Join now
Member login

NatRoad Submission to The Treasury 2026 – 27 Pre-budget submission

Australian road freight future

Read time: 13 mins

Executive summary

NatRoad calls for the Australian Government to:

  • Fund and accelerate the delivery of a National Automated Access Scheme (NAAS) to replace the majority of heavy vehicle access permits with automated, nationally consistent access decisions.
  • Fund and implement a nationally consistent PBS Approval Program to streamline Performance-Based Standards (PBS) approvals, reduce approval timeframes and accelerate deployment of safer, higher-productivity heavy vehicles.
  • Commit to an additional $2.4 billion to complete the ‘Clean Transport Fund’ and support the heavy vehicle industry transition to net zero acknowledging the commercial realities of decarbonisation.
  • Create a ‘Freight Productivity and Safety Infrastructure Package’ of $300 million per year for four years
  • Make no change to the Fuel Tax Credit Scheme (FTCS) until a viable Forward Looking Cost Base is developed with a resultant Road User Charge (RUC) applicable to all road users.
  • Continue to expand the Heavy Vehicle Rest Area Program to improve fatigue management, safety, and productivity across priority freight corridors with a focus on regional, remote, and high-volume routes.

Economic and Regulatory context

Transport operators are under the pump financially heading into this Budget. MYEFO shows government spending is constrained, so it is critical Budget reforms improve productivity and provide targeted investment in key infrastructure, rather than piling more costs and compliance onto small businesses.

Recent figures released by the Reserve Bank of Australia (RBA) indicate inflationary pressures persist, with a cash rate increase expected in February 2026[1].  Persistent inflation combined with unprecedented increases in operating costs from insurance, wages, parts and maintenance have resulted in less than 3% margins and the industry experiencing one of the highest rates of insolvency in Australia.  This is evidenced by high profile, well-known, family-owned transport brands such as Don Watson Transport and Crouch Transport entering voluntary administration and / or closing their businesses in the last six months[2].

NatRoad members are experiencing increased compliance burdens from ongoing regulatory reform. The staged implementation of Heavy Vehicle National Law (HVNL) amendments, effective from 1 July 2026, introduces significant changes to safety and fatigue management requirements. However, after years of consultation, the reforms fail to address critical issues around access and approvals—resulting in substantial productivity losses and unnecessary compliance costs for operators.

NatRoad is calling for targeted budget measures that reduce compliance burdens, increase productivity, and deliver improved safety outcomes. Specifically, our members need:

  • Streamlined access and approvals for higher productivity vehicles, with dedicated support for small business operators
  • Targeted infrastructure investment on high-risk corridors to improve safety and efficiency
  • Protection of the fuel tax credit scheme from short-sighted changes that would further erode operator financial viability

To support Governments’ efforts to decarbonise, NatRoad is calling for further investment in the Clean Transport Fund. It is imperative Governments acknowledge the commercial realities of transitioning to low emission technologies and vehicles, noting the significant cost to transition cannot be absorbed by operators and compounded by customer unwillingness to pay.  NatRoad is seeking support via incentives, grants, and tax concessions to transition to proven emissions reducing technologies such as low rolling resistant tyres, retrofitting of Euro VI engines, and other engine optimisation technologies.

Further support for transition to net zero is required via development of tools and guidance on emissions reporting, technologies and pathways identification is required.  This challenging transition involves targeted investment in charging, grid and refuelling infrastructure combined, and support for small to medium sized road transport operators, who represent 97% of the industry.  Governments and industry will need to work collaboratively to transition to a lower carbon future, whilst not eroding the financial viability of the industry. In a fiscally constrained and low productivity economy, NatRoad is calling for sensible, pragmatic policy intervention and targeted investment to support road transport operators to keep delivering to Australia’s growing freight task safely, efficiently and sustainably.

Supporting Small Business

Road transport businesses are currently experiencing the most sustained cost escalation in more than a decade. Most small to medium operators run on margins below 3% which limits their ability to absorb cost increases and increased regulation.  The transport, postal and warehousing sector has one of the highest insolvency rates across all industries[3]. Over the past 12 months operators have been faced with:  

  • 15 – 25% increases in heavy vehicle insurance premiums.[4]
  • Up to 12% increases in Workers’ compensation premiums.[5]
  • Parts, maintenance and repairs have risen 10–20%[6].
  • Increases in fuel and labour costs due to volatility, award increases, and skilled driver shortages.

