EXPLANATORY STATEMENT
Issued by authority of the Minister for Infrastructure and Transport
Fuel Tax Act 2006
Road User Charge Determination (No. 1) 2011
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 and Transport (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 11 February 2011, the NTC invited public comment on a consultation document which set out the data and calculations used to determine the 2011 heavy vehicle charges annual adjustment factor and the resulting proposed 0.5 cent per litre increase in the Road User Charge from 22.6 cents per litre to 23.1 cents per litre to take effect on 1 July 2011. During the subsequent four week consultation period, the NTC held a public workshop attended by a number of key industry stakeholders and received submissions on the consultation document.
On 24 March 2011, the NTC wrote to the Transport Minister advising that the public consultation process did not highlight any substantive issues with the annual adjustment calculations. The NTC recommended that the Transport Minister apply the annual adjustment factor to the Road User Charge to ensure ongoing cost recovery of the heavy vehicles’ share of government road construction and maintenance expenditure.
The instrument is a legislative instrument for the purposes of the Legislative Instruments Act 2003.
Overview
The Fuel Tax Act 2006, enacted by the Australian Parliament, addresses the issue of cost recovery for road construction and maintenance attributed to heavy vehicles. It establishes a mechanism for collecting the Road User Charge, a fuel-based levy aimed at ensuring that heavy vehicles contribute their fair share of road maintenance costs. The Act provides for the reduction of the fuel tax credit for eligible businesses and non-profit bodies to implement this charge. The Transport Minister, under the Act, is responsible for determining the Road User Charge rate, ensuring transparency by making any proposed increases publicly available for at least 60 days before implementation, and considering public feedback on such proposals. This legislative framework seeks to ensure the equitable distribution of road maintenance costs among all road users, particularly focusing on heavy vehicles.
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 that use vehicles with a gross mass of more than 4.5 tonnes on public roads for business purposes. The Act allows these entities to claim a partial fuel tax credit for the fuel they use, which is reduced by the Road User Charge to ensure the costs associated with heavy vehicle use are recovered. This cost recovery mechanism is integral to funding the construction and maintenance of roads, which are shared infrastructure expenses borne by both the Commonwealth and state and territory governments. The Act also mandates the Minister for Infrastructure and Transport to determine the rate of the Road User Charge, which must be calculated to achieve full cost recovery without excess. This calculation process involves public consultation, with data and proposed changes made publicly available for a minimum of 60 days before legislative action is taken. The Minister may also seek the advice of the National Transport Commission in determining the appropriate charge. Any proposed increase in the Road User Charge is subject to public consultation, ensuring transparency and stakeholder engagement in the decision-making process.
Key Provisions
The main operative sections of the Fuel Tax Act 2006 (the Act) include sections 41 and 43, which deal with the entitlement to a partial fuel tax credit for fuel used on public roads for business purposes by eligible entities. These sections provide that businesses and non-profit bodies registered or required to be registered for Goods and Services Tax, and using vehicles with a gross mass over 4.5 tonnes, are eligible for a fuel tax credit. The credit is equal to the effective fuel tax payable on the fuel minus the Road User Charge. The Transport Minister has the authority under subsection 43-10(7)(b) to determine the amount of the Road User Charge. To ensure transparency and public consultation, subsections 43-10(9)(a) and (b) require that any proposed increase in the rate of the Road User Charge and the underlying data be made publicly available at least 60 days before the legislative instrument is made. The Transport Minister must also consider any comments received during the specified public consultation period.
The obligations imposed by the Act on the relevant parties include ensuring that businesses and non-profit bodies that meet the eligibility criteria can claim a fuel tax credit. The Transport Minister must determine the Road User Charge rate in a manner that ensures cost recovery for heavy vehicle road construction and maintenance expenditure. This involves consulting with the National Transport Commission (NTC) to calculate the necessary charge rate and publishing the data and calculations used for public scrutiny. The NTC is tasked with conducting a public consultation process, which includes a public workshop and the acceptance of submissions from stakeholders. The Transport Minister, in turn, must consider the NTC’s findings and recommendations before finalising the Road User Charge rate.
The Act does not explicitly outline specific offences, penalties, or consequences for breaches in the determination or implementation of the Road User Charge. However, the legislative framework implies that failure to comply with the requirements for public consultation, transparency, and proper calculation of the Road User Charge could result in legal challenges or regulatory scrutiny. The consequences of such non-compliance might include the need to revisit and potentially adjust the charge rate to ensure it aligns with the principles of cost recovery and public interest, though the Act does not specify maximum penalties for breaches.