How much will Heavy Vehicle Charges potentially increase under the multi-year cost models? Are you ready to budget for increased operating costs and recover it from customers?
The decision rests with State and Territory Transport Ministers who have agreed in principle to a three-year road user charging cycle, replacing the current annual cost escalation process.
Natroad has supported a freeze in Year 1, and an increase of 2.75% for Year 2 and 3. A decision is expected soon and will likely apply from 1 July 2023.
Ramon Staheli, Head of Economics for the National Transport Commission (NTC), updated NatRoad Members in a webinar last week.
If you missed it, it’s archived here but here are 10 key takeaways:
- Heavy vehicle charges will likely increase over the next few years, but the percentage increase that will apply in each year is still undecided.
- The Pay-Go model has been used for a long time to set heavy vehicle charges. There are better models than this, but the NTC considers this to be the only functional model at present.
- Heavy vehicle costs are recovered through Road User Charges (RUC) on diesel fuel, gaseous fuels, and road components of registration charges.
- The regulatory component of registration charges is set to recover the National Heavy Vehicle Regulator’s (NHVR) budget.
- Government expenditure has increased significantly recently, especially in categories where a large percentage is allocated to heavy vehicles.
- Overall expenditure has increased significantly, with an increase of over 1.7 billion in just one year.
- The heavy vehicle cost recovery base has also increased significantly.
- Heavy vehicle charges are approved by the Infrastructure and Transport Minister’s Meeting (ITMM), who decided on a multi-year model which provides greater certainty to the industry by offering a longer-term view of costs.
- Ministers considered three options for heavy vehicle charges and decided on the three-year model in December 2022, with increases between 6 to 10% per annum.
- More options than those that have been under consideration need to be explored to achieve full cost recovery.
Modelling by the NTC shows that if ITMM decide on a 6% increase, it will increase the RUC cents per litre from current 27.2c (2022-23) to 28.8c (2023-24) to 30.5c (2024-25) to 32.4c (2025-26).
Registration cost for a 6-axle articulated truck from current the $6,530 (2022-23) to $6,872 (2023-24) to $7,236 (2024-25) to $7,621 (2025-26).
We stress than no decision has been made. If you have any questions or need advice on budgeting for the multi-year model and how to recover your costs effectively, however, speak to a NatRoad Advisor.
