The RTF tries another RUC rort

Written By: - Date published: 1:59 pm, May 1st, 2009 - 21 comments
Categories: transport - Tags:

Tony Friedlander of the trucking lobby and architect of the famous ‘truck strike’ (remember that? man that was weird when you think about it) was on the TV last week arguing that we should get rid of road user charges and replace them with a diesel tax the same as petrol tax. In typical Friedlander fashion there’s a rort buried at the heart of what he wants but it takes someone who understands the issues to see it. Which is where K’s post comes in:

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Rather than arguing that the official estimate of RUC fraud costing NZTA up to $20 million Freidlander actually stated that this was an underestimate. He then stated that the amount was at least three times greater. That’s a bizarre response from an industry lobbyist. It should start alarm bells ringing. In effect he was arguing that truckies are more dishonest than the government thinks.

However, he then proposed a solution that would prevent dishonest truckies for avoiding paying their fair share and being able to undercut the prices charged by honest truckies.

That solution is to replace RUCs with a diesel tax.

That might sound sensible to anyone who has no knowledge of how RUCs are set. To anybody who understands how are RUCs are set it is a very clever use of public prejudice to achieve the exact opposite of what the public really wants – fewer trucks on our roads and all truckies paying their way.

The starting point for setting RUCs is to make 2 tonne vehicles pay the same whether they use petrol or diesel. Then a road damage charge is added for heavy vehicles which increases with the 3rd power of axle weight. When the petrol tax was hypothecated last year it broke the parity with diesel because RUCs hadn’t included the Crown excise duty.

This means that if a diesel excise duty replaces RUCs it should be at 45c/l not at the old 25c/l.

  • That means the smallest diesel cars could still pay what they are paying now.
  • Larger diesel cars and vans and off-roaders will pay up to twice as much.
  • Diesel buses and local delivery trucks will pay about the same as they do now.
  • Logging trucks, B-trains, etc will pay half what they pay now.

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21 comments on “The RTF tries another RUC rort”

  1. Draco T Bastard 1

    And a diesel tax would slaughter the fishing and sea-freight industries.

  2. Chris G 2

    is this Friedlander the Garth McVicar of the roads?

  3. Pretty much Chris G. He was the National candidate for somewhere back in the 80s and now he’s hell-bent on doing whatever he can to give the truckies a free ride and pave the country with roads.

    Though, that said, he is just a lobbyist – so arguably he’s just doing his job. Doing it quite well in fact.

    • BLiP 3.1

      Another privateer working hand in pocket with the Government.

      • jarbury 3.1.1

        Oh I agree. My point being that’s the government’s fault and not his. He’s really just doing his job to promote the interests of those who are paying him to do that job.

        I do that all the time… except the Historic Places Trust is a bit more ‘feel-good’ than a trucking lobby. LOL.

  4. Macro 4

    New Plymouth I think. He was a National MP.

  5. trucker 5

    Just to clarify a few things

    RUC are calculated on a 4th power, not a 3rd, and the workings are based on 1960s calculations from the US AASHO tests, which do not apply accurately to NZ conditions.

    Us truckies support a fuel tax because it reduces the unbelievable cost of administration, currently exceeding $100,000,000 pa. NZTA figures suggest fraud is around $25,000,000 and reducing. RTF puts the potential higher under RUC and at nil under a fuel tax. Thus changing to a fuel tax would add at leat $125,000,000 to the roading pot. This is not liked by the bureaucrats because they are the beneficiaries of the admin spend. Hence some of the objections here I am guessing.

    The review was not to allow us to pay less, Friedlander has always said that we accept our fair share of costs, and we acknowledge that a truck is considerably heavier than a car.

    The RTF submission had a fuel tax component and a fixed registration component to equalise payments with the current (although we could argue that we should reduce our payments by removing 15% of the costs through admin–but we didn’t)

    Under the current system any off road user can claim back the road tax component of petrol.

