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Towards 2020: the Government's view: keynote address to the Australian Trucking Association Convention: Gold Coast Convention and Exhibition Centre, Broadbeach: 20 April 2006



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KEYNOTE ADDRESS TO THE AUSTRALIAN TRUCKING ASSOCIATION CONVENTION WS06/2006 20 April 2006

'TOWARDS 2020 - THE GOVERNMENT VIEW'

KEYNOTE ADDRESS TO THE AUSTRALIAN TRUCKING ASSOCIATION CONVENTION

THURSDAY 20 APRIL 2006 GOLD COAST CONVENTION AND EXHIBITION CENTRE BROADBEACH

Acknowledgements:

z Stuart St Clair, Chief Executive, ATA

z Ross Fraser, ATA Chair

z Senator Kerry O'Brien, Shadow Minister for Transport

Thank you for that kind introduction Stuart (Stuart St Clair).

It is a pleasure to be here today to speak at your national convention. I am sure you will find today's sessions an interesting start to the convention.

The next few days give you the chance to talk about what is new in the industry, to celebrate your successes over the past 12 months, and it is a time to look forward to some of the challenges and opportunities you, as an industry, may face.

From my perspective, today gives me a valuable opportunity to share with you what the Government is doing to build a stronger transport sector in Australia.

I would like to talk to you today about the Howard/Vaile Government's investment in our transport infrastructure, heavy vehicle charges, fuel tax, transport reform, and safety and security. It is a lot to cover in the first session of the morning, but it shows the enormous amount of work that is currently underway in this important sector.

Throughout my working life, I have always had a close association with Australia's transport industry.

As a grain grower not too far from here and a former agriculture minister, I appreciate your industry's significant contribution to Australia's growing economy.

29/05/2006

With transport and logistics representing about 9% of Gross Domestic Product and employing around 400,000 people, the trucking industry is one of the economy's key drivers.

Your role will become increasingly vital as Australia's freight task continues to grow strongly. The description I have noticed the association using - 'We carry the Australian economy on our backs' is a good one.

Much of what the Howard/Vaile Government is doing in the area of road transport is based on the forecast that Australia's total freight task will almost double in the 20 years to 2020.

Of course, while increases in demand for transport services appear very large when viewed over the long term, we should keep things in perspective. They involve growth rates that are similar to Australia's very impressive economic boom over the last 14 years. However, true that is, it does not alter the key conclusion that unless Australia continues to reform and improve our transport sector, then the price we must all pay for these services will be much higher, and the wellbeing of all Australians will be damaged.

That is why the Australian Government is making a significant investment in our transport infrastructure to help the economy meet this challenge.

AUSLINK

One of the ways we are preparing for this increase is through the Government's AusLink initiative, a $12.7 billion funding injection for essential land transport infrastructure.

AusLink has major benefits for Australia's truck industry, with more than $8 billion going to high priority road projects across the national network. Your members are now seeing the benefits from this program in the roadworks on the Hume, the Pacific, the Calder Highways and the Adelaide Port Expressway.

AusLink not only means more money for our roads and railways, it represents a new way of planning to meet our future transport needs.

A 20-year planning horizon is guiding our infrastructure funding. This longer-term strategic approach is in stark contrast to the ad-hoc way infrastructure was funded in the past, which often failed to adequately take account of future needs.

Just a few AusLink examples show you the critical nature of this investment program.

On the Hume Highway, we are spending more than half a billion dollars for the construction of a bypass at Albury. We have also invested more than $300 million for another bypass at Craigieburn which has now been completed.

A further $200 million will be spent on duplicating sections of the Hume, which will help to improve performance and reliability on Australia's most significant transport corridor.

We are providing $121 million for the construction of a Princes Highway bypass at Pakenham [Packen'em] which will remove the last remaining bottleneck on Melbourne's south-eastern outskirts.

We are investing almost $1 billion in conjunction with the New South Wales government for further duplication of the Pacific Highway, which is a significant step towards achieving our objective of completing the highway's

duplication by 2016.

Half a billion dollars is also being spent to improve the congested Ipswich motorway in south-east Queensland.

And here on the Gold Coast, the Australian Government is providing $120 million towards the cost of the four-lane Tugun by-pass which will dramatically ease congestion between Currumbin and Tweed Heads.

We are funding the key strategic links - a national network of both interstate highways and also, importantly, the key urban corridors which reduces your congestion and access costs to ports, airports and your key intermodal

terminals.

