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Truck Are Destroying Our Roads Picking Up The Repair Cost

Australia should change its truck user fees. The difference between heavy vehicle charges and money spent on road maintenance, construction costs. Road crashes involving large trucks, pollution, and urban road congestion. Amounts at least to a subsidy of A$3 billion annually by the taxpayer.

Like car fees, the current charges are based on annual registration fees as well as fuel taxation. Australia should follow the example of New Zealand, Switzerland, and other European countries by introducing a mass-based charge system.

Over the years, there have been numerous inquiries into the system and another one is underway. By the National Transport Commission (federal government). For a two-year initial period, heavy vehicle fees have been frozen at 2015-16 levels.

Heavy Vehicles Truck Have High Costs

The National Transport Commission determines the truck road user fees in Australia. The number of axles and the gross vehicle weight are factors that influence the annual registration fees.

For example, the annual fee for a six-wheel semitrailer costs A$6,334 while it costs A$15,000.16 for a nine-wheeler B-Double. Trucks are subject to fuel excise at 25.9 cents per gallon (which will increase to 24.8 cents on July 1st). While motorists pay 40.1 Cents per gallon.

It seems high to pay the registration fee. A B-Double can result in 20,000x the wear and tear on the roads than a family vehicle. A semitrailer with six axles costs 56 cents NZ (about 52 Australian dollars) per kilometre in mass-distance charges. A truck that travels 100,000km per year or more in Australia. Pays less than 17 cents per km for registration and fuel road user fees.

New Zealand’s road users charges, which mainly consist of mass distance charges levied by heavy trucks. Make up 37% of the total revenue for their land transport fund.

According to data from the Australian National Transport Commission, heavy vehicle operators. Paid about A$3 trillion in combined road user fees and registration fees revenue between 2014-15. This only accounts for 12.5% of the $24 billion in annual government road spending.

It is hard to understand why heavy vehicle charges in Australia should not be increased to a third of New Zealand’s. These subsidies do not benefit the truck driver, but companies that choose to transport large loads on the road.

Traffic Increases With Low Charges Truck

One reason for the steady shift from rail to road in interstate freight is because of ongoing hidden subsidies for long-distance heavy trucks.

For example, freight between Sydney and Melbourne now moves more than 15,000,000 tonnes annually by way of semi-trailers and B-Doubles every day and night. Rail now transports about 2% intercapital freight via this corridor in containers, along with some steel or bulk freight. Since the early 1990s when rail carried more than 20% of Melbourne-Sydney freight, this has decreased.

Shell Oil’s 2009 decision to stop using rail in long-haul transport of petroleum products in New South Wales, and instead use B-Doubles was yet another shift. This was partly due to subsidies for B-double operations and ongoing concessions to heavy truck dimensions and mass.

Over time, there have been minor adjustments in truck road user fees. The road freight industry has been able to resist even small increases, so this under-recovery of road system cost costs has persisted for decades.

Reform In Australia

Despite the fact that reform in Australia has been difficult, there are signs that some changes could be happening. The Victorian government asked the National Transport Commission to review the allocation of heavy truck road costs. Jay Wetherill, the South Australian Premier, demanded that a national heavy vehicle road-user charge system be established and managed by the Commonwealth. The proposed system would replace state-based registrations and federal-based fuel-excise fees with a charging system that is based on mass and distance.

Paul Fletcher, Urban Infrastructure Minister, suggested in August that trucks exceeding 4.5 tonnes should be subject to road user fees that are more accurate and reflect the damage they cause our roads. He also suggested the establishment of an independent price regulator.

Road outlays in Australia are now more than A$24billion per year, as Australia’s population is growing. By 2020, road congestion will cost more than A$20 billion annually. It is long past time to make real progress in road pricing reforms for heavy trucks.

Fuel Tax Credits Is A Tricky Business

Critics of Australia’s fuel credit system have called for the end to fossil fuel subsidies. They also highlighted the cost it has on Australian taxpayers as well as the impact it has on Australia’s budget. According to the Greens, ending fossil fuel subsidies for big mining companies would help save Australian taxpayers A$21Billion over the forward estimates (the next 4 years). Larissa Waters, Greens deputy leader, stated that her party supported.

Eliminating the A$24 Billion in forward estimates over four years. This is money that goes to fossil fuel sectors in cheap diesel and accelerated appreciation. These numbers were derived from the policy costings prepare by the Parliamentary Budget Office (PBO), ahead of the July federal elections. PBO’s 2016 post election report, which details budget impacts from various election commitments and notes:

Greens Propose Ending

The Greens propose ending fuel tax credits in all industries, except agriculture, and ending accelerated asset loss for aircraft, oil and gas industry, and vehicles (except those used for agricultural purposes), among other measures. There are many opinions on whether fuel tax credits are a subsidy or not.

Fuel users must pay a fuel excise tax of 39.5 cents per gallon. In certain cases, businesses may be exempt from this obligation. This exemption is in the form of a credit for fuel tax (excise/customs duty), which is include in the price.

These tax breaks include exemptions from fuel excise for off-road fuel use by primary producers and the mining industry. A partial rebate is available for large trucks exceeding 4.5 tonnes. The truck owners pay a road usage fee instead of the excise.

According to the PBO, the Australian Greens proposal to abolish the fuels credit for all industries but agricultural businesses would result in an increase of A$4.5 billion per year in the budget balance.

The Assumptions Are Unpack

It’s important to note the assumptions behind these calculations. The PBO states that its costing assumes business fuel consumption does not change due to the policy. The goal of a higher tax to reduce fuels consumption and pollution means that the PBO’s report estimate of revenue gains will be overestimate.

