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Interstate Road Transport Charge Amendment Bill (No. 2) 2008 Road Charges Legislation Repeal and Amendment Bill 2008

CHAIR —I now welcome officers of the Department of Infrastructure, Transport, Regional Development and Local Government. I remind senators that the Senate has resolved that an officer of a department of the Commonwealth or of a state shall not be asked to give opinions on matters of policy and shall be given reasonable opportunity to refer questions asked of the officer to superior officers or to a minister. This resolution prohibits only questions asking for opinions on matters of policy and does not preclude questions asking for explanations of policies or factual questions about when and how policies were adopted. Officers of the department are also reminded that any claim that it would be contrary to the public interest to answer a question must be made by a minister and should be accompanied by a statement setting out the basis for the claim. Do you wish to make a brief opening statement before we go to questions?

Mr Wilson —No. We are more than happy to answer questions.

CHAIR —Senator Williams.

Senator WILLIAMS —You have thrown me straight in the deep end.

CHAIR —It was your reference to the Senate. I am happy with the bill.

Senator WILLIAMS —Do you know the government’s plans for the construction of more parking bays for the transport industry?

Mr Wilson —As a number of speakers have indicated, the government has a $70 million program announced in the 2008-09 budget, which is contingent on the passage of these two pieces of legislation, to invest over the next three-and-a-half years.

Senator WILLIAMS —Is that $70 million per year?

Mr Wilson —No. It is $70 million complete. It will be $10 million in 2008-09 and $20 million in the following three years.

Senator WILLIAMS —Approximately how much would it cost to construct a truck stop? I know that is a difficult question because some may have to cut out the side of a hill and others might have to build land up, but assuming that it is on flat country, would it be $1 million or $2 million? Do you have any idea what it would cost to construct an average truck stop?

Mr Wilson —I have asked the same question of my colleagues in the state and territory jurisdictions. The rough answer is anywhere from $500,000 to $2 million. Depending on the site, it can be more expensive than that. It depends on the site, whether or not the work is being done as a component of other works that are already underway and the distance from facilities. The price will vary, but as a rough ballpark figure it would be anywhere between $500,000 and $2 million.

Senator WILLIAMS —Let us say that we worked on $1 million. This is a rough guess and I do not expect you to be precise and pedantic about the cost of each one. If it cost $1 million to set up the average truck stop, in 2008 we have a budget of $10 million. That is only 10 truck stops.

Mr Wilson —That would be correct.

Senator WILLIAMS —There are 20 for 2009, 20 for 2010 and 20 for 2011. The ATA is calling for an extra 900 truck stops by the year 2019. That is 70 over four years, which is a long way short of 900.

Mr Wilson —The provision of rest areas on the road network within Australia is the constitutional responsibility of the state and territory governments.

Senator WILLIAMS —Many things are.

Mr Wilson —They own the roads. As one of the previous witnesses indicated, a number of the states are currently introducing funding arrangements specifically designed to improve the number of rest stops available to the trucking industry throughout Australia. South Australia and Queensland, in particular, were mentioned. In addition to the Commonwealth’s funding over the next few years, the states will also be providing funding towards it.

Senator WILLIAMS —Is there any agreement in COAG for the states to work in conjunction with the federal government to construct a specific amount of truck stops?

Mr Wilson —I missed part of your question.

Senator WILLIAMS —Do you know if there has been any agreement through COAG, between the state and federal governments working together, to construct more truck stops?

Mr Wilson —As Mr McKinley indicated, COAG considered in February 2006 the concept of improving the number of rest areas and came to some agreement in regards to that. The Australian Transport Council considered the issue through 2006 and I believe at the end of 2006 indicated that there was, at that stage, insufficient funding in any of the jurisdictions to meet the guidelines which COAG had considered in February 2006.

Senator WILLIAMS —If you look at the Newell Highway, I have heard projections that the amount of trucks on that road will double by the year 2020. Does the department have any estimations or predictions of the amount of road transport on that particular road?

Mr Wilson —I do not have statistics in regards to road usage or prediction of road usage on the Newell with me. I would say that it is not actually an area that I am responsible for. It is another area within the department in regards to the provision of road funding and the negotiation of future funding for roads on the AusLink network. I do not have that data in front of me.

Senator WILLIAMS —Does your department cover rail transport as well?

Mr Wilson —Yes.

Senator WILLIAMS —Is there much progress being made towards the establishment of the Melbourne-Brisbane and Melbourne-Gladstone rail line? I am fully aware that there will be a report out next September.

CHAIR —I am just curious where you are going on this one.

Senator WILLIAMS —I would like to know what is going to take trucks off the road by shifting heavy freight and whether it is going to relieve the need for the construction of truck stops.

CHAIR —The officials can speak for themselves, but the question that you are putting to them is not really part of this bill. I will leave it up to Mr Wilson if he wants to digress.

