heavy vehicle charges issues discussion paper · 2020-03-03 · heavy vehicle charges issues...

33

Heavy Vehicle Charges Issues

Discussion Paper

December 2012

National Transport Commission

Heavy Vehicle Charges Issues

Report Prepared by: National Transport Commission

Heavy Vehicle Charges Issues Discussion Paper December 2011 i

Report outline

Title: Heavy Vehicle Charges Issues

Type of report: Discussion Paper

Purpose: For public consultation

Abstract: This report reviews industry concerns in relation to the current allocation of costs and current registration charges, including the A-trailer registration charge. The report recommends options for the solution to industry concerns.

Submission details: Submissions will be accepted until 30 January 2012 online at www.ntc.gov.au or by mail to:

Chief Executive Officer National Transport Commission L15/628 Bourke Street MELBOURNE VIC 3000

Key milestones: Report to SCOTI in February 2012

Key words: A-Trailers, Heavy Vehicle Charges, B-Doubles, B-Triples, road trains, COAG, pricing principles, cross subsidies, cost recovery, annual adjustment, reconstruction

Contact: Meena Naidu

[email protected]

Heavy Vehicle Charges Issues Discussion Paper December 2011 i

How to make a submission to the NTC

Who can make a submission?

Any individual or organisation can make a submission to the NTC.

Structure of submissions

If you are representing an organisation, please indicate your position, and if relevant, specify at what level the submission has been authorised (branch, executive, president, sub-committee, executive committee, national body). Where possible, you should provide evidence, such as data and documentation, to support your views.

How to submit

To make an online submission please follow these steps:

Step 1 On the NTC homepage (www.ntc.gov.au) select „Report Issued for Comment‟ or from the News & Publication menu.

Step 2 In the „New comments to‟ column, select the name of the NTC representative corresponding to the item you wish to comment on.

Step 3 Enter your NTC website login name and password. If you are not registered, then do so by selecting the „Register‟ button. If you have forgotten your login name and password, you can retrieve it by selecting the „Forgotten your password‟ button.

Step 4 Once you are logged in, you will be able to make a submission by selecting „Browse‟ and uploading your submission. Documents should be compatible with Microsoft Word 2003 (.doc) or be in Adobe Portable Document File (.pdf) format.

Step 5 Enter the submission author details, if these are different from the logged in user.

Step 6 Select the „Save‟ button.

Once your submission has been saved it is automatically sent via email to the NTC. You will receive a confirmation email once the submission is received.

Alternatively, you can mail your comments to: Chief Executive Officer, National Transport Commission, L15/628 Bourke Street, MELBOURNE VIC 3000

Publication of submissions

Unless submissions are clearly marked confidential or accompanied by a request to delay release, all submissions will be published online. Copyright of submissions will reside with the submission author(s), not with the NTC. Submissions that contain defamatory or offensive content will not be published.

Important - confidentiality

The NTC accepts confidential submissions. If you wish to provide confidential information, please provide two copies of your submission, one with the confidential content and the other with content suitable for public release. You are encouraged to contact the NTC before submitting confidential material.

In the absence of any clear indication that a submission is confidential, the NTC will publish the

submission online unless the submission author(s) requests that it is withdrawn.

Note that access to confidential material is determined in accordance with the Freedom of Information Act 1982.

Heavy Vehicle Charges Issues Discussion Paper December 2011 iii

Foreword

Since the early 90s – when the Inter-State Commission first proposed to replace different state-based heavy vehicle charges with a national system based on cost recovery – reform has been a difficult but important journey. The journey has delivered important improvements. The industry “pays its way” – no more, no less. Modular charges no longer penalise operators who want the flexibility to use their prime-mover in a semi, B-double or road train combination. Importantly, cost recovery has facilitated significant investment by governments in roads and bridges for a new generation of B-doubles and high productivity trucks. While the charges system is relatively simple to administer, it also has its limitations. For example, heavy vehicle charges are based on average use (kilometres and mass). This report acknowledges that higher A-trailer charges have particularly impacted some operators who use low mileage and/or multiple A-trailers. In the longer-term, CoAG‟s reform agenda will consider a move to more direct pricing of heavy vehicle use. It is, therefore, important to ensure policy reform proposals developed today do not undermine agreed longer-term goals for improved freight efficiency. The National Transport Commission takes its responsibility for recommending national charges very seriously. This year NTC staff have travelled the country listening to operators and industry groups. We thank those operators for taking time from their business – often travelling some distance – to tell their story. The analysis of the options, therefore, is informed by good public policy, a sound evidence base and a genuine desire to address industry issues as quickly as possible. We encourage the industry and community to participate in the consultation process which will inform the final recommendations to Ministers in February 2012.

Greg Martin Chair

Heavy Vehicle Charges Issues Discussion Paper December 2011 v

Executive summary

Australia has seen significant productivity, safety and efficiency benefits since the introduction of national charges in the early 1990s. Uniform charges prevented “forum shopping” across borders and supported the recovery of heavy vehicle road wear costs.

Initially, B-doubles were collectively charged less than the damage they imposed on the road network as they were considered a safer alternative to road trains. Since the late 1980s, governments have made significant investments in a separate national network for B-double combinations. Now nearly half of Australia‟s freight-tonne-kilometres are carried by B-doubles.

Following a Productivity Commission recommendation in 2006, the Council of Australian Governments (CoAG) directed the Ministerial Council ensure that each heavy vehicle class paid its way. This was considered an important “building block‟ for longer-term pricing reform.

When the most recent methodology for calculating charges was developed by Transport Ministers in 2007, industry also wanted modular charges to facilitate greater fleet flexibility. As a result, a separate charge for the lead trailer in B-doubles, known as A-trailers, was introduced. As A-trailers travel high kilometres on average, it attracts a higher charge, leading to concerns raised by some parts of industry, particularly those who use their A-trailers infrequently, or use multiple A-trailers (eg: B-triples).

NTC began investigating industry concerns in May 2011 and established a working group to develop options. In November 2012, Transport Ministers requested that options for addressing the A-trailer pricing concerns be considered and presented to them in February 2012.

Updated data and a more robust methodology for calculating the road wear of the different types of heavy vehicle is being considered as part of this process.

The NTC has identified four options for consultation:

Option 1: Use updated ESA cost allocation values to recalculate charges

Option 2: Introduce a standard trailer axle charge for all vehicle configurations

Option 3: Increase the RUC share of cost recovery and reduce registration charges

Option 4: Use updated ESA values, apply an unsealed road discount to B-triples and increase the share of RUC cost recovery.

Under each of the four options, two scenarios have been assessed; A, and B. Scenario A refers to an annual adjustment being added to the recalculated current 2011/12 charges, while scenario B refers to a combined approach where 2012/13 charges are calculated consistent with the relevant option but incorporating the input data for the annual adjustment (i.e. 2010/11 expenditure and 2008 usage data) so that an additional adjustment using the formula would not be required on 1 July 2012.

These options have been assessed against five key objectives- quick implementation, better B-triple/double road train pricing relativity; national consistency; minimising revenue change; and adherence to COAG Pricing principles.

The option identified as the preferred option, 1b, appears to achieve the best prospects of meeting these objectives in a timely fashion. It also upholds CoAG‟s pricing principles which provide the foundation for transitioning heavy vehicle charges from averaging to a methodology that more accurately reflects vehicle use and road damage.

Given the timing, there was an opportunity to also integrate the public consultation on the related issue of the annual pricing adjustment – the adjustment factor employed each year to ensure heavy vehicles continue to pay their fair share of road costs through registration and fuel charges.

Following several natural disasters across Australia, including flooding in early 2011, governments have funded a significant road and bridge reconstruction program. NTC proposes that this recovery expenditure is excluded from the adjustment process.

The options identified in this report will be subject to a consultation process which will close on 30 January 2012. Following this process NTC will report back to SCOTI on all options and recommending one option for implementation by 1 July 2012. NTC will also provide Ministers with advice on the treatment of the annual adjustment at this time.

Table of contents 1. Introduction 1

1.1 History 1 1.1.1 A new charging framework 1 1.1.2 Annual Adjustment 1

1.2 Current situation: charges issues 2 1.2.1 The A-trailer “problem” 2 1.2.2 The impact of natural disasters 3

2. Current Approach: Status Quo 4 2.1 Pricing principles 4 2.2 Current methodology 4 2.3 2012/13 Annual Adjustment 6

3. Options 7

3.1 Principles for assessing options 7 3.2 Option 1 - Updating ESA values in the cost allocation models 7

3.2.1 Description: 7 3.2.2 Assessment against criteria 9

3.3 Option 2 – Standard Trailer axle charge (ATA Proposal) 10 3.3.1 Description: 10

3.4 Option 3 - Change the split between Registration and the Road User Charge. 11 3.4.1 Description: 11

3.5 Option 4 Update ESAs, B-triple Discount, and Increased RUC 13 3.5.1 Assessment against Criteria 14

4. Option Impact analysis 15

4.1 Vehicle Operator Impact 15 4.1.1 Scenario A 15 4.1.2 Scenario B 16

4.2 Government Revenue Impact 17 4.2.1 Revenue impacts under Scenario A 17

5. Recommendation 20 5.1 Summary of options 20 5.2 Preliminary conclusions 21 5.3 Next steps 21

Appendix A: Calculation of allocable cost base 22

Appendix B: Charges under Scenario A 34

Appendix C: Charges under Scenario B 36

Appendix D: ESA methodology 39

Appendix E: Method to calculate usage data 40

Appendix F: Annual Adjustment calculations 41

1

1. Introduction

1.1 History

Since 1992 NTC has recommended heavy vehicle charges to the Australian Transport Council (ATC). The charges have taken the form of a fuel based Road User Charge (RUC) and fixed registration charges for every prescribed vehicle classification. The primary objective of the charges has been to ensure that, in aggregate, heavy vehicle charges fully recovered the expenditure on roads allocated to heavy vehicles. Historically B-doubles benefited from significant discounts. This was justified on the basis that the B-double was a much safer and more productive vehicle and should therefore be encouraged.

1.1.1 A new charging framework

In 2007, COAG outlined a new price reform agenda which included, as a first step, undertaking a new heavy vehicle charges determination. COAG was responding to a Productivity Commission Inquiry which verified NTC‟s charging models and also found that heavy vehicles, at the time, were no longer recovering their share of expenditure in aggregate and that significant cross subsidies existed within the charging framework.

As part of the new agenda, COAG required the following:

“ATC direct the NTC, in developing its Determination, to apply principles and methods that ensure the delivery of full cost recovery in aggregate, further develop indexation adjustment arrangements to ensure the ongoing delivery of full expenditure recovery in aggregate and remove cross-subsidisation across different heavy vehicle classes, recognising that transition to any new arrangement may require a phased approach” (COAG 2007).

In addition, the ATC required that charges should not over-recover costs.

In order to achieve these new requirements, as well as ensure modularity of the heavy vehicle fleet, NTC recommended a new charging framework that allowed flexibility of vehicle components to make up any legal combination without the requirement to re-register the components to achieve marginal cost recovery. The new element to the charging framework was the introduction of differentiated trailer axle charges, which differed by type of trailer and axle groupings. The charges were not intended to recover the specific costs of the component (i.e. trailer or prime mover). However, when vehicle components were coupled together they ensured marginal cost recovery of the vehicle configuration.

The new charging framework included the introduction of a considerably higher charge for the lead trailer of the B-double configuration known as the “A-trailer” by industry. The B-triple configuration also faced a significant charge with two lead trailers included in the configuration. Although the charges were introduced over a three year period to ease implementation, in December 2010 industry expressed the view that the new charging framework was leading to adverse outcomes and should therefore be reviewed.

1.1.2 Annual Adjustment

At the same time that the new charging framework was introduced, the annual adjustment formula was revised.

The annual adjustment was initially created to enable charges to keep up with expenditure.

The original adjustment was created in 2002 and was applied only to registration charges with a ceiling of CPI and a floor of 0% (i.e. charges could not fall and increases were limited to a maximum of CPI). The formula attempted to mimic a determination outcome at the aggregate level by calculating the percentage increase in charges required to recover changes in expenditure from year to year. However, with considerable increases in infrastructure spending and the adjustment being applied only to registration charges this had two effects:

2

1) Registration charges recovered a greater proportion of expenditure

2) Charges began to fall behind cost recovery.

As part of the Determination and to ensure the COAG requirement of on-going cost recovery is achieved, NTC introduced a modified annual adjustment which removed the floor and ceiling and also applied the formula to the Road User Charge (RUC).

In 2009, NTC discovered that the formula did not adequately take into account changes in fleet mix and that as a result, the adjustment could result in an under or over recovery of expenditure. The impact was more pronounced under the new annual adjustment than previously was the case because the floor and ceiling and application to only registration charges had “dulled” such impacts. As this outcome was contrary to the 2007 determination and was an unintended technical omission, NTC received a RIS exemption to modify the annual adjustment to take fleet mix changes into account.

