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Freight Transport Cost Recovery in Australia


									Freight Transport Cost
Recovery in Australia

         Philip Laird
    University of Wollongong

 29th ATRF 2006 Gold Coast
• CRC in Railway Engineering and Technologies (Rail

• 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
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
Rail freight deficits significantly decreased
 during the 1990s

Over $500m in 1990
By 2000 profits, small losses and
 Community Service Obligation (CSO)
• 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
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)
• average gross mass kms
• Equivalent Standard Axle (ESA)
What happens if we use …

• Older Commission of Enquiry into the
  NSW Road Freight Industry methodology


• 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
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

•   Rail and road accidents
•   Air pollution
•   Noise
•   Greenhouse gas emissions.
2005 ATRF paper social and environmental
  external cost estimates

              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

• substandard interstate rail track – some
  being upgraded by ARTC without track
• terminals
• over regulation of rail
'Twice the task' and increasing oil prices

requires a total rethinking of

land freight transport policy

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.

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