HV Road Charges Must Be Revised

Infrastructure and Transport Ministers recently met and considered the latest estimates from the National Transport Commission (NTC) about the cost of road provision. Ministers indicated that, in their view, there was a growing gap between road expenditure and revenue from charges. National heavy vehicle charges are designed to recover the heavy vehicle share of road expenditure and Ministers have decided to increase heavy vehicle charges by 2.5% (road user charge and registration costs).

The CEO of the National Road Transport Association (NatRoad), Warren Clark said, “The model used to estimate the heavy vehicle share of expenditure on roads is not reliable, especially as heavy vehicles pay for the construction of roads they can’t access or have limited access to. Whilst the limitation of increases to 2.5% is painted as part of the official response to COVID in 2020, this increase won’t help road transport operators to restore their very low-profit margins.

“Survey work from 2020 shows average net profit (after tax) margins have fallen to around three per cent of revenue, increasing the pressure many fleets face when it comes to modernising their transport equipment and in meeting ongoing investment in their businesses. The negative impact of COVID-19 and last year’s bushfires remains.

“Ministers noted the increase for 2021-22 would be significantly less than the amount of 13.4 per cent estimated by the NTC as necessary to recover the heavy vehicle share of recent road construction and maintenance costs. We thank Ministers for limiting the charges, but the gap identified reinforces the NatRoad view that there needs to be work done on the current model that achieves greater fairness for the heavy vehicle sector.

“We also note that a proposal for an increase in fuel duty or the imposition of a new fuel-based levy to cover the cost of Government fuel security measures is being debated. If this charge is introduced any further heavy vehicle charges must be discounted for this factor.”