National Automated Access Scheme

A significant cost for transport operators is the current permit system. Heavy vehicles need authorisation to access the road network. Depending on the type and dimensions of the vehicle they can be authorised for general access or restricted access. General access vehicles have access without needing specific authorisation, but restricted access vehicles need authorisation. This may be granted either as a vehicle category (notice) or a specific vehicle or combination (permit).[7]

Infrastructure Transport Ministers have agreed to progress a national automated access system for all heavy vehicles, known as the NAAS, with a goal to reduce permits by 90%[8].  Currently, multiple states, Tasmania, Queensland and New South Wales, are developing automated access schemes, demonstrating the critical need for national leadership and funding to accelerate the delivery of NAAS to unlock the broader productivity benefits.  It is estimated the introduction of the NAAS, and the reduction of 90% of permits, would remove approximately $54 million per year in administration fees.  Further, compliance costs will be cut for operators with a one hour less of administration per week resulting in an estimated $700 million in productivity.[9]  It is currently estimated access and / or permit constraints are costing the economy approximately $4–5 billion per year or $452 per household per year[10].

Having a nationally consistent, automated access scheme would deliver significant benefits for operators and support better compliance and safety outcomes.

Recommendation
The Australian Government fund and accelerate the delivery of a National Automated Access Scheme (NAAS) to replace the majority of heavy vehicle access permits with automated, nationally consistent access decisions.

Proposed funding of $30 million over four years to:

  • Complete national digital road network mapping suitable for automated access decisions.
  • Integrate state, territory and local government road data into a single national access platform.
  • Automate access decisions for PBS and other eligible higher productivity vehicles.
  • Materially reduce reliance on manual, permit-based approvals.
  • Support onboarding of road managers and industry.

PBS Approvals

Performance Based Standards (PBS) vehicles use engineering assessments to demonstrate safety performance, allowing operators to run larger, safer, and more productive vehicle combinations that would otherwise be prohibited. This approach improves both safety outcomes, productivity, and reduces carbon emissions. To further unlock productivity in the heavy vehicle sector it is essential to streamline the current Performance Based Standards (PBS) vehicle approval process.  Recent uptake data shows in 2023–24, the National Heavy Vehicle Regulator (NHVR) issued a record 4,299 PBS vehicle approvals, indicating growing demand, but also underscoring each must pass through the full, time-intensive approval process, sometimes in excess of six months[11].  Delays in PBS approval and access conservatively cost operators tens of millions of dollars each year[12] (an idle truck costs operators between $700 and $1200 per day) and inhibits uptake of safer, greener more productive vehicles.

Recommendation
The Australian Government fund and implement a nationally consistent PBS Approval Program to streamline Performance-Based Standards (PBS) approvals, reduce approval timeframes and accelerate deployment of safer, higher-productivity heavy vehicles.

Proposed funding of $20 million over four years to:

  • Digitise and automate PBS network access assessments,
  • Establish nationally consistent access decisions for PBS-approved vehicles,
  • Reduce duplication between state, local government and NHVR approvals, and
  • Integrate PBS approvals with automated access systems.

Building a Future Made in Australia

Road transport presents unique decarbonisation challenges in Australia, with long distances, heavy freight loads, and extensive reliance on diesel engines making it one of the hardest sectors to decarbonise.

In August 2025, the International Road Union (IRU), of which NatRoad is a member, released the ‘IRU Green Compact Survey Report 2025: Decarbonising commercial road transport: Progress and future pathways’, which examines the decarbonisation status of commercial road transport operations in Australia, Central Asia, Europe, Mexico and Türkiye[13]. The report indicates most transport operators are deeply concerned about the challenges posed by decarbonisation, stemming primarily from uncertainties about cost recovery and customers’ willingness to absorb higher operational costs.

Key findings in the survey report include: 

  • 71% of Australian operators are worried about decarbonisation (82% in Europe). 
  • 67% of Australian operators aren’t monitoring their carbon emissions, behind Europe where the figure drops to 56%. 
  • 67% of Australian operators said customers’ unwillingness to cover additional costs was a barrier to decarbonising (58% for Europe), while 50% regarded infrastructure not being ready to support new technology (Europe 45%) as another roadblock. 
  • Australia’s fleet is ageing, with half saying their fleet is between 5 and 15 years old. Only 25% of Australians reported their vehicles were less than five years old, contrasting with Europe where 57% of respondents run vehicles five years old or less. 
  • 100% of Australian operators said they intended to adopt biofuels as they become available in the next five years.
  • 75% of Australian Operators said they planned to continue investing in diesel vehicles. 

NatRoad acknowledge and welcome the $1.1 billion commitment already made by the Government to Cleaner Fuels Program, this funding will be critical in encouraging domestic production of Low Carbon Liquid Fuels (LCLF), while strengthening fuel security. Enabling transport operators to use existing fleets and technology to support new jobs in the net zero economy.