Mr Wilson —Again, I apologise. The rail area is not part of my division. I do not have material in front of me.

Senator WILLIAMS —We will get it from the next witnesses.

Mr Wilson —Mr Nye from the Australasian Railway Association should be able to provide you with some information.

Senator WILLIAMS —Does your federal department work closely with local government on issues such as the truck stops?

Mr Wilson —As you would be aware, the federal government provides funding through to the state governments in regard to the provision of road infrastructure. The construction of road infrastructure is undertaken by those state governments. The department works closely with both the state and territory governments, and also in consultation with the local councils, in developing advice for government to consider in regard to which projects to fund.

Senator WILLIAMS —Chair, you might be able to help me here. I am coming back to the point about the number of truck stops. I am very confused with these new road rules. I wish Senator Heffernan were here. Do you have to stop for a minimum of seven hours a day—is that correct?

CHAIR —I do not know what is going on in New South Wales. I am happy to have a conversation with you after the hearing. I cannot add to that. I can tell you about Western Australia.

Senator WILLIAMS —I am leaning towards the number of truck stops that are going to be constructed over the next years. You can see where I am coming. The $70 million has been far too short. There is no point asking questions on the budget. That is all I could ask at this stage.

CHAIR —I am sure I can help you out there. If there were any suggestion to alter the agreed rate to build more truck bays that that has been negotiated between industry and the NTC now, all of this building would collapse.

Senator McGAURAN —I wonder if you know the history of previous submissions put to the government in regard to the road-user charge and the fuel excise over the last eight years. What has been the submission by the commission?

Mr Wilson —Do you mean the National Transport Commission?

Senator McGAURAN —Yes. I am trying to work out whether I am right or wrong. There has been an almighty sea change in regard to the trucking representatives that we have had here today from the previous eight years when similar tax hikes have been put to the government.

Mr Wilson —It would be fair to say that the Australian Trucking Association quite vigorously opposed the previous determination which was considered by governments in 2006.

Senator McGAURAN —Was that the last one?

Mr Wilson —That was the last determination that was considered. At that time they indicated that they supported the concept of the industry paying for the utilisation of the road network. For as long as I have been involved in this area, they have indicated that they are willing to pay their way, but they did not support what is known as the 2006 or the third determination.

Senator McGAURAN —What was the one previous to that?

Mr Wilson —The determination previous to that was the 2001 determination.

Senator McGAURAN —What was the history of that? We will not just pick on the main body, being the Australian Trucking Association. What about the Australian Livestock Transport and the Road Train Association that came before us?

Mr Wilson —I believe all trucking associations opposed the 2006 determination. I would have to take the question on notice in regard to the 2001 determination and the relationship between industry and the NTC position was at that stage. That is before my time.

CHAIR —Trust me, they all spewed on it.

Senator McGAURAN —Take 2001 and 2006 on notice. You can even take the previous one. Do we go in five-year lots?

Mr Wilson —I would seek to clarify this if I get this wrong. The first determination is most likely to have been supported by industry, because it was aimed at removing the significant disjoint in charges between the jurisdictions. I can take you back to the original intent of heavy vehicle charges. Heavy vehicle charges were introduced to remove the differentials between trailer charges in South Australia being extremely low and the prime mover rates in Victoria being very low. You ended up with a number of trailers registered in South Australia, but actually residing all over the country side.

CHAIR —When was that?

Mr Wilson —That was in 1991, I believe, although it is stretching my memory.

Senator McGAURAN —What was the one previous to 2001?

Mr Wilson —There have been three determinations in total. The 1991 and 2000 determinations were implemented. The 2006 determination was voted down by the Australian Transport Council and not implemented. The most recent determination, known as the 2007 determination, was supported by all ministers in February of this year.

Senator McGAURAN —When we are talking about road users, is that the fuel excise element and not the registration?

Mr Wilson —Not the registration charge.

Senator McGAURAN —Does the registration have the same history?

Mr Wilson —It is the same history. It includes a determination of the charges to recover the costs previously spent by governments. The charges are split into registration charges and the road-user charge. The registration charges are predominantly charged by the state and territory jurisdictions, apart from about three per cent of the registration charges, which are levied through the federal interstate registration scheme. The other component of it is the heavy vehicle road-user charge, which is levied and collected by the Australian government.

Senator McGAURAN —Both sides of the parliament and the industry accept the principle of road user, but the increase and the amount of the increase is debatable. I would have thought that 2006, when the economy was booming, would have been a more acceptable time for those representative bodies to accept than now, when doom and gloom is over us. I am trying to get through you a line on the representative bodies’ submissions today. I find them out of whack. From 2006 to 2008 there are two different sets of circumstances for their drivers.

Mr Wilson —In many ways Mr McKinley was quite right in saying that the industry is a little more mature and has accepted the concept.