    Tony Friedlander was the Minister of Works under Muldoon, and member for New Plymouth until beaten by Harry Duynhoven (surprised you guys didn’t know that–and he is friends with Harry still). He has done a very good job on behalf of the road transport industry, and is well respected by both sides of the house, as well as minor parties.

  6. Kevyn 6

    Just to correct the “clarifications”.

    Pavement fatigue is proportional to the 4th power, pavement rutting is directly proportional to axle weight. The combined cost of the two sums to a fourth power financial relationship. The results of the 1960s AASHO tests have been substantially confirmed as applying accurately to NZ conditions.by the DIVINE and CAPTIF studies.

    The cost of administering RUCs isn’t anything like $100,000,000. It is actually $9.56 per licence (counter sales) or $3.38 for e-RUCs.

    From Vote Transport:
    The Minister of Transport is responsible for appropriations in Vote Transport for the 2008/09 financial year covering the following:
    • A total of $101 million for Departmental Output Expense Appropriations. The majority of this is spent on policy advice ($31 million) and motor vehicle registry management services ($67 million).

    • trucker 6.1

      correcting the corrections……:-)

      The fatigue and wear calculations for NZ are less than the AASHO tests, and are probably more like n3.5.

      The cost is not $9.56 (including gst) , that is the charge made to purchasers per licence.

      The $100,000,000 cost of administering the RUC system has not been disputed by MOT or NZTA.

      NZ commercial vehicles pay double what vehicles similar vehicles pay in the USA or Australia, and that is a tax on productivity for every commodity that moves by road (and everything does).

      • Kevyn 6.1.1

        Trucker,

        CAPTIF research has not identified n3.5 for a single leafsprung axle, however n3.5 is consistent with the DIVINE findings and with the RUCs for a tridem axle trailer and for the various possible tandem configurations, n2.75 and n2.9 respectively.

        I’m surprised you haven’t raised the serious problem of our government’s ignorine the DIVINE policy recommendation to implement lower charge rates for trucks with air-suspension.

        Here are the facts from the LTSA’s 2002/03 annual report which shows the breakdown of the portion of admin costs not spent on policy advice that year:
        Agency fees from road user charges 4,754,000
        Agency fees from motor vehicle registration 17,721,000
        Computing 14,433,000
        Registration plates and labels 4,024,000
        Sundry 1,423,000
        Motor vehicle registry and revenue management 42,355,000

        Fees paid to customs for collection of the fuel excise duty were $25m

        So the total administrative savings from abolishing RUCs is less than $7mil.
        The $100,000,000 cost of administering the RUC system has been disputed by MOT or NZTA everytime they and their predescessors have published their annual financial statements..

        Your conclusion that correctly charging heavy vehicles for road damage is a tax on productivity is quite true. The flip side of that argument is equally true. Charging heavy vehicles for only half the damage they do is a subsidy at the expense of the rest of the Australian economy. The damage is still being done, the maintenance is still being done, the economy is still paying for the maintenance. The only difference is that economic efficiency is being impaired by preventing the free market from sending correct pricing signals. But that doesn’t seem to have hurt the trucking industry’s market share in this country relative to Aus, and it is actually five times greater than in the USA. But the reason for that difference also makes comparison with FHWA studies problematic.

  7. outofbed 7

    coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping coastal shipping

    • r0b 7.1

      oob – I feel like you’re trying to tell us something – but I can’t quite put my finger on it. Is it something to do with coastal shipping?

    • Phil 7.2

      Greymouth – Christchurch?
      Palmerston North – Coromandal coast?
      Tauranga – Levin?

      Yep, costal shipping is really going to save me time and money on those routes!

  8. Yes, a diesel tax is a nonsense. It would not fairly reflect the marginal costs of road use of different vehicle classes. RUC is internationally acknowledged as good practice, as it involves paying for road use, not fuel. It allows charges to be targeted to different wheel configurations reflecting wear and tear, and when it was introduced it did reduce the costs of maintenance of NZ roads from heavy vehicles, despite increases in numbers of vehicles.

