A fundamental policy failing by Government?

Falling new truck sales coupled with our increasing freight task means one thing, our truck fleet grows older by the day. Data released by Australian Bureau of Statistics (ABS) in July 2015 showed that Australia’s truck park reached an average of 14.75 years in January this year, this age is likely to blow out to over 15 years by 2017. Our aging truck fleet has negative effects on truck safety, productivity and environmental outcomes. The possible reasons for continued poor new truck sales are many, such as weak business confidence. In my column this month I want to explore one of the more complex, but little discussed issues: government regulations.

The process for the development and adoption of new motor vehicle design regulations, Australian Design Rules (ADR), basically takes this course; the Vehicle Safety Standards group within the Department of Infrastructure and Regional Development is tasked with reviewing road safety and environmental issues in Australia, along with potential new and existing global standards that could deliver better safety and environmental outcomes for us in Australia. A Regulation Impact Statement (RIS) is then developed by the Department and presented to government for consideration.

There are some downsides to certain new technologies. Systems such as engine after treatment devices that lead to cleaner exhaust emissions and front under-run protection devices (FUPD) that reduce road accident trauma add complexity and cost to a new truck. These systems also add weight to the truck, reducing the potential payload and making the new truck not as productive as existing trucks. All in all, this can make the new truck a less attractive proposition to a transport operator. Of course, these additional costs to industry are factored into the RIS development and are weighed up against the positive safety and/or environmental benefits for all Australians. In simple terms, if the nett benefit to the Australian community outweighs the cost penalty to the transport industry, then the new ADR is likely to be accepted by government and become law.

The potential failing of this system is the accuracy of the RIS, particularly the projected take up (sales) of new trucks with these more advanced, mandated features.

Let us take a look, in hindsight, at the Department’s RIS for the introduction of ADR84/00, which mandated FUPD for all new trucks above 12t GVM sold after January 2012. The RIS, which was largely developed in 08/09, “estimated that FUPD would provide benefits of over $20 million a year, including an estimated 10 lives saved every year, once fully implemented”. TIC and its members fully supported this very worthwhile safety initiative.

However, it is the estimated take up rate, new truck sales, verses the retirement of older trucks in the RIS that needs to be scrutinised. The “high” (cautious) calculation in the RIS estimated that a truck’s life would be 25 years, the “low” (optimistic) calculation predicted a truck life of just 10 years, while the “likely” calculation, the one used for the RIS justification, detailed a truck’s life to be 15 years. Based on the current ABS data a truck’s life is fast approaching 30 years. Hence the projected benefits to the community, less than four years after implementation of ADR84/00, are going to take 100 per cent, or 15 years, longer to be realised than was estimated in the RIS.

I find myself asking two questions, is this a fundamental policy failing by government? And does government need to consider financial incentives for operators, such as those proposed in the TIC National Truck Plan, to accelerate the take-up of new safer and environmentally cleaner trucks?

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