VICTORIAN TRANSPORT STUDY

REPORT ON ROAD FREIGHT TRANSPORT INDUSTRY

Ordered by the Legislative Assembly to be printed

F. D. ATKINSON, GOVERNMENT PRINTER 1980 No. 33 • VICTORIAN TRA~SPORT STUDY ..

The Honourable R.R.C. Maclellan, M.L.A., Minister of Transport, 570 8ourke Street, MELBOURNE, VIC. 3000.

Dear Mr. Maclellan,. I have the pleasure to submit herewith a report on the Road Freight Transport Industry.

This is one of a series of reports being prepared to make known the results of the Victorian Transport Study. Yours sincerely,

• TABLE OF CONTENTS

SUMMARY 1. INTRODUCTION

Description of the Road Freight Industry

Board of I uiry into the Victorian Land Transport ystem (Sir ~Pnrj Eland) Developments in road and rail transport since the Board of Inquiry Current road transport licensing policy Abolition of road maintenance charges Truck blockades State Fuel Tax

2 • S UG f'i IS SI 0 ~~ S Summary of written submissions 3. FIELD WORK UNDERTAKEN BY STUDY GROUP Discussions with interested parties Visits to industry, railway yards and port facilities

4. AP~RECIATION OF EXISTING RUAD TRAf~SPURT LICENSII~G SYSTHI As of right "E" licences Discretionary 11 0" licences .. Licence and permit fees Country route services in non-rail areas •

"Border hopping" 5. VICTORIA RAILWAYS BOARD (VicRail) Analysis of written submission Common carrier status • Operation of road freight vehicles by VicRail

Regional Freight Centres VicRail Freight Policy 6. TRANSPORT REGULATION BOARD Analysis of written submission Proposed alternative truck licensing system Control of entry into road freight industry

Safe operating oractices 7. EXTENT OF SHIFT OF FREIGHT FRCM RAIL TQ ROAD IN THE EVENT OF UEREGULATIUN Grains Fertilisers Geelong Cement

Sawn Timber LCL Traffic (mixed freight in smell lots) Effect on rail revenue Effect on road system

U. ATTRIBUTA8LE COSTS UF HEAVY ROAD TRA~S~LRT Contributions to road construction enc infrastructure

Contributions to ro2d mrinlencnco 9. SUMMARY OF ISSUES RELATED TO DEREGULATION

1 D. DISCUSSION 11. CONCLUSIONS

Analysis of argument for and against deregulation and options

Related matters of control of entry, safe operating practices, driver competency regulations, overloading, hours of duty, vehicle inspections

12. RECOMMENDATIONS

APPENDICES "A" List of names of organisations which submitted a written submission "B" Dissection of commercial vehicles by load capacity and licence classification February 1980

"C" Shift of freight from rail to road in the event of deregulation "D" Maps showing extent of border hopping activities in Victoria in 1971 and 1980 "E" Paper by Advance Planning Division, Country Roads Board - "Separable pavement costs on Victorian Arterial roads with Federal and State Fuel tax payments and motor registration fees"

, SUMMARY

The importance of the road freight transport industry and the vital role it plays in our society in Victoria is not generally recognised or apprec­ iated. It is an industry which has been subject to commercial control by State Government regulation for almost 50 years, designed to favour and support the system. But by 1978, after a long series of favourable High Court decisions in which the freedom of interstate trade provisions in Section 92 of the Commonwealth Constitution Act were clarified, trans border operations in large areas of the State were common. Transport users have been demanding the ability to use road transport without restriction for many years. This support motivated the series of challenges and test cases. for its part, the Transport Regulation Board, the licensing authority, faced with growing border operations, took legal action which also resulted in High Court Judgements providing further clarification. There is now no justification for legislation which compels transport users in relatively small areas of the State to consign their goads by rail at a higher cost than the road transport alternative. VicRail is showing an annual deficit of $61 million in its freight business. Protection, by means of transport regulation, of rail freight being carried at an increasing loss is inflationary and is per­ petuating an outmoded system. Regulation is also discriminatory to industries, businessmen and private citizens in those small areas of the State which are affected. Complete deregulation of road transport, except for the carr1age of grains to the seaboard terminals at Geelong and Portland, is recommended. The report also i~cludes recommendations that the commercia! goods vehicle licensing system be abolished and that operator cGmpetency regulations, with emphasis on safe operation, be introduced. Reference is also made to roadside mechanical inspection of trucks, closely related to vehicle standards and road safety. It is recommended that the level of random roadside inspections be intensified. ..

