A Responsible Path to Fair Cost Recovery

The Australian Livestock and Rural Transporters Association is looking for some radical improvements in the Road User Charge regime and a responsible path to fair cost recovery.

It is practically unheard of for an industry association to ask governments to increase charges, but that’s exactly what ALRTA has done, and it is exactly what we need. If we don’t increase heavy vehicle registration and Road User Charges by 2.5 per cent in 2021-22, we are lighting the fuse on a charging bomb likely to blow up in our faces.

It’s been a rough couple of years. Droughts, bushfires, pandemics and now floods. It looks like Armageddon. Yet, rural road transport has faced these challenges and held up well. We are rightly recognised as ‘essential services’ and allowed, even encouraged, to supply transport services necessary to sow crops, reap crops, feed livestock, supply meat, milk and fruit and generally keep supermarket panic buyers at bay. Most rural transport operators are doing OK, all things considered.

In recent years, governments have embarked on a record road infrastructure spend. In fact, State and Territory investment in road infrastructure increased by 20 per cent between 2016-17 and 2019-20.  The Australian Government is spending $110b over 10 years and has fast-tracked a $1.5 billion infrastructure stimulus package in response to COVID-19. For some years, ALRTA has called on governments to increase spending on local roads by at least $1b. Recently, our prayers were answered with a commitment of $1.5 billion for local road and community infrastructure projects.

ALRTA members report a demonstrable increase in road works on regional freight routes around Australia. We do however have concerns regarding the lack consultation with the ALRTA or our state associations about the nature and quality of regional road works. Given that our members pay for the road works, we ought to have some say in how our money is spent. 

Our industry operates on a cost recovery model. Governments build the roads and industry pays for a proportion of heavy vehicle related road expenditure via vehicle registration charges and the Road User Charge under the PAYGO model.

Periodically, the PAYGO model is subject to review. Back in 2014-15, governments refused to implement a 6.3 per cent charging decrease and instead froze charges to allow expenditure to catch up. This led to several years of over-charging of industry, but expenditure did catch up in 2017-18.  Yet, charges have since remained frozen, in part because a planned increase of 2.5 per cent in 2020-21 was abandoned due to COVID-19. Cumulative over-charging and under-charging of our industry is now approximately equal. The ledger is square. It is time for fair cost recovery to resume. 

However, with charges frozen for so long while road expenditure continued to increase, there is now a revenue shortfall of 13.4 per cent. This starting point presents challenges when the aim is to balance revenue against heavy vehicle road expenditure.