Don’t charge in headfirst
Gary Mahon is the Chief Executive Officer of the Queensland Trucking Association following a career in senior management positions within the Queensland Department of Transport and Main Roads. Gary recently addressed the NatRoad Annual Conference on the subject of mass-distance-location charging as part of the proposal to replace road user charges and state charges for commercial transport.
Since the introduction of log books 80 years ago the methods of collecting and expending the transport industry’s contributions to road funding have become increasingly complex and at times unwieldy. Other factors including the future development of electric and alternative fuelled vehicles will impact on the revenues raised from charges such as fuel excise. The proposal for a Mass-Distance-Location (MDL) charging regime has been gathering momentum with opt-in commencement mooted for as soon as 2020.
GM: The fundamental purpose of our industry is to move a tonne of freight safely and efficiently from A to B. The Mass-Distance-Location approach is about putting a tax on that journey. Whether you spend two hours on the road or 10 and whether you’re carrying efficiently or not, each tonne of freight that gets moved will have a price and that should displace state registration fees and road user charges.
PM: Can we sustain the current model?
GM: Governments are saying they can’t sustain the model they currently have and we can’t tolerate a continuation of charges being raised from the industry and not enough being spent on infrastructure. The Australian road transport industry is a conglomeration of a bunch of niche businesses with most of them quite specialised. Some run short distances, some run long distances, some cart different types of commodities with different types of drivers and different combinations. In the current model we all pay the same whether we cover a million kilometres or 50,000 kilometres per year. The Mass-Distance-Location model is about that tonne of freight that you moved, how far you took it, on which calibre of road, how long you were on the road and so on.
PM: Mass-Distance-Location charging has been long established in much of Europe and includes some tolls on bridges and tunnels but importantly excludes charges on toll roads. In the US five states are currently participating in MDL projects including California. What role do you see it having here?
GM: I would argue that it is inevitable in terms of its arrival in this country in the relatively near future. One of the problems I see in the policy approach to the road transport industry is they tend to see us as generic, when we are not. Australia is quite unique in the way it runs its transport operations. For example: we are unique in the way we run multiple combinations while in Europe and the USA multi-combinations are extraordinarily rare. When you strip Mass-Distance-Location charging down to its rawest form it’s fundamentally a GST. It’s about applying a tax to every tonne that you carry. That can work but it has winners and losers and what we need to know a whole lot more about is the policy context to make it as fair and equitable as possible. The proposition is that the states would have to repeal state registration, the federal government will have to repeal the road user charge and apply Mass-Distance-Location in its place. We can’t be paying state registration and a road user charge and then some sort of element of MDL.
PM: How is the data collated and assessed?
GM: The methods of collection are relatively straight-forward. There are any number of businesses out there who are experts at GPS tracked collection systems. What we do not need is another bureaucracy being built to manage this system. There can be different rates on local government roads, state and national highways. They can attribute those charges and can also attribute those costs back to the road owners.
PM: Is there an opportunity in linking the charging system with the permit access system?
GM: If we are to be charged we should be charged different rates for different categories of roads such as class one highway at one rate, progressing down through secondary, local and dirt. The main inhibitor for high productivity vehicles are the bridges which are the fuses of the road network. If we have a system in this country that preconditioned the network, instead of post assessment, we would get the information and approval in real time. The technology is the easy bit. The hard bit is to get road managers to turn their heads around and precondition the network. This should be possible because the majority of movements outside of the standard routes are repeatable movements.
PM: Is the pending review of the Heavy Vehicle National Law a golden opportunity to bring about some fundamental and logical change?
GM: We’d like to see that any proposal for Mass-Distance-Location charging be fundamentally integrated into the HVNL review because how can we progress a HVNL without all of these considerations being factored in? Think of a world where you switch on the ignition and it connects the GPS and we immediately know where we are going, we know what weight we are carrying, we know what route we want to use, and we know if there is a permit fee applied. Those sorts of considerations have to be factored in as enablers within the law and they are not mutually exclusive issues. They are fundamental to access, charges and rates, types of vehicles being used and how the administration of that is applied.
PM: What’s the next step?
GM: We need a new paradigm of thinking. If the government is this close to moving to a Mass-Distance-Location model we need to be thinking about it now. We need to better understand what those new charging regimes might be about so that when in contract negotiations, or thinking about type of equipment to invest in and the type of technology to be used, we are fully informed. All of these signals need to be in play within the next 12 or 18 months so that decent investment decisions can be made. This is transformational. It’s a massive shift in the way that the business is undertaken and charged and we need a much better understanding about what the proposition is about. It needs to be flexible, agile and scalable. We don’t want to see an ever-increasing cost of administration to collect the money. If we move to a Mass-Distance-Location model our policy position is that as much as that money is collected it needs to be spent on infrastructure not on administration.