ALRTA recommends that road user charges are lowered

ALRTA says that the road user charge should be reduced to match fuel excise

The Australian Livestock and Rural Transporters Association (ALRTA) is making representations to key politicians to recommend that the road user charge is also immediately lowered to match the reduced fuel excise.

Following the federal government’s decision to reduce the fuel excise by 22.1 cents per litre for six months, the ALRTA is recommending politicians work to also immediately lower the road user charge by 22.1 cents per litre.

The impact of the ALRTA’s proposed change is that the fuel tax credit of 17.8 cents per litre would be reinstated, while the association also suggests any changes to the fuel excise or road user charge should be delayed until after the temporary relief period.

The ALRTA says the lack of consultation and poor understanding of the fuel excise cut’s impact on trucking businesses has short-changed the industry.

“The national average price of diesel has increased by 58 cents per litre since December 2021, meaning trucking businesses have limited capacity to pass on such dramatic increases,” ALRTA national president Scott McDonald says.

“The ALRTA appreciates the Federal government’s attempt to provide temporary relief from soaring fuel prices but given that transport costs are embedded in almost all Australian goods and services, reducing fuel excise by 22.1 cents per litre has the potential to lower business costs and cost-of-living pressures for all Australians.

“However, the effective net benefit for heavy vehicle operators is just 4.3 cents per litre, not 22.1 cents per litre.”

McDonald says this is because trucking businesses pay an effective fuel duty rate of 26.4 cents per litre and not the full rate of 44.2 cents per litre that’s paid by other motorists.

The normal 17.8 cents per litre fuel tax credit for on-road fuel use will be reduced to zero, meaning trucking businesses will hardly benefit from the fuel excise reduction.

“On the surface, it would seem that a 4.3 cents per litre net fuel discount is better than no relief at all,” McDonald says.

“However, this perspective does not appreciate the contracting chain and cash flow implications within the trucking sector.”

Under these changes, customers who have heard about the fuel excise reduction are now expecting a reduction in their own freight rates, while operators with agreed fuel levies already in place are now at the mercy of contracting parties. 

“This is because fuel levies are adjusted with reference to bowser prices. When such contracts are enforced, the transport operator must accept lower freight rates, cutting into profit margins or perhaps even resulting in a loss,” McDonald says.

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According to the ALRTA, having to explain these changes to customers and temporarily renegotiate contracts is time consuming and frustrating, meaning trucking businesses have been forced into accumulating and setting aside cash to pay other taxes that the fuel tax credits previously covered.

McDonald and the ALRTA say the Federal government’s lack of consultation within the trucking sector has resulted in a poorly understood decision to change the fuel excise tax.

According to McDonald, the last time this lack of consultation occurred, supermarket shelves were left empty for the first time in decades. He doesn’t want this to happen again.

“The only way to fix this problem is to immediately reduce the road user charge by 22.1 cents per litre and reinstate the fuel tax credit,” he says.

“If this is implemented, trucking operators would receive an effective fuel cost reduction of 22.1 cents per litre that would remain stable during the temporary relief period.

“Trucking operators would be able to pass on savings by way of lower freight costs to customers and ultimately achieve the government’s intended cost-of-living relief.”

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