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1. INTRODUCTION

1.1 At one or more stages during the processing and manufacturing of all foodstuffs, goods and materials, road transport plays a part. Invariably in the final distribution to the point of sale whether by truck, van or semi trailer, road transport provides the essential link. 1.2 The development of resources, farming and animal husbandry, construction of factories, power generating stations, waterworks and gas plants are dependant on road transport, either as feeder services with railways or shipping or quite often, in undevelop­ ed areas, as the sole means of transport. 1.3 In Victoria, as in other States and Territor- ies of the Commonwealth and in comparable overseas countries, road freight transport is a vital and major industry. The Study Group's own calculations shows that the value of the total fleet in Victoria, baseo on present day replacement prices, is to ~he order of 2,000 million. These calculations do not include 41,0CO vehicles under 2 tonnes load capacity.

1.4 The industry generates consi~erablo em~loyment in metropolitan, urban and country areas. Statis ics available to the Study indicate that about 130,000 persons are employed as drivers. Support industries such as truck manufacture and assembly, production of trailers, tankers, pantechnicons and s ecialised vehicles for the bulk carriage of flour, ce~ent, plaster, stock feed end bricks, to name a few, provides employment for a large number of people in the metal and vehicle body building industries.

1.5 Servicing - repair and maintenance, depot staff and administrative people amount to another appreciable sector of employment. ~o information is available as to the level of investment in terminals and depots but the Study Group believes that it runs into many millions of dollars. 2.

1.6 Figures for the year ending 30 September 1976, the latest available, published by the Australian Bureau of Statistics, show that 154.6 million bonnes of goods were carried by road transport in Victoria. The analysis reveals road freight tonne/kilometre figures for the same year as 8,149.4 million, 2,367 million of which were performed in the Melbourne metropolitan area. Corresponding VicRail figures for the whole of the network were 11.05 million tonnes and 3,091 million tonne/kilometres. 1.7 In the past three decades, road transport in Victoria has seen major technological improvements and growth, resulting in the use of high powered large capacity trucks showing significant advances in pay load capability, labour productivity and in the provision of transportation services which were not previously available to the community. Typical of these advances is the widespread consumption of deep frozen foods made possible as a result of the poliferation of sophisticated vehicles hauling large refrigerated pantechnicons maintaining produce and manufactured foods at strictly prescribed and control­ led temperatures during the course of transit. These immense community benefits accrueing from modern road transport have to be balanced out in terms of the sharing of the roads system with other users, especially private motorists. Environment protection - noise and air quality, are other important considerations. Road safety is also of vital importance.

1.8 The road transport industry itself, because of its highly competitive nature, is not without its problems. These problems will be addressed during the course of this report. But the fact that there are problems relating to competition within the industry is evidence of the vitality of the industry with the resultant beneficial effects of competition to the consumer. 1.9 The road transport industry has developed within the ~ontext of government regulation to protect the rail system to become the major force in the transportation of general freight in the State whilst sustaining a competitive pricing structure related to costs. It is now indispensable to the people of Victoria to the extent that, particularly in the Metro­ politan area, our way of life could not survive without it. 3.

1.10 In 1933, legislation was introduced in Victoria to regulate the growing road transport industry. Victorian Railways were experiencing diminishing freight business and the annual number of passenger journeys by rail on a per capita basis • was falling • 1.11 Commercial goods vehicles were brought under a mandatory licensing system. A feature of the system was that all licences were restrictive, either in terms of operating area or in respect of the types of goods which may be ca~ried on the vehicle. 1.12 The licensing authority, the Transport Reg­ ulation Board, was empowered, at its discretion, to issue special licences or permits to authorise vehicles to be operated beyond the usual prescribed radius in areas where there w~re no railway services. 1.13 In exercising this discretion, the Transport Regulation Board had to take into account the adequacy of existing transport service (usually rail) and the effect on such service if a road licence were granted.