Whilst the support to produce sovereign LCLF is welcome, further measures and policy interventions are needed to support the heavy vehicle industry to transition.  NatRoad encourages government to take advantage of existing technologies to incentivise uptake as immediate steps to assist transport operators to decarbonise, whilst investing in medium and long-term solutions such as biodiesel and infrastructure.

Further, it is imperative the heavy vehicle industry in Australia is given a long transition time and realistic targets to decarbonise.  This will require a mix of incentives, tax relief, and for governments to take an agnostic technology approach to decarbonisation.  Note, electrification will not suit all road transport scenarios given the Australian freight task.

NatRoad calls an additional $2.4 billion to complete the ‘Clean Transport Fund[14]’ including:

  • $1 billion in road freight transport decarbonisation financing for both vehicles and infrastructure, similar to the Clean Energy Finance Corporation model.  NatRoad note current funding mechanisms are geared to support large, national operators and are too complex and / or costly for small to medium business to access.
  • $900 million in low emission vehicle and technology incentives, with priority for small and medium sized operators, focus should initially prioritise:
    • Incentives for operators to transition to low-rolling resistant tyres, resulting in up to 40% reduction in long-haul emissions[15].
    • Incentivise transition to and retrofitting of Euro VI engines, and other engine optimisations such as:
      • high-pressure fuel injection;
      • improved piston designs; and
      • enhanced exhaust treatment systems

Adoption of these technologies in aging vehicles increasing engine efficiency by up to 54% and reducing fuel consumption by 7%[16].

  • Incentives to train drivers in eco-driving with the potential to reduce road transport emissions by 15%.
  • $500 million for investment in a low and zero emissions heavy vehicle recharging and refuelling strategy, including shared use facilities. Noting incentives for Electric Vehicles (EV’s) and Zero Emission Vehicles (ZEVs) should be considered in the medium to long term as charging, refuelling and grid investment increases.
  • Develop simple guidance and tools to allow businesses to calculate their emissions and identify technologies to support fleet transition. Then provide, grants and funding to support adoption of new technology.

Fuel Tax Credit Scheme

NatRoad notes the recommendation from the Productivity Commissions Investing in Cheaper, Cleaner Energy and the Net Zero Transformation Inquiry Report to remove the Fuel Tax Credit Scheme (FTCS) for heavy vehicles[17]. Transport operators are experiencing increased charges via the Road User Charge (RUC) and simply cannot absorb any more cost increases.  NatRoad cautions against making pre-emptive policy changes to the existing Fuel Tax Credit Scheme (FTCS) as this will do little to incentivise industry to shift to cleaner technologies.  There are significant infrastructure and commercial realities which require action prior to forcing industry to shift to significantly more expensive vehicles (2 to 4 times the cost of an internal combustion engine) without sufficient infrastructure investment. The simple reality is transport operators cannot absorb the cost, and customers are not willing to pay for the transition.

NatRoad acknowledge the National Transport Commission (NTC) work underway for the development of a Forward-Looking Cost Base (FLCB) to design and implement a Road User Charge (RUC) mechanism. This will be applicable to all classes of vehicles, ensuring all road users adequately fund the roads and infrastructure they use.

Recommendation The Australian Government commit to an additional $2.4 billion to complete the ‘Clean Transport Fund’ to support the heavy vehicle industry transition to net zero and acknowledging the commercial realities of decarbonisation.  

The Australian Government make no pre-emptive change to the Fuel Tax Credit Scheme (FTFS) until a viable Forward Looking Cost Base is developed with a resultant Road User Charge (RUC) applicable to all road users.

Investing in Infrastructure

Regional and Rural Road Investment

Australia currently lacks a consistent framework to ensure investment goes where it has the greatest impact to reduce road accidents and support the highest freight productivity return. The National Road Safety Strategy 2021–30 and the 2025 Major Incident Investigation Report[18] identifies infrastructure quality including:

  • lane width;
  • clear zones;
  • median treatments; and
  • shoulder sealing.

as decisive factors in fatal and serious injuries.  Yet progress against the strategy shows persistent gaps in upgrading high risk rural roads used heavily by freight.