As daily users of these roads, I am sure you recognise the pressing need for these projects, and importantly, the significant benefits that will flow from them for you and your businesses.

Heavy Vehicle Charges

Funding improvements to Australia's transport infrastructure is only part of the solution to meeting our transport needs. It is also important that governments get the pricing signals right in relation to accessing transport

infrastructure.

As you know, last month I announced the Australian Government would vote against that national heavy vehicle charges proposed by the National Transport Commission.

The decision was based upon the Government's concern that large increases in road user charges at this time would be very difficult for your industry, particularly in the climate of high fuel prices. I was also concerned that the charges represented an over-recovery of costs for the light vehicle classes and 6 Axle articulated class.

I am pleased that my state and territory counterparts also took this view and decided to vote against the proposed increases.

I would remind you that state and territory registration fees have increased over the past five years under a CPI-linked indexation system while the Australian Government's excise on your industry has not increased since 2001.

Sadly, the world price of oil is not something that any government can control. The idea of instituting some sort of domestic price control may seem attractive but the history of such efforts is that all they tend to do is stabilise prices toward the top of the range. Given the volatility of oil prices, it would be impossible to devise a system that would provide effective control of prices - and any attempt to artificially reduce the price of fuel in Australia would only lead to shortages in supply.

Nor is reducing federal excise an answer - if it was, then you wouldn't have such a problem now because excise has not changed for five years while the price of oil has skyrocketed.

With the decision on the third determination charges now made, all jurisdictions now need to decide on a way forward. I will continue to press my state and territory colleagues to take account of the cost pressures on your industry when they set charges and particularly be aware of the regional and rural heavy vehicle operators.

The Australian Government remains supportive of the principle of cost

recovery from the road transport industry, and I note that the ATA also recognises the principle that the industry must pay way.

I also note that if the states and territories do not give any further consideration to their registration charges, then we will be left with a default position under which registration charges will be indexed this year, as they have for the past five years.

This will exacerbate the existing cross-subsidy from smaller vehicles, and further distort the relativities in revenue between the Commonwealth and states and territories.

Whatever course of action my state and territory colleagues choose to take on registration charges, it will be important that the long-term need to invest sufficient funds in the infrastructure to support ongoing productivity reforms is recognised and acted upon.

All governments must find a way to fund the asset upgrades and improvements to support Higher Mass Limits (HML), more productive vehicles and access to your distribution points.

I can assure you that while we were negotiating the AusLink Bilateral agreements with the states and territories, we fought hard to open up more HML routes. We will provide funding under AusLink for Higher Mass Limits to be extended.

I will be looking to press all the jurisdictions to further extend HML and implement the national Concessional Mass Limits from July this year.

To this end, under the AusLink Bilateral arrangements, the Australian Government is targeting $30 million in New South Wales and $10 million in Queensland for infrastructure upgrades to expand the HML network. This is a perfect example of productivity targeted investment.

We must make our infrastructure work better and more productively for our road transport industry and Australia. A continuation of the restrictive asset protection approach of some state road agencies is 'standing still' and holding back innovation.

Australia cannot afford that.

COAG Reform Agenda

This linking of price, productivity and investment is critical to the ongoing economic success of Australia and is one of the challenges identified by the Council of Australian Governments in February.

I was very pleased to have transport adopted as one of the four key agendas of the future competition and regulation reforms in Australia.

As I have said, continued reform is essential if we are to meet the freight challenges facing us as we head towards 2020. It is crucial that while industry is striving to make productivity improvements, governments commit to enhancing the operating frameworks to foster those benefits.

The COAG agreement offers the transport industry - road transport in particular - the opportunity to drive some significant reforms with the support and endorsement of First Ministers.

The Productivity Commission will develop proposals for efficient pricing of road and rail freight infrastructure through consistent and competitively

neutral pricing regimes.

That inquiry is now underway, and I urge all interested parties to make submissions to the Commission. I am hopeful that the Productivity Commission will be able to provide governments with a clear and concise way forward when we next consider road and rail pricing decisions.

COAG has also committed to actions for further reform of rail and road regulation, including a detailed work program for heavy vehicle productivity improvements and a rail safety reform agenda. This is an ambitious agenda that the Australian Government drove hard to get on the COAG program. It will require all jurisdictions and industry to work together to achieve the potential benefits which it could deliver.

As an industry, I am aware that you are working with the NTC and jurisdictions to resolve a national package on driver fatigue.