1.2 Current situation: charges issues

1.2.1 The A-trailer “problem”

Following concerns raised by industry and initial findings from an industry initiated “A-Trailer survey”, NTC commenced a review of A-trailer charges in May 2011 to ensure that the charges were not producing unintended consequences. As part of the review NTC consulted with industry operators around the country and also established a “Solutions Working Group” to consider the issues raised and potential solutions to address the issues.

The review concluded the following:

1. The impact of cross subsidisation within the vehicle class has been exacerbated due to the removal of cross subsidies between vehicle classes. Previously the under-recovery of cost was spread across the entire vehicle fleet whereas it is now contained to the vehicle class. As the charge for A-trailers is relatively high, there is a greater impact for operators of vehicle classes which face this charge and operate at low mass or low mileage.

2. B-triples are being disadvantaged compared to double road trains as they are limited to the road train network (which has a high proportion of unsealed roads). The charge reflects a 2007 CoAG commitment to a wider national B-triple network that has yet to be realised. Road trains receive an unsealed road discount of around 30% to take into account the lower expenditure associated with unsealed roads.

3. New research commissioned by NTC/Austroads in 2009 showed that the ESA values used to allocate pavement related costs in the 2007 Determination did not accurately reflect more current road use. This had the impact of over-allocating costs to the heavier end of the fleet.

The impact of these issues is unclear. Registration figures were somewhat unreliable due to the lag in flow on impacts and the transitional nature of implementation of charges. Further, manufacturers indicated a broader decline in sales (i.e. not limited to A-trailers). NTC concluded that whilst there was not strong empirical evidence that there was a significant impact on B-doubles, there was anecdotal evidence of an impact for B-doubles and of a more significant impact on B-triples.

Whilst it was difficult to find evidence that the A-trailer charge in its own right was significantly impacting B-double demand, the report found that these issues were probably exacerbating the impact industry was facing as a result of the general economic downturn. This appeared to be confirmed by a general decline in vehicle manufacturing of vehicles not in the mining sector. NTC did consider that there may be substitution issues resulting from charges and that this would have an adverse cost particularly in terms of road maintenance and safety. In addition, the discrepancy between WA charges and SA created an opportunity for SA operators to re-register their vehicle in WA and receive a $10,000 discount for a B-triple combination. The opportunity to do so, however, appeared relatively limited due to registration requirements.

3

Following receipt of NTC‟s advice and growing concern from industry, SCOTI directed NTC to present it with options in February 2012 for consideration.

This report details the proposed options that will be presented to SCOTI and details how the charges have been calculated as well as the high level impacts.

1.2.2 The impact of natural disasters

In 2010, much of the country experienced significant natural disasters – particularly flooding. As a result, many governments were required to undertake considerable road reconstruction activity. Some of this activity has been funded through insurance. Some is being funded through a newly created flood levy which was created specifically to fund reconstruction activity. Whilst the levy is being collected only in the 2011/12 financial year, it may be take a number of years for it to flow through to road expenditure.

NTC identified that this would be an issue early in 2011 following industry concerns raised during the consultation of the 2011–12 annual adjustment for the RUC. Whilst NTC did not believe the issue relevant for that annual adjustment (as the expenditure related to non-flood years), it did believe it would be a relevant issue for 2012–13. As such, NTC held a government workshop in May 2011 to discuss the issue and amended its template for the 2010–11 government expenditure return so that governments could identify reconstruction activity funded through other sources.

NTC is of the view that reconstruction activity funded through insurance and the flood levy should be excluded from the annual adjustment cost base for the following reasons:

Those governments which are insured have advised that they have claimed the cost of their premiums through the heavy vehicle charges. Therefore industry has already paid their share of insurance cost. Recovery of reconstruction activity through charges that is then claimed through insurance would constitute a double recovery.

The flood levy has been created specifically for reconstruction activity. Again it would be double counting if jurisdictions were to claim this expenditure through charges as well as through the flood levy fund.

NTC is of the view that the inclusion of these items would breach the ATC requirement of no over-recovery. Further, the exclusion of this expenditure is consistent with the Determination approach to exclude other sources of revenue in determining heavy vehicle charges to ensure there is no double counting. For example, NTC excludes an estimate of the contribution of council rates towards road expenditure in the charges determination models.

As this would not be a departure from current practice of excluding revenue from other sources, NTC has obtained a RIS exemption to make this adjustment to the annual adjustment formula.

This document will consider this approach as part of the consultation process in advance of providing advice to Ministers in 2012. It is important to note that this report seeks only to consult on the approach to the modification. NTC is currently undertaking a verification process with governments to ensure accurate reporting of reconstruction activity funded through other sources.

4

2. Current Approach: Status Quo

2.1 Pricing principles

Historically the NTC has been guided in the development of its heavy vehicle charges recommendations by a number of principles which are endorsed by Transport Ministers. In the 2007 Determination the guiding principles were prescribed as:

“National heavy vehicle road use prices should promote optimal use of infrastructure, vehicles and transport modes.

This is subject to the following:

full recovery of allocated infrastructure costs while minimising both the over and under recovery from any class of vehicle

cost effectiveness of pricing instruments

transparency

the need to balance administrative simplicity, efficiency and equity (eg impact on regional and remote communities/access)

the need to have regard to other pricing applications such as light vehicle charges, tolling and congestion.”

The ATC principles provide a degree of flexibility where trade-offs are able to be made between the principles.

As discussed in section 1.1.1, COAG introduced additional requirements for heavy vehicle charges. These are:

On-going cost recovery in aggregate

The removal of cross subsidies between vehicle classes,

The COAG requirements offer less flexibility in the calculation of charges.

Both the ATC and COAG principles are standing principles until the relevant authority changes them.

2.2 Current methodology

The current charging framework is based on a Pay As You Go (PAYGO) cost base. The cost base is calculated on the principle of full cost recovery of both capital and operational historic road expenditure in any given year. In reality, however, an averaging over time approach is applied to both cost estimation and usage so that there is effectively a lag in recovery, The averaging (over seven years) is intended to moderate fluctuations and volatility in both expenditure and usage so that there is greater consistency in charges from year to year.

The cost base for charges is calculated using annual arterial road expenditure figures (provided by each State and Territory every year against 14 cost categories) as well as local government road expenditure reported to ABS. These figures are published in the NTC annual report and include any contributions made by the Commonwealth. Expenditure that is recovered through other sources is excluded from the cost base. This includes an “amenity” amount from local government which is recovered through local rates. As a result only 25% of urban local and 50% of rural local road expenditure is included in the NTC cost base. This takes the total cost base from $16.2b to $11.6b (see appendix A).

The remaining figure is known as the allocable cost base which is then allocated across the entire vehicle fleet to derive the amount to recover by each vehicle class.

5

Four key parameters are used to allocate costs in each cost category to each vehicle class:

Average Gross Mass (AGM)

Equivalent Standard Axles

Passenger Car Units (PCU)

Vehicle kilometres travelled (VKT)

The cost allocation matrix is presented below:

Table 1. Cost allocation matrix

Expenditure Category

Percentage of cost that varies with:

Attributable costs Non-attrib.

(VKT)

VKT PCU-km ESA-km

AGM-km

Heavy Vehicle

VKT

A Servicing and operating expenses

100 0 0 0 0 0

B Road pavement and shoulder maintenance

B1 Routine maintenance 0 38 0 38 0 24

B2 Periodic maintenance 0 10 0 60 0 30

C Bridge maintenance and rehabilitation 0 0 0 33 0 67

D Road rehabilitation 0 0 45 0 0 55

E Low cost safety/traffic improvements 80 20 0 0 0 0

F Asset extension/ improvements

F1 Pavement components 0 0 45 0 0 55

F2 Bridges 0 15 0 0 0 85

F3 Land acquisition, earthworks, other extension improvement expenditure

0 10 0 0 0 90

G Other miscellaneous activities

G1 Corporate services 0 0 0 0 0 100

G2 Enforcement of heavy vehicle regulations

0 0 0 0 100 0

The cost matrix determines the attributable costs by vehicle class as well as the common costs by vehicle class (see appendix A). Attributable costs are those that are directly related to road usage (e.g. road maintenance).

The cost by vehicle class is converted into the RUC and registration charges by dividing by Survey of Motor Vehicle Usage (SMVU) usage data. NTC uses an „average‟ data point by using the mid-point year of the seven year average as the representative usage year. Fuel consumption and vehicle numbers are used to derive the charges and a 1.5 multiplier is used to factor in space trailers (i.e NTC assumes there are 50% more trailers than in any given trailer combination). The

6

combination of the RUC and registration charge for each vehicle class must ensure recovery of at least attributable costs.

The split between the RUC and registration charges (currently 62%:38%) are largely historical in nature and reflect revenue shares between the Commonwealth and states/territories at the time of the introduction of national charges.

To ensure the modularity of the vehicle components, the amount to recover is spread over the various component pieces of the vehicle configuration so that they are able to be used in different configurations whilst still meeting the pricing principles.

Industry has argued that the resulting charges are not intuitive in nature as they do not reflect the payload capacity of the trailer. This argument highlights the difference in the way operators‟ value freight transportation and the requirement that vehicle configurations (not components) recover costs.

2.3 2012/13 Annual Adjustment

NTC has now calculated the annual adjustment to take effect on 1 July 2012. Using the existing formula (and including the technical adjustment for fleet mix changes) the adjustment is 6.7%. The adjustment is higher than normal due to the considerable increase in road construction costs over the past 12 months. This is captured through the Bureau of Infrastructure Transport and Regional Economics (BITRE) Road Construction and Maintenance Price Index (RCMPI) which the annual adjustment uses to inflate nominal expenditure figures in the seven year average. The index showed road construction costs increased by 11 points over the past 12 months which reflects a percentage change of 7.2% from the previous year. This is considerably greater than the previous year which showed a percentage change of 1.4%.

The annual adjustment discussed above currently includes reconstruction expenditure which arose from natural disasters in 2010/11. As discussed in section 1.2.2, NTC proposes to recommend to SCOTI that a further technical adjustment should be made to the annual adjustment to deduct reconstruction activity funded through other sources such as the flood levy and insurance. NTC has made an initial estimate of the adjustment based on initial information provided by governments in relation to their reconstruction activity. However, this number is likely to change as governments are able to more clearly identify how much of their reconstruction activity is to be funded from other sources.

This results in an estimated modified annual adjustment of between 5.4% and 6.7%, subject to verification of data.

For the purpose of calculating charges for consultation, NTC has used the 5.4% figure. The calculation of the annual adjustment is contained in appendix F.

7

3. Options

NTC has identified four key options which seek to address the issues raised in section 1.2.1. The options are:

Option 1: Use updated ESA cost allocation values to recalculate charges

Option 2: Introduce a standard trailer axle charge for all vehicle configurations

Option 3: Increase the RUC share of cost recovery and reduce registration charges

Option 4: Use updated ESA values, apply an unsealed road discount to B-triples and increase the share of RUC cost recovery.

Under each option NTC has considered how the annual adjustment could be treated. There are two scenarios:

a. A separate approach where 2011/12 charges are recalculated consistent with the relevant option and the annual adjustment derived using the annual adjustment formula is then added to the recalculated charges; or

b. A combined approach where 2012/13 charges are calculated consistent with the relevant option but incorporating the input data for the annual adjustment (i.e. 2010/11 expenditure and 2008 usage data) so that an additional adjustment using the formula would not be required on 1 July 2012.

The two different scenarios result in different charging outcomes for each option as the first approach uses a formula which estimates the outcomes of the charges models and applies a blanket increase across all charges whilst the second approach reflects the actual outcomes of the charges model where charges better reflect actual cost allocation by vehicle class.

The status quo is the current charges + 5.4% (i.e. what would occur if no change was made to charges).

3.1 Principles for assessing options

The following assessment criteria have been identified to assess each option:

Quick implementation – to be implemented by 1 July 2012

Better B-triple/double road train pricing relativity

National consistency – the preparedness of each government to implement the option

Minimising revenue change for each government from what they would otherwise receive

Adherence to existing pricing principles

PLEASE NOTE: The numbers presented for analysis in this document are for consultation purposes only. They will change over the consultation period as issues are raised and resolved. However, they give a clear direction of the movement and magnitude of change. NTC will continue to work with industry as numbers are updated.

3.2 Option 1 - Updating ESA values in the cost allocation models

3.2.1 Description:

Under this option, the status quo methodology is applied with an amendment to the Equivalent Standard Axle (ESA) values in the cost allocation matrix.

8

ESA values are used to apportion road wear costs that a particular vehicle class is responsible for. The allocation of these costs contributes to identifying the “attributable” or marginal cost of each vehicle class.

