EXPLANATORY STATEMENT
Issued by authority of the Minister for Infrastructure, Transport, Regional Development and Local Government
Fuel Tax Act 2006
Road User Charge Determination (No. 1) 2010
Heavy vehicles are charged to recover that part of the road construction and maintenance costs that are attributed to heavy vehicles (cost recovery). Part of the costs are recovered by states and territories through heavy vehicle registration charges and part by the Commonwealth through the fuel based Road User Charge.
The Fuel Tax Act 2006 (the Act) establishes a mechanism for the collection of the Road User Charge by reducing the fuel tax credit provided to eligible businesses and non-profit bodies.
Divisions 41 and 43 of the Act provide that businesses registered or required to be registered for Goods and Services Tax and non-profit bodies are entitled to a partial fuel tax credit for fuel used on a public road for business purposes in registered vehicles with a gross mass of more than 4.5 tonnes. The fuel tax credit claimable is equal to the amount of the effective fuel tax (excise) that is payable on the fuel minus the Road User Charge.
Subsection 43‑10(7)(b) of the Act provides that the Minister for Infrastructure, Transport, Regional Development and Local Government (the Transport Minister) may determine the amount of the Road User Charge.
Subsections 43-10(9)(a)(i) and (ii) of the Act require that the Transport Minister must ensure that any proposed increase in the rate of the Road User Charge (and any data relied upon to determine an increase) be made publicly available at least 60 days prior to the making of a legislative instrument by the Transport Minister. Subsection 43-10(9)(b) also requires that the Transport Minister consider any comments received, in the time specified by the Transport Minister, from the public about the proposed increase.
In accordance with subsections 43-10(9)(a) and (b) of the Act, the Transport Minister wrote to the National Transport Commission (NTC) on 6 April 2009 requesting they calculate the rate of the Road User Charge that was needed to ensure full cost recovery and no more. In addition, the Transport Minister requested that the NTC publish the data relied upon to determine the annual adjustment factor and undertake a period of 4 weeks public consultation.
On 26 March 2010, the NTC invited public comment on a consultation document on the proposed heavy vehicle charges annual adjustment to take effect on 1 July 2010. On 30 April 2010, the Chair of the NTC advised the Australian Transport Council (ATC – consisting of the Commonwealth and state and territory Transport Ministers) of the outcomes of the public consultation process for the 2010 heavy vehicle charges annual adjustment.
The NTC work demonstrated that there has been a real 10.7 per cent increase in average road spending requiring an increase to heavy vehicle charges to ensure full cost recovery. However, the consultation process further noted that the fleet mix assumptions agreed as part of the 2007 heavy vehicle charges determination and built into the annual adjustment formula are not consistent with the latest data estimate of the growth of high productivity heavy vehicles such as B-doubles. Implementation of the formula, without adjustment, would have resulted in an increase in heavy vehicle charges of 9.7 per cent on 1 July 2010, producing an over-recovery of heavy vehicles share of road construction and maintenance costs in 2010-11 by around $116 million.
As a consequence of this potential over-recovery, ATC approved a technical modification to the heavy vehicle charges annual adjustment formula to ensure that it avoids over or under-recovery of road costs due to changes in road use (including fleet mix).
Accordingly, the Road User Charge Determination (No. 1) 2010 increases the rate of the Road User Charge by 4.2 per cent from 21.7 cents per litre to 22.6 cents per litre to recover heavy vehicles allocated share of increased government road expenditure, ensuring all heavy vehicles continue to pay their fair share of road costs.
The instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Fuel Tax Act 2006 was enacted to address the problem of cost recovery for road construction and maintenance specifically attributed to heavy vehicles, which are vehicles with a gross mass of more than 4.5 tonnes. This Act was introduced to ensure that heavy vehicles pay their fair share of the costs associated with road infrastructure. The mechanism established by the Act involves the collection of the Road User Charge, which is implemented by reducing the fuel tax credit provided to eligible businesses and non-profit bodies. The Minister for Infrastructure, Transport, Regional Development and Local Government has the authority to determine the rate of this charge. The 2010 Road User Charge Determination (No. 1) was made to adjust the rate of the Road User Charge to 22.6 cents per litre, ensuring full cost recovery while avoiding over-recovery due to changes in road use patterns, including fleet mix. This legislative instrument was developed following public consultation and technical modifications recommended by the National Transport Commission and approved by the Australian Transport Council.
Scope and Application
The Fuel Tax Act 2006 applies to businesses registered or required to be registered for Goods and Services Tax (GST) and non-profit bodies, providing them with a partial fuel tax credit for fuel used on public roads for business purposes in registered vehicles with a gross mass of more than 4.5 tonnes. The Act facilitates the collection of the Road User Charge (RUC) by reducing the fuel tax credit provided to eligible entities, ensuring that heavy vehicles contribute their fair share towards road construction and maintenance costs. The Transport Minister has the authority to determine the amount of the RUC, with any proposed increase in the rate subject to public consultation as mandated by the Act. The Road User Charge Determination (No. 1) 2010, made under the Act, adjusts the rate of the RUC by 4.2 per cent to 22.6 cents per litre, based on an increase in road spending and a need to avoid over-recovery of heavy vehicle costs. This adjustment ensures that all heavy vehicles continue to pay their fair share of government road expenditure.
Key Provisions
The main sections of the Fuel Tax Act 2006 relevant to the Road User Charge are sections 41 and 43 (subsections 41-10(7)(b) and 43-10(9)). These sections allow for the establishment of a mechanism to collect the Road User Charge by reducing the fuel tax credit provided to eligible businesses and non-profit bodies. Specifically, section 43-10(7)(b) empowers the Minister for Infrastructure, Transport, Regional Development and Local Government to determine the amount of the Road User Charge. Furthermore, section 43-10(9) requires the Minister to ensure that any proposed increase in the rate of the Road User Charge, along with the relevant data, is made publicly available at least 60 days prior to the creation of a legislative instrument, and that the Minister considers any public comments received on the proposed increase.
The obligations imposed by the Act primarily fall on the Transport Minister and the National Transport Commission (NTC). The Transport Minister must ensure transparency in the determination of the Road User Charge by publishing any proposed increases and the data relied upon at least 60 days before any legislative action is taken. The Minister must also consider public comments on the proposed increase within a specified timeframe. The NTC, on behalf of the Transport Minister, is tasked with calculating the necessary rate of the Road User Charge to ensure full cost recovery and no more, based on the latest data, and conducting a public consultation on the proposed changes.
The Act includes provisions for breaches and penalties, although specific penalties are not detailed in the explanatory statement. Under Australian law, breaches of legislative instruments such as the Road User Charge Determination (No. 1) 2010 can result in civil or criminal penalties depending on the nature and severity of the breach. Typically, breaches may lead to fines, which can vary significantly based on the specific offence and jurisdiction. In the context of fuel tax credits and heavy vehicle charges, non-compliance might result in financial penalties, interest on unpaid amounts, and potentially legal action to recover owed charges.
The legislative instrument, being a legislative instrument under the Legislative Instruments Act 2003, must adhere to the requirements of that Act, including parliamentary scrutiny and disallowance provisions. This ensures that the instrument is subject to appropriate oversight and accountability mechanisms. In summary, the Act establishes a framework for collecting the Road User Charge through fuel tax credits, imposes obligations on the Transport Minister and the NTC to ensure transparency and public consultation, and leaves the specifics of penalties for non-compliance to be determined under broader legislative frameworks.