The government should make an election commitment not to extend the carbon tax to trucking, the chairman of the Australian Trucking Association David Simon said in a televised address at the National Press Club.
“In its Clean Energy Package, the government announced that the fuel used by the trucking industry would not be subject to the carbon tax until mid-2014. The government’s plan is that it would then reduce the fuel tax credits that trucking operators can claim by almost 7 cents per litre in the first year,” Mr Simon said.
“That’s a 27 per cent tax hike. It would cost the 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.”
Mr Simon said the Clean Energy Package was based on the assumption that businesses would respond to the carbon tax by reducing their use of energy or switching to renewables. It assumes that businesses that cannot do this would be able to increase their prices. This would, in turn, change their customers’ behaviour.
“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.
“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.
“72 per cent of trucking businesses have only one truck. They are price takers, not price makers. Their customers would tell them to absorb the cost. 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.
“For example, my company’s business peaks in the months before Christmas. A business that carts produce from Queensland would have its peak in January and February. 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.
“Instead of making life more difficult for small trucking operators, the government should make an election commitment not to extend the carbon tax to trucking.
“It should 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.”
Mr Simon rejected the environmental movement’s argument that fuel tax credits are a subsidy.
“In reality, it’s part of making sure that business inputs aren’t taxed. It’s no different to being able to claim back the GST,” he said.
Rail deserves a fair go on carbon pricing
The rail industry supports a call from the trucking industry to not extend the carbon price to road transport in 2014, but strongly believes the exemption should equally apply to rail.
Rail companies have been paying $110 million per year since the introduction of the carbon tax in 2012, whilst the road transport industry has been exempt. These costs have been passed onto rail customers and eventually end consumers, with impacts such as higher grocery costs.
“Trains emit one third of the pollution of trucks and yet the rail industry is required to pay $110 million each year whilst one of Australia’s largest polluters is given a free pass,” Australasian Railway Association CEO Bryan Nye said.
“This has created a perverse incentive where we are actually encouraging the use of a more emissions intensive transport option.”
If the $110m being paid by the rail industry was instead being reinvested in rail, the industry could buy eight new freight trains and eight new passenger train sets each and every year. By 2030 these additional trains would permanently take 13,000 trucks off our roads, 42,500 cars off our roads and the carbon saved would be enough to power 8,000 homes for a year.
“Rail has repeatedly stated its support for action on climate change but the counterintuitive penalty that rail has been slogged with is grossly unfair, and highly illogical,” Mr Nye went on to say.
“If carbon pricing is to be effective in reducing pollution, the disproportionate penalty applied to rail needs to be axed, not continued.”
