EXPLANATORY STATEMENT

Select Legislative Instrument 2010 No. 177

 

Issued by Authority of the Minister for Infrastructure, Transport,

Regional Development and Local Government

 

Interstate Road Transport Charge Act 1985

Interstate Road Transport Charge Amendment Regulations 2010 (No. 1)

 

Section 7 of the Interstate Road Transport Charge Act 1985 (the Act) provides, in part, that the Governor-General may make regulations for the purposes of section 5 of the Act, which relates to the amount of the heavy vehicle registration charge.

 

The Act provides for an annual charge for the registration of heavy vehicles under the Federal Interstate Registration Scheme (FIRS). Section 5 provides that the amount of charge is the amount calculated in accordance with regulations made by the Governor-General under section 7.

 

The Interstate Road Transport Charge Regulations 2009 (the Principal Regulations) provide a mechanism for the annual adjustment of heavy vehicle registration charges for FIRS vehicles. Schedule 1 to the Principal Regulations provides the annual adjustment factor, which provides a basis for adjusting FIRS charges on 1 July each year. The adjustment is intended to ensure that heavy vehicles’ share of road construction and maintenance costs continue to be fully recovered going forward as road expenditure and heavy vehicle fleet use changes.

 

The formula in the Principal Regulations contains fixed assumptions about the heavy fleet and its use that are based on past trends in fleet data. However, analysis of vehicle fleet data during recent calculation of the 2010-11 annual adjustment factor shows there has been a structural change to the heavy vehicle fleet and in particular, a rapid growth in the use of higher-productivity vehicle combinations such as B-doubles, which attract higher charges. This structural change would result in over-recovery of heavy vehicles’ share of road costs from operators if the fixed assumptions in the formula were applied.

 

The purpose of the Regulations is to make a technical modification to Schedule 1 to the Principal Regulations to ensure an alternative formula is used to determine the annual adjustment factor applied to FIRS charges, in those years when heavy vehicle fleet structure differs from the trend assumptions contained in the original formula.

 

The Regulations ensure ongoing cost recovery (and no over or under-recovery) from FIRS heavy vehicle registration charges, meeting a key Council of Australian Governments’ road charging principle.

 

On 30 April 2010, the Australian Transport Council (the ATC) agreed the technical modification in the form of the Model Heavy Vehicle Charges (Amendment) Act 2010, to be applied in all jurisdictions. As a signatory to the Intergovernmental Agreement for Regulatory and Operational Reform in Road, Rail and Intermodal Transport (the IGA), the Commonwealth has an obligation to implement and maintain ATC agreed reforms in a uniform or nationally consistent manner.

 

The amendments to the Principal Regulations are consistent with the IGA and produce an annual adjustment factor of 4.2 per cent for 2010-11 FIRS heavy vehicle charges rather than 9.7 per cent that would apply were the Principal Regulations not amended.

 

The Office of Best Practice Regulation granted an exemption from the requirement for a Regulation Impact Statement (ID 11201) for the Model Heavy Vehicle Charges (Amendment) Act 2010 (Model Charges Act) that was drafted by the National Transport Commission (NTC) and agreed by all Australian transport ministers. The amendment to the Principal Regulations implements the changes contained in the Model Charges Act.

 

The NTC undertook a four week public consultation period which included the release of a public consultation document on the proposed heavy vehicle charges annual adjustment reflected in the Model Charges Act and a stakeholder meeting. The NTC also published the data relied upon to determine the annual adjustment factor. The state and territory registration authorities that administer the Federal Interstate Registration Scheme on behalf of the Commonwealth have also been consulted about the implementation of the annual adjustment for FIRS heavy vehicle registration charges from  1 July 2010.

 

Details of the Regulations are provided in the Attachment.

 

The Regulations are a legislative instrument for the purposes of the Legislative Instruments Act 2003.

 

 

 

ATTACHMENT

Details of the Interstate Road Transport Charge Amendment Regulations 2010 (No. 1)

 

Regulation 1 – Name of Regulations

This regulation provides that the name of the Regulations is the Interstate Road Transport Charge Amendment Regulations 2010 (No. 1).

