Monday, 25 June 2012

Australia - New South Wales toll expansion - Federal heavy vehicle fees to rise - UPDATED

The Sydney Morning Herald reports that the New South Wales (NSW) Government appears to be encouraging a new debate about road pricing in the state, with the report that Roads Minister, Duncan Gay saying there will now be debate about “tolling some parts of the motorway network that are currently not tolled”.   That report talks of tolls on the M4 East project, but also introducing them on the untolled M5 East Tunnel to help finance a widening of that corridor.  Motorist lobby group the NRMA is opposed because “It's hard to justify new tolls on roads that have already been paid for by the community”.  However, roads are never “paid for”, since they regularly need new capital for replacement, as they are depreciating assets.   Although, given the presence of existing taxes covers such capital on the rest of the network, such a view regarding tolls paying the initial capital costs is commonplace and understandable.

The same report talks of a A$20- A$30 billion backlog of capital works on NSW roads, which could be funded with more tolls.  Tolls already raise A$800 million a year, mostly to pay the capital costs of the projects they are levied on.  

The big question must surely be to what extent it is palatable to use revenue from tolls on motorways to pay for non-motorway projects, and whether NSW should be looking to make the next logical step – a shift towards wider network tolls of some kind.  Replacing existing ownership taxes, particularly for heavy vehicles, with a distance based charge would be the start of making a big difference to this.

Meanwhile, the (Australian) Daily Telegraph reports that Duncan Gay has denied that tolls will be reinstated on Sydney’s M4 – the motorway towards the Blue Mountains across its western suburbs (tolls were removed from the motorway in 2010).  He also rejected “congestion pricing”, yet supports “distance based tolling” describing it as “fairer tolling” for new roads.  What this does it make things unclear.  It could be that the extension to the M4 towards the city (M4 East) will be tolled, but the remainder of the motorway wouldn’t be.  It could be that tolls “as they once were” wouldn’t be introduced, but a distance based toll would be, which in this context means gantries and charging points past each interchange (so vehicles are charged a proxy for distance).   It could be that he’s thinking about a bigger shift towards charging vehicles on multiple roads to replace other taxes, but I am sceptical that he is pushing such a big move.

The conclusion is that there will be more tolls in New South Wales, but how far this can go without tackling existing taxes and charging existing roads is clear.  Not very far at all.  The current steps towards “normalising” tolls and shifting towards toll charges that resemble distance are sensible and fairly low risk, but there needs to be a deeper look at how to reform further and talk about changing motoring taxes, not just adding to them.  It appears the Minister is sending contradictory signals, when clarity is needed.  

I’d have thought the appropriate strategy is:
1.       Use tolls where feasible for any new roads or capacity;
2.       Reform tolls to reflect distance travelled and peak/off peak charging;
3.       Investigate the best steps to expand tolls beyond new roads and existing tolled capacity.

Heavy vehicles

Meanwhile, Beef Central (the magazine of the Australian Beef and Cattle Industry) reports that the Australian Federal Government has decided to increase the “Road User Charge” that applies to heavy vehicles, which is a hybrid of ownership taxes and the fuel duty on diesel from 1 July 2012.  The increase is 10.4% and has upset the road freight lobby.  The increase follows exactly recommendations from the National Transport Commission – an independent government body assigned responsibility for determining, among other things, the level at which such charges should be set.   The combination of ownership charges and fuel tax is meant to enable recovery of such costs from heavy vehicles, although inevitably it means that the heaviest vehicles that travel the furthest tend to be undercharged, given the importance of the ownership tax component to addressing the shortfall fuel excise presents for vehicles above a certain weight.  This issue can really only be addressed by a shift to a weight-distance charge as is seen in neighbouring New Zealand.

The Opposition Coalition (Liberal and National Parties) is calling on the increase to be halved to relieve pressure on the road freight industry, and has supported calls for a review of the calculation model used to determine the charges.

UPDATE: The North Queensland Register reports on the criticism by Federal Transport Minister Anthony Albanese of the critics of the proposed increase.  He says:

Supported by all Coalition State governments, the latest annual adjustment simply reflects the fact that this Labor Government has more than doubled the federal roads budget".

"It's astonishing that we've now reached the absurd situation whereby the federal coalition is criticising us for having done nothing more than retaining and implementing their policy.


The Sydney Morning Herald reports that a survey conducted by the University of Sydney Institute of Transport and Logistics Studies indicated majority support for a cordon based congestion charge for Sydney IF it results in removal of existing tolls on major highways and all revenue is used to support public transport.  However, such support did not translate into support for a wider distance based road pricing scheme.   The survey was of 200 Sydney residents, so take from that as you wish (when one person = 0.5% of the opinion).

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