The construction sector in Australia could be hit with higher costs in transporting equipment and materials to site under a new proposal from South Australia to introduce a national heavy vehicle charge.
In an address before the National Press Club in Canberra on July 8, South Australian Premier Jay Weatherill outlined a proposal under which State-based registration and Federal fuel excise charges would be replaced by a new charging system which would be run by the Commonwealth and would be based around mass, distance and location.
Weatherill said the proposal – which would see all revenue earned from the charges going directly back into investment in road infrastructure – would help address challenges associated with the ongoing need to upgrade freight infrastructure in an environment in which meeting the demands of road users from general taxation revenue was becoming increasingly difficult, and would help to open up opportunities for private investment in roads.
He said the state would be willing to trial different elements of charging, with intelligence collected forming the introduction of a national scheme.
“I don’t think Australians care too much who builds our roads,” Weatherill said. “They just want them built in a timely fashion, according to some rational set of priorities and at a reasonable cost.”
While from a building sector perspective, the freeing up of funding for new infrastructure construction and more efficient road networks is obviously beneficial, the more direct impact would revolve around higher costs to get materials such as cement, bricks and timber as well as cranes and heavy machinery to site. The magnitude of this measure, however, will not be known until the likely amount of any charge is determined.
Notwithstanding this, the proposal has been welcomed by infrastructure groups and engineers, with Infrastructure Partnerships Australia chief executive officer Brendan Lyon calling it a ‘watershed’ for infrastructure funding.
According to Lyon, IPA modelling released last year found the current infrastructure funding system to be unfair, with low impact road users in the regions and outer areas paying large subsidies to high end users in the inner city.
“This is a breakthrough moment in the process of seriously reforming how we pay for major infrastructure in Australia,” Lyon said. “It is a very important first step in walking away from Australia’s outdated and ineffective way of funding transport infrastructure.”