Regulation 2 – Commencement

This regulation provides for the Regulations to commence on the day following registration.

Regulation 3 – Amendment of Interstate Road Transport Charge Regulations 2009

This regulation provides that Schedule 1 amends the Interstate Road Transport Charge Regulations 2009.

Schedule 1 Amendments

Item [1] – Schedule 1, subclause 1(1)

 

Subclause 1(1) defines that the annual adjustment factor used to adjust heavy vehicle charges is determined in accordance with the formula in clause 1.

 

This item inserts the term ‘(the relevant year)’ as a descriptor for the financial year for which an annual adjustment factor is being calculated. The insertion of the term is necessary because the term is used in Schedule 1, subclause 5.

 

Item [2] – Schedule 1, subclause 1(4)

 

This item replaces current subclause 1(4) with new subclauses 1(4) to 1(10).

 

Subclause 1(4) provides that the amount determined under subclause 1(3) of Schedule 1 to the Principal Regulations is to be the (preliminary) Raw Annual Adjustment Factor (RAAF). This RAAF is then used to determine the annual adjustment factor for the relevant year in either subclause 1(5) or subclause 1(10).

 

This item also inserts subclauses 1(5) to 1(10), which are new provisions that allow the use of an alternative (modified) annual adjustment factor in those financial years where the National Transport Commission (NTC) publishes certain data in its Annual Report for the financial year ending one year before the financial year for which the annual adjustment factor is being determined. This data includes:

 

·        estimated annual fuel use by category of heavy vehicle;

·        estimated registration revenue by category of heavy vehicle (excluding trailer registration revenue); and

·        estimated trailer registration revenue by category of heavy vehicle.

Subclause 1(5) provides that, where the NTC does not publish estimates of annual fuel use, registration revenue (excluding trailers) and trailer registration revenue by category of heavy vehicle in the Annual Report of the NTC for the financial year that ended one year before the financial year for which the annual adjustment factor is being determined, then the RAAF calculated in subclause 1(4) is the annual adjustment factor for the relevant year.

 

Subclause 1(6) provides that, where subclause 1(5) does not apply (that is, when the NTC publishes the relevant data in its Annual Report), then the Revised Adjusted Base Cost (RABC) (subclause 1(7)) is to be calculated by applying the RAAF to the revised adjusted base cost in relation to the previous financial year – that is, the Previous Revised Adjusted Base Cost (PRABC). The source of the PRABC figure will either be:

 

a)      the revised adjusted base cost, as referred to in subclause 1(7), in relation to the previous financial year if subclause 1(6) was used to determine the annual adjustment factor for that year; or

b)      if subclause 1(5) was used to determine the annual adjustment factor in the previous financial year, the revised adjusted base cost as published in the Annual Report of the NTC for the financial year that ended one year before the financial year for which the new annual adjustment factor is being determined.

 

Subclause 1(7) defines the answer from the calculation in subclause 1(6) as the Revised Adjusted Base Cost (RABC).

 

Subclause 1(8) sets out the formula for determining the (rounded percentage) annual adjustment factor in subclause 1(10). The formula is the percentage difference between the RABC and total revenue collected from heavy vehicles (being the sum of estimated total revenue from the road user charge (FR) and heavy vehicle registration charges (RR) as determined in clauses 2A and 2B, respectively.

 

Subclause 1(9) provides that the numeric outcome determined in subclause 1(8) is to be rounded to the nearest one decimal place.

 

Subclause 1(10) defines the answer determined in subclause 1(9) as the percentage annual adjustment factor.

 

Item [3] – Schedule 1, after clause 2

 

Item 3 inserts two new clauses – the first relating to the calculation of the estimated total amount (cost) of the road user charge (clause 2A) and the second relating to the calculation of the estimated revenue raised from registration charges (clause 2B).

