Bills Digest No. 53   1997-98 National Road Transport Commission Amendment Bill 1997


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This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

CONTENTS

Passage History

National Road Transport Commission Amendment Bill 1997

Date Introduced: 25 September 1997
House: House of Representatives
Portfolio: Transport and Regional Development
Commencement: Royal Assent

Purpose

The major amendment proposed by the Bill extends the life of the National Road Transport Commission by one year.

Background

The Road Transport Industry

The Australian road transport industry accounts for approximately 2% of Australia's GDP and approximately 2.1% of total employment.(1) Based on these figures, in 1994 road freight transport has been estimated to be a $8.5 billion industry that employed over 160 000 people.(2)

Road transport is the principal means by which freight is transported in Australia. Road transport accounts for approximately three quarters of the value of the Australian freight market.(3) The share of the total quantity of freight carried by road has increased from 18% in 1975-76 to 33% in 1900-91.(4)

In 1992, there were approximately 17 000 road transport firms.(5) Small firms dominate the road transport industry. In 1992, firms which employed less than five people accounted for approximately three-quarters of operators.(6) The dominance of small firms is not reflected in industry share. In 1994, less than 1% of transport and storage firms accounted for more than 60% of trading profit.(7)

The Australian road transport industry is heavily regulated. Responsibility for industry regulations is largely a State and Territory matter. Substantial differences in regulations between States and Territories have existed. For example, the States and Territories have: applied different registration charges for the same type of vehicle; applied different allowable weight in respect of the same type of vehicle; applied numerous regulations which cover the design and construction standards of vehicles; and applied different regulations regulating the driving practices of road transport operators. Since 1991, the Commonwealth, States and Territories have worked, through the mechanism of the National Road Transport Commission, at establishing a national regulatory regime for road transport.

The Department of Transport and Regional Development issued a report in July 1996 examining the impact on the road transport industry of adopting a national approach to road transport regulation.(8)

Major Findings

The reform process [the Commonwealth, State and Territory working through the mechanism of the National Road Transport Commission to adopt a national approach to road transport regulation] is expected to lead to a reduction in operating costs by providing firms with greater freedom to manage their vehicle fleets.

The easier access to all parts of the Australian transport market provided by the reform process will lower operating costs in the longer term as firms have greater incentive to invest in more efficient vehicles.

While a significant number of firms considered that their sales would increase, these gains are expected to be largely achieved by winning business away from other road transport firms rather than from providers of other forms of transport or from an increase in the size of the transport market.

The reform process is expected to exert some small downward pressure on freight rates as the highly competitive nature of the road transport industry will ensure that improvements in efficiency are passed on to the consumer. However, the impact of the reform process on freight rates will be swamped by other influences such as developments in vehicle technology and changes in fuel costs.

The costs involved in coping with regulatory differences between States/Territories fall more heavily on interstate operators than intrastate operators. As a result, State/Territory borders have, to some extent, become artificial market boundaries and provided some shelter for intrastate operators from interstate competition. Under a national approach this artificial disadvantage to interstate operators will be removed.

Several of the reforms - such as the development of national routes for the large vehicles, the national acceptance of new vehicles and uniform vehicle design and construction standards - enable firms to make more efficient use of their existing fleets by giving them greater freedom to select the most appropriate vehicle for a given job. Small firms are unlikely to have fleets of sufficient number to gain significant benefits from these reforms(9).

The National Road Transport Commission

The National Road Transport Commission (the Commission) is an independent statutory body established as a result of two Commonwealth, State and Territory agreements. The first, in 1991, was the Intergovernmental Agreement on Heavy Vehicles. The second, in 1992, was the Light Vehicles Agreement.

The Commission's genesis can be traced to the desire for economic restructuring in Australia as a way of improving long term competitiveness. The Commission's first Annual Report states:

Road transport typically accounts for 5-10 per cent of the costs of Australia's primary products and 2-7 per cent of the costs of manufactures. Future economic prosperity will depend substantially on our ability to contain and reduce the cost shares of traded commodities against our competitors.

