From the CEO: Road User Charge hike puts spotlight on the bigger picture

You only have to look at the barrage of issues that has confronted our industry over the last few years to understand why some are saying “enough is enough”.

Read time: 3 mins

By Warren Clark

Originally Published in Deals on Wheels Issue 493

Now is the time to radically re-think the way government extracts its pound of flesh from the trucking industry.

By now you will be aware that the Road User Charge is increasing by six percent in the 2023-24 financial year, and by the same percentage in the two years after that.

NatRoad’s preference was for the charge to be frozen for a year and for the increase to be limited to 2.75 percent in the two years after that.

The RUC is the percentage government puts on top of the price of diesel fuel purchased for heavy vehicles involved in commercial activities. You pay it as you go.

The money raised, along with part of the registration charges levied by States and Territories, is funnelled back into road maintenance and repairs, and pays for the operations of the National Heavy Vehicle Regulator.

The rate of annual increase is collectively set by Federal and State and Territory ministers, and the distribution of funds is largely based on past expenditure.

NatRoad has long argued that its nuts to continue with a system that determines cost responsibility based on previous spending.

It produces a situation where RUC charges can be driven by how much a government can spend, rather than how much it should spend, based on need.

Let me give you an example.

We all know the country has been lashed by extreme weather. Floods cut off sections of remote Western Australia and devastated freight routes connecting much of the eastern states.

The Feds and states have thrown hundreds of millions of dollars at the problem, pushing funding down to the local government level to patch and fill potholes and repair road shoulders.

There comes a time (and I’d suggest it’s now) when topping up annual road maintenance spending isn’t enough.

Money needs to go where it makes the most strategic sense.

A state’s slice of the RUC pie should not be determined by its size, and thus its ability to spend.

Sometimes the need to spend more on road maintenance or sealing outweighs the desire for nice new roads where Minister can turn a sod or cut a ribbon.

The politicians would have it that determining the rate of annual rises in the RUC over three financial years enables our industry to plan ahead.

They’re correct but it’s the distribution method that’s not working.

There’s also the question of industry’s ability to pay.

Not every operator has the ability to pass on costs to their customers and, by default, consumers. 

I don’t resile from saying that the hike in the RUC will be a death knell for those operators who are already struggling to make ends meet.

You only have to look at the barrage of issues that has confronted our industry over the last few years to understand why some are saying “enough is enough”.

State governments need to re-assess how they recover costs from all road users because their cut of fuel excise will quickly dry up as electric vehicles become the norm rather than the exception.

At the time of writing, there was a High Court judgement pending that would determine how states tax electric and hybrid vehicles.

Once that’s clear, it’s time for a special meeting of the states to make some hard decisions.

By all means give each of them a share, but what about consolidating a proportion of revenue in a fund and apply it to critical freight routes that need urgent attention?

The old arguments about each state looking after itself will surface, so let’s agree a transparent formula.

Let’s use the expertise of road users, logistics experts, safety advocates, engineers and planners, and put Infrastructure Australia’s priorities into the mix.

It’s not a matter of state against state. If road freight doesn’t move efficiently through, say, South Australia, don’t consumers in Victoria and Western Australia suffer?