 

The results of these calculations would feed into the calculation of the annual adjustment factor in subclause 1(8) above, were the Annual Report of the NTC (for the financial year that ended one year before the financial year for which the annual adjustment factor is being determined) to include the following estimates, by category of heavy vehicle, of:

 

·       annual fuel use;

·       registration revenue excluding trailers; and

·       trailer registration revenue.

 

Clause 2A – Estimated total amount of road user charge

 

Subclause 2A(1) sets out that the estimated total cost of the road user charge (FR) – for the year for which the annual adjustment factor is being determined – is calculated according to clause 2A.

 

Subclause 2A(2) defines the first element of the calculation of FR as being the multiplication of total fuel use by heavy vehicles (TFU) by the last rate of the road user charge (RUC) which applied in the financial year immediately before the financial year for which the annual adjustment factor is being calculated (the relevant year). The RUC is determined by the Minister for Infrastructure, Transport, Regional Development and Local Government in accordance with section 43-10 of the Fuel Tax Act 2006.

 

The TFU is determined by adding together the estimated fuel use by category of heavy vehicle. The estimated fuel use by category of heavy vehicle would be published in the Annual Report of the NTC for the financial year that ended one year before the start of the financial year for which the annual adjustment factor is being calculated.

Subclause 2A(3) sets out that the amount determined in subclause 2A(2) is to be divided by 1,000,000.

 

Subclause 2A(4) sets out that the amount determined in subclause 2A(3) is to be rounded to the nearest two decimal places.

 

Subclause 2A(5) defines the answer determined in subclause 2A(4) as the estimated total amount of the road user charge (the FR) – that is, the estimated total amount of the road user charge for the relevant period.

 

Clause 2B – Estimated revenue from registration charges

 

Subclause 2B(1) sets out that the estimated total revenue from heavy vehicle registration charges (RR) for the year for which the annual adjustment factor is being determined is to be calculated according to clause 2B.

 

Subclause 2B(2) sets out the first element of the calculation of RR as being the sum of total estimated heavy vehicle registration revenue (HV) and total estimated heavy vehicle trailer registration revenue (TTR).

 

The estimated heavy vehicle registration revenue (excluding trailers) by category of heavy vehicle, and estimated trailer registration revenue by category of heavy vehicle, would be published in the Annual Report of the NTC for the financial year that ended one year before the start of the financial year for which the annual adjustment factor is being calculated. HV is determined by adding together the estimated heavy vehicle registration revenue (excluding trailers) by category of heavy vehicle. The TTR is determined by adding together the estimated trailer registration revenue by category of heavy vehicle.

 

Subclause 2B(3) sets out that the amount determined in subclause (2) be divided by 1,000,000.

 

Subclause 2B(4) sets out that the amount determined in subclause (3) be rounded to the nearest two decimal places.

 

Subclause 2B(5) sets out the answer determined in subclause (4) as the estimated revenue raised in relation to heavy vehicle registration charges for the financial year for which the annual adjustment factor is being calculated (the RR).

 

Item [4] - after clause 3

 

Item 4 inserts a new clause to deal with transitional provisions for calculating the annual adjustment factor for the 2010-11 financial year. There is a need to apply the modified annual adjustment formula (being the formula described in subclause 1(6)) to heavy vehicle charges in 2010-11 to ensure no over recovery of heavy vehicle charges during this period. However, the Annual Report of the NTC for 2008-09 (the Annual Report for the financial year which ended one year before the start of the 2010-11 financial year) which should have included estimates of annual fuel use, registration revenue (excluding trailers) by category of heavy vehicle, and trailer registration revenue by category of heavy vehicle, has already been published without the data necessary to implement a modified annual adjustment as per subclause 1(6) above.

 

Paragraph 4(a) inserts transitional provisions for the purposes of calculating the annual adjustment factor for 2010‑11 by providing the PRABC figure necessary to calculate the (modified) annual adjustment factor as per subclause 1(6).

 

Paragraph 4(b) inserts transitional provisions for the purposes of calculating the annual adjustment factor for 2010-11 by providing that the source of the data required in clauses 2A and 2B be tables published by the NTC in the Commonwealth Government Gazette prior to 1 July 2010.