The variety of regulatory frameworks under which Australia's road transport industry is required to operate is anathema to the very idea of competitiveness.(10)

The Commission's functions include developing national policies and laws on road transport and making recommendations to the Ministerial Council on Road Transport. The 1991 Agreement on Heavy Vehicles provided that there would be an agreement between the Commonwealth and the ACT:

under which the former, with the consent of the latter, will seek to enact or make the Commonwealth Act and the Commonwealth Road Transport Legislation for the Australian Capital Territory which law will be the model on which the pertinent law of the Parties to this Agreement, other than the Commonwealth and the Australian Capital Territory will be based.(11)

What is called the 'new national Road Transport Law' is being developed in six modules: road transport charges, vehicles and traffic, dangerous goods, registration, driver licensing, and compliance and enforcement. So far, the Commonwealth Parliament has enacted the Road Transport Charges (Australian Capital Territory) Act 1993, the Road Transport Reform (Vehicles and Traffic) Act 1993, the Road Transport Reform (Dangerous Goods) Act 1995 and the Road Transport Reform (Heavy Vehicles Registration) Act 1996.

The Commission is funded by the Commonwealth, States and Territories. For the 1997-98 financial year the NRTC received $3.605 million, with the Commonwealth contributing approximately 35% of funds.(12)

Rationale for amendments

The rationale given in the Second Reading Speech to the Bill by the Government for extending the life of the Commission is to give effect to a recommendation flowing from a section 47 review. Basically, section 47 of the National Road Transport Commission Act 1991 (Cth) requires the Commission to conduct an internal review of its operations and make a recommendation as to whether the Principal Act should cease to have effect or be re-enacted. According to the Second Reading Speech the Review found:

that the Commission should continue through an amendment to its enabling legislation, but that several improvements needed to be made to improve its functioning and effectiveness.

The Government has signalled in the Second Reading Speech to the Bill that it intends to introduce a Bill to put the substantive recommendations of the Review into effect.

Main Provisions

The effect of item 1 of Schedule 1 is to allow members of the Commission to be appointed for more than two terms. The stated rationale for this amendment to allow the reappointment of existing members to preserve the continuity of the Commission prior to the enactment of substantive new legislation.(13)

The effect of item 2 of Schedule 1 of the Bill is to extend the life of the National Road Transport Commission Act 1991 (the Principal Act) from six years to seven years. As the Principal Act commenced on 15 January 1992, the proposed one year extension means that the Principal Act will cease to have effect on 14 January 1999.

Endnotes

  1. Department of Transport and Regional Development, A National Approach to Road Transport Regulation, July 1996, p. 5.
  2. Ibid.
  3. Ibid.
  4. Ibid., at p. 6.
  5. Ibid., at p. 7.
  6. Ibid.
  7. Ibid.
  8. Department of Transport and Regional Development, A National Approach to Road Transport Regulation, July 1996.
  9. Ibid., pp. vi & vii.
  10. National Road Transport Commission, Annual Report 1992, p. 2.
  11. National Road Transport Commission Act 1991 (Cth), Schedule.
  12. National Road Transport Commission Amendment Bill 1997, Explanatory Memorandum, p. 3.
  13. Ibid., at p. 4.

Contact Officer and Copyright Details

Ian Ireland
3 October 1997
Bills Digest Service
Information and Research Services

This Digest does not have any official legal status. Other sources should be consulted to determine whether the Bill has been enacted and, if so, whether the subsequent Act reflects further amendments.

IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

ISSN 1328-8091
© Commonwealth of Australia 1997

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means, including information storage and retrieval systems, without the prior written consent of the Parliamentary Library, other than by Members of the Australian Parliament in the course of their official duties.

Published by the Department of the Parliamentary Library, 1997.

This page was prepared by the Parliamentary Library, Commonwealth of Australia
Last updated: 3 October 1997

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