BILLS DIGEST NO. 95, 2017–18              26 March 2018

Interstate Road Transport Legislation (Repeal) Bill 2018

Sophie Power
Science, Technology, Environment and Resources Section

Date introduced: 28 February 2018

House:  House of Representatives

Portfolio: Infrastructure, Regional Development and Cities

Commencement: Schedule 1 the day after Royal Assent; Schedule 2 on 1 July 2019.

Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through the Australian Parliament website.

When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the Federal Register of Legislation website.

All hyperlinks in this Bills Digest are correct as at March 2018.

Purpose of the Bill

The purpose of the Interstate Road Transport Legislation (Repeal) Bill 2018 (the Bill) is to repeal the Interstate Road Transport Act 1985 and the Interstate Road Transport Charge Act 1985 (Charge Act) in order to close the Federal Interstate Registration Scheme (FIRS) for heavy vehicles.

Structure of the Bill

The Bill has two schedules:

•       Schedule 1 amends the Interstate Road Transport Act to close the FIRS to new entrants and prevent re-registration of existing FIRS operators from 1 July 2018 and

•       Schedule 2 contains three parts:

–      Part 1 repeals the Interstate Road Transport Act and the Charge Act

–      Part 2 contains consequential amendments to the COAG Reform Fund Act 2008 and

–      Part 3 provides for transitional arrangements relating to the closure of FIRS.

Background

The Federal Interstate Registration Scheme (FIRS)

The Federal Interstate Registration Scheme (FIRS) was established by the Commonwealth Government under the Interstate Road Transport Act and commenced in 1987 as an alternative to state based registration for heavy vehicles weighing more than 4.5 tonnes involved in interstate trade or commerce.[1] FIRS was originally designed to address a lack of national coordination for truck registration and ‘to overcome interstate road transport challenges arising from different registration charging regimes and restrictions within state and territory registration schemes’.[2]

FIRS is a voluntary scheme that provides for uniform charges and operating conditions for heavy vehicles engaged solely in the interstate carriage of passengers or goods, in trade or commerce.[3]

Revenue from FIRS heavy vehicle registration charges is collected and provided to the Commonwealth government by the states and territories.[4] This revenue is then redistributed to the states and territories (in accordance with a set formula) for the purposes of road maintenance.[5] In 2016–17, approximately $67.6 million in registration revenue was collected and remitted under FIRS.[6]

A key feature of FIRS is an exemption from stamp duty for FIRS operators: state-based stamp duty tax for new vehicle purchases is not applied to FIRS registered vehicles.[7] This exemption was intended as an incentive to heavy vehicle operators to regularly upgrade their vehicles.[8] The Department of Infrastructure and Regional Development (the Department) has estimated that ‘FIRS operators can save between $5,130 and $12,750 per new B-double registered under FIRS instead of state or territory based registration schemes’.[9]

As at 30 June 2017, there were 13,927 FIRS-registered vehicles (including trailers) in Australia, representing approximately 1.6 per cent of Australia’s heavy vehicle fleet.[10]

Heavy vehicle regulatory reform

In recent years, the Commonwealth, states and territories have agreed to reforms to improve consistency and coordination in heavy vehicle regulation. In 2009, the Council of Australian Governments (COAG) agreed to establish a single national system of laws for heavy vehicles over 4.5 tonnes, to be administered by an independent national regulator.[11]

In 2011, the Commonwealth, states and territories made the Intergovernmental Agreement on Heavy Vehicle Regulatory Reform (the Agreement). The Agreement reaffirmed the commitment to national legislation regulating all vehicles over 4.5 tonnes, to be established through Queensland legislation, with each state and territory to pass enabling legislation to give effect to the Queensland legislation. The Agreement also stated that the Commonwealth would introduce legislation to cease new registrations under the FIRS and to repeal the scheme ‘following passage of enabling legislation by states and territories’.[12]

The Heavy Vehicle National Law (HVNL) commenced in February 2014 in Queensland, New South Wales (NSW), Victoria, South Australia (SA), Tasmania and the Australian Capital Territory (ACT). The Northern Territory and Western Australia have not applied the HVNL at the time of writing.[13]