1.14 Basically the same regulatory system is still in existence, but by 1980, it is effective only in Gippsland and in a small area outside the 80 kilometre radius of Melbourne because of the activities of road carriers operating under the freedom of Section 92 of the Commonwealth Constitution Act. 1.15 The Study reveals a strong and widespread demand for road freight services in the years preceding and following the Board of Inquiry into the Victorian Land Transport System, 1971-1972 (Sir Henry Bland Kt. CBE). Successive TAB Annual Reports in the 1970's mention numerous applications for road licences, especially for the carriage of less than car load (LCL) traffic. 1.16 The growth of intrastate road transport of goods under the protection of Section 92 ("border hopping") and the absurdity of some of these movements, e.g. Melbourne to Mount Gambier, South , and back to Warrnambool, requiring additional distances (Warrnambool-Mount Gambier and return) of some 40C kilometres or about 250 miles, is a clear indication of the lengths to which transport users are prepared to go to obtain the lower costs and other advanta~es of direct road delivery. 4.

1.17 In this scenario the gap between rail revenue and costs for intrastate freight operations is steadily widening- VicRail estimated the deficit at $61.~ million for 1979/80. Productivity is declining as a result of reduced patronage and costs are increasing through the inability of VicRail to shed costs at an equivalent rate. 1.18 Some concern was expressed to the Study Group in Gippsland that deregulation of road freight transport may place rail services in jeopardy. This is further evidence of a strong demand for road transport. 1.19 There is a common denominator in the circum­ stances pertaining in 1933 and those in 1980. It is that in many areas of the State there is insufficient general freight traffic to sustain duplicatin services. Given open competition, the railways general eight services will experience additional losses. In the longer term a net financial benefit will accrue to VicRail if its general freight business is shed and this could result in significant savings to the people of Victoria. 1.20 Several related matters were raised with the Group during the course of the Study:- the need for general control of the road freight industry; policing of legislation pertaining to goods vehicles; control of entry into the road freight industry; vehicle inspection; traffic congestion, metropolitan roads; special traffics, grains, timber, general merchandise and cement; fears by country interests of monopol­ isation in local areas by metropolitan based operators;

1.21 Each of these issues is dealt with in this report or, in the case of petroleum, grain, sawn timber and less than car load (LCL) traffic, cement and metropolitan roads, in reports submitted separately under corresponding headings. 5.

1.22 This study of the freight industry reveals that road transport, already performing the bulk of the freight task, is well placed to efficiently deal with the consequences of a scaling down or withdrawal of rail general freight services, which would permit VicRail to commit the whole weight of its resources into the role for which it has inherent advantages - the operation of block trains from siding to siding for the carriage of bulk commodities in high volumes. 1.23 In his Report of Inquiry into the Victorian Land Transport System (1972) Sir Henry Bland Kt.CBE.~ recommended that the Transport Regulation Board (TRBJ should exercise a "continuation of its discretionary licence and permit policies" (paragraph 18.18). In paragraph 18.19 he observed that "it would be something of a miracle if the railways were able to stand on their own feet in any sort of truly compet­ itive situation in less than 5 years". Earlier, in paragraph 9.11, he drew attention to what he saw as a need for continuing regulation because "the Railways system is larger and more wide flung than it should be and the Railways are inadequately equipped, organisationally and in physical facilities •••••••• So, the regulatory system must, for the time being, continue to have a protective quality which will allow the Railways to make the necessary adjustments and, by precluding the road operator from intruding in areas in which the Railways potentially have inherent advantages, prevent compromise of the prospects of the Railways successfully making their adjustments". 1.24 VicRail, then known as Victorian Railways, was the subject of a number of recommendations in the Report of the Board of Inquiry. It was suggested that "the railways should function primarily as a commercial undertaking" •••• "in such a way that their total revenues cover their total costs ••••••"• 1.25 A restructured railway management was suggested under a Board "comprising men from business and high executives from the railways service, including a Chief Executive, under an outside Chairman ••••••"• A number of other measures designed to improve overall efficiency, including a freight rating structure based on costs of providing service, withdrawing passenger services on certain country lines, closure of other lines and a review of general merchandise traffic, were also recommended. 6.