The 2007 determination utilised ESA research completed by ARRB (Styles and George 2005). Whilst this work represented the most up to date research at the time, the authors identified a number of limitations in the methodology:

1. An average Gross Vehicle Mass (GVM) approach was used instead of a distributional approach – from a statistical point of view, a distributional approach methodology delivers a more accurate representation of the WIM data set.

2. Data was missing from key jurisdictions – The current sample of weigh-in-motion (WIM) data does not include observations from Western Australia.

3. Data was only available for a limited number of vehicle types – ESA values are only available for a limited number of vehicle types which are considered in the current PAYGO charging model.

4. Inaccurate logarithms used in deriving ESA values for certain vehicle types – For the vehicle classes that an ESA value was not observed, logarithms were used to estimate an ESA.

5. Data was significantly outdated – The WIM data that used in the 2007 determination used 1998 to 2000 data.

In 2008 ARRB, as part of a project undertaken in conjunction with Austroads, commence work to recalculate the ESA values based on a more comprehensive data set and across all heavy vehicle categories. The research, completed in 2009, addressed each of these data limitations listed above as a means to increasing the accuracy and confidence in the ESA estimates (see appendix D for a summary explanation of how the ESA values were derived by ARRB).

NTC has used this research as the basis for the new ESA values incorporated in this option. However, it has amended the values to ensure better consistency with the current charges framework. Specifically it has asked ARRB to ensure the data is representative in nature (the original work had a high Victorian representation), and overloading has been limited to 10% (consistent with current practice and reflecting a general accepted error factor in WIM data).

A continued recognised limitation of the research is a bias in the ESA values of some vehicle types due to the difficulty in identifying certain vehicle classes at different mass levels in the WIM data. However, these limitations are consistent with the limitations of the current ESA values. In addition, industry has questioned whether it is appropriate to include HML data limits in the methodology as this is inconsistent with current practice. NTC will further consider this issue during the consultation period.

Despite the known limitations, NTC believes the research represents a significant improvement for industry in the estimation of ESA values. The work essentially shows that the lighter end of the heavy vehicle fleet is having a more significant impact on the road network than the previous approach had estimated and that there are a number of non-articulated vehicles which are now not recovering their attributable costs. This would appear to be consistent with views expressed by articulated vehicle operators who have argued that there is vehicle substitution to less productive and less safe vehicles due to lower registration charges for these vehicles.

9

3.2.2 Assessment against criteria

Table 2. Option 1a, and 1b assessment.

Criteria Option 1a (2011/12 charges + annual adjustment formula)

Option 1b (2012/13 charges no annual adjustment formula required)

Quick implementation

A paper could be prepared and delivered to ministers for decision in February 2012. Implementation would require that jurisdictions replace the current heavy vehicle charges with the new numbers – this is essentially equivalent to the implementation of the annual adjustment. No other change in law is required.

A paper could be prepared and delivered to ministers for decision in February 2012. Implementation would require that jurisdictions replace the current heavy vehicle charges with the new numbers – this is essentially equivalent to the implementation of the annual adjustment. No other change in law is required.


The results show the B-Triple registration charge falling by $2,463 to $20,972, and the B-Double falling by $1,284 to $15,273. This is due to a reduction in the lead tandem, and lead tri axle charges by 27%, and 18% respectively. In terms of price relativities, the B-Triple charge of $20,972 still remains approximately double the registration charge of the double road train at $11,986. See appendix B for detailed charges.

The results show the B-Triple registration charge falling by $6,551 to $16,883, and the B-Double falling by $3,152 to $13,404. This is due to a reduction in the lead tandem, and lead tri axle charges by 49%, and 47% respectively. In terms of price relativities, the B-Triple charge of $16,883 is more comparable to the registration charge of the double road train of $12,718. (a reduction in the gap of around 80%) See appendix C for detailed charges.

National consistency This is dependent on the views of governments

This is dependent on the views of governments

Minimising revenue change

There is likely to be a moderate decrease in overall State / Territory revenue due to a higher RUC which is required to balance out the reduced revenues accrued via the registration portion of the charge model. NTC estimates revenue shares as in appendix G.

There is likely to be a slight decrease in overall State / Territory revenue due to a marginally higher RUC which is required to balance out the reduced revenues accrued via the registration portion of the charge model. NTC estimates revenue shares as in appendix G.

Adherence to Pricing principles

The adoption of this option is compliant with COAG principles as it removes cross subsidies between vehicle classes. As such, OBPRs advice is that this amendment would not require a RIS as there is no change in policy or regulation.

The adoption of this option is compliant with COAG principles as it removes cross subsidies between vehicle classes. As such, OBPRs advice is that this amendment would not require a RIS as there is no change in policy or regulation.

10

3.3 Option 2 – Standard Trailer axle charge (based on the ATA Proposal)

3.3.1 Description:

Under this proposal, the A Trailer charge would be reduced, with the cost spread across over vehicle classes. There are several sub-options:

a) Introduce a standard axle charge for trailers: this is equivalent to the charges framework that existed prior to the 2007 heavy vehicle charges determination. This approach is administratively simple and is supported by industry.

b) Reduce the A Trailer charge to an “acceptable” level and spread the cost over remaining vehicle components: this maintains a differentiated trailer charge. This approach would only be taken to strike a better balance in terms of revenue impacts.

NTC has modelled the first of these approaches which is based on the proposal the Australian Trucking Association (ATA) has identified as its preferred model. This option results in the reintroduction of a B-double cross subsidy of around $6,000 per vehicle (i.e. on average B-doubles would under-recover their direct impact on the road by $6,000 per annum). This under-recovery would be recovered by other vehicle classes by increasing their charges.

NTC notes that the second approach has an objective of maintaining revenue neutrality in each jurisdiction. However, because each jurisdiction has a different fleet mix this approach would necessarily bring an end to national charges and could ultimately result in nine sets of charges for each vehicle class. In addition to encouraging “shopping around” for the best charges (as was the case prior to national charges being introduced), this would result in additional administrative complexity for the new National Heavy Vehicle Regulator.

3.3.2 Assessment against criteria




Quick implementation

This approach would require COAG agreement to change their pricing principles and under COAG processes would be subject to a Regulatory Impact Statement.

NTC estimates a final RIS could be presented to SCOTI in June with implementation on 1 October 2012 (assuming COAG principles changes at its March 2012 meeting).

This approach would require COAG agreement to change their pricing principles and under COAG processes would be subject to a Regulatory Impact Statement.

NTC estimates a final RIS could be presented to SCOTI in June with implementation on 1 October 2012 (assuming COAG principles changes at its March 2012 meeting).


Under this option the registration charges for B-Triples would fall by $7,663 to $15,771, and for B-Doubles, a fall of $4,871 to $11,686. This equates to a fall in both the lead tandem, and lead tri axle charges by approximately 73%.

The option achieves greater price relativity between the B-Triple and the double road train with the gap narrowing considerably. The B-Triple charge under this option

Under this option the registration charges for B-Triples would fall by $8,702 to $14,732, and for B-Doubles, a fall of $5,576 to $10,980. This equates to a fall in the lead tandem, and lead tri axle charges by approximately 74% and 76% respectively.

The option achieves reasonable price relativity between the B-Triple and the double road train. The B-Triple charge under this option would be $14,732 compared to a

11



would be $15,771 compared to a Double road train at $12,853.

Double road train at $12,052.

National consistency This is dependent on the views of jurisdictions.

This is dependent on the views of jurisdictions.


The majority of the states will experience a material fall in revenues while the Commonwealth will pick up the difference through the increased RUC. Revenue impacts would be neutral if increased RUC revenues are redistributed. This this did not occur NTC estimates revenue shares as in appendix G

There is likely to be an increase in overall State / Territory revenue due to a marginally lower RUC which is required to balance out the higher revenues accrued via the registration portion of the charge model. NTC estimates revenue shares as in appendix G.


This approach does not comply with COAG principles and is inconsistent with the principles underpinning CRRP. It encourages the uptake of vehicles that is in excess of efficient levels and encourages inefficient operation (e.g. Inefficient trailer loading) which has costs to road providers. It may also act as a discouragement for broader investment and access for B-doubles and B-triples as they would no longer be „paying their way‟

This approach does not comply with COAG principles and is inconsistent with the principles underpinning CRRP. It encourages the uptake of vehicles that is in excess of efficient levels and encourages inefficient operation (e.g. Inefficient trailer loading) which has costs to road providers. It may also act as a discouragement for broader investment and access for B-doubles and B-triples as they would no longer be „paying their way‟

NTC notes that there are other combinations of charges which could be calculated under this model for scenario B and it will work with the ATA on identify the best combination prior to providing its advice to SCOTI.

It should also be noted that the ATA has argued that this option could be made to be compliant with COAG pricing principles if trailers were treated as a vehicle class. However, this is a fundamental change to the vehicle classification system and would require new usage data (that is currently not collected) as well as potentially changes to registration systems. Furthermore, it assumes that the costs that trailers would be required to recover are consistent with what trailers currently recover as a whole. However, there is no data or evidence to suggest this is the case.

NTC is of the view that if this change to the classification system was to take place, it would constitute a significant change and would take some time to implement.

3.4 Option 3 - Change the split between Registration and the Road User Charge.

3.4.1 Description:

This option applies the status quo methodology but increases the share of costs recovered through the RUC. This results in a higher RUC and lower registration charges.

The split between the RUC and registration charges has been historically set and reflects the revenue shares that existed between the Commonwealth and State/territories at the time of the First Determination in 1992. Over time, the share changed in favour of the States/Territories as

12

registration charges were increased by the annual adjustment and the RUC was not. The 2007 Charges Determination set revenue splits between the two charges to reflect more the revenue shares in 2007 (60:40) and took into account the inclusion of enforcement costs in the cost base (which the Commonwealth does not contribute to).

This option increases the RUC share to more historical levels (i.e. 66:34). Whilst this reflects historical shares, it does mean a movement away from revenue shares agreed in 2007. As a result, governments may seek to negotiate a financial agreement to hold them revenue neutral.

This option is limited in its effectiveness due to a limitation in the methodology which requires heavy vehicle registration charges to maintain relativity to registration charges for light vehicles. This is to prevent “boundary” issues where some commercial operators may be given a perverse incentive to use heavy vehicles (e.g. a 2 axle rigid) because it is cheaper than a light vehicle.

13

Assessment against Criteria




Quick implementation NTC is of the view that this option is unlikely to require a RIS as current commonwealth legislation provides a process for increasing the RUC. If a RIS is required, the timeframes would be similar to the timeframes outlined under option 2.

NTC is of the view that this option is unlikely to require a RIS as current commonwealth legislation provides a process for increasing the RUC. If a RIS is required, the timeframes would be similar to the timeframes outlined under option 2.


B-Triple registration falls by $3,336 to $20,098 and the B-Double by $2,087 to $14,470. This equates to a fall in both the lead tandem, and lead tri axle charges by approximately 17%. Price relativities between the B-Triple and the Double Road Train are not materially reduced by this option, with the B-Triple still costing approximately double that of the Double Road train.

B-Triple registration falls by $5,773 to $17,661 and the B-Double by $3,446 to $13,110. This equates to a fall in the lead tandem, and lead tri axle charges by approximately 30%. Price relativities between the B-Triple and the Double Road are slightly better under this option, however the B-Triple will still cost approximately 60% more than that of a Double Road train.




This option results in decreases in registration revenues. However, should governments agree the additional RUC revenues will be redistributed to the States/Territories, this option would maintain revenue neutrality.


Adherence to pricing principles

This approach is compliant with COAG principles and could be seen as a positive move towards direct pricing.


3.5 Option 4 Update ESAs, B-triple Discount, and Increased RUC

This is a combination approach which combines options 1 and 3 and also includes an unsealed road discount for B-Triples similar to the discount which is applied to road trains. The discount reflects the fact that these vehicles typically operate on the road train network which has a large proportion of unsealed roads. Unsealed roads have lower costs attributed to them.

Like its component parts, combination Option 4(a) is in keeping with the COAG pricing principles. It would not need a RIS and could be implemented by 1 July 2012. The combination of the options provides greater flexibility in adjusting the level of current charges whilst still meeting the attributable costs for each vehicle class.

14

3.5.1 Assessment against Criteria




Quick implementation NTC is of the view that this option is unlikely to require a RIS as current commonwealth legislation provides a process for increasing the RUC and the other changes have a RIS exemption. If a RIS is required, the timeframes would be similar to the timeframes outlined under option 2.

NTC is of the view that this option is unlikely to require a RIS as current commonwealth legislation provides a process for increasing the RUC and the other changes have a RIS exemption. If a RIS is required, the timeframes would be similar to the timeframes outlined under option 2.


