The topic of a road user charge (RUC) has come and gone for the last 25 years, ever since the concept was mooted as part of the negotiations to introduce the Goods and Services Tax (GST).
Now the current fuel tax credit system, which was designed to compensate truck operators for the imposition of GST across all fuel sales, needs to be replaced.
The current charge is based around the fuel excise paid per litre of diesel, but the new class of low, or zero emission, vehicles is growing in number as the trucking industry starts the very long transition away from fossil fuels.
As a result, trucks using alternative fuels, such as hydrotreated vegetable oil (HVO) – or hydrogen – or electric vehicles (EVs) will not pay the excise.
The last 25 years have seen several initiatives investigating the topic of an RUC using truck tracking and a mass/distance/location charge, or something similar. However, all of them were examined and eventually put into the ‘too hard basket’.
Since carbon emission reductions came into the equation in the last few years, and the percentage of EVs began to grow, state and federal governments have floated various ideas about an RUC for all vehicles.
An RUC on all EVs in Victoria was floated three years ago but was overturned by the High Court as unconstitutional. Since then, the conversations about an RUC have ramped up again, because currently EVs are not paying fuel excise.
Federal Treasurer, Jim Chalmers, speaking at the recent Economic Reform Roundtable in August, put the topic back on the agenda. However, there’s still a lot of conjecture about what form any kind of RUC will take.
The Treasurer was quoted as saying the road user charge being developed with the states will only be applied to EVs and not to those vehicles already paying fuel excise.
An idea about what kind of RUC is going to brought in for trucks, can be found in the RUC the New South Wales government has developed for car EVs, and intends to implement as of 1 July 2027, or when 30 per cent of new car sales are electric, whichever comes first.
Under that scheme all electric cars will be subject to a rate of 2.974 cents/km, with 80 per cent of that char ming in for hybrids at 2.379 cents/km.
Chalmers and the state governments involved have ruled out the idea that the charge should be levied across all vehicles, which is the policy being pushed by environmental groups. Drivers of fossil fuelled vehicles will not be ‘double taxed’, in the words of the Treasurer.
“Reforms to road user charging arrangements for electric vehicles have the potential to bolster productivity through more efficient use of the road network and vehicle fleet and ensure fair and sustainable funding for road investment and maintenance,” said a joint statement from Federal and State Treasurers.
From the point of view of the trucking industry, the issues are more complex but will not play out in the media. The whole process of a transition to zero carbon is also likely to take a much longer period as trucks currently on the road have an average age of 14 years.
As this plays out, this means we will have two parallel road charging regimes running concurrently for some time, adding complexity for fleet managers and road funding.
The introduction of an RUC seems inevitable, but how long it will take to get the charge implemented is anybody’s guess.
Record keeping roulette
The scheme we end up with may well hinge on having a record-keeping element, to track each truck’s driving distance. It isn’t clear how the different configurations will be divided and rates set, but this would be an opportunity for the government to design an RUC which rewards productivity and low emissions at the same time.
There is currently a National Heavy Vehicle Charging Pilot (NHVCP) exploring road charging options for the future through a series of on-road trials. It is said to be testing different ways to charge heavy vehicles for their road usage based on the weight of the vehicle and distance travelled.
In fact, the pilot is exploring two alternative methods of RUC. There is one utilising a manual system using hubodometers and mock permits, while the second method is testing an automated system using telematics and mock invoices.
“It is important to note that no decisions have been made to change the way heavy vehicle road user charges are collected,” notes the Federal Transport Department.
“Any decisions made by governments to move to a new way to charge heavy vehicles would be informed by the results of the trials and undertaken in consultation with industry.”
Although a recording mechanism based on some form of telematic tracking would be the most accurate and effective from the government’s point of view, there is likely to be resistance from the trucking industry as a whole.
If the recording is based on a ‘trust’ system, as a recording hubodometer readings method would have to be, then an output report from one of the many telematic tracking systems already in use would surely also suffice. However, at this stage, such details are unclear.
If an RUC did include an element of collecting location data, this could potentially drive the process towards directing investment based on road usage. State governments could advocate for a bigger share in the federal funding pool, based on the number of trucks, and the mass of freight, travelling a particular route.
When Victoria brought in its very short-lived scheme, drivers were going to have to take a photo of their odometer reading and send it to VicRoads. Hopefully, there will be something slightly more sophisticated than that.
An alternative for our governments to consider would be a charge along the same lines the New Zealand approach.
For trucking operators there is probably going to be a requirement based on the sharing of data for the purpose of recording annual kilometres travelled. However, as yet, there has been little work to develop guidelines and frameworks around any required accessing of onboard data.
This thorny topic may well come into the equation. Many operators are currently sharing their data with Transport Certification Australia – now part of Austroads – with such data is anonymised before being shared with the government and used for freight route planning and assessments.
It is therefore reasonable to say that operators are going to be a lot less comfortable with sharing their route data directly to a government entity for fund raising purposes.
The NZ model
New Zealand is currently going through the process of introducing an RUC and, although trucks are exempt until June 2027, that government has already published the rates they are expected to pay when the scheme commences.
On top of a $12.44 administration fee, a car driver in NZ will be charged $76 per 1000km. This amounts to a third of the amount Victoria and NSW have floated for car drivers in those states.
Looking at the rates proposed for trucks, there are rates for both prime movers and trailers. The top rate of $435 per 1000km is to be levied on the ubiquitous 8×4 trucks on NZ roads. Towing a B-double or truck and dog, both with eight axles and a 6×4 prime mover, gets a slightly reduced rate of $431 per 1000 km.
Trailers pay a lower rate, and those utilising more triaxle groups get a reduced rate, presumably because they are likely to cause less road wear than the tandem axle groupings and single axle trailers in the higher cost combinations.
Heavy haulage combinations travelling over-mass are stung with some hefty rates, some topping $1000 per 1000km.
However, there is a great deal of criticism of the New Zealand system, and it has been described as a ‘laborious bureaucratic process, which ankle taps fleet flexibility and impacts cashflow’.
Apart from the different rates for trucks and trailers and other combinations, there’s also a complex set of rules for High Productivity Motor Vehicles based on prime movers that can operate with any particular trailer, depending upon the classification.
Operators have to buy their RUC in advance in 1000km blocks. However, swapping to a different type of trailer is not allowed, as the new combination will have a separate classification and requires a change of type on the 1000km permit.
That change is not a simple click on a website and can take at least a day to process, after which the operator has to apply for a refund from the original permit purchase.
The NZ scheme is a system developed by a smaller country with a single road transport authority. Australia has a much larger and more diverse truck and trailer fleet, as well as the added complication of separate states with separate road transport and road management authorities.
The process of introducing a new road charging regime is likely to be a long and arduous process. It will be one with which the trucking industry needs to engage from the outset to avoid likely pitfalls. A poorly designed scheme could act as a handbrake on the drive for higher productivity, while creating a mountain of paperwork for the truck operator.
There also needs to be a careful balance between any new distance/mass charge and the rate at which the fuel excise is levied.
If governments get that equation right and the introduction of an RUC could stimulate the adoption of lower emission trucks while, at the same time, avoiding punishing other operators who can’t complete road freight tasks without using fossil fuels.
Read more about Road User Charges and road pricing.
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