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CONTENTS
Passage History
Purpose
Background
Main Provisions
Endnotes
Contact Officer & Copyright Details
Road Transport Charges (Australian Capital Territory)
Amendment Bill 2000
Date Introduced: 8 March 2000
House: House of Representatives
Portfolio: Transport and Regional Services
Commencement: On a day to be fixed by
proclamation, or failing that, on 1 January 2001
To implement updated national heavy vehicle
registration charges as agreed by the Australian Transport Council
in February 2000. (1)
This Bill is one of three Bills intended to
update national heavy vehicle registration
charges.(2)
Origins of the heavy vehicle
registration charge
In 1991, the Commonwealth, States and
Territories signed an agreement to create the National Road
Transport Commission (NRTC). As part of this agreement, governments
also committed to a national approach to regulating heavy vehicles,
including the setting of registration and other charges to be
levied on heavy vehicles. The NRTC is responsible for recommending
the level of charges. In making its recommendations regarding
charges to the Australian Transport Council (ATC),(3)
the NRTC is required to abide by the following set of
principles:(4)
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- to fully recover distributed road costs while minimising
over-recovery from any vehicle class, thereby achieving full
recovery of all road costs
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- adopting a common methodology
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- to determine and collect charges in a way that achieves a
reasonable balance between administrative simplicity, efficiency
and equity in the charging structure
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- 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
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- to minimise the incentive for operators to 'shop around' for
lower charges and undermine the integrity of the national charging
system.
There are actually two components to heavy
vehicle charges targeted to recover road use costs. The first is a
fuel charge, in which 18 cents out of the total 44 cents per litre
excise on diesel fuel currently paid by vehicle operators is
nominally considered to count as recovery against road
costs.(5) This raises about two-thirds of the calculated
road costs. The second component, which is the subject of this
Bill, is the heavy vehicle registration charge.
The current registration charges were agreed by
the ATC in 1992 and implemented by the ACT through the Road
Transport Charges (Australian Capital Territory) Act 1993. The
various States and Territories then implemented the charges in
their jurisdictions during 1995 and 1996 by either using the 1993
Act as a template for new legislation or incorporating its
substance into existing legislation. The charges have not been
updated since then. They currently range from $300 per year for
smaller heavy vehicles and buses under 12 tonnes up to $8500 for
larger road trains.(6)
The proposed increases to registration charges
are to be implemented by amending the Road Transport Charges
(Australian Capital Territory) Act 1993. The intention is the
States and Territories would then make similar changes to their
legislation in time for a 1 July 2000 start date.(7)
The rationale for updating the heavy
vehicle registration charge
In August 1998, the NRTC circulated a draft
policy paper canvassing options for updating heavy vehicle
registration charges.(8) The major reason for the
changes proposed in that discussion paper (and subsequently carried
over to the Explanatory Memorandum and regulatory impact statement
(RIS)), is that the current level of charges does not recover the
cost of damage to the roads by heavy vehicle use. In 1992, the
national annual cost of heavy vehicle use was estimated at $1,023
million. This has since risen to $1,280 million. The current
registration charges raise $399 million, which combined with the
fuel charge, raise a total of $1,270 million - ie a shortfall of
about $10 million. In relation to this, the RIS says
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 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.(9)
The damage caused to roads by various types of
vehicles is also now better understood than in 1992 when the
current charges were recommended. This more recent research has
apparently indicated that under the current charges smaller heavy
vehicles effectively subsidise heavier vehicles.(10) As
a consequence, charges for smaller heavy vehicles, which constitute
over 80% of the vehicles subject to the registration fees, will not
change under the Bill. Road trains and conventional semitrailers
face increases of around 5%. The most significant proposed change
under the Bill is for certain classes of articulated trucks which
face an increase of 70%.(11)
The proposed new registration charges are
forecast to raise $425 million per year which, combined with the
lift in the nominal apportioning of fuel excise to 20c a litre,
raises a total of $1,393 million.(12)
Impact of changes on operating costs and
freight charges
The Explanatory Memorandum states that the
'increases represent around 1%(13) of operating costs,
and are expected to have little impact on freight costs,
particularly due to the much larger expected benefits due to
concurrent tax system changes.'(14)
The main tax changes referred to are the
elimination of sales tax and the effective reduction of the diesel
fuel excise through the Diesel and Alternative Fuels grants
scheme.(15) The RIS contains the following example to
illustrate the effect of the changes.(16)
For all vehicle classes, the effect of reducing
the effective rate of diesel excise from 43 c/l to 20 c/l and the
effect of removing sales taxes are substantial.
The vehicle classes for which increases in
proposed registration charges are likely to be greatest (ie the
larger vehicles) will receive the greatest benefit from the excise
and sales tax reductions (due to higher capital costs, higher
distances driven, greater numbers of tyres and higher fuel
consumption rates).
Table 04.1: Estimated Implications of Taxation Reforms:
Selected Vehicle Classes
($ per vehicle per annum)
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2 axles (7 to 12 tonnes) Rural
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2 axles (7 to 12 tonnes) Urban
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Articulated Trucks (6 axles)
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Road Trains (triple trailer)
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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
Indexation of registration
charges
The RIS states that recalculating the charges as
has been done for the purposes of the Bill is resource-intensive
and suggests that the charges could be indexed to CPI changes in
order to partially(17) avoid the situation in which,
over time, charges fall below what is required to recover roads
costs.(18) This proposal was recently discussed by the
ATC,(19) with West Australia and the Northern Territory
opposing the idea. Implementation of indexation is due to by
discussed at the May 2000 meeting of the ATC and as a consequence
is no indexation provision is included in the Bill.