Under this option the registration charges for B-Triples would fall by $6,723 to $16,712, and for B-Doubles, a fall of $3,794 to $12,762. This equates to a fall in both the lead tandem, and lead tri axle charges by approximately 39% and 45% respectively. In terms of revenue, the states as a whole would receive less revenue, with some states seeing a material decrease.

The option achieves greater price relativity between the B-Triple and the double road train with the gap narrowing considerably. The B-Triple charge under this option would be $16,712 compared to a Double road train at $11,113.

Under this option the registration charges for B-Triples would fall by $7,908 to $15,526, and for B-Doubles, a fall of $4,240 to $12,316. This equates to a fall in both the lead tandem, and lead tri axle charges by approximately 53% and 51% respectively. In terms of revenue, the states as a whole would receive less revenue, with some states seeing a material decrease.

The option achieves greater price relativity between the B-Triple and the double road train with the gap narrowing considerably. The B-Triple charge under this option would be $15,526 compared to a Double road train at $11,902.









15

4. Option Impact analysis

4.1 Vehicle Operator Impact

4.1.1 Scenario A

The following table shows the changes in registration charges as a proportion of total cost (i.e. registration, fuel costs, crew, other operational costs) for a select group of vehicle types. The table refers to “scenario a” for each option (ie assumes the old cost base with registration charges inflated by 5.4% across the vehicle classes).

Table 6. Scenario A, registration as a portion of total cost

Vehicle Type

Current Registration

Charge

($2010/11)

Current Registration Charge (% of total operator

cost)

Option 1a

Option 2a

Option 3a

Option 4a

Rigid trucks: 2 axle: no trailer: GVM 4.5 to 7.0 tonne

$418 2.6% 2.7% 2.7% 2.7% 2.7%

Rigid trucks: 3 axle: no trailer GVM >18 tonne

$945 2.1% 3.1% 2.2% 2.0% 2.8%


$945 1.7% 5.0% 1.8% 1.6% 4.3%

Truck trailers>42.5 tonne

$7,880 6.3% 6.6% 7.0% 6.1% 6.4%

Articulated trucks: single trailer: 6 axle rig

$5,747 4.3% 4.7% 4.9% 4.3% 4.3%

Articulated trucks: B-double 9 axle

$15,708 5.0% 4.9% 3.8% 4.6% 4.1%

Articulated trucks: Road train: 2 trailers

$11,437 3.0% 3.1% 3.3% 2.9% 2.9%


$13,693 6.9% 7.2% 7.9% 6.8% 6.8%

Buses: 2 axle: GVM over 10.0 tonne

$418 0.7% 0.8% 0.8% 0.8% 0.8%

Articulated trucks: B-triple 12 axle

$22,233 9.3% 8.8% 6.7% 8.4% 7.1%

16

The most notable increase in registration charges will impact the 4 axle rigids, who would see their registration charge increase from 1.7% of total cost, to 5.0% under option 1a, and 4.3% under option 4a. However, this increase returns the charge for those vehicles to a level consistent to pre-2007 Determination levels. In terms of decreases, the most notable reduction in charges will impact the B-Triples, who would see their registration charge fall from 9.3% of their toal cost to 6.7% under option 2a and 4a.

4.1.2 Scenario B

The same exercise has been completed for the same group of vehicles, only this time under scerenio B. (ie assumes the new cost base and road usage information have been applied to calculate charges).

Table 7. Scenario B, registration as a portion of total cost

Vehicle Type

Current Registartion

Charge

($2010/11)

Current Regiatration Charge (% of total operator

cost)

Option 1b

Option 2b

Option 3b

Option 4b

Rigid trucks: 2 axle: no trailer: GVM 4.5 to 7.0 tonne

$418 2.6% 2.7% 2.7% 2.7% 2.7%


$945 2.1% 3.2% 2.1% 1.9% 2.7%


$945 1.7% 5.1% 1.7% 1.6% 4.5%

Truck trailers>42.5 tonne

$7,880 6.3% 7.1% 6.6% 5.9% 6.8%

Articulated trucks: single trailer: 6 axle rig

$5,747 4.3% 4.7% 4.5% 4.1% 4.4%

Articulated trucks: B-double 9 axle

$15,708 5.0% 4.3% 3.6% 4.2% 4.0%


$11,437 3.0% 3.3% 3.2% 2.9% 3.1%


$13,693 6.9% 7.8% 7.4% 6.8% 7.4%

Buses: 2 axle: GVM over 10.0 tonne

$418 0.7% 0.7% 0.7% 0.7% 0.7%

17

Articulated trucks: B-triple 12 axle

$22,233 9.3% 7.2% 6.4% 7.5% 6.7%

Like scenarion A, the most notable increase in registration charges will impact the 4 axle rigids, who would see their registration charge increase from 1.7% of total cost, to 5.1% under option 1b, and 4.5% under option 4b. In terms of decreases, the most notable decrease will impact the B-Triples, who would see their registration charge fall from 9.3% of their toal cost to 7.2% under option 1b, and 6.3% under option 4b.

4.2 Government Revenue Impact

4.2.1 Revenue impacts under Scenario A

The following graphs depict the expected impact each option (under scenario A) will have on both State and Commonwealth revenues; the calculation of revenues assumes the old cost base inflated by 5.4%, and vehicle numbers derived from the SMVU, not actual registration data. The status quo under this scenario reflects estimates of revenues from 1 July 2012 for each government should no change be made to charges.

Figure 3: State/territory revenue impact under Scenario A

Option 1a will enable all states and territories to maintain their existing revenue share. Option 2a will see NT and WA receive additional revenues, whilst the others will receive less. Both options 3a and 4a will see all states and territories losing revenue to the Commonwealth with the increased RUC.

$-

$50

$100

$150

$200

$250

$300

NSW VIC QLD SA TAS NT ACT WA

Mill

ion

s

State Revenue Impact

Status Quo

Option 1a

Option 2a

Option 3a

Option 4a

18

Figure 4. Commonwealth revenue impact under scenario A

4.2.2 Revenue impacts under Scenario B

The same analysis has been presented under scenario B, which assumes the new cost base, and road use numbers. Like scenario A, the revenues derived have used SMVU road use numbers, and not actual registration data.

Figure 5. State / territory revenue impacts under scenario B

Similar to the results under scenario A, option 1b will enable all States and Territories to maintain their existing revenue share, while option 2b, 3b, and 4b will see all states receive less revenues, with the exception of the NT under option 4b which will see a marginal increase in revenue.

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

Commonwealth

Mill

ion

s

Commonwealth Revenue Impacts

Status Quo

Option 1a

Option 2a

Option 3a

Option 4a

$-

$50

$100

$150

$200

$250

$300

NSW VIC QLD SA TAS NT ACT WA

Mill

ion

s

State Revenue Impacts

Status Quo

Option 1b

Option 2b

Option 3b

Option 4b

19

Figure 6. Commonwealth revenue impact under scenario b

Analysis of Commonwealth revenue shows that, in all cases except for option 1, the Commonwealth will see an increase in revenue.

$-

$200

$400

$600

$800

$1,000

$1,200

$1,400

$1,600

$1,800

$2,000

Commonwealth

Mill

ion

s

Commonwealth Revenue Impacts

Status Quo

Option 1b

Option 2b

Option 3b

Option 4b

20

5. Recommendation

5.1 Summary of options

The benefits associated with the various options are summarised below

Table 8. Summary of options

Options Scenario A – Separate annual adjustment

Scenario B – combined approach

Status Quo Current charges plus 5.4%

Option 1 Marginal reduction in A-trailer charge

Can be implemented quickly – no RIS required

Relativities between B-triples and road train marginally improves

Significant reduction in A-trailer charge

Increase in charges to rigid vehicles similar to levels pre 2007 Determination

Provides better charging signals to favour safer and more productive vehicles

Can be implemented quickly – no RIS required

Relativities between B-triples and road trains significantly improves

Option 2 Significant reduction in A-Trailer charge

Breaches pricing principles – requires a COAG agreement to soften cross subsidy principle

Will take longer to implement – requires a RIS

Significant reduction in A-Trailer charge

Breaches pricing principles – requires a COAG agreement to soften cross subsidy principle

Will take longer to implement – requires a RIS

Option 3 Marginal reduction in A-Trailer charge

Limited by the requirement to maintain registration charge relativity with light vehicles

Requires revenue reallocation from the Commonwealth

RIS may not be required but implementation timelines are uncertain

Marginal reduction in A-Trailer charge

Limited by the requirement to maintain registration charge relativity with light vehicles



Option 4 Reduction in A-Trailer charge



Significant reduction in A-Trailer charge



21

5.2 Preliminary conclusions

NTC‟s preliminary recommendation is for SCOTI to adopt option1b. This option is compliant with charging principles and consistent with the COAG Road Reform Plan, is able to be implemented in a timely fashion without a RIS and results in a significant reduction in the A-Trailer charge and the gap between B-triples and double road trains. This option also eliminates the need to undertake a separate annual adjustment process using the annual adjustment formula in 2012/13.

Option 4b is also an attractive option and has the additional benefit of reducing the impact of cross subsidies within the vehicle class. However, this option has fiscal complexities with states and territories likely to seek the redistribution of the additional RUC revenues. This may compromise the timely implementation of this option. NTC notes that if this was able to be resolved, it would this option would enable governments to be held revenue neutral.

Option 2 is a viable option. However, NTC is of the view that a RIS would be required to deliver this option as it is a more fundamental charge in the charging framework and reverses the outcomes of the 2007 Determination. COAG would be required to soften their pricing principles to underpin a RIS. The RIS requirements compromise the timeliness in delivery of this option.

Options 3 does not deliver a reasonable outcome and is therefore not considered to be a viable option.

5.3 Next steps

NTC will commence a consultation process on these options on 19 December 2011 and seeks written submissions on the options by 30 January 2012.

NTC will submit its final report to SCOTI by the end of February 2012 with the expectation that the preferred option is implemented by States and Territories by 1 July 2012.

22

Appendix A: Calculation of allocable cost base

The following tables provide details on how the allocable cost base is derived. Scenario A assumes a seven year average upto and including 2009/10 whilst scenario b assumes a seven year average upto and including 2010/11.

Table 9 shows total average arterial road expenditure by cost category. Expenditure is reported by each state/territory annually and is then averaged over seven years. Arterial road expenditure includes all Commonwealth contributions to state/territory road investment.

Table 9. Arterial road expenditure $m


Scenario A Scenario B

A Servicing and operating 852 932

B Road pavement and shoulder construction

B1 Routine maintenance 473 505

B2 Periodic surface maintenance 393 433

C Bridge maintenance/ rehabilitation 197 221

D Road rehabilitation 576 637

E Low-cost safety/traffic 566 686

F Asset extension/improvements

F1 Pavement improvements 1,433 1,594

F2 Bridge improvements 645 772

F3 Land acquisition, earthworks/other 2,888 3,307

G Other miscellaneous activities

G1 Corporate services 326 393

G2 Enforcement of heavy vehicle regulations 118 123

Totals 8,467 9,603

Note: excludes G3 to G5 categories on vehicle registration, driver licensing and loan servicing

Table 10 provides the same information but for local road expenditure. This information is reported to the ABS and as such it is reported with a lag. Therefore the seven year average for local roads is for expenditure upto and including 2008/09 in scenario a and 2009/10 for scenario b.

Table 10. Local road expenditure $m


Scenario A Scenario B

A Servicing and operating 899 946

B Road pavement and shoulder construction

B1 Routine maintenance 388 397

B2 Periodic surface maintenance 352 371

C Bridge maintenance/ rehabilitation 190 209

D Road rehabilitation 510 537

E Low-cost safety/traffic 631 751

F Asset extension/improvements

F1 Pavement improvements 672 723

F2 Bridge improvements 306 356

F3 Land acquisition, earthworks/other 1,366 1,524

Totals 5,314 5,814

23

Table 3 show the deductions that are made from total road expenditure. Under scenario A, this leaves $10,255m and in scenario b it is $11,555m. These totals are known as the allocable cost base and are then applied across the whole vehilce fleet using the cost allocation matrix described in section 2.2 and the usage data in tables 4 and 5.