1.26 Road transport licensing policy The Bland Report recommended changes to the Commercial Goods Vehicles Act, proposing a new ~ype of 80 kilometre radius licences based on Melbourne and Portland respectively. In paragraph 19.4 it was stated that "taking the long term view, the scope for free competition between rail and road modes should be progressively extended" and that "there should be a further review, before the end of the 1970s of the character entrusted to this Board (of Inq~iry)". Another proposal was a system of surveillance of entry to the road transport industry, directed to the character and financial position of aspirants. 1.27 Developments since the Board of Inguiry into the Victorian Land Transport System Several of the Bland Report's recommendations were implemented during the 1970s, the most notable being the restructuring of railway management, the substitution of a number of unprofitable country rail passenger trains by buses and the closure of a number of uneconomic railway branch lines. 6y the end of 1979, VicRail had completed its network of country regional freight centres, a concept which received the support of the Board of Inquiry. 1.28 The Road Transport Act, 1973, provided, inter alia, two new types of road transport licences author­ ising the carriage of goods on journeys of up to 80 kilometres radius of Melbourne and Portland, known as EM and EP licences respectively. The Act also increased the maximum load capacity, from 4 tonnes to 6 tonnes, for vehicles used to carry the vehicle operator's own goods in a manner subservient to the principal course of trade. In addition, the Act introduced new qualitative licensing criteria, of the lines suggested in the Bland Report, to applicants for the EM or EP licences,

1.29 In practice the EM licence (80 kilometre radius) applied mainly to Geelong - Melbourne - Geelong traffic, much of which was already moving under temporary permits, and to the growing freight traffic to and from Western­ port, where significant industrial development was occurring. The EP licence was in recognition of the increasing tonnages moving through the Port of Portland. 7.

1.30 Although several important recommendations of the Bland Report have been implemented, and a considerable amount of reorganisation and rational­ isation undertaken by the Victorian Railways Board the viable railway freight business operated on commercial lines envisaged by Sir Henry Bland has not been brought about. Opportunities to focus its resources on bulk traffics potentially suited for the railways mode, have not been fully taken, although some progress has been made. It was unfortunate that, in the time scale proposed in the Bland Report for VicRail to undertake a fundamental revision of its role in the freight area, it was beset by a rate of inflation, especially in regard to labour costs, virtually unprecedentsd in the post World War II period. Opportunities to shed costs, especially labour, have been inhibited by delicate industrial relations considerations, and a background of growing unemployment in recent years.

1.31 Present road movement of freight within Victoria

In his report, Sir Henry Bland supplied Transport Regulation Board estimates that the total quantity of goods moving by road under the permit system in 1970 was close to 2 million tons annually, including timber, fertilisers, petroleum products, solid fuels (briquettes) and farm machinery. Then, as now, the quantity moving under the authority of the various annual licences issued by the Transport Regulation Board is unknown. 1.32 More recent statistics were not available at the time of this report but analyses of other data by the Study Group show that road transport dominates the freight transport task.

1.33 Commodities being carried by road transport include:-

per annum tonnes (approx.)

• Gippsland timber 70,188 Geelong cement 300,000 Fertilisers 500,000 Briquettes 210,000 B.

1.34 The Study Group was informed that temporary permits are issued because of a number of reasons, sometimes on a proportionate basis such as the 1/3 road, 2/3 rail system for Gippsland sawn timber. The reasons include recognition of transport users' needs for flexibility in the choice of transport to cater for particular circumstances and the inability t of VicRail to provide service during periods of industrial disputes or to supply the appropriate types of rail wagons. 1.35 . Road transport is thus already performing the major portion of the freight task in Victoria, carry­ ing a significant range of goods which, because of their nature are deemed to be not suited to rail transport. Included in this task are significant volumes of bulk commodities, being carried efficiently and at competitive rates. 1.36 Border crossing operations According to the TRB submission, the 1970s saw a steady escalation in the practice of border crossing whereby freight, consigned by road from one place in Victoria to another place in Victoria, is taken over the State ~order during the course of transit to attract the free trade provisions of Section 92 of the Commonwealth Constitution Act. In Appendix "D", a map provided by the Transport Regulation Board illustrates the areas affected, at the time of the Bland Report in 1972, and today, by border operations. By 1980, the practice had extended as near to Melbourne as Ballarat and Seymour. State­ ments made to the Study Group suggest that the contin­ uance of restrictions on the transport of goods by road had rendered the economics of the longer road haul favourable to the proliferation of "border hopping" as the practice is generally known. 1.37 Abolition of the system of road maintenance charges