Senator McGAURAN —Do you mature if you accept an increase in tax?

Mr Wilson —I would go back to the point that the road-user charge is not a tax. It is accepted by both industry and the government as a charge to recover costs associated with the provision of roads to the heavy vehicle industry. Both within the NTC and government we have had long conversations with the industry in regard to that, and the heavy vehicle industry accepts the concept of a cost recovery of expenditure made by governments previously. Whilst it is levied by government and therefore could be considered to be a tax in the general sense, it is actually recognised as a charge for the utilisation of the road network. It is a recovery of costs previously incurred by government in provision of that network.

The argument—certainly within the three years that I have been here—has always been around the quantum. In 2006 it was an argument about the quantum of costs to be recovered. There were arguments between government and the industry that the NTC model generated too high costs to be recovered. That was the industry’s major concern. If you look at the situation with this determination, there has been an acceptance by industry that the model has been refined and improved, and now gets the number to be recovered reasonably close. You will always have an argument at the edges about—

Senator McGAURAN —But the model does not have to be accepted. Previous governments have not accepted the recommendation. That is all it is. It is just a recommendation.

Mr Wilson —That is correct. In voting down the previous 2006 determination, the previous government did not accept to vote for the charges that came out of that model. In this instance, all governments have voted for the charges that have been determined through the utilisation of the model, and the model is a model. It models the expenditure by governments. It models the utilisation of the road network by the industry. It generates out one end a group of charges whereby you try to recover the costs previously considered.

Senator McGAURAN —Given that the model is accepted by the industry, do you think that they are just arguing on the fringes in regard to the so-called indexation? Is it just a fringe argument by them? Do you think that they have left themselves to debate a fringe point?

Mr Wilson —I do not know that I would consider it a fringe argument. I would indicate that the indexation or an adjustment of the charges on an ongoing basis, which is the methodology included in the NTC determination, is in accordance with what COAG agreed in April of 2007, which was to ensure that cost recovery was maintained. One of the major issues that government and bureaucrats faced in 2006 with the determination at that stage was that there had been a long period of time between the previous determination and the new determination. That period of time meant that there was a translation shock for industry with a significant jump in the charges to be recovered. In 2006 COAG agreed to remove that level of shock over time and that you would adjust the charges on an ongoing basis to maintain a level of cost recovery.

Senator McGAURAN —I am concerned about the capacity to pay in this climate. Does that model in any way factor in capacity to pay?

Mr Wilson —Do you mean in terms of individuals?

Senator McGAURAN —The individual drivers’ capacity to pay freight charges and the ability to pass on an increase or decrease in freight charges.

Mr Wilson —The model is an averaging model which takes into account the costs of the provision of the road network over the previous seven years by state and territory governments, including Commonwealth expenditure. It then goes through a process of averaging those costs across a vehicle fleet to generate a registration charge and a road-user charge. I do not believe that the model has a sensitivity analysis built into it that you could use to determine an individual’s capacity to pass on those costs.

Senator McGAURAN —I agree with you, you cannot. Therein lies where a government that is given the recommendation and industry representatives must make those judgements. I can always understand the government putting up the charges, but I am at a loss to understand the analysis of the industry representatives that in 2008 it is better take a user charge and registration hike than in 2006.

CHAIR —In all fairness, that is a question for the industry associations rather than the departmental officials.

Mr Wilson —There are a couple of mitigating factors. As I indicated previously, there was significant disagreement about the level of funding to be covered with the model in 2006. I will take Senator Sterle’s point. There will have been some truck drivers out there who violently disagreed with the concept of it, but there was no disagreement between government, bureaucracy and the industry on the concept of heavy vehicle charges and the concept of paying their way. There still is no disagreement between paying their way. What has happened in the intervening period is that the refinement to the model, in terms of generating the cost to be recovered, has met with industry support. The extension of the averaging period over which the costs are to be recovered from three years to seven years has had industry support. The concept of phasing-in the major increases in registration charges over a three-year period as opposed to a one-hit from 1 July 2009 has had industry support. And the concept of delaying the introduction of the road-user charge increase from 1 July through to 1 January 2009 had industry support. If I reflect back, when governments voted for the determination the heavy vehicle safety and productivity package of $70 million that the government had committed also received industry support.

There are a number of things that have changed since the 2006 determination to the 2007 determination that materially change the disagreements between government and industry.

CHAIR —I would like to get back to the basics of this bill. We heard from witnesses earlier, Mr McKinley in particular, that there were all sorts of promises of 900 truck bays that did not come to fruition. The question of why it did not come to fruition is being answered as we speak. You have reiterated the statement, which is right. The industry tells us they are maturing. Everyone wants safe trucks, safe drivers, and roads to be safe for other road users. This is a step, albeit a very small step, in the right direction. On that, if there are no further questions, I thank you for your time.

  • [6.23 pm]