Among other matters, the HVNL establishes the National Heavy Vehicle Regulator (NHVR) to administer the HVNL and regulations.[14] However, some aspects of heavy vehicle regulation, including heavy vehicle registration, inspections, driver licensing and matters related to the carriage of dangerous goods are still the responsibility of relevant state and territory authorities.[15]

In May 2017, the COAG Transport and Infrastructure Council agreed to introduce a national registration scheme for heavy vehicles. The scheme is scheduled to commence on 1 July 2018 in all jurisdictions that have applied the HVNL.[16] Key changes include removing the requirement for heavy vehicle registration stickers, ‘more flexible and more consistent’ options for heavy vehicle registration transactions, and the introduction of a national number plate.[17]

Consultation on future of FIRS

In October 2017, the Department released a consultation paper on the future of the FIRS (FIRS consultation paper). The Department invited submissions on the paper by 27 October 2017.

The FIRS consultation paper noted ‘the regulatory environment since FIRS was first established has changed significantly’.[18] These changes include the heavy vehicle regulatory reforms outlined above, including in particular the proposed harmonised heavy vehicle registration arrangements, but also changes in ‘how vehicles are used in today’s economy’:

The move toward Higher Productivity Vehicles (like B-doubles and road trains), the way freight and passengers are transported within and across borders, the use of technology, and the size of the freight task have all dramatically changed since the 1980’s. These changes, and others, have contributed to FIRS being perceived as a beneficial scheme only to a small (and shrinking) number of heavy vehicle operators.[19]

Indeed, the Assistant Minister suggested in his second reading speech that ‘initiatives such as uniform registration charging agreements and increased ongoing communication between states and territories have made FIRS redundant’.[20]

Committee consideration

Selection of Bills Committee

At its meeting on 21 March 2018, the Senate Selection of Bills Committee deferred consideration of the Bill to its next meeting.[21]

Senate Standing Committee for the Scrutiny of Bills

The Senate Standing Committee for the Scrutiny of Bills had no comment on the Bill.[22]

Policy position of non-government parties/independents

At the time of writing, non-government parties and independents do not appear to have commented on the Bill.

Position of major interest groups

Unfortunately, submissions to the FIRS consultation paper do not appear to have been made publicly available on the Department’s website. However, some major interest groups have published their submissions, or relevant media releases, on their own websites, as outlined below.

The Australian Trucking Association (ATA), the peak body that represents trucking operators, opposes the Bill and considers that the FIRS should instead be retained and improved.[23] The ATA expressed particular concern that abolishing FIRS will remove stamp duty exemptions and ‘increase the tax burden on the hardworking trucking operators who deliver Australia’s interstate trade’.[24] The ATA has called on the Senate to refer the Bill to a committee for inquiry, also suggesting that the Government ‘hasn’t done, or hasn’t released, any modelling of the economic impact of closing FIRS’.[25]

The National Road Transport Association (NatRoad), which represents the road freight industry, also opposes the closure of FIRS, arguing that the decline in FIRS take-up in recent years is ‘due to a complete lack of promotion of the scheme and persistent persecution by the states of FIRS operators for unfounded alleged abuse of the scheme’.[26] NatRoad further suggested that the new national registration scheme ‘will not offer the same benefits to transport operators as FIRS’.[27] In particular, it argued that the stamp duty exemption for FIRS registered vehicles ‘has allowed operators to replace their trucks more often and take advantage of new safety equipment, electronic aids and better emission controls that are standard features on newer vehicles’.[28] NatRoad proposed:

Instead of abolishing FIRS, the Australian Government needs to improve the scheme’s design, promotion and governance. Australia has one of the oldest truck fleets in the world and any incentive to reduce this ageing fleet should be encouraged.[29]

Financial implications

According to the Explanatory Memorandum, the Bill will have no financial impact. The Explanatory Memorandum states this is because:

FIRS is a budget neutral activity for the Commonwealth. The registration charges collected under FIRS are redistributed to the states and territories in line with an agreed determination based on a road use formula. States and territories are required under section 23 of the Interstate Road Transport Act 1985 to expend the funds on road maintenance.

