Monday, July 11, 2011

Australian Haulage Industry Gets Exemption from Carbon Tax

Two Years Grace Period for Truckers
Shipping News Feature

AUSTRALIA – Hard lobbying on behalf of the Australian haulage industry by the Australian Trucking Association (ATA) has seen a partial victory with the Australia government granting the country’s road freight industry a two-year exemption from a new carbon tax that it plans to introduce. If made law, Australian companies that have heavy emissions - such as mining and air transportation - will initially have to pay A$23 per tonne of CO2.

Road freight will be exempt until the 1st of July, 2014, giving the haulage industry time to increase their fuel efficiency and renegotiate contracts with their clients to take the new costs into account.

Though the ATA had hoped to get a total exemption from the tax the decision to give some lee-way to the industry was gratefully accepted by the ATA’s Chairman David Simon, who thanked the government for listening to their members concerns.

“In the lead up to today’s announcement, the ATA argued strongly that trucking operators should be exempt from the carbon tax altogether,” Mr Simon said.

“In a series of meetings we pointed out that 85 per cent of trucking businesses have fewer than five employees, and a limited ability to pass on increases in their costs. 

“The industry has reduced its greenhouse gas emissions by 35 per cent per billion tonne kilometres since 1990, as well as massively reducing its other emissions. This has cost the industry hundreds of millions of dollars.

“We pointed out that business conditions for trucking operators were extremely tough.”

Under the plan, transport fuel will be taxed through changes to the fuel tax credits system. From the 1st of July 2014, the diesel fuel tax credits received by trucking operators for on-road use will fall 6.858 cents per litre, matching the planned 2014-15 carbon price of $25.40. This is expected to cost the industry and its customers $510 million in 2014-15 alone.

Off-road fuel users, including the mining and rail industries, will be subject to carbon tax from 1 July 2012, when their diesel fuel tax credits will fall 6.21 cents per litre, consistent with the initial carbon price of $23 per tonne. Trucking businesses that claim fuel tax credits for off-road use, such as the fuel used in excavators or bobcats, will be affected, but only for the fuel they use off-road. Fuel used off-road in agriculture, forestry and fisheries will not be taxed.

In terms of the impact of the proposals on the wider Australian logistics community industry bodies that represent broader freight interests warned that increased costs anywhere in the supply chain inevitably raised costs.

Michael Kilgariff, CEO of the Australian Logistics Council (ALC), said that:

“Australia’s freight transport and logistics industry is not particularly impacted by the headline carbon tax, rather by the way in which fuel tax credits and excise changes will be amended. These forecast changes will be felt differently across industry, as there are inconsistent tax treatments across the various transport modes.

“While these changes will impact on companies to varying degrees, they will increase the cost of moving freight around Australia. These costs cannot be absorbed by operators and will need to be passed on to consumers.”

Mr. Kilgariff also called for the Australian government to support industry efforts to create and invest in new, more efficient technology, saying that:

“Whether Australia achieves the emissions reduction targets outlined by Prime Minister Gillard remains to be seen. The introduction of a carbon price, and its eventual transition to an Emissions Trading Scheme, may turn out to be the best way to achieve these long term objectives.

“One thing is sure however, the most effective way to tackle climate change is through a comprehensive and sustained commitment on behalf of industry – and that is exactly what the logistics industry is doing.

“A large proportion of industry members are proactively investing in new technologies and equipment to reduce their carbon output and to improve the energy efficiency of the sector.

“ALC calls on the Government to ensure it fully supports industry efforts in this area by providing greater support for and investment in initiatives such as smart fuel technology and low emission equipment and facilities.”