    The better answer to evasion is technology, as the Swiss and Germans both use far more sophisticated means of calculating, paying and enforcing their RUC systems.

    trucker: RUC does not cost $100m to administer. I know RUC policy very well, as RUC is a marginal activity on top of the motor vehicle registry and CVIU, although core to ECU.

    NZ roads have lower densities of traffic, higher marginal costs than both Australian and US roads, and are far less subsidised by non road users. The STCC study demonstrated trucks pay their marginal road use costs on average in NZ, though they underpay for local roads, and overpay for state highways. Another advantage technology could offer is differential charges by location, and actual weight,

    Trucks in Australia and the US face enormous advantages over rail because they are focused on charging fixed charges for road use, not variable charges. So they do not pay their fair share over very long distances.

    It isn’t surprising RTF would seek to pay less, the rail sector has been underpaying since the Toll deal, but both should be ignored. The future is to take RUC to the next generation, by requiring all new heavy vehicles to be equipped for a more sophisticated system. Hopefully the RUC review will confirm this.

  9. trucker 9

    Liberty Scott and Kevyn.

    Thanks for the reasoned debate.

    The $100,000,000 cost of administration of RUC is quoted by the RTF, and appears logical to me. It includes more than the costs quoted in Kevyn’s response. I accept Kevyn’s figures as far as they go, but they do not end there. What about the wasted Police time enforcing RUC offences, and the Courts’ time following up. The legislation allows lots of strange things, and many is the time I have stood in a courtroom defending my employer over the positioning of a label in a vehicle. Prosecutor, witnesses, Police Officers and Judge, and me, all because the label fell out of the holder. Last month a return drive of 700km because the label was displayed in the truck, not on the trailer (case dismissed). It feels like something out of Alice’s Restaurant as we stand in court amongst rapists and thieves for “failing to display a licence”.

    The theory of Road User Charges is fine, and it is hard to argue the principle of paying by tonne/kilometer. It sounds great, but it is a pain to administer and use. What seems logical and simple from a non users point of view is very different in practice.

    NZ is the only country in the world who uses this system. The first RUC Act was passed in 1977, and if the system was so good someone else would have picked it up in 32 years. No one has.

    The results of the RUC review are imminent, and I will be interested to see what comes out of it.

  10. Kevyn 10

    Trucker, One of the main reasons that RUCs haven’t been introduced elsewhere is because of the difficulties created by cross-boarder traffic, which of course isn’t a problem in New Zealand.. That’s why the European Parliament narrowly voted down a plan to adopt the system in the EU in 1989, by two votes. The member states simply couldn’t agree on the rates to be charged, and they still haven’t finished the process of equalizing registration and fuel taxes that was adopted instead of RUCs..

    Idaho’s RUC scheme was struck down by the courts in 2001 on the basis that vit iolated Art. I, § 8 of the United States Constitution, in that it was a restraint on interstate commerce. Consequently Oregon’s pay-at-the-pump RUF proposal is designed to allow users to choose between a fuel tax or an onboardGPS mileage tax system.
    http://www.oregon.gov/ODOT/HWY/OIPP/ruftf.shtml

    Federal Highway Administration and 15 state departments of transportation: California, Connecticut, Iowa, Kansas, Michigan, Minnesota, Missouri, North Carolina, Ohio, Oregon, South Carolina, Texas, Utah, Washington, and Wisconsin are currently involved in the National Evaluation of a Mileage-Based Road User Charge. study.
    http://ppc.uiowa.edu/dnn4/Default.aspx?tabid=65

    Both of the US schemes are intended to implement congestion charging for light vehicles as well as more equitably sharing roading costs between different sizes and weights of trucks.

    The enforcement problem doesn’t surprise me. The police have become law enforcement officers with no common sense. But at least the RUC fines and penalties are payed into the land transport fund unlike ‘safety’ fines that go into the government’s coffers. So it’s not surprising that the road safety advertising seems to be oriented as much to denying the role that inadequate pavement rehabilitation funding as it is aimed at influencing driver behaviour.

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