Bills Digest no. 95, 2017–18
PDF version [251KB]
Sophie Power
Science, Technology, Environment and Resources Section
26 March 2018
Contents
Purpose of the Bill
Structure of the Bill
Background
The Federal Interstate Registration
Scheme (FIRS)
Heavy vehicle regulatory reform
Consultation on future of FIRS
Committee consideration
Selection of Bills Committee
Senate Standing Committee for the
Scrutiny of Bills
Policy position of non-government
parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human
Rights
Parliamentary Joint Committee on
Human Rights
Key issues and provisions
Issue—stamp duty
Improving heavy vehicle productivity
Issue—declining participation in FIRS
Key provisions
Closure of the FIRS
Transition to closure
Concluding comments
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.
[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.
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