The process of collecting and redistributing registration fees will still take place under a different regime; however, the Commonwealth will no longer be involved in the administration of this process. Accordingly, the closure of FIRS has a nil financial impact.[30]

Statement of Compatibility with Human Rights

As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act. The Government considers that the Bill is compatible.[31]

Parliamentary Joint Committee on Human Rights

At the time of writing, the Parliamentary Joint Committee on Human Rights had not yet considered the Bill.

Key issues and provisions

Issue—stamp duty

As noted in the ‘Background’ section, state-based stamp duty tax for new vehicle purchases is not applied to FIRS registered vehicles.[32] The Department has estimated that ‘FIRS operators can save between $5,130 and $12,750 per new B-double registered under FIRS instead of state or territory based registration schemes’.[33]

As noted in the ‘position of major interest groups’ section, the loss of this stamp duty exemption as a result of the closure of FIRS is a major concern for trucking industry groups. So, for example, the ATA has expressed concern that ‘abolishing FIRS amounts to a $6.2 million annual tax increase on new heavy vehicles’.[34]

However, the FIRS consultation paper stated:

The Australian Government considers that a concession is not sufficient reason to retain an ineffective regulatory program. The current stamp duty concessions afforded by FIRS are available only to a niche sector of operators, providing one small (and falling) sector of the industry with an unfair advantage over the others.[35]

With the closure of FIRS, former FIRS-registered operators will be required (unless provided with a jurisdictional exemption) to align with other operators and pay the tax or duty levied by the local jurisdiction. State and territory registration jurisdictions have agreed that FIRS vehicles transferring to national registration, once it commences on 1 July 2018, will not be required to pay stamp duty for the value of those vehicles.[36] However, the ATA has pointed out that this proposed one-off stamp duty exemption ‘would simply mitigate the estimated $39.75 million in stamp duty that would otherwise be applied to the FIRS registered vehicles transferring to the state registration systems’.[37]

Improving heavy vehicle productivity

As noted earlier in this Digest, the stamp duty exemption for FIRS vehicles is intended as an incentive to heavy vehicle operators to upgrade their fleet more frequently, thereby improving productivity and safety in the heavy vehicle fleet.[38] NatRoad, for example, argues that the exemption for FIRS registered vehicles ‘has allowed operators to replace their trucks more often and take advantage of new safety equipment, electronic aids and better emission controls that are standard features on newer vehicles’.[39]

However, the FIRS consultation paper noted that an evaluation of FIRS commissioned by the Department in 2016 found ‘no evidence that FIRS is achieving its policy objectives, including promoting interstate trade or greater use of high productivity vehicles’.[40]

Similarly, in his second reading speech, the Assistant Minister referred to the evaluation which he stated had:

… revealed the stamp duty exemption afforded by FIRS had not improved safety outcomes nor reduced fleet age, with industry figures showing the average fleet age to be around 14 years—a figure that has not reduced since the introduction of FIRS.[41]

The ATA argues that, instead of abolishing FIRS, if the Government updated and modernised FIRS, it could be used to ‘set the pace on reforming heavy vehicle standards and road access for high productivity vehicles’.[42] The ATA pointed out the numerous benefits of high productivity vehicles [HPVs], including safety, environmental and economic benefits, and suggested that ‘Australian, state and territory governments have been slow to remove the regulatory barriers to the uptake of HPVs’.[43]

Issue—declining participation in FIRS

In his second reading speech, the Assistant Minister pointed to the declining number of FIRS-registered vehicles over the past decade:

The numbers of FIRS-registered vehicles have declined steadily for nearly a decade after peaking at nearly 22,000 vehicles.

As at 30 June 2017, there were 13,927 FIRS-registered vehicles (including trailers) in Australia, representing only 1.6 per cent of the Australian fleet.

Independent modelling suggests that the size of the FIRS fleet will continue to fall, reducing to approximately one per cent of the total fleet by 2022.[44]

The Minister suggested that this declining participation supports the notion that FIRS has become redundant since its introduction.[45]

However, as noted earlier, NatRoad argues that the decline in FIRS take-up in recent years is ‘due to a complete lack of promotion of the scheme and persistent persecution by the states of FIRS operators for unfounded alleged abuse of the scheme’.[46] The ATA similarly considers:

… the decline in the number of FIRS vehicles since 2007-08 has coincided with the Australian Government shifting in 2009 from using FIRS to drive reform to a focus on closure, only limited attempts to maintain and upgrade FIRS, and declining industry productivity and economic growth.[47]

The ATA further argues that ‘reforms to FIRS to improve the productivity of FIRS vehicles would likely increase the number of FIRS registered vehicles’.[48]

Key provisions

Closure of the FIRS

The substantive provisions of the Bill are contained in Part 1 of Schedule 2 of the Bill. Item 1 repeals the Interstate Road Transport Act 1985 in its entirety and item 2 repeals the whole Interstate Road Transport Charge Act 1985.

