Road usage study highlights path to reform

Australia’s peak motoring body, the Australian Automobile Association (AAA) says a new study by Transurban which tested consumer reactions to different road charging options has reinforced the need for the Australian Government to advise motorists how much excise they pay on every tank of fuel.

AAA Chief Executive Michael Bradley said: “This important study by Transurban shows Australians are more open to considering changes to the way we pay for the transport we all need, once they know how much they currently pay in Australian Government motoring taxes.

“The Transurban study again demonstrates that the majority of Australian motorists are unaware they pay around 40 cents in excise on every litre of fuel. That’s why the AAA is calling for the Australian Government to disclose the amount of excise paid on fuel dockets in the same way GST is currently displayed.”

The Transurban study also highlights the fact that so little of what motorists pay goes into building transport infrastructure, and that over time, the amount of money available to the Government from fuel excise will fall.

In 2013-14, road-related taxes and charges reached almost $28 billion. Despite this, motorists are getting a very poor return on their investment.  Over recent decades, only 47 per cent of the tax paid by motorists at the bowser has found its way into the federal land transport infrastructure budget. By 2020, this figure will be down to 27 per cent.

“We already have a massive shortfall in transport infrastructure funding and this will only worsen as the amount of fuel excise collected drops due to improved vehicle efficiency and the increased use of electric vehicles,” Mr Bradley said.

“The AAA’s Transport Affordability Index shows the average Australian household is already paying around $17,000 a year for transport. It’s important therefore that governments find new and fairer ways to ensure we can fund the transport systems Australia will need for the 21st century. A great place to start is by ensuring Australians understand exactly how much they already pay in fuel excise.”

The AAA believes a two stage funding reform approach is required that would first secure a dedicated and stable source of revenue to be directed to land transport projects and second, to examine, develop and implement options for broader land transport market reform.

On this basis the AAA calls for the Australian Government to:

  • Set up a transport infrastructure fund, with a guaranteed minimum of 50 per cent of net fuel excise paid into the fund to be spent on land transport infrastructure. This policy is supported by around 90 per cent of Australians surveyed by the AAA.
  • Implement Infrastructure Australia’s recommendation for a public inquiry into transport market reform and how we move in the long term to a system that replaces current taxes with a fairer road user pricing mechanism. This inquiry is the critical next step in developing a funding model capable of building the transport system Australia needs for the 21st century.
Written by Paul Kindermann 0439 575 669
September 12, 2016