An Act of Parliament amending Part II of the Commercial Goods Vehicle Act, which previously required owners of commercial goods vehicles of load capacities in excess of 4.1 tonnes to pay a contribut­ ion as compensation for wear and tear to public highways, made Part II of the Act no longer applic­ able on or after 1st ~uly 1979. 9.

1.38 This unpopular legislation, which had been in force since 1st April 1956, was subject to con­ siderable evasion including the establishment in South Australia of so called "straw" companies to avoid liability. In many cases, there had been a genuine inability to pay because of depressed \ cartage rates. 1.39 Successive annual reports of the Transport Regulation Board reveal about 4,000 prosecutions each year during the 1970s involving penalties in excess of $200,000 per annum. In 1977/78 for example, offenders were o~dered by the courts to pay $131,479 by way of road maintenance contributions, in addition to penalties. In the same year, invest­ igating officers of the TRB established a total of $508,587 in evaded or unpaid contributions for travel on Victorian highways. Penalties and Court Orders adjudged in the quasi-criminal jurisdiction, with associated liability of imprisonment in the event of non-payment, not only exacerbated the financial position of many transport operators, but actually resulted in the imprisonment of some of them. 1.40 Business franchise (Petroleum Products) Act The Act, given Royal Assent on 10th July 1979, established a system of licensing of wholesalers and retailers of motor spirit and diesel fuel, introducing a charge equal to 4.5% of the value of motor spirit and 7.1% of the value of diesel fuel sold for use in road vehicles. The Le slation, effective from 1st September 1979, provided that the licensing fees collected by the Commissioner of Business franchises, less cost of administration, should be paid into the "Roads and Special Projects fund" for disbursement to the Country Roads Board Fund and Transport fund in proportions determined by the Minister for Transport. 1.41 This method of payment to the cost of road usage was generally well received by those heavy transport operators who had been paying road maint­ enance charges. Unfair advantages being exploited by those who were evading the charges, were effect­ ively removed. 1 0.

1.42 In the Transport (Road Funds) Act, 1980, which, inter alia, came into force on 1st July 1980, certain provisions of the Business Franchise (Petroleum Products) Act 1979, were amended, so that .. no less than 75% of the total money credited to the "Roads and Special Projects Fund" shall be paid to the Country Roads Board. · ,.

1.43 Hichway blockades In April 1979, subcontractors, mainly owner­ drivers~ began a blockade of the at Razorback Mountain near Picton, N.S.~., using their semi-trailers to block the road to any other commercial goods vehicles. The campaign quickly spread to other States, including Victoria. Major blockades at Kal Kallo, Horsham, Melton, Murchison East and at other locations in the State brought road freight traffic to a halt, disrupting industry and commerce for several days. 1.44 Truck operators were drawing attention to their grievances, which included growing criticism of the system of road maintenance charges, a call for increased load capacities, and requests for Government intervention in the settling of viable cartage rates paid by freight forwarders to subcontractors. 1. 45 Truck Operators' Associations Another development of the 1970s, especially in the latter part of the decade, was the emergence of new operator associations, catering for owner drivers or small fleet operators, usually acting as sub-contractors to freight forwarders. 1.46 Both the Independent Truckers Association (ITA) and Australian Transport Association (AlA) were established in the late 1970s. The Study Group under­ stands that ITA membership is restricted to the owner­ driver possessing not more than 5 vehicles. The Professional Transport Drivers Association, which had been active in South Australia, established a branch at Geelong in 1977, soon followed by a branch at Horsham. There are now eight Victorian Branches with a total membership exceeding 900 persons. 11 •

1.47 The availability and intensive marketing of relatively cheap and efficient two-way radio sets, • suitable for installation in vehicles and tuned to "citizen's band" frequencies, which began several years ago, has given the truck operator a communic­ ations f~cility which encourages frequent day by day airing of industry matters and provides opportunities for initiatives to foster associations. 1.48 Total membership of all industry associations representing owner-drivers and small fleet operators is at a record level, according to information given to the Study •

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2. SUBfiJISSIONS

2.1 Notices inserted in metropolitan and country newspapers advised of the appointment of the Study and invited written submissions from interested , persons and organisations. Letters conveying the same advice, were posted to 81 organisations, including Government Authorities.