The effect of these items will be to close the FIRS from 1 July 2019 (as noted earlier, these items are scheduled to commence on 1 July 2019).

Transition to closure

Schedule 1 amends the Interstate Road Transport Act to close the FIRS to new entrants and prevent re-registration of existing FIRS operators from 1 July 2018.

Section 9 of the Interstate Road Transport Act currently provides for the registration of motor vehicles or trailers for the FIRS with a ‘Registration Authority’, provided the vehicle or trailer meets certain criteria and a prescribed fee is paid. In practice:

State and Territory road transport authorities administer FIRS on behalf of the Australian Government. Operators wishing to register vehicles under FIRS apply to do so at the registration authority in their jurisdiction of residence.[49]

Item 1 of Schedule 1 inserts two new subsections into section 9:

•       proposed subsection 9(2A), which provides that a Registration Authority must not register a motor vehicle or trailer if the registration would come into force on or after 1 July 2018 and

•       proposed subsection 9(2B), which provides that if the registration of a motor vehicle or trailer would come into force on or after 1 July 2018, the registration is valid until it is cancelled. This proposed subsection is designed to clarify that registrations taking effect after 1 July 2018 remain subject to cancellation (at the discretion of the relevant Registration Authority) under subsection 11(1) of the Act.[50]

Section 11 of the Interstate Road Transport Act currently enables Registration Authorities to cancel or suspend the registration of motor vehicles or trailers under FIRS in certain circumstances. Item 4 of Schedule 1 of the Bill inserts a new paragraph 11(1)(g) to provide that Registration Authorities may cancel registrations that would expire on or after 1 July 2019.

Part 3 of Schedule 2 provides for transitional arrangements relating to the closure of the FIRS, including requirements relating to cancellation of registration, refund of charges and review of decisions under the Interstate Road Transport Act. In particular, item 12 enables the Minister to make rules prescribing matters of a transitional nature relating to the closure of FIRS. Those rules would be a disallowable legislative instrument.

Finally, Part 2 of Schedule 2 contains minor consequential amendments to repeal references to the Interstate Road Transport Act in the COAG Reform Fund Act 2008.

Concluding comments

The Bill will close the Federal Interstate Registration Scheme (FIRS) for heavy vehicles involved in interstate trade or commerce. This closure has been foreshadowed for many years and the Government argues that the FIRS is now redundant, as a result of changes since the scheme was first introduced in the 1980s. These changes include recent reforms to provide national consistency in heavy vehicle regulation and declining participation in the FIRS.

However, major trucking industry associations oppose the Bill and the closure of FIRS. They argue the scheme should be retained and updated. A key concern for these groups appears to be the loss of the exemption from state-based stamp duty on new vehicle purchases for FIRS registered vehicles.

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[1].              Department of Infrastructure, Regional Development and Cities (DIRD), ‘Federal Interstate Registration Scheme’, DIRD website.

[2].              DIRD, Future of the Federal Interstate Registration Scheme, FIRS consultation paper, October 2017, p. 1; see also Legislative Research Service, Interstate Road Transport Bill 1985, Bills digest, 167, 1985, Department of Parliamentary Library, Canberra, 1985, p. 2.

[3].              DIRD, ‘Federal Interstate Registration Scheme’, op. cit.

[4].              Ibid; DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 1; see also DIRD, ‘Schedule of FIRS heavy vehicle registration charges’, DIRD website, last updated 11 July 2017.

[5].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 1; see also Interstate Road Transport Act, paragraph 23(1)(b).

[6].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 4.

[7].              Ibid., p. 1.

[8].              Ibid.

[9].              Ibid., p. 5. Note that the Department of Infrastructure and Regional Development is now known as the Department of Infrastructure, Regional Development and Cities and this Digest uses ‘DIRD’ to refer to both.

