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

CHAIR —I welcome Mr Morris from the Australian Logistics Council via teleconference from the Gold Coast. Would you like to make a brief opening statement before we go to questions?

Mr Morris —Yes. I know you have had a number of speakers today. The first point I would like to make is the importance of the considerations that you are currently pursuing. We would be concerned if there were any slowdown in the focus of reform and, in fact, we would argue that it has never been more important to get the reform right in terms of Australia’s supply chains and it has become even more critical in view of the current economic climate that we are in.

Just to recap very briefly, the research that we published last year demonstrated that Australia’s transport logistics industry accounted for 14.5 per cent of GDP. That is on the 2007 figures. This year we are about to publish data that indicates it represents in excess of 1.2 million jobs, or around about 160,000 businesses Australia-wide. Not only is it an important support mechanism for just about every other element of social and economic activity, but it is a major industry in its own right.

The second point is that it is essential that the determinations that you make focus on a whole-of-supply-chain perspective. There was a time, which is long past, where Australia’s transport logistic systems were based on the original colonies and then on states which were run by modes and where regulation, income and investment were worked on an individual modal basis. We believe it is essential that we look past that. We need to look past the days of road versus rail versus shipping versus air versus Victoria versus New South Wales. We need to put that behind us and say that it is around multimodal end-to-end supply chains as the basis of evaluation and decision making and that, therefore, the whole-of-the-supply-chain view is essential.

When we recently published our 23 national supply chain blockages, which was our submission into the Infrastructure Australia process, looming large among those supply chain blockages was a need for reform of road pricing. It was No. 20 of No. 23 and it reads:

Reform road pricing to facilitate the efficient use of road vehicles and appropriate allocation of freight between road and rail.

  • It was very much the appropriate allocation. In saying that, I acknowledge that this is a divisive issue. I am sure that you will have found that the road view is that there is already full cost recovery and that any further cost recovery should be linked to infrastructure spent on roads. The rail view would say that the roadies are wrong and that they need to have their charges increased so that there is a level playing field. We disagree with both of them, in that they are both right and both wrong. We believe the basis of collection of income should be a separate set of considerations from the basis of investment; that is that you should separate money in from money out. The money in should be about the cost of the system and that there should be minimum, if any, distortions in terms of income so that we can get the most effective and efficient use of the system. On the other side of it, the investment in the system should not be linked to any particular jurisdiction or mode, but rather should be made on the basis of the whole of the supply chain addressing the most critical highest priority blockages, ideally through Infrastructure Australia.

We have submitted a written submission to you by email today, so I will leave it there and wait for questions.

CHAIR —Thank you. I had the pleasure of meeting someone from your council in Brisbane a couple of years ago. I will say it was a pleasure because we sat together for about an hour and a half and did not have an argument. That was good because we were all heading in the same direction. On that, when we talk about Australia’s supply chain, have you convinced the users of transport, that is Woolworths, Coles and the mining industry, to be part of your council?

Mr Morris —Absolutely. Woolworths, Coles, Metcash, Xstrata Coal, Toyota, Australian Wheat Board and so on are all members of our council.

CHAIR —That is fantastic. When we are talking about this they are playing a responsible role knowing that they have a moral obligation to do whatever they can to improve the safety of not only truck drivers but of other road users.

Mr Morris —Absolutely. The safety group is chaired by Ingilby Dickson, who is the Vice-President Logistics for BlueScope Steel.

CHAIR —We have come a long way. I do apologise. I only got the submissions this morning. That is my fault because I was not available. Am I right in assuming that your organisation has no problem with the increase from 19c to 21c per litre for the excise?

Mr Morris —Yes. We agree with that. We believe that it should move forward as quickly as possible.

CHAIR —We have heard from other industry stakeholders today who have said to us that they would be more than happy to sit down every year and go through this process. What is the council’s view?

Mr Morris —I think that is essential. We welcome a closer relationship between government and industry.

