Tax a trucking disgrace

That’s the grim warning about the trucking industry’s future delivered by Australian Trucking Association (ATA) chairman David Simon in an address at the National Press Club in Canberra last week.

Mr Simon said more than 70 per cent of the nation’s freight is transported by road, often moving fresh farm produce from paddock to market - and road freight is projected to double by 2030 as the national economy and population grows.

But the number of truck drivers to handle that task could plummet significantly if the carbon tax continues to add to the growing strain of input cost burdens.

Mr Simon said the federal government should make an election commitment to not extend the carbon tax onto trucking.

“We’re an apolitical organisation, but I’ll back any government that makes a commitment not to extend the carbon tax to trucking,” he said.

Mr Simon said under the Clean Energy Package, the government said any fuel used by the trucking industry would not be subject to the carbon tax until mid-2014. He said the government’s plan was to reduce the fuel tax credits that trucking operators can claim by almost 7 cents per litre in the first year.

However, Mr Simon said that represented a 27pc tax hike that would cost the trucking industry more than half a billion dollars a year.

“It would be a massive shock for many trucking businesses and they would not be able to respond,” he said.

Mr Simon said the Clean Energy Package was based on the assumption that businesses would respond to the carbon tax by reducing their energy use or switch to renewable energy sources, and that businesses that cannot would be able to increase their prices, subsequently changing their customers’ behaviour.

But neither of these assumptions fit the commercial reality of the trucking industry, he said.

“Trucking businesses only have limited opportunities to reduce their energy use. Switching to renewables is not generally an option,” he said.

“The government projects that the use of biodiesel will increase rapidly from the end of the decade and that it will be the dominant transport fuel by 2030 - but the carbon tax on trucking would take effect in 2014, not the end of the decade.

“Biodiesel blends are rarely available and gaseous fuels like LNG are not usable for long distance operations, so businesses are left with trying to pass on the carbon tax.”

Mr Simon said 72 per cent of trucking businesses have only one truck and like farmers they’re “price takers, not price makers”.

“Their customers would tell them to absorb the cost,” he said.

“The pace of businesses leaving the industry would increase. This would be a tragedy for the people involved. It would also reduce the industry’s overall flexibility and productivity.

“All large trucking businesses have peaks in demand. Different businesses have different peaks.

“By using owner drivers and subcontractors to cover our individual peaks in demand, the trucking industry doesn’t need to invest capital in equipment that stands idle for most of the year.”

Mr Simon said the government should make an election commitment not to extend the carbon tax to trucking, and should also focus on developing a road funding and planning system that would enable the industry to use more productive vehicles that use less fuel to do the same job.

He rejected the environmental movement’s argument that fuel tax credits are a subsidy, saying in reality the credits were part of making sure that business inputs aren’t taxed and no different to being able to claim back the GST.

Mr Simon said a significant number of ATA members were involved in transporting on-farm produce to markets, including livestock and fresh food deliveries to supermarkets.

He said if the carbon tax was extended to truck drivers it may also spark cost increases for primary producers.

“Those that are able to get a price increase will survive and those that are unable to get a price increase to cover the carbon tax will simply go out of business – they’ll choose to go out of business or they’ll fail,” he said.

Mr Simon said given the government’s determination that biofuels will be the trucking industry’s dominant fuel by 2030, they need to review whether enough research is being done in Australia now to create that outcome.

“There’s a lot of research being done globally into all sorts of alternative fuels, second, third and fourth generation biofuels,” he said.

“Whether we just piggyback off that research or get some intellectual property development in Australia, is a decision for government and science, but I know we’ll be relying on the fuel source in future.”

Mr Simon said industry had successfully trialled biofuels in the past but a lot of that work was driven by tax incentives which have now gone, with the political focus shifting onto the carbon tax and other means of reducing greenhouse gas emissions.