[10].              Ibid., p. 2.

[11].              Council of Australian Governments (COAG), Communique, COAG Meeting, Canberra, 2 July 2009.

[12].              See Part 5 of the Intergovernmental Agreement on Heavy Vehicle Regulatory Reform.

[13].              National Heavy Vehicle Regulator (NHVR), ‘Heavy vehicle national law’, NHVR website.

[14].              NHVR, ‘What we do’, NHVR website.

[15].              NHVR, ‘Heavy vehicle national law’, op. cit.

[16].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 3; see also COAG Transport and Infrastructure Council, Communique, COAG Transport and Infrastructure Council Meeting, Brisbane, 19 May 2017, p. 3.

[17].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 3; COAG Transport and Infrastructure Council, Communique, COAG Transport and Infrastructure Council Meeting, Hobart, 10 November 2017, p. 2.

[18].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 3.

[19].              Ibid.

[20].              D Drum, ‘Second reading speech: Interstate Road Transport Legislation (Repeal) Bill 2018’, House of Representatives, Debates, (proof), 28 February 2018, p. 12.

[21].              Senate Standing Committee for Selection of Bills, Report, 3, 2018, The Senate, Canberra, 22 March 2018.

[22].              Senate Standing Committee for the Scrutiny of Bills, Scrutiny digest, 3, 2018, The Senate, 21 March 2018, p. 18.

[23].              Australian Trucking Association (ATA), Keep federal interstate truck registration, ATA says, media release, 28 February 2018; ATA, Retain FIRS to boost trucking productivity, media release, 27 October 2017.

[24].              ATA, Keep federal interstate truck registration, ATA says, op. cit.

[25].              Ibid.

[26].              National Road Transport Association (NatRoad), NatRoad strongly opposes the closure of the Federal Interstate Registration Scheme (FIRS), media release, 31 October 2017.

[27].              Ibid.

[28].              Ibid.

[29].              Ibid.

[30].              Explanatory Memorandum, Interstate Road Transport Legislation (Repeal) Bill 2018, p. 2.

[31].              The Statement of Compatibility with Human Rights can be found at page 3 of the Explanatory Memorandum to the Bill.

[32].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 1.

[33].              Ibid., p. 5.

[34].              ATA, Keep federal interstate truck registration, ATA says, op. cit.

[35].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 5.

[36].              Ibid., p. 7.

[37].              ATA, Submission to the Department of Infrastructure and Regional Development, Future of the Federal Interstate Registration Scheme, 27 October 2017, p. 8.

[38].              Drum, ‘Second reading speech’, op. cit., p. 12; see also DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 1.

[39].              National Road Transport Association (NatRoad), NatRoad strongly opposes the closure of the Federal Interstate Registration Scheme (FIRS), op. cit.

[40].              DIRD, Future of the Federal Interstate Registration Scheme, op. cit., p. 4. An executive summary of the evaluation has been made available on the Department’s website: DIRD, Evaluation of the Federal Interstate Registration Scheme.

[41].              Drum, ‘Second reading speech’, op. cit., p. 12.

[42].              ATA, Submission to the Department of Infrastructure and Regional Development, Future of the Federal Interstate Registration Scheme, op. cit., p. 8.

[43].              Ibid., p. 8.

[44].              Drum, ‘Second reading speech’, op. cit., p. 12.

[45].              Ibid.

[46].              NatRoad, NatRoad strongly opposes the closure of the Federal Interstate Registration Scheme (FIRS), op. cit.

[47].              ATA, Submission to the Department of Infrastructure and Regional Development, Future of the Federal Interstate Registration Scheme, op. cit., p. 7.

[48].              Ibid., p. 5.

[49].              DIRD, ‘Federal Interstate Registration Scheme’, op. cit; see also Interstate Road Transport Act, section 7.

[50].              Explanatory Memorandum, Interstate Road Transport Legislation (Repeal) Bill 2018, p. 5; see also item 5 in Part 2 of Schedule 1 to the Bill which clarifies that proposed subsection 9(2A) only applies to registrations under the Act granted on or after the commencement of Schedule 1 and proposed subsection 9(2B) applies to registrations granted before the commencement of Schedule 1.