Home' Future Freight Networks : Yearbook 2016 Contents 56
HEAVY VEHICLE ROAD
Amid the mountains of briefs prepared for this week’s COAG
Leaders Retreat, perhaps the most important document
will be in Jay Wetherill’s back pocket. The South Australian
Premier will take to the meeting a bold plan to reform the
federation, including long overdue reforms to how our
national highways and roads are funded.
In a speech to the National Press Club earlier this month,
Premier Weatherill proposed the establishment of a
national heavy vehicle road-user charging system run
by the Commonwealth. In his speech, he lamented the
lack of a market-based funding system for roads, despite
similar systems being in place for almost all other forms of
infrastructure. Under his plan, state-based registration and
federal-based fuel-excise charges would be replaced by a
more transparent pricing mechanism that more closely links
road use and investment. He also offered up South Australia
as the test site for different elements for the new heavy
vehicle road user charging regime.
From the perspective of Australia’s freight and logistics
industry – the sector to be most directly impacted by Premier
Weatherill’s proposal – we believe that his plan requires
serious consideration by all levels of government.
Seen through the political lens, his proposal is a direct policy
response to growing pressure on state budgets for road
The fact is that there are growing demands on the
government purse requiring the use of taxpayers’ money,
particularly in the areas of health and education.
Premier Weatherill’s blueprint echoes similar calls for reform
made in recent times by the Productivity Commission,
Infrastructure Australia, the Harper Review and the National
Commission of Audit. These and other reports also flagged
the concept of extending the heavy vehicle road reform, over
time, to all vehicles, to send a more direct price signal and to
help address congestion in our cities.
There is a growing consensus that the infrastructure
funding system in Australia requires a major overhaul.
The key will be delivering reform that improves long-term
funding sustainability of key freight routes in a transparent
and equitable manner. Currently, funds raised through
registration and fuel excise are smeared across the network,
and are not returned to the key freight routes carrying high
levels of traffic.
A system where funds are arbitrarily applied across the
system, with no real linkage to where the freight has come
from, or is going to, is one requiring reform. It is not a system
that supports improved productivity levels in the industry.
Industry’s support for this reform will hinge on the extent
to which it supports supply chain efficiency and reliability. It
is critical, however, that funds collected are invested in the
infrastructure used by the vehicle. In other words, the revenue
follows the freight, and is not lost to consolidated revenue.
ALC has long argued that funds from heavy vehicles should
be hypothecated for investment in productivity-enhancing
For this initiative to succeed, Treasuries need to drive the process
forward. Not only will it be quicker, but it will also be more
effective if it’s part of a broader set of reforms to change the
infrastructure revenue stream.
And, importantly, having Treasuries take carriage of this initiative
will help to ensure a greater level of national coordination. This
is important, because in the long run, road reform needs to be
national, it needs to be consistent, and it needs to be coherent.
This reform is a long time in the making.
In April 2007, COAG set out a three-phase ‘COAG Road
Reform Plan’ to consider alternative models of heavy vehicle
road pricing and funding. The plan’s objective was to promote
the more efficient, productive and sustainable provision and
use of freight infrastructure. Now, more than eight years later,
governments have taken only tentative steps to deliver on these
With studies showing that the national freight task will increase
by 100 per cent between 2010 and 2030, all policy proposals to
improve the long-term efficiency of the freight logistics network
need to be on the table; otherwise, the living standards of all
Australians will be reduced.
These studies into Australia’s rising freight task coincide with a
report by ALC and ACIL Allen, which showed that a one per cent
improvement in productivity would yield a $2-billion-per-year
benefit to the national economy.
As American economist Paul Krugman said, ‘Productivity isn’t
everything, but in the long run, it’s nearly everything’. ALC
hopes COAG leaders have Krugman’s productivity mantra at the
forefront of their minds when they sit down to discuss Wetherill’s
reform to fix our flailing federation.
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