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CHECK AGAINST DELIVERY P-MBARGOEn UNTI DELIVERY
SPEECH BY THE PRIME MINISTER
ROAD TRANSPORT INDUSTRY FORUM
MELBOURNE 19 FEBRUARY 1991
Bruce Mclver, Chairman
Last year, I addressed the Road Transport Industry Forum at
the Sydney Opera House on the opening day of the campaign
for my Government's fourth term. You probably recall a
small incident concerning the placement of microphones on
the lectern but nevertheless we went on to win the
election campaign.
It is a pleasure to return to this Forum, and to these
microphones, with a renewed mandate, and with a continued
determination, to tackle the challenge of land transport
reform. On that occasion at the Opera House, I spoke about the
importance of land transport, of improved regulation of road
safety and of road funding. In the last twelve months we
have moved a. significant distance in these areas, and we
will see even greater change before this term of Government
is out.
This will net be reform just for the sake of it.
We have not embarked on improvements to land transport in
Australia because it is easy. It is not.
We do not seek reform because it will be cheap. It will not
be. And we have not taken an interest in this area in order to
court popularity. As we have seen repeatedly, it is all too
simple for critics of land transport reform to get cheap
popularity by claiming that it threatens the life-blood of
remote communities, or that it is a cover for milking the
industry for more revenue.
Such criticisms are of course totally inaccurate. They fail
to recognise that the industry, though highly competitive,
is held back by inappropriate and inconsistent State
regulation, and by a lack of balance between the three
variables of diesel excise, road damage, and road
expenditure. Substantial variations in charges between
States create distortions so severe that in some cases heavy
vehicles which principally use roads in New South Wales can
escape most of the cost recovery mechanisms by registering
in, say, South Australia and buying fuel in Queensland.
The nation cannot afford a system of regulation that allows
that kind of distortion, and that is the reason my
Government is keen to remove impediments to the industry's
efficiency. The Industry Commission's analysis of road transport is the
most thoroughly researched study of this issue available.
It suggests that the value to the Australian economy of
reform of road transport alone is worth $ 1.2 billion a year.
And rail reform because of its relative inefficiency may
be worth a further $ 4 billion.
To put that in context, coastal shipping reform about
which we hear so much, and where many changes are also
taking place may generate an extra $ 500 million a year a
small sum by comparison. Even tariff cuts and the
elimination of bounty payments are not worth as much to the
economy as the creation of a fully competitive, commercial
and properly regulated land transport system. It is in this
sense the most important industry reform yet it receives
the least attention from many who claim to be interested in
structural change.
In the early years of this Government, the principal focus
of land transport reform was on road funding in order to
direct more funding to roads of economic significance and
on providing a simple means of allowing interstate vehicles
some consistency in road regulation under the Federal
InterState Registration Scheme.
That was an appropriate focus for the time. However,
following the! Special Premiers' Conference last year, new
and tougher areas for reform are now under scrutiny. They
are: first, the competitive relationship between road and
rail, including the abysmal return on billions of
dollars of taxpayers' funds tied up in out-dated,
poorly-utilised and unrealistically-priced rail freight
operations; second, the need for consistency in regulation between
States;
third, the need f or a clear relationship one accepted
by Government and industry between cost recovery and
expenditure on roads, and effective delivery of road
programs; and fourth, the need to ensure that capacity for road
damage -is assessed in setting cost recovery levels for
different types of vehicles.
Negotiations with the States, which control much of this
area, are on. Ly part complete. But let me tell you what I
can of the pr~ ogress being made on these issues.
First, the road-rail interface.
Many of you will be legitimately concerned to know what the
Commonwealth is doing in the rail area, as it has the
capacity to affect your business.
Let me take iLt from first principles. You believe your
industry is highly competitive. We agree. You believe the
rail system is subsidised, inefficient and sets prices
without reference to commercial standards. That is, it does
not have to face commercial realities. We agree.