While it is encouraging that we are continuing to see a downward trend in the number of deaths on our roads involving articulated trucks, more needs to be done. This is important both for industry participants and to enhance the community's confidence in the way the industry operates.

In the decade to 2002 the average was 190 fatalities per year, with a peak of 208 in 2000. There were 173 in 2003 and since then, the number has remained around 150.

This is 21% below the long-term average and less than half of the figure for 1989.

While this drop is of course good news, I am sure you will agree that there is no room for complacency. I look forward to working with you to continue this downward trend. The package the NTC is working on aims to do just this.

If adopted, it will strengthen the focus on the need to ensure heavy vehicle drivers do not drive when fatigued. The package will allow some additional flexibility in working hours for drivers willing to adopt stringent fatigue counter measures. I understand that the NTC expects to present it to Ministers by the end of the year.

Strengthening the Partnership with the NTC

The NTC was established by governments to assist them to drive reform.

I know there has been a lot of negative comment by industry surrounding the 3rd heavy vehicle charges determination and the slow pace which productivity reforms have been implemented.

But the NTC can only be successful in getting the state and territories to make reform changes if it has a good understanding of your needs and your industry's commitment to work with them.

The NTC's work program and the pace it can drive change are dependant on governments. It can only put the case for productivity reforms and more flexible regulation if the work with you and your industry puts a balanced case to all jurisdictions.

I fully support Ross Fraser's and Stuart St Clair's public statements on the way in which you will work with the NTC to drive productivity reforms.

Fuel Credits Scheme

No doubt one of the issues that you will discuss over the next couple of days is the Australian Government's new fuel credits legislation.

You will all be aware that the Government is replacing the energy grants credit scheme to remove a major anomaly in present arrangements for your industry. The new scheme will expand excise credits to a broader range of your industry's fuel users.

This will help Australia's transport sector to grow. At the same time, the changes help governments meet our environmental protection goals.

The key changes from 1 July are:

z the expansion of heavy vehicle diesel excise credits through the

removal of the current boundary conditions; and z the expansion of credits to all taxable fuels used in heavy vehicles of

more than 4.5 tonnes, including petrol.

This measure will save your industry some $130 million in each of the next two financial years.

To access these benefits, operators of heavy diesel vehicles will need to meet one of four environmental criteria to qualify for a fuel tax credit. Any operator who is doing the right thing and maintaining their vehicle's engine in a responsible manner, regardless of the vehicle's age, will be able to access the fuel tax credit.

My department has worked closely with the ATA to develop these guidelines. Broadly, the criteria relate to a vehicle's age, maintenance program, maintenance schedule and emission standard.

These guidelines have now been finalised between government and industry. My department will be providing detailed information on its website to explain the new criteria. In addition, copies of the guidelines are available at this conference, and the Australian Taxation Office has established a booth here at the convention centre to provide information and help operators understand what is involved under the new Fuel Credits Scheme arrangements.

If you have any concerns with the new system, I encourage you to raise them with your association or get in touch with officers from my department or the ATO.

I know some of you are concerned the legislation has yet to pass Parliament, but the Government's urgent security legislation and industrial relations changes have led to some delays.

However, I am confident the legislation will be passed in time for the new credit scheme to commence, as planned, on July 1.

As a final point, I would like to make it clear that the Howard/Vaile Government is not only committed to making our roads safer and more productive, but it is determined to put in place appropriate safeguards to protect our transport systems, and the people who use them.

It will come as no surprise to you that one of the Australian Government's highest priorities following the events of September 11 has been to strengthen the nation's transport security laws.

Adapting to this new working environment has implications for the transport and logistics sector, particularly Australia's trucking industry.

These stronger laws include new identification requirements for people working in special maritime security zones at our ports. From January 1 next year, people working unmonitored or unescorted in maritime security zones need to display a valid Maritime Security Identification Card, or an MSIC.

This change affects truck drivers, owners and operators who need to work in these zones when carrying goods and services to and from ports.

My department has produced a range of information materials to help you understand your obligations under these new laws.

More information is available from my department's website or from your local trucking association. Information brochures are also available at the registration table at the entrance.

Conclusion

Looking through the program for this week's convention leaves me in no doubt that the ATA is preparing thoroughly to meet the transport challenges that confront Australia in the years ahead.

What I've outlined this morning is the Australian Government's plan to build a stronger transport sector, which will help grow Australia's economy. I am confident that, together, we can achieve these two important goals.

I wish you well for the rest of your Convention.

Thank you

Last Updated: 20 April, 2006

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