2.2 . A total of 56 written submissions in which reference was made to deregulation of road freight transport, was received by the Study Croup. 2.3 Major contributions were made by the Transport ~orkers' Union, Victorian farmers and Graziers Association, Professional Transport Drivers Association, Australian Wheat 8Lard, Victorian Road Transport Association, Grain Elevators Board, Urban freight Croup Department of Civil Engineering (Transport Croup~ at Monash University, Victorian Sawmillers' Association and several municipalities. The Port Authorities of Melbourne and Ceelong, the Victorian Chamber of Manufactures and the Victorian Automobile Chamber of Commerce also forwarded valuable and useful submissions. 2.4 Government Departments, Authorities and Agencies concerned with planning, roads, transport and road safety also made significant submissions. A full list of all persons, organisations, private and Government, having made submissions is contained in Appendix "A". 2.5 Analysis of the submissions revealed a wide variety of views, many of them displaying self interest motives. A not uncommon attitude conveyed in written material and during discussions was a call for freedom of choice of mode of transport but maintenance of an efficient comprehensive railway freight network to avoid monopolisation by road transport.

2.6 Transport operators' associations called for removal of road restrictions but urged control of I' entry into the industry on the grounds that deregul­ ation would lead to intense competition. The con­ sequences would be overloading, rate cutting and other undesirable practices. 13.

2.7 VicRail called for continuing controls over bulk traffics including grains, superphosphate, cement and briquettes, and submitted that an uncontrolled process of deregulation would bring chaotic conditions in the road transport industry forcing many small operators out of business, especially in the Country. ' 2.8 The concept of qualitative licensing of truck operators received support in the TRB submission, which also proposed a number of alternative licences for goods vehicles, ranging from State wide operating rights to .local licences. 2.9 The submissions were extremely valuable, not only drawing attention to issues, but providing a sampling of the weight of opinion.

2.10 Every submission was acknowledged in writing and arrangements were made for discussions with delegates, where this had been requested. In other cases the Study Group, on its own volition, sought meetings with delegates or persons acting on their own behalf. 2.11 further reference to submissions is made as related issues are analysed and investigated in the course of this Study report. 1 4.

3. FIELD WORK UNDERTAKEN BY STUDY GROUP

3,1 In the course of its enquiries and invest- igations, the Study Group visited Horsham, Hamilton, Portland, Warrnambool, Ballarat, Beech Forest, Geelong, Bairnsdale, Lakes Entrance, Drbost, Korumburra, Leongatha, Foster, Wycheproof, Mildura, Swan Hill, , Shepparton, Wangaratta, -, Bendigo, Morwell, Drouin and Warragul, Heywood and Talbot. 3.2 Industrial installations, warehouses and commercial establishments visited included:- railway goods yards, Melbourne, Westall and Wodonga, Dandenong and Orbost; road transport terminal, TNT Management Pty. Ltd., trading as Comet Overnight Transport; railway regional freight centres at Horsham, Orbost, Morwell, Bairnsdale, Wodonga and Dandenong; railway workshops at Newport; port facilities at Melbourne, Geelong and Portland; grain storages - Marmalake, Geelong and Wycheproof; sawmill operated by APM Forests Pty. Ltd. at Waygara, near Drbost; supermarket, Coles New World, Doncaster; paper mills, APM Ltd., Maryvale;

Farmers and Graziers Cooperative Ltd. (woolstore) Albury; Milos Cool Stores and Warehouse, Wodonga; bogie exchange, Wodonga rail yards; 15.

