The South Australian Road Transport Association (SARTA) has warned the trucking industry that the Coalition’s “naïve” fuel excise policy will “irreparably harm” the sector.
SARTA added its voice to the excise debate, which began when opposition leader Peter Dutton announced the Coalition’s election plan to halve the excise for 12 months as part of his budget reply speech.
With the likes of the Australian Trucking Association (ATA) supporting the move, SARTA has joined the list of those against it alongside the Queensland Trucking Association (QTA) and the National Road Transport Association (NatRoad).
SARTA says the Coalition, as part of the plan, wants operators to fund 80 per cent of the fuel excise cut while they would only pay 20 per cent.
“It is an absolute outrage that the Coalition, in chasing votes, wants to be seen to be making a grand cost of living gesture by halving the fuel excise but they want us to pay for most of it,” SARTA says in a social media post.
“The Coalition, as well as officials in Treasury and even some other groups, show that their grasp of the commercial reality of the trucking industry is dangerously simplistic and naïve.”
SARTA says the Coalition only wants to fund just 5.1 cents per litre (cpl), or just 20 per cent of the total cost of the fuel excise cut. The 30.5cpl road user charge would then be reduced by 5.1cpl to match the halved excise, meaning the trucking industry would have to fund the other 20.3cpl, or 80 per cent, of the excise cut due to the loss of fuel tax credits.
“The massive and very damaging mistake they are making is they are thinking about the way that fuel excise, the road user charge and the fuel tax credit scheme work in complete isolation,” SARTA says.
“They are not thinking about those three components and how they operate within the context of the trucking industry’s economic world and its very real implications.”
SARTA has accused economic theorists of “thinking like a first-grader” due to the logic that the halving of the fuel excise would be less than the road user charge, meaning operators aren’t paying more excise than the road user charge and that they have nothing to recover through fuel tax credits.
However, SARTA says the flaw in this logic is the false premise that there are no adverse consequences and that the fuel tax credit scheme is not an integral component of truck operators’ cash management.
“They are utterly missing the key point that the industry is making about why the Coalition’s naïve and simplistic thinking will cause massive harm in the trucking industry and the economy,” SARTA says.
“They’re forgetting or missing the realities that freight customers will demand the excise cut to be passed on, meaning there’s no savings for heavy vehicle operators.
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“Only 75 to 80 per cent of heavy vehicle operators are price-takers, so they have zero capacity to secure freight increases. Heavy vehicle operators have responsibly been accruing the fuel tax credit of 20.3cpl with the ATO, which is the operator’s money and substantially covers their BAS obligations of typically 60 per cent.
“The abolition of the fuel tax credit would mean heavy vehicle operators would have to fund all of their BAS obligations from within their existing operating budgets.”
With profit margins of barely two per cent, SARTA says operators can’t find any extra free cash and can’t cut other costs without impacting safety, meaning the only way they could increase their revenue to provide the extra funds needed would be to substantially increase freight rates.
This, in turn, would wipe out the Coalition’s intended cost of living benefit.
“The trouble is that most, or 80 per cent, of heavy vehicle operators aren’t in a position to secure increased rates, leaving them with a choice between closing their business or building a significant debt up with the ATO that will take years to recover from,” SARTA says.
“So Dutton’s policy would actually devastate a lot of SME family businesses.”
If the Coalition is elected, SARTA says the only way to halve the excise and avoid widespread serious damage to the trucking industry would be to replace the road user charge by the same amount as the excise cut, preserving the fuel tax credit and managing the temporary (12 month) reduction in road funding revenue as the price they pay for their election decision.
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