Australian evidence indicates targeted regional and rural road safety investments typically deliver benefit–cost ratios of around 3:1, with higher returns commonly achieved on high-risk freight corridors. This means for every $1 invested in regional and rural road safety infrastructure, approximately $3 in economic and social benefits are returned, primarily through avoided fatalities and serious injuries, reduced health and emergency response costs, lower productivity losses and reduced network disruption.[19]

In 2024 the Commonwealth Bridges Renewal (BRP) and Heavy Vehicle Safety and Productivity Safety Programs (HVSPP) were rolled into the Safer Local Roads and Infrastructure Program, this saw a shift away from targeted heavy vehicle infrastructure program money.  Hundreds of projects were delivered under both programs focussed on infrastructure upgrades, bridge reinforcement and renewal, safety and warning systems.  It is encouraging to see the funding for Heavy Vehicle Rest Areas was increased as this continues to be a significant safety concern for operators. 

Similarly, NatRoad acknowledge the success of the federally funded Black Spot program with over 720 black spot projects approved and 453 completed[20].  Funding for this program should continue at current levels of $150 million per year.

Local governments manage around 77 per cent of Australia’s road network[21], including the majority of the first and last mile freight links, ultimately determining where high-productivity vehicles can operate.  Local Council Road Managers often take a risk adverse approach to management of assets including hesitation in letting heavy vehicles access their networks due to lack of funding to maintain and / or lack of accurate assessments on load capacities.

Previous work undertaken by the Productivity Commission shows structural barriers in road funding, short funding cycles, fragmented responsibilities across 537 local governments, and limited asset condition data, undermine efficient investment and impede the rollout of High Productivity Freight Vehicle (HPFV) networks.

Councils receive only a small share of national road funding allocations and face widening infrastructure backlogs driven by rising construction costs, ageing assets and growing freight demands. The Grattan Institute identified there is a $1 billion shortfall in local council funding to maintain their road network[22]. The Australian Local Government Association (ALGA) has consistently highlighted this structural underinvestment and previously advocated for $300 million per year over four years, for councils to improve freight productivity and infrastructure on Australia’s local roads[23].

Recommendation The Australian Government create a ‘Freight Productivity and Safety Infrastructure Package’ of $300 million per year for four years to:

  • Provide route and asset assessment support to councils to better understand the condition of infrastructure and enable better-informed access decisions.
  • Provide capability-building and data collection support to councils to enable alignment with national data standards and prepare their systems to integrate with the automated national heavy vehicle access system, and
  • Support fixing, upgrading and maintaining key and high-risk corridors to enable increased productivity and safety outcomes on freight networks across all jurisdictions.

The Australian Government continue to fund the Black Spot Program at $150 million per year

Heavy Vehicle Rest Areas

The Australian Government’s Heavy Vehicle Rest Area Initiative has supported co-funded upgrades to rest areas across the national freight network, improving fatigue management, safety and driver amenity. In New South Wales, the complementary NSW Heavy Vehicle Rest Area Program demonstrates the value of sustained, corridor-based investment.

NatRoad recommendthe Commonwealth continue and strengthen the existing Heavy Vehicle Rest Area Program through a dedicated, multi-year funding commitment, drawing on the NSW model of planned, corridor-based investment. A planned corridor approach would close critical gaps on high-volume freight routes and dramatically improve fatigue and safety outcomes for operators.

Using Austroads and Bureau of Infrastructure Transport Research Economics (BITRE) crash-cost values, a 5–10 per cent reduction in fatigue-related heavy vehicle crashes would deliver economic benefits of approximately $45–$90 million per year, with higher returns achievable on priority freight corridors. These benefits alone can justify ongoing investment in the Heavy Vehicle Rest Area Program.

Recommendation The Australian Government continue to expand the Heavy Vehicle Rest Area Program and improve fatigue management, safety and productivity across priority freight corridors, with a focus on regional, remote, and high-volume routes.

  • Continue to fund the current program commitment of $140 million to 2031–32 to:
  • Deliver new heavy vehicle rest areas on nationally significant freight corridors.
  • Upgrade existing sites to improve capacity, safety, lighting, amenities and security.
  • Address gaps in rest-area spacing to support compliant work and rest planning.
  • Co-fund projects with states, territories and local governments to accelerate delivery.

Close and next steps

In a fiscally constrained environment, the 2026–27 Budget must prioritise measures which deliver productivity gains and support practical decarbonisation outcomes. For road transport operators, the most effective reforms are those which reduce regulatory compliance costs, improve access certainty, and enable safer more efficient use of existing infrastructure.  Transport operators require long transition times and adequate policy interventions to support emission reductions with pathways that are technology agnostic and mindful of the commercial realities.

NatRoad thank the Treasury for the opportunity to submit to the Pre-Budget 2026 -27 consultation and welcome the opportunity to discuss any recommendations further.

Sources:

Categories
Categories
Related Posts
Join now
Member login
What are you looking for?