Zero Emission Trucks and Road User Charging

Tony McMullan, Truck Industry Council CEO.

In early 2020, just before the world and Australia faced the first wave of the COVID-19 pandemic, the National Transport Commission (NTC) undertook a review of heavy vehicle pay as you go (PAYGO) charging fees in Australia at the request of, the then named, Transport and Infrastructure Council within the Council of Australian Governments (COAG).

This was the first review of Australia’s road user charging (RUC) scheme in over four years.

A preliminary study commissioned by the NTC identified that there was a substantial shortfall in the revenue generated by the heavy vehicle road user charge versus road spending.

The study estimated that an increase to the RUC of 11.4 per cent in the financial year 2020/2021 would be required to address the gap.

However, the NTC found, that if the PAYGO costing formula was applied, the calculated increase was much smaller, at only 3.7 per cent.

This was because the formula uses qualified government road expenditure information from, then, 2016-2017 and not current year financial data. Further, COAG members were recommending only a 2.5 per cent increase be applied consecutively for the next two years, 2020 to 2022, justifying the smaller increase due to a then slowing economy, drought and bushfires, that collectively had led to reduced regional road freight movements.

At that point in time COVID had barely reached our shores and certainly not taken hold.

At the start of the 2020 RUC review, the Truck Industry Council (TIC) expressed an opinion that the NTCs analysis should be extensive and holistic, arguing the current RUC, that derived much of its funding from a diesel tax levy, was fundamentally flawed in light of a global movement to alternatively fuelled trucks, most likely to be powered by electricity and hydrogen.

TIC postulated that the current RUC arrangements could not take Australian road transport deep into the twenty first century and that a significant overhaul of the current charging arrangements was required.

TIC suggested a RUC scheme that ensures that all vehicles pay proportionally for the damage, or lack thereof, they contribute to our roads, the safety they afford all road users, the public health outcomes they generate and the carbon emissions that they produce, would be a fairer scheme.

The NTC rejected the Truck Industry Council’s calls for a wide-ranging review of the RUC, detailing that the scope of their actions was governed by the request set by the Transport and Infrastructure Council ministers.

The review process was a somewhat benign examination of the PAYGO parameters. In TICs view, it was a missed opportunity.

So, roll on a couple of years, the RUC review was delayed due to the difficulties of consultation with industry during COVID, with the NTC making its final recommendations in December 2021 and the Ministers deciding to engage industry on a 2.75 per cent increase to heavy vehicle charges for the 2022/2023 financial year only.

In announcing their decision, Ministers also indicated that they would revisit the determination later in 2022, with a view to what future action needs to be undertaken.

Hopefully we have now seen the worst of the COVID pandemic. We have a new Federal Government elected on a strong mandate to deliver our Australian share of global carbon abatement over the next couple of decades.

We also are witnessing the launch of twenty first century, zero emission, truck trials and new truck sales here in 2022, however we still have a RUC scheme that is reliant on diesel fuel revenue.

Revenue that will decrease substantially over the next ten, or more years, as low and zero emission trucks become the norm. A scheme that does not reward operators for the take-up and use of those new CO2 emission reducing trucks.

A road user charging scheme developed and still firmly entrenched, in the last century.

TIC calls upon State, Territory and the Federal Transport governments to show some vision and look beyond the current RUC scheme and to instigate a substantial review of the PAYGO road user charging scheme in Australia.

That work should investigate and develop a heavy vehicle road user charging scheme to take our country out of the twentieth century and into the twenty first.

Paving the way to a safer truck fleet, one that leads to better health outcomes for all Australians, produces ongoing reductions in CO2 emissions from the road freight sector and provides operators who embrace low and zero emission technology with financial incentives whilst using these new vehicles in their daily businesses.

Tony McMullan,
CEO, TIC

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