Table 3 Expenditure excluded from allocation process ($m)

Scenario A

Expenditure Type Arterial Roads

Local Roads

Total

Total road agency expenditure 9,182 5,314 14,496

Deductions

Expenditure recovered through other fees

Administration of vehicle registration 364 364

Administration of licensing 214 214

Loan interest 138 138

Council expenditure providing for all-weather

access, amenity and non-motorised road users 3,473 3,473

Part of enforcement expenditure not included 52 52

Total deductions 768 3,473 4,241

Total allocated 8,414 1,841 10,255

Scenario B

Expenditure Type Arterial Roads

Local Roads

Total

Total road agency expenditure 10,369 5,814 16,183

Deductions

Expenditure recovered through other fees

Administration of vehicle registration 392 392

Administration of licensing 230 230

Loan interest 144 144

Council expenditure providing for all-weather

access, amenity and non-motorised road users

3,808 3,808

Part of enforcement expenditure not included 54 54

Total deductions 820 3,808 4,628

Total allocated 9,549 2,006 11,555

24

Table 4: Usage data under scenario a (trend 2007 road use)

Number of Vehicles

Distance

Travelled

(KM) 000

Fuel

Consumption

(Litres) 000

GVM/Km 000 AGM ESA PCU

Motor cycles 376,201 1,709,627 110,050 0 0.00 0.00 1

Passenger cars 9,213,578 126,948,909 14,107,433 0 0.00 0.00 1

Passenger van and light buses 175,968 2,696,599 367,041 0 0.00 0.00 1

4WD's passenger 1,639,552 28,438,381 3,716,218 0 0.00 0.00 1

4WD's light commercial 693,805 12,561,185 1,643,861 24,995,327 1.99 0.04 1

Light commercials & Other light vehicles 1,439,143 25,064,513 3,281,915 41,879,408 1.67 0.04 1

Light rigid trucks 91,159 1,819,171 300,841 6,167,658 3.39 0.05 1

Rigid trucks: 2 axle: no trailer: GVM 4.5 – 7.0 t 46,812 762,340 160,859 3,229,887 4.24 0.05 2

Rigid trucks: 2 axle: no trailer: GVM 7.0 – 12.0 t 84,746 1,933,862 471,888 13,429,206 6.94 0.17 2

Rigid trucks: 2 axle: no trailer: GVM > 12.0 t 51,830 1,131,367 332,786 12,189,366 10.77 0.98 2

Rigid trucks: 2 axle: with trailer ≤ 42.5 t 15,553 412,791 124,317 4,837,451 11.72 0.89 2

Rigid trucks: 3 axle: no trailer GVM 4.5 – 18.0 t 2,409 59,618 21,950 614,865 10.31 0.68 2

Rigid trucks: 3 axle: no trailer GVM > 18.0 t 42,449 1,268,843 526,340 20,791,293 16.39 1.45 2

Rigid trucks: 3 axle: with trailer 18.0 ≤ 42.5 t 4,841 149,302 60,319 3,386,347 22.68 1.17 3


Rigid trucks: 4 axle: no trailer GVM > 25.0 t 5,867 215,365 96,621 4,233,948 19.66 1.42 2

Rigid trucks: 4 axle: with trailer 25.0 ≤ 42.5 t 152 3,654 1,980 117,975 32.29 1.64 3

Truck trailers > 42.5 t 9,896 711,152 355,432 22,659,620 31.86 3.10 3

Articulated trucks: single trailer: 3 axle rig 1,094 30,048 10,729 452,627 15.06 0.68 3

Articulated trucks: single trailer: 4 axle rig 3,612 157,185 66,287 3,268,194 20.79 1.21 3

Articulated trucks: single 3 axle trailer: 5 axle rig 988 57,868 25,726 1,658,036 28.65 2.27 3

Articulated trucks: single 2 axle trailer: 5 axle rig 5,587 286,974 139,483 7,531,467 26.24 1.78 3

Articulated trucks: single trailer: 6 axle rig 37,738 3,142,520 1,598,628 102,466,262 32.61 2.29 3

Articulated trucks: B-double: < 9 axle rig 1,802 271,653 151,398 11,691,642 43.04 3.27 4

Articulated trucks: B-double: 9 axle rig & above 10,615 1,924,809 1,128,877 99,481,876 51.68 3.55 4

Articulated trucks: B-triple 12 axle 410 49,690 35,777 3,363,998 67.70 4.43 4

Articulated trucks: road train: 2 trailers 3,980 506,508 341,207 30,686,440 60.58 4.58 4

Articulated trucks: road train: 3+ trailers 928 118,077 118,077 11,013,863 93.28 5.65 5

Articulated trucks: > 6 axle rig (not yet classified) 2,034 173,100 109,477 8,499,280 49.10 2.36 3

Other trucks (special vehicles non-load carrying) 12,348 138,978 48,858 3,404,964 24.50 1.55 2

Buses: 2 axle: GVM 3.5 to 4.5 tonne 4,964 112,703 15,963 360,650 3.20 0.05 2

Buses: 2 axle: GVM 4.5 to 10.0 t 13,998 357,498 72,220 1,930,492 5.40 0.08 2

Buses: 2 axle: GVM over 10.0 t 19,585 810,802 318,476 8,108,021 10.00 0.70 2

Buses: 3 axle 2,362 171,278 63,290 2,603,424 15.20 1.24 3

Buses: articulated 434 18,380 9,131 305105.0357 16.60 0.75 3

Total (All Vehicles) 14,017,440 214,229,352 29,939,264 455,620,813

Total (HV) 383,070 14,878,264 6,395,942 382,217,770

25

Table 5: Usage data under scenario b (trend 2008 road use)

Number of

Vehicles

Distance

Travelled (KM)

000

Fuel

Consumption

(Litres) 000

GVM/Km 000 AGM ESA PCU

Motor cycles 412,364 1,768,904 119,561 0 0.00 0.000 1

Passenger cars 9,182,899 116,909,712 12,421,177 0 0.00 0.000 1

Passenger van and light buses 184,859 2,335,217 335,607 0 0.00 0.000 1

4WD's passenger 1,754,475 27,732,788 3,930,869 0 0.00 0.000 1

4WD's light commercial 737,491 13,666,685 1,671,655 27,195,146 1.99 0.044 1

Light commercials & Other light vehicles 1,410,320 25,516,663 3,497,068 42,634,890 1.67 0.042 1

Light rigid trucks 96,850 1,886,649 323,374 6,396,432 3.39 0.047 1

Rigid trucks: 2 axle: no trailer: GVM 4.5 – 7.0 t 47,278 768,375 161,727 3,255,459 4.24 0.117 2

Rigid trucks: 2 axle: no trailer: GVM 7.0 – 12.0 t 86,401 2,031,478 458,785 14,107,070 6.94 0.509 2

Rigid trucks: 2 axle: no trailer: GVM > 12.0 t 52,356 1,132,480 331,051 12,201,351 10.77 2.239 2

Rigid trucks: 2 axle: with trailer ≤ 42.5 t 16,187 413,112 124,238 4,841,216 11.72 0.515 2


Rigid trucks: 3 axle: no trailer GVM > 18.0 t 44,343 1,322,171 546,269 21,665,123 16.39 2.772 2

Rigid trucks: 3 axle: with trailer 18.0 ≤ 42.5 t 4,976 150,689 59,803 3,417,811 22.68 1.526 3

Rigid trucks: 4 axle: no trailer GVM 4.5 – 25.0 t 546 9,352 3,697 167,858 17.95 1.005 2

Rigid trucks: 4 axle: no trailer GVM > 25.0 t 6,419 232,635 106,468 4,573,483 19.66 3.838 2

Rigid trucks: 4 axle: with trailer 25.0 ≤ 42.5 t 47 3,362 1,822 108,575 32.29 1.695 3

Truck trailers > 42.5 t 10,114 725,335 364,943 23,111,528 31.86 5.152 3

Articulated trucks: single trailer: 3 axle rig 1,109 30,247 9,927 455,621 15.06 0.903 3

Articulated trucks: single trailer: 4 axle rig 3,523 149,285 64,124 3,103,937 20.79 1.471 3

Articulated trucks: single 3 axle trailer: 5 axle rig 991 52,962 23,657 1,517,449 28.65 1.383 3

Articulated trucks: single 2 axle trailer: 5 axle rig 6,018 285,850 138,764 7,501,949 26.24 1.621 3

Articulated trucks: single trailer: 6 axle rig 38,541 3,009,968 1,752,521 98,144,233 32.61 2.253 3

Articulated trucks: B-double: < 9 axle rig 1,824 263,344 146,706 11,334,037 43.04 2.955 4

Articulated trucks: B-double: 9 axle rig & above 11,778 2,103,247 1,235,046 108,704,254 51.68 3.210 4

Articulated trucks: B-triple 12 axle 410 49,690 35,777 3,363,998 67.70 3.727 4

Articulated trucks: road train: 2 trailers 4,286 473,526 316,411 28,688,262 60.58 3.402 4

Articulated trucks: road train: 3+ trailers 1,068 178,699 141,711 16,668,420 93.28 4.986 5

Articulated trucks: > 6 axle rig (not yet classified) 2,029 170,620 108,142 8,377,534 49.10 2.158 3

Other trucks (special vehicles non-load carrying) 13,244 145,521 52,090 3,565,264 24.50 1.546 2

Buses: 2 axle: GVM 3.5 to 4.5 tonne 4,623 103,548 14,573 331,354 3.20 0.047 2

Buses: 2 axle: GVM 4.5 to 10.0 t 14,586 365,426 72,881 1,973,298 5.40 0.077 2

Buses: 2 axle: GVM over 10.0 t 19,931 827,278 330,559 8,272,776 10.00 0.701 2

Buses: 3 axle 2,265 174,907 65,113 2,658,592 15.20 1.239 3

Buses: articulated 445 18,648 9,295 309,553 16.60 0.746 3

Total (All Vehicles) 14,176,682 205,055,117 28,991,800 469,128,583

Total (HV) 392,801 15,134,950 6,677,915 392,570,760

26

The following tables show the costs by vehicle class once they have been allocated across all vehicle classes using the cost allocation matrix parameters.

