Thursday, 18 August 2016

Australian Federal and State Government Ministers reconfirm commitment to heavy vehicle charging reform

Australia has a Federal system of Government, with fuel tax only collected at the Commonwealth (Federal) level, but registration fees collected by the States.  Transport policy between Commonwealth and State level has some co-ordination through the Transport and Infrastructure Council (TIC) which brings together Ministers of Transport/Infrastructure from states and the Commonwealth to decide on matters that need interstate/national co-ordination.  This is already done on registration fees on heavy vehicles.

With the Liberal/National Coalition reelected in July 2016, the latest TIC meeting was important, and  in terms of road user charging, it was notable that the TIC released its communique from that meeting (PDF) mentioning the importance of heavy vehicle road user charging reform for Australia.

The second item from that communique, which is on this specific matter,  is repeated in full below:

The Council noted the growing momentum for road charging and investment reform, including the Council of Australian Governments’ December 2015 directive that Council accelerate Heavy Vehicle Road Reform and investigate the benefits and costs of introducing user charging for all vehicles. A presentation was provided by the Commonwealth outlining pressures on the current model for funding and provision of road services, and the potential benefits of moving to market based provision of these services for all vehicles. Council noted that the immediate priority is further development of the heavy vehicle user charging system. Council will progress next steps, including further, more detailed consideration of potential costs and benefits of reform.

What this means is that there is broad agreement on reforming heavy vehicle charging in Australia, but the emphasis will be on getting a closer indication of the economic impact of such reforms.  Understanding costs means understanding how such a system or systems may work, including the impact different procurement and delivery models may have (e.g. single supplier PPPs vs open system approaches), and how the costs of both in vehicle and on road systems will be recovered.  The benefits of reform need to be calculated and discussed in the context of how they will affect different heavy vehicle user groups, by vehicle type, industry and location.

The existing system has considerable cross-subsidies, and although part of the reform process is going to make these transparent, it is unlikely that those who benefit from those cross-subsidies will support changes that suddenly mean they pay more.  Much more thought needs to be given as to how a transition towards weight/distance/location based charging can be implemented progressively, including the transition away from registration fees (although I'd suggest a portion be retained to recover the administrative costs of registration at least) and fuel tax.

However, the future is positive.  South Australia declared last year that it wants to be the first state to pilot heavy vehicle charging.  Western Australia also announced that as part of its Perth Freight Link project, it wants to introduce a heavy vehicle charge for the route, to help pay for the state's portion of the capital costs and the maintenance costs of the route (rather than a toll).  

The Heavy Vehicle Road Reform programme is well underway (covering much more than charging) going wider than charging, but also towards the use of revenue, the management of roads and how to address improving the productivity of the road freight sector (such as charging to address specific infrastructure deficiencies).  Hopefully, this commitment from TIC is followed by specific commitments at Commonwealth and State levels, and sees action on developing pilots and introducing heavy vehicle charging

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