By Wayne Kayler-Thomson
VECCI believes a proposed Victorian Government surcharge set for introduction in 2011 will not only be bad for exporting businesses, but raise prices for families all around Victoria.
As part of an overall freight strategy, the Government will implement a Freight Infrastructure Charge (FIC), which is designed to reduce truck congestion in and around the Port of Melbourne.
The Government’s reasoning
As explained in its fact sheet, about 3000 trucks enter Swanson dock per day to transport containers for shipping. On average the trucks carry a little more than two containers per visit.
With the Port of Melbourne set for huge growth over the next couple of decades, more trucks are set to visit the dock, with forecasts of up to 12,000 by 2035.
The Government says the FIC will encourage rail transport to the ports and off-peak truck use to lessen congestion at peak usage times.
Wharfage at the Port of Melbourne is currently $38.40 and the channel deepening charge is an additional $33.10 per container. The mooted FIC charge of $180 would be the equivalent of another $90 per container on trucks at current rates. Even at double the rate (four containers per truck), it would still equal $45 extra per container.
The Government says it plans for the FIC to raise about $1 billion, which will be invested in the Government’s overall transport plan.
What are the issues?
The main issue for exporting businesses and truck owner-drivers, especially smaller operators, is cost. With increased charges already in place to pay for channel deepening, a single trip to the Swanson dock could now cost up to and over $300.
Small truckers will be charged the FIC by truck, while they in turn charge their customers by container. They will also have to differentiate between peak and off-peak loads. Administering a new taxation regime for the Government along these lines will be complex to say the least and could drive some smaller operators out of business.
Furthermore, larger truck operators could pass on costs to export customers, many of whom, for example agricultural producers, are price-takers in world markets.
Why we oppose it
Put simply, the FIC is effectively an export tax. The FIC has the potential to seriously weaken Victoria’s export competitiveness, after so much work has been done to increase it via projects like channel deepening. The FIC will also increase the cost of finished imports, adding to inflationary pressures for business and consumers.
Many of the major users of the port have already invested many millions of dollars into the infrastructure and workforces that operate around the clock and deliver in an efficient and timely manner to the port.
Such companies have indicated that they cannot easily find any further efficiencies and already maximise loads to avoid road congestion.
It may be possible to design a revenue neutral congestion pricing regime, with credits for off-peak deliveries and debits for peak deliveries, better balancing both `carrot’ and `stick’, as Los Angeles has done with its PierPass system.
However, the FIC appears to be just a blatant grab for cash. We urge both political parties to examine the cost of this surcharge to business and consumers before implementing it next year.
For my full opinion piece in The Age on the Freight Infrastructure Charge, click here.