Table 6: Option 1a allocation costs by vehicle class $m

Vehicle Types Old

Attributable New

Attributable Non-

Attributable New Total

Allocated Cost

Motor cycles 20.0 20.2 46.0 66.2

Passenger cars 1,485.2 1,503.4 3,412.7 4,916.1

Passenger vans & Light buses 31.5 31.9 72.5 104.4

4WDs: passenger 332.7 336.8 764.5 1,101.3

4WDs: light commercial 201.2 203.0 337.7 540.7

Light commercials & Other light vehicles 388.0 391.6 673.8 1,065.4

Light rigid trucks 33.1 33.3 48.9 82.2

Rigid Trucks

2 axle: no trailer: GVM 4.5 to 7.0t 22.6 22.7 21.8 44.5


2 axle: no trailer: GVM over 12.0t 121.3 121.4 32.4 153.8

2 axle: with trailer 21.9 22.0 11.8 33.8

3 axle: no trailer GVM 4.5-18t 3.7 3.7 1.7 5.4

3 axle: no trailer GVM >18t 167.9 168.1 36.3 204.4

3 axle: with trailer >18t 15.7 15.7 4.3 20.0




Heavy Truck trailers over 42.5t 166.9 167.0 20.3 187.4

Articulated trucks

single trailer: 3 axle rig 2.3 2.3 1.0 3.3


single 3 axle trailer: 5 axle rig 6.4 6.4 1.9 8.4



B-double: <9 axle rig 50.6 50.6 9.1 59.7

B-double/triple: 9 axle rig &> 396.9 397.2 64.5 461.7

B-Triple 15.7 15.7 1.7 17.3

Road train: 2 trailers 139.6 117.6 17.0 134.6


Articulated trucks: > 6 axle rig (NEC) 28.3 28.4 5.8 34.2

Other trucks 14.3 14.3 3.3 17.6

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.5 2.5 3.2 5.7

2 axle: GVM 4.5 to 10.0 t 10.7 10.8 10.2 21.0

2 axle: GVM over 10.0 t 45.9 46.1 23.2 69.3

3 axle 15.1 15.1 5.7 20.9

articulated 1.4 1.4 0.6 2.0

All Vehicles 4,424.0 4,424.0 5,818.0 10,242.0

Heavy Vehicles Only 1,929.8 1,901.2 458.8 2,360.0

27


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 20.0 20.2 46.0 66.2

Passenger cars 1,485.2 1,503.4 3,412.7 4,916.1


4WDs: passenger 332.7 336.8 764.5 1,101.3




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 56.6 56.6 9.1 65.7


B-Triple 15.7 15.7 1.7 17.3




Other trucks 15.9 15.9 3.3 19.2

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.5 2.5 3.2 5.8

2 axle: GVM 4.5 to 10.0 t 10.9 11.0 10.2 21.2

2 axle: GVM over 10.0 t 49.7 49.8 23.2 73.0

3 axle 16.3 16.3 5.7 22.1


All Vehicles 4,421.6 4,421.6 5,818.0 10,239.6


28


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 20.0 20.2 46.0 66.2

Passenger cars 1,485.2 1,503.4 3,412.7 4,916.1


4WDs: passenger 332.7 336.8 764.5 1,101.3




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 56.6 56.6 9.1 65.7


B-Triple 15.7 15.7 1.7 17.3




Other trucks 15.9 15.9 3.3 19.2

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.5 2.5 3.2 5.8

2 axle: GVM 4.5 to 10.0 t 10.9 11.0 10.2 21.2

2 axle: GVM over 10.0 t 49.7 49.8 23.2 73.0

3 axle 16.3 16.3 5.7 22.1


All Vehicles 4,421.6 4,421.6 5,818.0 10,239.6


29


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 20.0 20.3 46.0 66.2

Passenger cars 1,485.2 1,504.8 3,412.7 4,917.5


4WDs: passenger 332.7 337.1 764.5 1,101.6




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 50.6 50.6 9.1 59.8


B-Triple 15.7 15.7 1.7 17.3




Other trucks 14.3 14.3 3.3 17.6

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.5 2.5 3.2 5.7

2 axle: GVM 4.5 to 10.0 t 10.7 10.8 10.2 21.0

2 axle: GVM over 10.0 t 45.9 46.1 23.2 69.3

3 axle 15.1 15.1 5.7 20.9


All Vehicles 4,424.0 4,426.4 5,818.0 10,244.4


30

Scenario B

Table 10: Option 1b allocation costs by vehicle class $m

Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 24.3 24.6 56.4 81.0

Passenger cars 1,608.2 1,625.7 3,729.7 5,355.4


4WDs: passenger 381.5 385.6 884.7 1,270.4




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 53.9 53.9 10.5 64.5


B-Triple 15.7 15.7 2.0 17.7




Other trucks 16.1 16.1 4.1 20.2

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.6 2.6 3.5 6.1

2 axle: GVM 4.5 to 10.0 t 12.3 12.4 12.4 24.8

2 axle: GVM over 10.0 t 51.6 51.8 28.1 79.9

3 axle 17.1 17.1 7.0 24.1


All Vehicles 4,926.0 4,926.0 6,614.1 11,540.1


31


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 24.3 24.6 56.4 81.0

Passenger cars 1,608.2 1,625.7 3,729.7 5,355.4


4WDs: passenger 381.5 385.6 884.7 1,270.4




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 60.2 60.3 10.5 70.8


B-Triple 15.7 15.7 2.0 17.7




Other trucks 17.9 17.9 4.1 22.0

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.6 2.7 3.5 6.2

2 axle: GVM 4.5 to 10.0 t 12.5 12.6 12.4 25.0

2 axle: GVM over 10.0 t 55.8 55.9 28.1 84.0

3 axle 18.4 18.5 7.0 25.4


All Vehicles 4,923.4 4,923.4 6,614.1 11,537.5


32


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 24.3 24.6 56.4 81.0

Passenger cars 1,608.2 1,625.7 3,729.7 5,355.4


4WDs: passenger 381.5 385.6 884.7 1,270.4




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 60.2 60.3 10.5 70.8


B-Triple 15.7 15.7 2.0 17.7




Other trucks 17.9 17.9 4.1 22.0

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.6 2.7 3.5 6.2

2 axle: GVM 4.5 to 10.0 t 12.5 12.6 12.4 25.0

2 axle: GVM over 10.0 t 55.8 55.9 28.1 84.0

3 axle 18.4 18.5 7.0 25.4


All Vehicles 4,923.4 4,923.4 6,614.1 11,537.5


33


Vehicle Types Old

Attributable New

Attributable Non-


Allocated Cost

Motor cycles 24.3 24.6 56.4 81.0

Passenger cars 1,608.2 1,627.0 3,729.7 5,356.7


4WDs: passenger 381.5 386.0 884.7 1,270.7




Rigid Trucks












Articulated trucks






B-double: <9 axle rig 53.9 54.0 10.5 64.5


B-Triple 15.7 15.7 2.0 17.7




Other trucks 16.1 16.1 4.1 20.2

Special Purpose

2 axle: GVM 3.5 to 4.5 t 2.6 2.6 3.5 6.1

2 axle: GVM 4.5 to 10.0 t 12.3 12.4 12.4 24.8

2 axle: GVM over 10.0 t 51.6 51.8 28.1 79.9

3 axle 17.1 17.1 7.0 24.1


All Vehicles 4,926.0 4,928.4 6,614.1 11,542.5


34

Appendix B: Charges under Scenario A

Trailer charge per axle Status quo Option 1a Option 2a Option 3a Option 4a

Standard trailer axle charge 418 441 584 441 441

Semi trailer tr-axle 473 473 584 473 441

B-double lead trailer – tandem axle 2,065 1,581 584 1,723 1,269

B-double lead trailer – tri axle 2,175 1,876 584 1,814 1,189

Road train dolly trailer 418 441 584 441 441

Road User Charge (RUC)* 24.3 22.0c 23.5c 24.6c 24.0c

Vehicle categories Total

Charges Diff Diff Diff Diff

Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total

Rigid trucks: 2 axle: no trailer:

GVM 4.5 to 7.0 tonne 418 23+ - - 441 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0-


GVM 7.0 to 12.0 tonne 418 23+ - - 441 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0-


GVM over 12.0 tonne 718 39+ - - 757 989 53+ - - 1,043 285 718 39+ - - 757 0- 651 35+ - - 687 71- 893 48+ - - 942 184

Rigid trucks: 2 axle: with trailer

< 42.5 tonne 718 39+ 627 34+ 1,418 989 53+ 627 34+ 1,703 285 718 39+ 831 45+ 1,633 214 651 35+ 627 34+ 1,347 71- 893 48+ 627 34+ 1,603 185

Rigid trucks: 3 axle: no trailer

GVM 4.5-18 tonne 718 39+ - - 757 989 53+ - - 1,043 285 718 39+ - - 757 0- 651 35+ - - 687 71- 893 48+ - - 942 184


GVM >18 tonne 945 51+ - - 996 1,310 71+ - - 1,381 385 945 51+ - - 997 0 857 46+ - - 904 93- 1,184 64+ - - 1,248 252


>18 < 42.5 tonne 945 51+ 1,254 68+ 2,318 1,310 71+ 1,253 68+ 2,702 384 945 51+ 1,661 90+ 2,748 429 857 46+ 1,253 68+ 2,225 94- 1,184 64+ 1,254 68+ 2,569 251


GVM 4.5-25 tonne 718 39+ - - 757 718 39+ - - 757 0- 718 39+ - - 757 0- 651 35+ - - 687 71- 649 35+ - - 684 73-


GVM >25 tonne 945 51+ - - 996 2,696 146+ - - 2,842 1,846 945 51+ - - 997 0 857 46+ - - 904 93- 2,324 125+ - - 2,450 1,453


>25 < 42.5 tonne 1,754 95+ 1,254 68+ 3,171 1,754 95+ 1,253 68+ 3,170 2- 1,754 95+ 1,661 90+ 3,600 428 1,591 86+ 1,253 68+ 2,998 173- 1,585 86+ 1,254 68+ 2,992 180-

Prime Movers

Charges

Trailer

Charges TrailerTotal TotalTotalTotalTrailer Prime Movers Trailer

Status Quo Charges under Option 1 Charges under Option 2 Charges under Option 3 Charges under Option 4

New ESA ATA approach with NTC data Changes to Rego & Fuel Mix Combination Option

Prime Movers Trailer Prime Movers Prime Movers

35

*Given the constraints of the model, the RUC will marginally fluctuate between options as it acts as a balancing variable to ensure there is no under, or over recovery of costs.

Vehicle categories Prime Movers Trailer Total

Charges Charges Charges Diff Diff Diff Diff

Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total Base +5.4% Base +5.4% Total

Truck trailers>42.5 tonne 6,417 347+ 1,463 79+ 8,306 6,417 347+ 1,462 79+ 8,306 0- 6,417 347+ 1,938 105+ 8,807 500 5,821 314+ 1,462 79+ 7,676 631- 6,182 334+ 1,463 79+ 8,058 248-

Articulated trucks: single

trailer: 3 axle rig 1,101 59+ 418 23+ 1,601 1,101 59+ 418 23+ 1,601 0 1,101 59+ 554 30+ 1,744 143 998 54+ 418 23+ 1,493 109- 995 54+ 418 23+ 1,490 112-


trailer: 4 axle rig 1,101 59+ 836 45+ 2,041 1,101 59+ 836 45+ 2,041 0- 1,101 59+ 1,107 60+ 2,328 286 998 54+ 836 45+ 1,934 108- 995 54+ 835 45+ 1,929 112-

Articulated trucks: single 3 axle

trailer: 5 axle rig 1,101 59+ 1,419 77+ 2,656 1,101 59+ 1,386 75+ 2,622 35- 1,101 59+ 1,661 90+ 2,912 255 998 54+ 1,347 73+ 2,472 184- 995 54+ 1,346 73+ 2,468 189-


trailer: 5 axle rig 4,327 234+ 836 45+ 5,442 4,327 234+ 836 45+ 5,442 0- 4,327 234+ 1,107 60+ 5,729 286 3,925 212+ 836 45+ 5,018 424- 3,910 211+ 835 45+ 5,002 441-


trailer: 6 axle rig 4,327 234+ 1,419 77+ 6,057 4,327 234+ 1,386 75+ 6,022 35- 4,327 234+ 1,661 90+ 6,313 255 3,925 212+ 1,347 73+ 5,557 500- 3,910 211+ 1,346 73+ 5,540 517-

Articulated trucks: B-double:

<9 axle rig 7,764 419+ 5,549 300+ 14,032 7,764 419+ 4,386 237+ 12,806 1,226- 7,764 419+ 2,769 150+ 11,102 2,930- 7,042 380+ 4,615 249+ 12,287 1,746- 7,015 379+ 4,347 235+ 11,975 2,057-

Articulated trucks: B-double 9

axle 7,764 419+ 7,944 429+ 16,556 7,764 419+ 6,726 363+ 15,273 1,284- 7,764 419+ 3,322 179+ 11,686 4,871- 7,042 380+ 6,686 361+ 14,470 2,087- 7,015 379+ 5,093 275+ 12,762 3,794-

Articulated trucks: B-triple 12

axle 7,764 419+ 14,469 781+ 23,434 7,764 419+ 12,133 655+ 20,972 2,463- 7,764 419+ 7,199 389+ 15,771 7,663- 7,042 380+ 12,026 649+ 20,098 3,336- 7,015 379+ 8,840 477+ 16,712 6,723-

Articulated trucks: Road train:

2 trailers 7,764 419+ 3,674 198+ 12,055 7,764 419+ 3,608 195+ 11,986 69- 7,764 419+ 4,430 239+ 12,853 797 7,042 380+ 3,528 191+ 11,142 914- 7,015 379+ 3,529 191+ 11,113 943-

Articulated trucks: Road train:

3 trailers 7,764 419+ 5,929 320+ 14,432 7,764 419+ 5,830 315+ 14,328 104- 7,764 419+ 7,199 389+ 15,771 1,339 7,042 380+ 5,711 308+ 13,442 990- 7,015 379+ 5,710 308+ 13,413 1,020-

Articulated trucks: > 6 axle rig

(not elsewhere classified) 4,759 257+ 1,419 77+ 6,512 4,759 257+ 1,386 75+ 6,477 35- 4,759 257+ 1,661 90+ 6,767 255 4,316 233+ 1,347 73+ 5,969 543- 4,299 232+ 1,346 73+ 5,951 562-

Other trucks (special vehicles

non load carrying) 1,007 54+ - - 1,061 1,061 57+ - - 1,119 57 1,061 57+ - - 1,119 57 962 52+ - - 1,015 47- 958 52+ - - 1,011 51-

Buses: 2 axle: GVM 4.5 to 10.0

tonne 418 23+ - - 441 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0-

Buses: 2 axle: GVM over 10.0

tonne 418 23+ - - 441 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0-

Buses: 3 axle 2,298 124+ - - 2,422 2,298 124+ - - 2,422 0 2,298 124+ - - 2,422 0 2,084 113+ - - 2,197 225- 2,076 112+ - - 2,189 234-

Buses: articulated 418 23+ - - 441 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0- 418 23+ - - 441 0-


Prime Movers Trailer Total Prime Movers Trailer Total Prime Movers Trailer Total Prime Movers Trailer Total


36

Appendix C: Charges under Scenario B

Trailer charge per axle Status quo Option 1b Option 2b Option 3b Option 4b

Standard trailer axle charge 418 527 536 455 527

Semi trailer tr-axle 473 473 536 500 580

B-double lead trailer – tandem axle 2,065 1,581 536 1,440 955

B-double lead trailer – tri axle 2,175 1,876 536 1,517 1,069

Road train dolly trailer 418 527 536 455 527

Road User Charge (RUC)* 24.3 23.3c 26.1c 27.6c 25.2c

Vehicle categories

Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff

Base +5.4% Base +5.4% Total


GVM 4.5 to 7.0 tonne 418 23+ - - 441 441 - 441 - 441 - 441 - 441 - 441 - 441 - 441 -


GVM 7.0 to 12.0 tonne 418 23+ - - 441 441 - 441 - 441 - 441 - 441 - 441 - 441 - 441 -


GVM over 12.0 tonne 718 39+ - - 757 1,068 - 1,068 311 718 - 718 39- 653 - 653 104- 947 - 947 190


< 42.5 tonne 718 39+ 627 34+ 1,418 1,068 791 1,858 440 718 804 1,522 104 653 682 1,334 84- 947 791 1,738 320


GVM 4.5-18 tonne 718 39+ - - 757 1,068 - 1,068 311 718 - 718 39- 653 - 653 104- 947 - 947 190


GVM >18 tonne 945 51+ - - 996 1,440 - 1,440 444 945 - 945 51- 859 - 859 137- 1,225 - 1,225 229


>18 < 42.5 tonne 945 51+ 1,254 68+ 2,318 1,440 1,581 3,021 703 945 1,608 2,553 235 859 1,364 2,223 95- 1,225 1,582 2,807 489


GVM 4.5-25 tonne 718 39+ - - 757 757 - 757 - 718 - 718 39- 653 - 653 104- 681 - 681 76-


GVM >25 tonne 945 51+ - - 996 2,903 - 2,903 1,907 945 - 945 51- 859 - 859 137- 2,589 - 2,589 1,593


>25 < 42.5 tonne 1,754 95+ 1,254 68+ 3,171 1,849 1,581 3,430 259 1,754 1,608 3,362 191 1,595 1,364 2,958 213- 1,664 1,582 3,246 75

Charges under Option 4

ATA approach with NTC data Changes to Rego & Fuel MixTotal

Charges Charges

Charges under Option 1 Charges under Option 2 Charges under Option 3

Charges

Combination OptionNew ESA

Status Quo

Prime Movers Trailer

37

*Given the constraints of the model, the RUC will marginally fluctuate between options as it acts as a balancing variable to ensure there is no under, or over recovery of costs.

