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Heavy vehicle charges—options for improving the accuracy and stability of the PAYGO heavy vehicle charges methodology

18 August 2016

The ATA’s submission to the National Transport Commission’s review of the PAYGO system for setting truck and bus charges argues that truck registration labels should be abolished and businesses should be allowed to pay their registration charges monthly.

The Western Australian Government has removed the requirement for trucks to have registration labels from 1 July 2016, with the government saying the decision would save thousands of hours of industry time and some $200,000 a year in government costs.

The WA approach to removing labels should be extended nationally, and operators should be able to make monthly payments to reduce the cashflow burden of the high charges.

Governments should also accept the NTC’s conclusion that the existing system will overtax truck and bus operators by more than half a billion dollars in 2016-17 and 2017-18, and immediately cut charges.

The heavy vehicle charging system must be a cost-recovery mechanism, not a general taxation regime.

If governments do not accept this recommendation, the only acceptable alternative in the ATA’s view would be to investigate a technical change to the way the PAYGO cost base is calculated, so it would include one year of forecast and one year of estimated expenditure.

Modelling commissioned by the ATA shows that this approach should address the revenue concerns of governments while still providing fair results for the industry.

The PAYGO model has not succeeded in delivering predictable and stable registration charges.

Trucking businesses need heavy vehicle charges to remain stable from year to year, or at least to change at a relatively stable rate.

Governments should empower the National Transport Commission to determine a smoothed path for charges during what should become fixed, five year determination periods.

The NTC should also be designated as the independent pricing regulator for heavy vehicle charges, with decisions appealable to the Australian Competition Tribunal. At present, the NTC only has the ability to recommend charges.

The ATA submission recommends against adopting the ‘building block’ pricing model that is used to regulate many monopoly prices because of its complexity and expense.