And we would add that rail has also been at a singular
disadvantage because its freight operations have been the
? poor cousin' to passenger operations; because it has been
even more heavily-constrained in cross-border operations by
different State regulations than your industry; and because
of an absence of new investment over decades.
Our commitment to rail freight is to remove these
constraints. The States cannot do so on their own. And the
nation cannot: afford so poor a return from its rail network.
We intend to set up the National Rail Freight Corporation to
take over as much of the inter-State rail freight task as
possible. Intra-State services will remain with the States,
although they may seek to contract them to the Corporation.
The Corporation will charge commercial rates. It will have
a commercially-developed capital base. It will have a new
award structure and work practices essential to its
commercial focus. It will be expected to pay its own way
without subsidies.
If these requirements cannot be met, there is no incentive
for the Commonwealth to invest in rail freight. The future
for State rail services, particularly other than commuter
rail operations and some bulk tasks, must then seem very
bleak. I do not expect that all of you will welcome with open arms
the revitalisation of rail freight. However, two important
factors suggest that you should not fear it:
first, combined road-rail services can offer a very
effective method of freight forwarding, so the benefits
of improved rail efficiency will be obvious and
valuable to your industry;
and second, this will not be subsidised competition.
Your industry will be able to compete on its merits.
Turning to the need for consistent road regulation,
Commonwealth and State officials have reached broad
agreement on a single national heavy vehicle registration
scheme to cover all vehicles 4.5 tonnes or more fully laden.
This would in~ volve an integrated set of State registries,
offering rapi~ d information exchange.
We have also broadly agreed to introduce uniform regulation
in other areas including weight limits, driver licensing,
loading codes, enforcement and road-worthiness.
About time tcoo, you might say. I agree. And I am confident
that the Premiers do too.
The third and fourth areas of reform which I mentioned
relate to the inter-related questions of cost recovery,
roads expenditure and road damage.
There will be much less heat and much more light generated
in this area if we can get to a better-understood linkage
between what you pay in cost recovery charges and what we
and the States spend on roads. That may be optimistic, but
it is our objective.
Since coming to Office, my Government has allocated more
than $ 10 billion to road funding Australia-wide. In 1990-91
we will provide $ 1.6 billion for roads and other land
transport projects an increase of 13 percent in real terms
on last year.
But the present system of responsibilities for roads
expenditure is a mish-mash, despite all efforts to refine
the system which has been in place for decades.
When it comes to roads, some seem to be more preoccupied
with passing -the buck rather than spending it.
The effective way out of this is for the Commonwealth to
designate a specific set of roads which are its
responsibility to construct and maintain, and for the States
and local government to do likewise. In the case of the
Commonwealth, something like an expanded National Highways
System is one concept. What that will mean in practice,
however, is yet to be determined. Again, much depends on
our colleagues in the States.
We are also discussing with the States major changes to
their cost recovery practices and to ours. There is perhaps
a greater degree of acceptance, following the early rounds
of discussion, on the principles established by the
InterState Commission.
That said, I do not believe we will end up with a system
which equates completely to that proposed by the ISC.
There are many reasons for this. Governments need to
implement systems which are practical and which recognise
the interests of the industries in which they operate.
There is also frequently a need to phase in reforms,
particularly where the nature of change is very broad, as is
the case here.
While charges could rise for some perhaps, relatively, a
few vehicles, there is at least the possibility that
charges will fall for many others. This is an aspect of the
ISC's report which has not been given much attention, and
yet which has not been ruled out either.
Much will depend on the co-operation of the States and the
understanding of the industry.
I can give you a guarantee that this is not a grab for new
revenue. I can also guarantee further consultation with your industry
representatives before we finalise our position.
In return, I hope that you will continue to contribute to
the reform process and help us, after the May Premiers'
Conference, implement a better system for road transport in
Australia. The rewards for our nation will be enormous.