Vehicle categories

Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff Prime Movers Trailer Total Diff

Base +5.4% Base +5.4% Total

Truck trailers>42.5 tonne 6,417 347+ 1,463 79+ 8,306 7,152 1,845 8,996 690 6,417 1,876 8,293 13- 5,834 1,591 7,425 881- 6,745 1,846 8,591 285


trailer: 3 axle rig 1,101 59+ 418 23+ 1,601 1,160 527 1,687 86 1,101 536 1,637 36 1,001 455 1,455 146- 1,044 527 1,572 29-


trailer: 4 axle rig 1,101 59+ 836 45+ 2,041 1,160 1,054 2,214 173 1,101 1,072 2,173 132 1,001 909 1,910 131- 1,044 1,055 2,099 58


trailer: 5 axle rig 1,101 59+ 1,419 77+ 2,656 1,160 1,740 2,900 244 1,101 1,608 2,709 53 1,001 1,501 2,502 154- 1,044 1,742 2,786 130


trailer: 5 axle rig 4,327 234+ 836 45+ 5,442 4,561 1,054 5,615 173 4,327 1,072 5,399 43- 3,934 909 4,843 599- 4,105 1,055 5,160 282-


trailer: 6 axle rig 4,327 234+ 1,419 77+ 6,057 4,561 1,740 6,301 244 4,327 1,608 5,935 122- 3,934 1,501 5,435 622- 4,105 1,741 5,846 211-

Articulated trucks: B-double: <9

axle rig 7,764 419+ 5,549 300+ 14,032 8,183 3,848 12,031 2,001- 7,764 2,680 10,444 3,588- 7,058 4,382 11,440 2,592- 7,365 3,653 11,018 3,014-

Articulated trucks: B-double 9

axle 7,764 419+ 7,944 429+ 16,556 8,183 5,220 13,404 3,152- 7,764 3,216 10,980 5,576- 7,058 6,052 13,110 3,446- 7,365 4,951 12,316 4,240-

Articulated trucks: B-triple 12

axle 7,764 419+ 14,469 781+ 23,434 8,183 8,700 16,883 6,551- 7,764 6,968 14,732 8,702- 7,058 10,603 17,661 5,773- 7,365 8,161 15,526 7,908-

Articulated trucks: Road train: 2

trailers 7,764 419+ 3,674 198+ 12,055 8,183 4,534 12,718 663 7,764 4,288 12,052 3- 7,058 3,911 10,969 1,086- 7,365 4,537 11,902 153-

Articulated trucks: Road train: 3

trailers 7,764 419+ 5,929 320+ 14,432 8,183 7,328 15,512 1,080 7,764 6,968 14,732 300 7,058 6,321 13,379 1,053- 7,365 7,334 14,699 267

Articulated trucks: > 6 axle rig

(not elsewhere classified) 4,759 257+ 1,419 77+ 6,512 5,015 1,740 6,756 244 4,759 1,608 6,367 145- 4,326 1,501 5,827 685- 4,514 1,742 6,256 256-

Other trucks (special vehicles

non load carrying) 1,007 54+ - - 1,061 1,092 - 1,092 31 1,036 - 1,036 25- 942 - 942 119- 983 - 983 78-

Buses: 2 axle: GVM 4.5 to 10.0

tonne 418 23+ - - 441 441 - 441 - 441 - 441 - 441 - 441 - 441 - 441 -

Buses: 2 axle: GVM over 10.0

tonne 418 23+ - - 441 441 - 441 - 441 - 441 - 441 - 441 - 441 - 441 -

Buses: 3 axle 2,298 124+ - - 2,422 2,422 - 2,422 - 2,298 - 2,298 124- 2,089 - 2,089 333- 2,180 - 2,180 242-

Buses: articulated 418 23+ - - 441 441 - 441 - 441 - 441 - 441 - 441 - 441 - 441 -

Prime Movers

Charges

Trailer

Charges

Total

Charges



39

Appendix D: ESA methodology

The new research conducted by ARRB seeks to address the data limitations discussed in section

3.2.1 as a means to increasing the accuracy and confidence in the ESA estimates.

This work has been done in conjunction with Austroads and has been reviewed through the assets

taskforce.

The following is a high-level overview of the steps taken to prepare and process the data, and

generate the ESA values for each vehicle class.

1) Processing of the raw data:

a. The raw data is „cleaned‟ and split into 63 separate vehicle categories, using

complex categorisation rules based on axle groupings and separation

b. For each category, grossly overloaded vehicles are removed based on maximum

allowable masses for GVM and individual axle groups (values are dependent on

vehicle category)

c. Categories are condensed into the 22 NTC price allocation vehicle classes, for the

rural and urban components of each jurisdiction (approx. 315 data sets)

2) Processed data is used to derive ESA values:

a. An adjusted national data set is recreated based upon the distribution of the

jurisdictional (and where possible, the urban-rural split) Vehicle Kilometres

Travelled (VKT) data. Separate checks and processes are adhered to where a

particular jurisdiction and/or urban-rural split has insufficient sample size.

b. Further processing is undertaken to remove statistical outliers based upon the

impact they have on the overall data set („robust regression‟)

c. Curves (equations) are fitted to the data set. Checks are conducted to ensure the

fitted equations are closely representative of the data.

d. Several ESA values are generated from the fitted equations using different

methods

3) Removal of overload data.

The original ARRB / Ausroads report included WIM observations for up to 100% overload

of a vehicle‟s GVM limit. However, for charges purposes the NTC, on the advice from

ARRB has only included overload data for up to 10% of a vehicles GVM limit. This 10%

represents an error margin, and is consistent with the 2007 determination. Any deviation in

the 10% overload factor represents a significant change to the charging methodology and

would require the completion of a RIS.

Despite the complex and detailed rules for processing data, there are inherent limitations to using

the WIM dataset, and these limitations can in some instances lead to the miscategorisation of WIM

observations. This issue also existed in the 2007 determination.

40

Appendix E: Method to calculate usage data

SMVU data is used as the source data to calculate the heavy vehicle charges for Determinations and Annual Adjustment purposes. The SMVU data set is acknowledged to be the only data set that provides sufficient level of disaggregation that meets the requirements to calculate the prescribed heavy vehicle charges method.

However, the data set has relatively high RSE‟s (Relative Standard Errors) at the level of disaggregation required by the NTC due to the survey based nature of the information as opposed to an empirical / observation based data gathering method.

To address the issue of statistical variability and volatility, a seven year trend approach is taken to reduce inherent bias should a particular year of data be used. The method uses seven years of historical data to return a line of best fit using a least squares linear regression.

This method has been the approved approach since 2007 for both the Determination and the Annual Adjustment of charges.

However, the NTC has had to adjust this method due to the unavailability of SMVU data in 2008 and 2009. Whilst continuous annual SMVU data was available from 1998 to 2007, due to budget cuts, ABS ceased collecting data for 2008 and 2009. In 2010, the SMVU data collection was resumed and ABS has confirmed that going forward the SMVU data will be collected on a bi-annual basis.

To address the issue of missing 2008 and 2009 data, the trending method has been modified, and a “double trending” approach adopted.

The 2010 SMVU data has been used in conjunction with the data set from 2001 to 2007 to infer the 2008 and 2009 data using a least squares linear regression. In order to do improve the accuracy of this method, the regression analysis has been done for each of the vehicle categories and not just at the overall total values.

After the 2008 and 2009 values are established, the normal trending method as described above is then applied to calculate the 7-years trend value used for the calculation of heavy vehicle charges.

For the purposes of setting charges for 2011/12, the 2008 trend road usage data is used (7 year mid-point).

The “double trending” approach has been independently reviewed by an external consultant, who considered the approach to be an acceptable fix for the missing data.

41

Appendix F: Annual Adjustment calculations

As per the April 2007 COAG communiqué, one of the responsibilities of the NTC is to apply an annual adjustment to ensure the ongoing recovery of Heavy Vehicle road expenditure in aggregate. The annual adjustment formula, as agreed to by the ATC in April 2010, is documented in the Model Heavy Vehicle Charges Act 2007 (as amended).

The derivation of the annual adjustment factor can essentially be broken down into three distinct steps:

Step 1 Determine the „raw‟ annual adjustment factor

Step 2 Derive the new estimated heavy vehicle cost base

Step 3 Derive the annual adjustment factor – the rate at which charges must increase so that the charge revenue equals the estimated cost base.

The section below outlines the processes involved and calculations undertaken in each of these steps.

Step 1: Derive the „raw‟ annual adjustment factor

The raw annual adjustment factor (RAAF) represents the annual change in the cost base that is

attributed to heavy vehicles. The RAAF formula as outlined in the Act is as follows: Raw annual adjustment factor (%) = road expenditure factor + road use factor

Where the road expenditure factor (REF) =

0.454 x percentage change in rural arterial road expenditure +

0.362 x percentage change in urban arterial road expenditure +

0.119 x percentage change in rural local road expenditure +

0.064 x percentage change in urban local road expenditure

The road use factor (RUF) = –1% When the new road expenditure data is applied to the above formula it generates a REF of 11.4%. When combined with the RUF of –1% the result is a raw annual adjustment factor of 10.4% (refer to the later section on the Road Use Factor for explanation of this).

The figure of 10.4% represents the estimated percentage increase in the heavy vehicle cost base from the previous year.

Road expenditure factors

The road expenditure factor reflects the change in expenditure across the four different road types: rural arterial, urban arterial, rural local and urban local. Arterial expenditure relates to state/territory expenditure, while local expenditure refers to local government expenditure. Federal government financial contributions (such as the Building Australia Fund road projects) are included in both these categories. Furthermore, the calculations are weighted („A‟ factor weights) to reflect the influence of each expenditure type on road costs that should be recovered from heavy vehicles.

1

The „percentage change in road expenditure‟ refers to the change in the seven-year moving average road expenditure – in real dollars. Therefore, the annual adjustment compares a seven-year average of road expenditure for years 1 to 7 against years 2 to 8, with year 8 being the last year of actual expenditure data.

1 The weights are based on data used in the 2007 Heavy Vehicle Charges Determination.

42

Road expenditure

The annual adjustment formula requires that road expenditure figures are expressed in real dollars (which is consistent with the method undertaken in a charging determination). The Bureau of Infrastructure, Transport and Regional Economics (BITRE) Road Construction and Maintenance Price Index (RCMPI) is used to convert road expenditure from nominal dollars to real dollars. Table 1 contains the most recent set of RCMPI values that have been used for the 2012 annual adjustment, the data including revisions to prior years.

2

Road Construction and Maintenance Price Index (RCMPI)

Year Index (%)

2001–02 108.9

2002–03 113.7

2003–04 120.5

2004–05 126.2

2005–06 131.5

2006–07 136.3

2007–08 145.8

2008–09 148.0

2009–10 152.7

2010-11 163.7

Arterial road expenditure

For 2010/11 expenditure, NTC proposes to deduct any reconstruction expenditure that is funded through other revenue sources (eg insurance or the flood levy). The estimated expenditure for that year is shown in Table 14. These numbers are currently being verified by each state and territory and are subject to change.