Uncertainty about the future also means that any revenue estimates for such a period are not certain. According to the PBO. Many view the 39.5 cents per litre fuel excise as a form of user-pays fees to pay for government spending on public roads. For 2014-15, the federal, state, and local governments will spend more on road construction and maintenance than they have on fuel excise, which is A$17.8billion, and on motor vehicle taxes, which are A$9.5billion.

Representatives of the mining industry have made this the rational argument for exempting fuels excise. They point out that the mining industry constructs and maintains its roads. Similar arguments can made for the fuels use by primary industries for off-road purposes.

Fuel Taxes Encourage

Others believe that fuel taxes encourage people to use less gasoline and reduce their carbon emissions. A tax of 39.5 cents per gallon is a large tax per ton of equivalent CO2. The fuels excise, if it were view as a tax on greenhouse gases, would be 39.5 cents per gallon. This is more than A$150 for each tonne of greenhouse gases from the combustion of fuel. It is also higher than the A$24 per-tonne carbon price set by the Gillard government and the much lower European Union pollution permit price. It’s a stretch of credibility to claim that the fuels excise is a tax on pollution.

I would support the 2010 Henry tax review’s recommendation for a revenue-neutral reform package that replaces the fuel excise tax and the state motor vehicle tax with a road use charge and a congestion tax. This reform would exempt the mining and agricultural sectors from the tax components on road fuels and congestion. However, they would have to pay a portion for external costs related to greenhouse gas emissions.

Road Users Must Pay Sooner Or Later

Australia has adopted the idea that motorists should pay for their road beyond tolls and fuel excise fees. The idea of a user-pays system could replace the existing fees with charges that are based on motorists actual road use. The use of new technologies could allow for different charges during peak periods, similar to how we pay for electricity or telecommunications.

It’s now, according to the Henry Tax Review, Harper Competition Review and the Productivity Commission’s Public Infrastructure Inquiry. However, politicians are not sure that it will pass the pub-test with voters.

To reduce congestion and increase productivity in the future, a user-pays system will be necessary. It is important that we have a discussion about how and not if we implement a road user pay system. There is a good chance that political debates will end up dragging the user-pays concept down a rabbit hole long before it begins.

Can It Pass The Road Pub Test?

A user-pays system for roads is not something that any politician wants to do. While the jury isn’t yet out on whether motorists support user-pays, current fuel excise impacts those who can least afford it.

A user-pays system that is well design would be more fair. Road users would be able to see exactly what they are getting for their money. A debate about transport reform is not possible. The debate on user-pays should cover:

  • Road-related revenue for construction and maintenance: Hypothecation (earmarking)
  • Our existing transport infrastructure can be made efficient or sweat
  • There are many ways to enable intermodal freight movement
  • Public-private partnerships are use to maximize capital availability and increase infrastructure spending
  • Effective approaches to competitive tendering in infrastructure projects
  • Changes to existing fuel excise
  • There are effective ways to reduce the impact of user-pays for those who cannot afford it.
  • Infrastructure improvements can provide new opportunities to capture the added value of nearby properties
  • Better ways to finance public transport

It will be a heated debate. Business-as-usual only leads to increased congestion in cities, lower productivity, and ultimately a decrease in our standard of life. Without a user-pays system, it will be difficult to implement necessary reforms.

Pricing And Charging Are Two Different Things

Pricing and charging are two important topics that must be address separately. First, it is necessary to recognize the price, which is the amount that consumers will pay to use roads, relative to the costs involved in funding, construction, and maintenance. A second requirement is to allow users to pay for actual use of roads, where the price is reflected in the charge.

The main issue in the political debate will be about charging. However, pricing will be the most important reform. Although voters already pay for roads, they don’t know how much or what the contribution will be to actual road use.

We can only guess how to prioritize road construction and maintenance without accurate pricing. Without such market information, building more roads won’t address the root causes qq online.

A per-kilometre charge is popular, but accurate pricing would result in different charges depending on the demand. It may be necessary to combine congestion and per-kilometre charging. Charges should be adjust to reflect the amount motorists are willing to pay in different situations. As the cost of commuters becomes more transparent, a broad user-pays system may encourage flexible work practices.

There are still many issues. One is that the Australian Motoring Enthusiasts Party opposes any user-charges on existing roads. However, road pricing might make it more fair for motorists living in rural areas.

We Don’t Have The Money Road

Road pricing could prove to be as challenging, if not harder than the GST. It took over 30 years for this to happen. We can’t afford to wait so long.

The Coalition’s Fightback! is 650 pages long! Fightback! was the longest political suicide note in human history. Fightback! was implement more than 20 years later. Fightback! has been successfully implement.

The GST debate was, however, simpler than the road user-pays discussion. John Howard was able to get the support of the States in introducing the GST. Road pricing will require the States to get back on board, but only in an area that is within their constitutional rights.

Tony Abbott, Prime Minister of Australia, has not had a good relationship with Victoria and Queensland. Transport reform is a key issue at all levels of government. It is easy to see why politicians are concerned about a backlash from voters over transport reform.

Reform Will Be Hamper By Media Stoicism

Even worse, transport reform will be harder to explain in media-grabbing quips than the GST’s impact on birthday cakes. History suggests that transport reform could be put on hold for many years by another birthday cake incident.

Our politicians cannot take all the responsibility. It is vital to have a thoughtful debate and large-scale support from the community for reform. If this is not done, the implementation of GST will look like a cakewalk. In the meantime, regardless of whether user-pays occurs now or in future, the longer that we wait, we will pay more.