Implications

Industry

 

 

Transport Operators

·          No change for 80% of vehicles

·          Savings in administration costs for road train and SPV operators

·          No change for 80% of vehicles

·          Increased fixed annual charges for others of  6 % overall

·          Increase in vehicle operating costs of less than 1% for 20% of vehicles

Transport Users

·          Minimal changes to freight costs (less than 1%)

·          No change to bus passenger costs

·          Minimal changes to freight costs

Government

·          Savings in administrative costs due to simplifications in structure and improved consistency

·          Small implementation costs of changing administrative and computer systems

·          Small increase in revenue of 6%.  See Section 1.20

C onsumers

·          None or minimal

·          None or minimal

 

1.14      Competition Assessment

Restrictions on Competition

National heavy vehicle charges do not provide any restrictions on competition.  The charges involved are set to recover road expenditure, and therefore simply reflect the costs of road use associated with different types of heavy vehicles.  Differences in charges for different types of heavy vehicles reflect differences in the costs to government of providing and maintaining roads for different vehicles, while ensuring that appropriate pricing signals are delivered ( vis a vis light vehicle charges, environmental concerns regarding emissions, and relative safety of different vehicle configurations).  Neither the existing nor proposed heavy vehicle charges:

·          impose methods of work on operators;

·          directly restrict the number of operators in the industry;

·          advantage one operator compared to another, regardless of size; or

·          erect barriers to entry to the industry.

Table 0 . 13 7 :   Comparison of Indexed and Recalculated Charges: Selected Vehicles

($ per vehicle per annum)

Vehicle Type

Vehicle Size

Current Charges

Charges Indexed by CPI

Recalculated (Proposed) Charges

Up to 12.0t

300

311

300

Over 12.0t

500

519

500

Up to 16.5t

600

623

600

Over 16.5t

800

830

800

Under 42.5t

2,850

2,958

2,900

Over 42.5t

2,850

2,958

4,700

Up to 20.0t

900

934

900

Over 20.0t

2,000

2,076

2,000

Up to 12.0t

300

311

300

Over 12.0t

500

519

500

 

1,250

1,297

1,250

 

4,000

4,152

4,300

5,750

5,968

6,800

6,750

7,006

7,400

8,500

8,823

8,900

Total Annual Revenue from Fixed Charges

 

 

$399 million

$414 million

$424 million

Note:  These annual charges apply in conjunction with a fuel-based charge, currently 18c/l and proposed to increase to 20c/l

 

The levels of charges and the way in which they are administered has little, if any, impact on methods of work employed by different operators.  Heavy vehicle charges have no bearing on the number of operators in the industry, as there is no restriction on the number of vehicles that can be registered or the number of operators that can register heavy vehicles.  As all operators with the same vehicles pay the same charges, which are commensurate with their share of road expenditure, and the charges do not vary with the number of vehicles registered by any one operator, they do not advantage large versus small operators.

As with existing charges, a large component of the charge (2/3 rds overall) is levied as a variable charge through diesel excise payments.  Consequently, fixed annual charges are a relatively small component of the charges.  They are very small in comparison to the capital costs of heavy vehicles and therefore do not constitute barriers to entry to the road transport industry.  Typically, the fixed annual charge on registration of a heavy vehicle represents around 1 per cent of the total costs of operating the vehicle.

Impacts of the revised charges on road-rail competition are likely to be minimal.  Registration charges for road freight vehicles which compete most directly with rail are subject to the largest increases (6-axle articulated trucks and B Doubles), as a result of a higher degree of cost recovery from these vehicle classes.  However, as the registration charges are a small proportion of vehicle operating costs, it is likely that the extent of these revised charges will be small.

Effects on Small Business

The proposals to update heavy vehicle charges are not expected to have any significant impact on small business.  Compliance costs and any burden of paper work can be expected to be unchanged.  Both small and large operators who wish to vary the use of road train prime movers between towing two and three trailers will face lower administrative costs, as they will no longer need to nominate how many trailers are towed, or change their registration details if circumstances change.

Effects on Trade

Proposals to update heavy vehicle charges are not expected to have any direct impact on export performance or trade more generally.



CONSULTATION

1.15      Consultative Process

An extensive process of consultation was held as part of the process of developing proposals to update heavy vehicle charges.  This process began with the release of a discussion paper in August 1998 (NRTC 1998a).  The paper was intended for public comment and put forward the issues that the Commission believed should be taken into account, gave the results of its work to date and included a draft set of revised charges.  The report proposed a range of improvements to existing charges, including elimination of some inconsistencies and the incorporation of more accurate data than was available in 1992.

At the same time around 8000 copies were distributed of an information bulletin canvassing the issues raised in the discussion paper.  Shortly after this a detailed technical paper setting out the methodology used, details of the input data, assessing alternatives and reporting sensitivity tests was released to assist in the public discussions (NRTC 1998b).  A series of public forums was arranged, with meetings to discuss the papers arranged in all capital cities.  These meetings were attended by a variety of interested parties including heavy vehicle operators, academics, government officials, farmers and other specialist vehicle operators.

In addition a meeting of the Commission’s Cost Allocation Reference Group was held to discuss details of the methodology, input data and results of calculations.  The Reference Group includes representatives from:

·          all State and Territory road authorities;

·          the federal Department of Transport and Regional Services;

·          the Australian Local Government Association;

·          ARRB Transport Research and the Bureau of Transport Economics;

·          the Australian Automobile Association and Australian Trucking Association; and

·          the Australasian Railways Association.

Formal written comments were also requested and thirty-five written submissions were received from a wide cross-section of interested parties.  With the release of three supplementary technical papers further informal discussions were held and formal written submissions received (totaling thirty-two additional submissions).  The three supplementary papers dealt with:

1.        charges for vehicles travelling low annual kilometres (NRTC 1998c);