2 In 2010 the BITRE revised the RCMPI methodology; this included rebasing the index year with 1998–99 =

100.

43

Table 14: 2010/11 Arterial road expenditure excluding disaster relief funded expenditure and insurance

Note: The total reported flood grants and insurance proceeds are currently being verified with the states and may be subject to change.

The change in road expenditure for arterial road expenditure uses the following formula for the 2012 annual adjustment calculation:

Historical arterial road expenditure has been sourced from the 2011 NTC annual report.

Total Australia

Less Flood

Grant &

Insurance

Net

Australian

Road

Expenditure

Expenditure Category $m $m $m

A Servicing and Operating 956.21 2.31 953.90

B

Road Pavement and Shoulder

Construction

B1 Routine maintenance 926.90 462.10 464.80

B2 Periodic surface maintenance 447.92 1.64 446.28

C Bridge Maintenance/Rehab 264.34 4.41 259.93

D Road Rehabilitation 1,049.67 344.40 705.27

E Low-cost Safety/Traffic 877.40 0.23 877.17

F Asset Extension/Improvements

F1 Pavement improvements 1,494.68 4.00 1,490.68

F2 Bridge improvements 920.68 1.00 919.68

F3

Land acquisition, earthworks,

other extensions / improvement

expenditure 3,589.76 14.21 3,575.55

G Other Miscellaneous Activities

G1 Corporate services 568.42 568.42

G2 Enforcement of HV regs 98.47 98.47

G3 Vehicle registration 387.41 387.41

G4 Driver licensing 228.90 228.90

G5 Loan servicing 155.78 155.78

Totals 11,966.55 834.31 11,132.24

H Other Road-Related Payments - -

H1

Financial assistance to Councils

for work on council managed

arterials 261.76 - 261.76

H2

Payments to councils for contract

work on State managed roads 443.07 - 443.07

H3

Spending on local access roads in

unincorporated areas 13.79 1.10 12.69

H4

Direct spending on council

managed local access roads 265.66 122.94 142.72

H5

Any other direct state spending on

local access roads 83.97 18.96 65.01

Combined adjusted expenditure for years 2–8


44

For urban arterial road expenditure, combined adjusted expenditure for years 2 to 8 is equal to $37,388.5 million; for years 1 to 7 it is $31,880.1 million. This is as per Table 15 using the RCMPI to express it in real terms.

Table 15 Urban arterial – combined adjusted expenditure

Urban arterial

$m 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010-11

Combined adjusted

expenditure

Year 1 2 3 4 5 6 7 8

Nominal (as per NTC annual report)

2,130.0 2,177.0 3,164.0 4,441.0 5,157.0 6,338.0 5,957.0 6,105.0

Real 2009–10 dollars

2,699.2 2,634.1 3,674.1 4,975.4 5,401.1 6,539.3 5,957.0 31,880.1 A


2,823.9 3,938.8 5,333.8 5,790.1 7,010.3 6,386.1 6,105.0 37,388.5 B

For rural arterial road expenditure, combined adjusted expenditure in real terms for years 2 to 8 is equal to $30,804.4 million; for years 1 to 7 it is $28,048.5 million, as per Table 16.

Table 16 Rural arterial – combined adjusted expenditure

Rural arterial

$m 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009–10 2010-11

Combined adjusted

expenditure

Year 1 2 3 4 5 6 7 8

Nominal (as per NTC annual report)

2,591.0 3,018.0 2,941.0 3,173.0 4,049.0 4,752.0 5,000.0 4,255.0


3,283.4 3,651.7 3,415.1 3,554.8 4,240.6 4,902.9 5,000.0 28,048.5 C


3,914.8 3,661.2 3,810.9 4,546.1 5,256.1 5,360.2 4,255.0 30,804.4 D

This enables the percentage change for both rural and urban arterial road expenditure to be calculated as per Table 17.

Table 17 Arterial expenditure – percentage changes

Urban arterial

Cumulative totals Total $m

A 2003–04 to 2009–10 (years 1–7) $31,880.1 = ((B/A) – 1) * 100 = 17.2785%

B 2004–05 to 2010–11 (years 2–8) $37,388.5

Rural arterial


C 2003–04 to 2009–10 (years 1–7) $28,048.5 = ((D/C) – 1) * 100 =9.8253%

D 2004–05 to 2010–11 (years 2–8) $30.,804.4

45

Local road expenditure The change in road expenditure for local road expenditure uses the same formula:

Local road expenditure has been sourced from the Australian Bureau of Statistics (ABS).3 For

urban local road expenditure, combined adjusted expenditure in real terms for years 2 to 8 is equal to $24,620.7 million and for years 1 to 7 is $23,683.5 million, as per Table 18.

Table 18 Urban local – combined adjusted expenditure

Urban local $m

2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009-10 Combined adjusted

expenditure

Year 1 2 3 4 5 6 7 8

Nominal (as revised by ABS)

2,600.0 2,595.0 2,681.0 2,740.0 3,015.0 3,523.0 4,034.0 3,677.0


3,384.3 3,187.2 3,144.1 3,083.8 3,273.8 3,576.2 4,034.0 23,683.5 G


3,288.4 3,244.0 3,181.7 3,377.8 3,689.7 4,162.1 3,677.0 24,620.7 H

For rural local road expenditure, combined adjusted expenditure for years 2 to 8 is equal to $14,969.7 million and for years 1 to 7 is $14452.2 million, as per Table 19.

Table 19 Rural local – combined adjusted expenditure

Rural local $m

2002–03 2003–04 2004–05 2005–06 2006–07 2007–08 2008–09 2009-10 Combined adjusted

expenditure

Year 1 2 3 4 5 6 7 8

Nominal (as revised by ABS)

1,695.0 1,742.0 1,688.0 1,687.0 1,890.0 2,078.0 2,267.0 2,266.0

Real 2008-09 dollars

2,206.3 2,139.6 1,979.6 1,831.8 1,918.5 2,109.4 2,267.0 14,452.2 E

Real 2009-10 dollars

2,207.5 2,042.5 1,959.0 1,979.4 2,176.3 2,339.0 2,266.0 14,969.7 F

This enables the percentage change for both rural and urban arterial road expenditure to be calculated as per Table 20.

3 As with the prior year‟s data, the 2009–10 local road expenditure data provided by the ABS includes updates

and revisions to prior years. The NTC uses the most recent figures, which includes revised numbers, for our analysis.



46

Table 20 Local expenditure – percentage changes

Urban local


G 2002–03 to 2008–09 (years 1–7) 23,683.5 = ((H/G) – 1) * 100 = 3.9576%

H 2003–04 to 2009–10 (years 2–8) 24,620.7

Rural local


E 2002–03 to 2008–09 (years 1–7) 14,452.2 = ((F/E) – 1) * 100 = 3.5811%

F 2003–04 to 2009–10 (years 2–8) 14,969.7

Applying the road expenditure figures derived in Tables 17 and 20 to the REF formula results in a RUF of 11.4%.

RUF = (0.362 x 17.2785) % change in urban arterial expenditure

+ (0.454 x 9.8253) % change in rural arterial expenditure

+ (0.064 x 3.9576) % change in urban local expenditure

+ (0.119 x 3.5811) % change in rural local expenditure

= 11.4%

Road use factor

The RUF reflects the change in expected road use by heavy vehicles. There are three parts to calculating the RUF:

expected changes in light vehicle travel

expected changes in heavy vehicle travel

expected changes in the number of heavy vehicles.

It is important to capture changes in light vehicle travel when estimating costs for heavy vehicles. If light vehicle travel increases more than heavy vehicle travel, light vehicles will absorb a greater share of the allocated cost and the road costs to be recovered from heavy vehicles will fall.

If the number of heavy vehicles increases, the cost to be recovered from heavy vehicles per vehicle will decrease, assuming the overall level of cost allocated to heavy vehicles remains unchanged.

A RUF of –1.0% was estimated based on a review undertaken as part of the 2007 Heavy Vehicle Charges Determination. This factor acts to modify the overall road expenditure impact in the annual adjustment formula to take account of changing road use by heavy vehicles.

Having derived the various expenditure components of the REF (11.4%) and the RUF (–1%) we are able to add the two components together in order to derive the RAAF. The RAAF associated with the 2012 annual adjustment is 10.4%.

Step 2: Derive the revised adjusted base cost

Step 2 involves using the RAAF to derive the revised adjusted base cost (RABC). The RABC is the estimated heavy vehicle cost base that is be recovered via registration and road user charges in order for heavy vehicle users to pay their share of road costs. The RABC for 2012 is derived by multiplying the RABC from 2011 by the newly derived RAAF.

For the 2012 annual adjustment, the RABC or estimated heavy vehicle cost base is $2,640.65 million. This equals $2,391.89 million, which is the 2011 heavy vehicle cost base multiplied by 1.104 (the 2012 RAAF).

47

Step 3: Derive the annual adjustment factor

The third step involves deriving the annual adjustment (AA) factor. The annual adjustment factor is equal to the percentage change required in both existing registration and road user (fuel charge) revenue required to equate total charge revenue with the updated estimate of the RABC.

AA = (RABC – RR – FR) / (RR + FR) x 100

Where, RR refers to current registration revenue and FR refers to current fuel revenue.

This equation says that the AA factor (expressed as a percentage) is equal to the difference between the updated RABC for the current annual adjustment year and the total amount of existing registration and road user charge (fuel charge) revenue at last year‟s charge rates divided by the total amount of existing registration and road user charge (fuel charge) revenue at last year‟s charge rates (refer to Appendix A for registration and fuel revenue estimates).

For the 2012 annual adjustment year, the value of the AA factor is as follows:

AA = (RABC – RR – FR) / (RR + FR) x 100

Where:

RABC = allocated cost in the current year of $2,640.65 million as derived above

FR = existing RUC revenue based on last year‟s fuel rate = $1,546.62 million. This is based on heavy vehicle fuel use as published in the NTC 2011 Annual Report (Appendix E) of 6,695,337,207 litres multiplied by 2011 RUC of 23.1 cents per litre.

RR = existing registration revenue based on last year‟s registration charges = $957.80 million. This is based on combined heavy vehicle registration revenue of $617.52 million plus heavy trailer registration revenue including spare trailers of $340.28 million as published in the NTC 2011 Annual Report (Appendix E).

AA = ($2,640.65 m – $957.80 m – $1,546.62 m) / ($957.80 m + $1,546.62 m) x 100

= ($136.23 m / $2,504.42) x 100

= 5.44%

This value is then rounded up or down to one decimal place as similarly applies to the raw AA factor. Therefore, for the 2012 annual adjustment year, the AA factor that applies equally to both registration charges and the RUC is 5.4%.

48

Appendix G: Revenue impacts

Scenario A

Scenario B

Note: Revenues are indicative, and have been derived using SMVU road use data, and not actual registration data.

Status Quo Option 1a Option 2a Option 3a Option 4a

New South Wales 212,753,420 209,207,180 194,329,876 181,286,880 190,307,931

Victoria 251,341,404 244,866,028 224,756,730 216,815,422 220,328,079

Queensland 210,142,677 204,639,028 187,871,465 180,091,557 184,354,380

South Australia 75,417,044 73,662,105 68,314,214 65,037,583 66,345,689

Tasmania 18,743,832 18,488,284 17,378,009 16,011,821 16,852,415

Northern Territory 10,501,290 10,437,655 10,537,107 9,257,488 9,621,014

Australian Capital Territory 4,095,619 4,023,673 3,693,621 3,474,080 3,649,470

Western Australia 120,469,941 119,333,685 115,379,094 103,315,082 109,493,315

Commonwealth 1,584,203,195 1,603,010,784 1,665,408,307 1,712,378,510 1,686,716,129

Total cost recovered 2,487,668,422 2,487,668,422 2,487,668,422 2,487,668,422 2,487,668,422

Status Quo Option 1a Option 2a Option 3a Option 4a

New South Wales 212,753,420 212,706,928 183,062,501 173,360,737 194,964,049

Victoria 251,341,404 244,376,687 211,528,937 206,069,802 224,496,037

Queensland 210,142,677 204,732,987 176,781,413 171,350,151 187,842,324

South Australia 75,417,044 74,020,063 64,251,767 62,048,674 67,978,564

Tasmania 18,743,832 18,864,832 16,367,962 15,345,101 17,252,399

Northern Territory 10,501,290 10,955,900 9,894,741 9,035,049 10,143,282

Australian Capital Territory 4,095,619 4,067,594 3,481,192 3,309,959 3,723,782

Western Australia 120,469,941 123,879,294 108,485,899 100,033,636 114,158,190

Commonwealth 1,584,203,195 1,767,237,130 1,886,987,003 1,920,288,305 1,840,282,788

Total cost recovered 2,487,668,422 2,660,841,415 2,660,841,415 2,660,841,415 2,660,841,415