Road user pricing needs to fairly capture costs without placing bias on rail

Freight affects every Australian, every day, everywhere. Common goods purchased by Australians such as food, clothing, household appliances and medicine all need to be transported by freight operators.

Similarly, the freight supply chain provides the materials to build and operate critical community infrastructure – roads, hospitals and schools – which are fundamental to our society.

An inefficient and unproductive national supply chain can ultimately result in lost export income, reduced employment, higher consumer prices and Australia becoming less competitive in the global market.

ALC believes road pricing processes should fairly capture all the relevant cost components of roads, without distorting the choice of transport unfairly, particularly from rail to road.

This is the second inquiry that has been recently conducted into road tolling by the NSW Legislative Council.

A specific issue was that heavy vehicles will have a toll imposed that is three times higher than car tolls. However, the economic rationale behind the three-time multiplier has never been explained. Heavy vehicles currently pay road user charges for using Australia’s roads, through a pay-as-you-go model (colloquially known as PAYGO).

In a nutshell, PAYGO is designed to recover from heavy vehicles the allocated proportion of the amount jurisdictions spent on the construction and maintenance of roads over the previous five years. Australian governments are now considering a new pricing mechanism being developed under a project called Heavy Vehicle Road Reform (HVRR) to replace PAYGO.

Put simply, the HVRR concept road owners will put forward for the consideration of governments road construction and maintenance proposals, with costs calculated on a ‘forward-looking basis’ using the ‘building block’ method of developing charges used in the water, rail and electricity sectors.

Rachel Smith, ALC Interim CEO.

However, both methods only require heavy vehicles fund the additional maintenance costs incurred as a result of the road infrastructure carrying a heavy vehicle. It doesn’t establish a profit centre for road owners.

It has been reported that trucks are avoiding using, for example, NorthConnex as a result of the costs imposed on using the infrastructure, clearly imposing freight chain inefficiencies as well as adding to the road congestion that access to infrastructure of a motorway standard was meant to avoid.

However, the toll road pricing regime should support other government policies designed to ensure the efficient movement of freight, particularly within the Sydney Metropolitan area such as port rail mode share targets.

As the NSW Government has said: A Strategic Target of the NSW Freight and Ports Plan 2018-2023 is to increase the share of rail freight at Port Botany to 28 per cent or 930,000 TEU by 2021 (against a 2016 baseline of 17 per cent or 388,552).

Transporting freight on the rail network significantly improves efficiency, congestion and sustainability, especially around major trade gateways. This is important as the volume of freight moved through NSW ports will grow in the future.

This target has not been met.

ALC insists to the Government that the rationale behind the principle of requiring heavy vehicles to pay three times the toll of light vehicles for access to toll roads be investigated.

Perhaps most crucially, the government road pricing principles need to also consider the objectives of other relevant polices such as the NSW Freight and Ports Plan and the NSW Ports Masterplan to increase the level of the movement of freight by rail. Australia’s freight needs to be planned and considered as a total connected end-to-end supply chain solution.

Only when supply chains are planned and utilised from an end-to-end solutions perspective, are all modes of freight able to benefit and maximise productivity and efficiency gains.

Rachel Smith,
Interim CEO, ALC

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