The ARA recently made a submission to the National Transport Commission (NTC) to address the long-standing disparity between the way road freight users and rail freight users are charged, often to the disadvantage of rail.
The NTC is considering options for a forward-looking cost base (FLCB) for heavy vehicle charges to replace the current pay-as-you-go (PAYGO) model. Under the PAYGO model, heavy vehicle charges are nationally averaged and collected through a combination of registration charges and the road user charge, with limited connection to the particular roads used, the quality of those roads, the costs imposed by different vehicle configurations, or the broader external costs of road freight.
By contrast, rail freight operators pay direct access charges to use rail infrastructure. These charges are explicit, commercially visible and generally linked to access rights, train paths, gross tonnes, axle loads, service characteristics or contractual access arrangements. Rail operators also bear terminal costs, pathing risk, train start-up risk and the costs of operating across multiple networks and access regimes.
The ARA’s submission emphasises the importance of that difference. Where there is an absence of a transparent and cost-reflective infrastructure charge for road freight, rail freight is required to compete against a road price that does not reflect the full cost of providing the infrastructure road freight uses. That is not competitively neutral.
The ARA believes heavy vehicle charging is not only a road funding issue. It is also a major freight competition policy setting. The way road infrastructure costs are calculated, allocated and recovered has direct implications for rail freight, particularly for interstate intermodal corridors, port shuttle markets, regional export supply chains and other high-volume freight routes where road and rail compete.
The submission welcomed the proposed change from a PAYGO to an FLCB model, but with conditions to ensure rail is not disadvantaged. It outlined 9 considerations for a future FLCB model, including improving transparency of the heavy vehicle cost base and assumptions used to allocate costs, as well as requiring consideration of the road-rail competitive neutrality impacts of each charging determination.
Overall, the submission made 15 recommendations, including:
- Assessing the impacts on competitive neutrality between road and rail freight
- Publishing a comparison of road charging and rail access charging impacts on any major mode-contestable freight corridors
- Providing regular reporting on whether heavy vehicle charging arrangements are improving or worsening competitive neutrality between road and rail freight.
Australia needs road and rail freight networks that are efficient, resilient and capable of meeting a growing national freight task. Road freight is essential for first and last mile, regional distribution and time-sensitive freight. Rail is particularly well suited to high-volume, long-distance, bulk, intermodal and port-related freight tasks.
The public policy objective should not be to favour one freight mode over another. It should be to ensure that freight customers face price signals that support the most efficient mode for the task. That requires pricing frameworks that reflect infrastructure costs, safety, emissions, resilience, congestion, community impacts and the long-term sustainability of transport networks.
Read the ARA’s full submission here: https://ara.net.au/submissions/response-on-implementing-a-forward-looking-cost-base-for-heavy-vehicle-charges-c-ris/