Fuel for thought

The road transport industry must be able to effectively manage and forecast such a significant cost to assure maintained business confidence and ongoing investment. The Federal Government’s recent announcement to increase the tariff indexation on fuels does not encourage business confidence.

Although the increase on fuel tariffs on 10 November saw the rate of fuel duty increase from 38.143 cents per litre to 38.6 cents per litre, the review of indexation will return to the biennial CPI method from 1 February 2015. These increases will be seen at the pump and as usual be collected by fuel sellers.

The road transport industry had adopted a mechanism of fuel levy schemes to ensure that the direct cost recovery is as flexible and in real time as it can be.

The Fuel Levy Scheme, attached to customer rates, usually reviews the cost of fuel each month on future invoicing based upon the previous periods average diesel fuel cost. There are many varied formulas and assumptions that may be applied from customer to customer.

Transport businesses eligible to claim Fuel Tax Credits or Cleaner Fuel Grants will also need to follow the Federal Governments amendments to ensure that claims against the schemes are true and accurate.

As an industry so heavily reliant on diesel fuel we must be able to clearly and efficiently recover what can be rapid variants in pricing and cost. The fuel rebate scheme is reducing in value, the road user charge is increasing, the fuel excise indexation is increasing and the cost of diesel fuel varies every day.

The road transport industry is continually striving to become more efficient in its usage of diesel fuel. More efficient engine technology is designed into each generation of new trucks, and the investment in cleaner diesel fuels such as Shell Diesel Extra have strengthened the commitment by suppliers to meet customers’ demands.

With the announcement of the change in Fuel Excise Indexation the Federal Government claims that the heavy vehicle industry will not be impacted, as additional specific legislation will be introduced to protect the Fuel Tax Credits regime before this Christmas. Even so, you will still pay the higher price at the pump and will need to understand the new legislation, after it is implemented to ensure the correct claims are put forward to the Australian Taxation Office.

It is difficult for transport operators, large or small, to keep track of all variables when evaluating the cost, recovery and impact of diesel pricing, rebates and claims. All transport operators must know what the impact of the cost of diesel has on their business.

The VTA will monitor all legislative proposals and will continue to provide the previous month’s average fuel pricing to its members. We will report to all members on specific changes and advise accordingly on the impacts and actions that need to be taken. One thing is certain though; the cost of diesel fuel will continue to rise.

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