Competition between road and rail
transport(20)
The proposed charges are unlikely to have any
significant direct impact on the relative competitiveness of rail
and road freight. On this point, the regulatory impact statement
comments
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.(21)
As previously mentioned, the Bill does not deal
with the fuel excise component of road use cost recovery since this
is only a nominal charge. However, it is worth noting that fuel is
a greater proportion of the operating costs of road transport as
compared to rail and thus the reductions in fuel excise potentially
benefit road transport. A recent Bureau of Transport Economics
report, commented that, in relation to the proposed abolition of
sales taxes and reduction of fuel excise under the Commonwealth
Government's new tax system (ANTS) and the Diesel and Alternative
Fuels Grants Scheme,
If [these] had been in place in 1998-99, average
input costs for interstate non-bulk rail and interstate non-bulk
road would have been 8 per cent and 15 per cent lower,
respectively, than actual average input costs in 1998-99. If such
changes in costs were reflected in freight rates, then growth in
road's share of interstate non-bulk freight would increase
marginally at the expense of rail's share.(22)
Environmental issues
In addressing the issue of environmental impacts
of heavy vehicles, the 1998 NRTC draft policy paper comments
that
most [environmental impacts] are specific to
geographical areas and may not be susceptible to treatment through
a national charging process. However, the Commission suggests that
future charging structures could closely examine options in this
regard, in conjunction with the Motor Vehicle Environment Committee
and the National Environment Protection Council.(23)
This inability of the NRTC's charging structure
to explicitly allow for the incorporation of environmental
considerations is confirmed by the RIS. The RIS states
At present there is no direct means of taking
account of [environmental] issues in heavy vehicle charges. The
Commission(24) 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.
The NRTC however begun a process to formulate a
long-term strategy for improving heavy vehicle charges. One of the
issues flagged for possible examination as part of this process is
the extension of cost recovery targets to include global external
costs such as costs of greenhouse gas emissions.
Schedule 1
Item 1 sets out the obligation of the ACT
Government to determine registration and permit charges. It also
provides that if the Act commences on or before 1 July 2000, the
new charges start from 1 July, but otherwise they start when the
Act commences.
Items 2-39 amend existing
technical definitions in the Road Transport Charges (Australian
Capital Territory) Act 1993 relating to heavy vehicle types
and specifications or insert new definitions. According to the
Explanatory Memorandum, the definitions 'change and clarify how
some vehicles are defined for charging purposes and also to
simplify the calculation of charges...[and]...provide greater
consistency between the Act and other national legislation
developed under the road transport reform process through the
National Road Transport Commission'.(25)
Item 40 repeals the existing
charges and substitutes a set of new charges applicable to heavy
vehicles according to class of vehicle, weight, number of axles
etc. It also specifies that if a vehicle falls into two or more
charging categories, the higher charge applies.
Item 42 clarifies that the ACT
Government will continue to levy the current heavy vehicle
registration and permit charges until 1 July 2000 or, if the Act
comments at a later date, until that date.
- National Road Transport Committee 'Updated National Heavy
Vehicle Charges' News release 14 February 2000.
- The others are the Interstate Road Transport Amendment Bill
2000 and the Interstate Road Transport Charge Amendment Bill
2000.
- The Council consists of relevant Commonwealth, State and
Territory Ministers.
- See Schedule 1 of the National Road Transport Commission
Act 1991
- Note that under the modified A New Tax System (ANTS) regime,
the excise payable by heavy vehicle operators will drop to 20c a
litre.
- See p (v) of the Regulatory Impact Statement contained in the
Explanatory Memorandum.
- Australian Transport Council, Communique of 12 November
1999.
- National Road Transport Commission 'Updating Heavy Vehicle:
draft Policy Paper' August 1998
- Regulatory Impact Statement, op cit. P. 1.
- Martin, T 'Estimating Australia's attributable road truck
costs', ARRB Transport Research Report No 254, November
1994.
- Regulatory Impact Statement , op cit. P. (v).
- Ibid.
- It is not clear from the Explanatory Memorandum whether this 1%
would apply to the class of articulated truck that will be subject
to the 70% increase mentioned above.
- Explanatory Memorandum p. 2.
- Background on the scheme can be found in Bills Digest
no. 34 1999-2000 'Diesel and Alternative Fuels Grants Scheme Bill
1999' . http://www.aph.gov.au/library/pubs/bd/1999-2000/2000BD034.htm
- Regulatory Impact Statement, op cit. P. 31.
- The diesel fuel excise component, which accounts for
approximately two-thirds of the recovery of road costs, will not be
indexed.
- Regulatory Impact Statement, op cit. P. 21.
- Australian Transport Council 'Ministers Vote on Indexation'
News Release 2 March 2000.
- For more background on the issue of Rail Transport see Richard
Webb, 'Issues in Rail Reform' Parliamentary Library Research
Paper no. 14 1999-2000 http://wopared/library/pubs/rp/1999-2000/2000rp14.htm.
- Regulatory Impact Statement , op cit. pp 39-40.
- Bureau of Transport Economics 'Competitive Neutrality between
Road and Rail', Working paper no. 40, September 1999 p ix.
- National Road Transport Commission, op cit p. 17.
- Ie the NRTC
- See p. 4 of the Explanatory Memorandum.
Angus Martyn
6 April 2000
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ISSN 1328-8091
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