CHAIR —It would have been nice if we could have done it for the last eight years, but we have not. Senator Williams.

Senator WILLIAMS —Do you oppose a blanket indexation system put forward on the road-user charge?

Mr Morris —I believe that the indexation should be linked to CPI, but on anything beyond CPI we should have an annual dialogue. The priorities exist in terms of the blockages in supply chains. That is something that needs to be kept fresh and updated. We see that, at least on an annual basis, there would be the chance to reassess where the major blockages are.

Senator WILLIAMS —I am new to this job so please forgive my ignorance. Is all of the 19.7c road-user charge spent on road repairs and so on?

Mr Morris —No, it is not. My understanding is that the circumstance is that income comes in from heavy vehicle road-user charges into consolidated revenue as an intermediate step, and then it goes back into investment.

Senator WILLIAMS —Would you have any idea of what proportion of the 19.7c of the current road-user charge goes back into the repair, maintenance and construction of roads?

Mr Morris —No, I am not sure.

Senator WILLIAMS —It would be interesting to find out, wouldn’t it?

Mr Morris —It certainly would. I understand that the basis of cost recovery is different between road and rail, which is an interesting point. My understanding is that, while not 100 per cent of road charges moves back into the road system, in terms of reinvestment, 100 per cent of rail charges do move back into the rail system. Our argument would be that it should not be quarantined into either. As I said before, everybody should pay their way. There is no question about that. I would suggest that after collection of the money that there is the opportunity to say that we will not just put it back into road or back into rail, we will put it back into the most important investment that we can make right across the whole supply chain, both domestically and internationally.

Senator WILLIAMS —Where I live in northern New South Wales, if I saw a train I would probably die of fright. With the roughly 38c of federal government excise per litre of diesel, how much rebate does the rail get?

Mr Morris —I understand that it does not get any.

CHAIR —We have the Australasian Railway Association attending later, so you might want to ask them some questions.

Senator WILLIAMS —Yes. Are you saying that you would happy with a CPI increase on the road-user charge every year?

Mr Morris —Yes. In acknowledgement of the catch-up, we need to make sure that we fully pay our way. The whole point here is to make sure that we have appropriate allocation of freight between road and rail, so that we have the right priorities. We would also support mass-distance charging as part of that process.

Senator WILLIAMS —I do not have any other questions.

CHAIR —You just mentioned catch-up. Can you explain that to the committee?

Mr Morris —Our concern is that for some decades now there has been a systemic under allocation of funding on the rail system. If you have a look at the proportion of investment, in nearly all states and territories and at the Commonwealth level you will see that is the case. Therefore, as Senator Williams was saying, it is not surprising that there are not a lot of trains in his area, because over the last 40 or 50 years we have under invested. It is a real national challenge to do two things. One is to make sure that we invest sufficiently to catch up. It has been our argument since first publishing the national infrastructure priorities in 2006 that there is a catch-up element, particularly in investment in rail infrastructure, to make sure that rail can play its part.

The second part is that it is about national reconfiguration of our transport logistics system. Historically it grew inward from the coastal areas of the original colonies, like the threads of a spider web, and there is the opportunity now to look again at the national system. That is why we believe that the north-south inland rail link is a high priority because we do not believe that it is going to be possible to continue to keep pace just using road with the increased requirement for freight logistics in this country.

CHAIR —I could not agree with you more. I will come back to why we are sitting here this evening, which is the road-user charge where we are talking about catch-up. I would love to see a truck stop every 100 metres but—with the greatest of respect and as a non-political statement—every time the previous government wanted to talk to the industry about the road-user charges, crikey, Armageddon was coming. Would that be a fair assumption?

Mr Morris —That is certainly how I remember it.

CHAIR —I will not pursue that line because that has been made very clear. Mr Morris, we do appreciate your time. We are sorry to have kept you waiting.

  • [5.56 pm]