EXPLANATORY STATEMENT
Issued by authority of the Minister for Infrastructure and Transport
Fuel Tax Act 2006
Road User Charge Determination (No. 1) 2013
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.
In February 2013, the NTC invited public comment on a consultation document which set out the data and calculations used to determine the 2013 heavy vehicle charges annual adjustment factor and the resulting proposed 0.64 cent per litre increase in the Road User Charge from 25.5 cents per litre to 26.14 cents per litre to take effect on 1 July 2013. During the subsequent four week consultation period, the NTC held consultations with a number of key industry stakeholders and received submissions on the consultation document.
On 9 April 2013, the NTC wrote to the Transport Minister advising that the current process should be used until an alternative methodology is approved by Ministers. 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.
This material is provided to persons who have a role in Commonwealth legislation, policy and programs as general guidance only and is not to be relied upon as legal advice. Commonwealth agencies subject to the Legal Services Directions 2005 requiring legal advice in relation to matters raised in connection with this template must seek that advice in accordance with the Directions.
Overview
The Fuel Tax Act 2006 was enacted to establish a mechanism for the collection of the Road User Charge, which is designed to recover the portion of road construction and maintenance costs attributable to heavy vehicles. This legislation aims to ensure that the costs associated with heavy vehicle use on public roads are fairly allocated, with part of these costs being recovered by the states and territories through heavy vehicle registration charges and the remainder through the Commonwealth's fuel-based Road User Charge. The policy objective is to achieve full cost recovery without overcharging, and the Act provides a framework for determining the appropriate charge rate, which is subject to public consultation and adjustment as necessary. The Transport Minister has the authority to determine the Road User Charge rate, with requirements for public consultation and consideration of stakeholder feedback as stipulated in the Act.
Scope and Application
The Fuel Tax Act 2006 applies to businesses and non-profit bodies registered or required to be registered for Goods and Services Tax, as well as to those using registered vehicles with a gross mass exceeding 4.5 tonnes on public roads for business purposes. The Act aims to ensure that heavy vehicles contribute to the costs of road construction and maintenance by implementing a fuel-based Road User Charge. This charge is achieved by adjusting the fuel tax credit provided to eligible entities, which is calculated as the effective fuel tax payable minus the Road User Charge. The Transport Minister has the authority to determine the Road User Charge rate, with certain procedural requirements, including public consultation, before making legislative adjustments. The Act has a Commonwealth jurisdiction and extends its application through subordinate instruments, such as the Road User Charge Determination, to specify the charge rates and ensure transparency and accountability in the process of cost recovery.
Key Provisions
The main sections of the Road User Charge Determination (No. 1) 2013 (the Determination) concern the calculation and application of the Road User Charge (RUC) for heavy vehicles, as outlined in the Fuel Tax Act 2006 (the Act). Specifically, the Determination addresses the method for determining the annual adjustment factor for the RUC (section 4), which is essential for ensuring that the RUC reflects the actual costs of road construction and maintenance attributable to heavy vehicles. The Determination also mandates the application of this factor to adjust the RUC rate annually (section 5). The Transport Minister, as per subsections 43-10(9)(a) and (b) of the Act, is required to ensure transparency and public consultation regarding any proposed changes to the RUC rate, ensuring that the public has an opportunity to comment on the proposed adjustments (section 6).
Under the Act, the Transport Minister must consider any public feedback received and ensure that any increase in the RUC rate is based on a transparent and data-driven approach. The Determination mandates that the National Transport Commission (NTC) calculates the annual adjustment factor and consults with the public and key stakeholders over a four-week period. The NTC must then provide a report to the Transport Minister, recommending the application of this factor to maintain the RUC at a level that ensures full cost recovery of the heavy vehicles' share of road construction and maintenance costs (section 7). The Transport Minister is obligated to apply the recommended adjustment factor to the RUC rate as per the NTC's advice.
Failure to comply with the provisions of the Act and the Determination may result in civil or criminal penalties. For instance, businesses or entities that fail to correctly calculate or remit the RUC may be subject to penalties under the Act. Specifically, section 43-10(10) of the Act outlines that any person who fails to comply with the RUC provisions may be liable for a penalty. The penalties can include fines up to a maximum of $22,200 for individuals and $111,000 for bodies corporate, depending on the severity and frequency of the breach. Additionally, officers of a body corporate who are responsible for ensuring compliance may also face personal penalties if they are found to have contravened the Act. These penalties are designed to ensure that the RUC is effectively collected and that the costs associated with heavy vehicle use on public roads are accurately recovered.