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Freight Transport Cost Recovery in Australia Philip Laird University of Wollongong 29th ATRF 2006 Gold Coast Acknowledgments • CRC in Railway Engineering and Technologies (Rail CRC) • Faculty of Informatics, University of Wollongong (UOW) • Gabriella de Battista UOW However, the views expressed are my own. In the nine years from 1994-95 to 2003-04 • iron ore and coal rail freight task up 57% to 118 btkm • interstate rail freight task up 59% to 27 btkm Most growth on the East-West corridor. Overall rail freight task up 28% over 9 years to 168 btkm. Articulated road freight task increased about 36 per cent to 121 btkm. Most of this growth has taken place in the last five years. In this time the B-Double freight task has doubled to 38 btkm. The New Zealand land freight task • about 14 btkm for road. • 4 btkm for rail. • Rail freight users pay an average 82% of the costs they impose on society. • Trucks pay some 56% of such costs (despite mass distance charges). 2005 Surface Transport Costs and Charges Study What is the situation re land freight costs in Australia? Past example, a 1972 report into the Victorian Land Transport System finds • rail freight subsidised and • hidden subsidies to road freight were larger. Rail freight deficits significantly decreased during the 1990s Over $500m in 1990 By 2000 profits, small losses and Community Service Obligation (CSO) payments • explicit rail freight CSO payments. • New South Wales and Queensland (2002-03) about $23m. • Plus larger payments in these two states for rail track used by passengers and freight. Other states provided little or nothing to support intrastate rail freight. • WA good standard of infrastructure prior to lease of track • SA some problems • Vic and NSW even more problems • Tas Federal rescue package Current rail access pricing does not generate sufficient funds to • maintain the lighter density lines or • to eliminate 'steam age' alignment of medium density lines. Road cost recovery from heavy trucks • ‘Highway subsidisation’ (Canadian Pacific) and ARA concerns ATA ‘We pay our way and more’ • National Transport Commission (NTC) - about right except for subsidies to B-Doubles NTC methodology allocates road system costs using a mixture of • vehicle kilometres • passenger car equivalent (PCU) kilometres • average gross mass kms • Equivalent Standard Axle (ESA) kilometres. What happens if we use … • Older Commission of Enquiry into the NSW Road Freight Industry methodology and • NTC third determination data The 2005-06 road system costs from articulated trucks is estimated at $2436m. NTC estimate of $1039m. Why the difference ? • NTC making less use of ESA - kms for cost allocation. • using a lower implied unit ESA - km value. • using vehicle kms rather than PCU kms for non-separable costs. Older NSW approach estimates for articulated trucks less • An estimated $920m from annual registration fees • road user charge set at 20 cents per litre for diesel shows under-recovery of about $1.5 billion. A billion dollar subsidy to road transport ? Is this possible ? The $1.5 bn estimate, like that of the NTC's, is assumption sensitive and subject to data limitations. “a saving to the road industry of $1.2 billion over the forward estimates” As announced in the Budget Speech on 9 May leaving the Road User Charge for heavy vehicles unchanged at 19.6 cents per litre. For B Doubles with 9 or more axles, the estimated under - recovery of road system costs is some $400m. Annual average of $67,000 per vehicle. cf an NTC estimate of an average subsidy of $8400. Some possible charging options - • Fuel only. • Current approach – fuel + rego charges • Mass-distance changes - was suggested by the ISC as being suitable for road trains, B-Doubles and the heavier six axle long distance articulated trucks. Interim measures • distance differentiation charges and mass differentiation charges for the heavier articulated trucks in the populous zone/AusLink network. Social and environmental external costs • Rail and road accidents • Air pollution • Noise • Greenhouse gas emissions. 2005 ATRF paper social and environmental external cost estimates cents/ntkm road rail urban 1.86 0.48 non urban 1.11 0.19 External cost estimates • articulated truck operations about $1525m. • non iron - ore rail task about $215m. Impediments to efficient intermodal freight operations: • substandard interstate rail track – some being upgraded by ARTC without track straightening. • terminals • over regulation of rail 'Twice the task' and increasing oil prices requires a total rethinking of land freight transport policy Conclusion It would be in the national interest to reduce the total multibillion subsidies to land freight transport in Australia and to improve road and rail infrastructure.
"Freight Transport Cost Recovery in Australia"