bulk cement and superphosphate storages, Wodonga rail yards; Albury railway station; .. Mildura railway station; Hamilton-Noradjuha railway (Balmoral line); 3.3 At each of the establishments listed in paragraph 3.2, the packing, sorting, loading, unloading and handling of freight was observed in the presence of management, who explained procedures. The selection of establishments represents a cross sampling of the freight transport task including shipping as well as road and rail, bulk commodities, general merchandise and parcels traffic, warehousing and bulk storage. 3.4 During visits to country areas, the Study Group met Consultative Committees, established under the provisions of the Ministry of Transport (Consul­ tative Committees) Act for the Gippsland, Northern, South Western, Western and North Eastern transport regions. The whole transport scene was discussed but the question of deregulation and the future of road transport received special attention. The meetings were fruitful and of considerable assistance to the Study Group •

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4. EXISTING ROAD TRANSPORT LICENSING AND REGULATION POLICY

4.1 The Commercial Goods Vehicles Act provides that every goods vehicle used in Victoria for the carriage of goods for hire or reward or in the course of any trade or business LJhatsoever, shall be licensed by the Transport Regulation Board. Only primary producer vehicles of not more than 2 tonnes load capacity are exempt. The Act does not apply to commercial vehicles being used solely for the purposes of interstate trade, 4.2 The owner of the vehicle is responsible for- its licensing with the TRO. He has a choice of any one of 12 as of right "E 11 licences, specified in the Act. The conditions of the respective licences are designed for a variety of truck operations. A country general carrier may therefore select an EC licence as being most related to his needs whereas his metro­ politan counterpart may select an EA licence. The carrier of fresh orchard and market garden produce would choose the EH licence. 4.3 A feature of every one of the various "E" licences is that the operator is restricted, either in terms of operating radius, or in the types of goods or commodities he may carry. 4.4 The EM licence, which authorises road transport operations within a radius of 80 kilometres radius of Melbourne and the Portland EP licence, also 80 kilometres radius, provide the largest operational areas for hire and reward carriers. There are 551 EM licences and

57 EP licences on issue. About 40,670 vehicles are k authorised by EA, EB and EC licences, which provide -" a 40 kilometre operating radius. 7,806 vehicles on the TRB register are covered by EH licence, the conditions of which are confined to a prescribed range of goods. Ancillary operators holding ED, EG, EG(S) and El licences may only carry their own goods. Furthermore, the EG licensee is confined to a radius of 80 kilometres from his principal place of business. 17.

4.5 In cases where none of the "E" licences suit the particular needs of the owner of a truck, he may apply to the Transport Regulation Board for a special licence, known as a "D" (discretionary) licence. His application is required by law to be published in the Government Gazette. Interested parties, such as VicRail or road transport operators, may object on the grounds that existing services are adequate to meet the need. At public hearings, the TRB, using criteria set out in Section 8 of the Act, will deter­ mine whether or not the application should be granted after hearing sworn evidence for and against. The TRB decision is subject to approval by Governor-in­ Council. 4.6 As at 1st February 1980, there was a total of 117,381 vehicles in respect of which "E" licences had been issued, including 17,739 vehicles, owned by primary producers. Another 8,696 vehicles were subject to 11 0 11 licences, issued at the discretion of the Board. It is estimated by the Transport Regulation Board that, in addition, another 14,000 goods vehicles, registered for interstate use only, are travelling along Victorian roads regularly or from time to time. Full details, showing breakdowns in licence types and load capacities are shown in Appendix "B". 4.7 The owner of a licensed vehicle wishing to use it on a journey outside the prescribed licence radius or to carry goods of a type not nominated in the licence may apply to the Board for a permit to operate temporarily in a manne~ not specified in the licence. Some commodities and general merchandise are considered by the Transport Regulation Board as railway traffic and under normal circumstances road permits would not be available. There is however a large range of goods for which permits are granted without question, subject to payment of permit fee. 4.8 Annual fees for "E" licences, prescribed by Governor-in-Council vary between $7.00 and $750 per annum, depending on the licence classification and pay load capacity of the vehicles. The Commercial .. Goods Vehicles Act sets the maximum annual fee for a discretionary ("D"l licence of 11,000 and $30 for a temporary permit. 1 8.

4.9 During the year ending 30th June 1979, a sum of $5,397,032 by way of licence fees and $1,147,012 in goods permit fees, was paid to the Transport. Regulation Board. The Board's cost of administration of the licence and permit system, and its enforcement, was $1.08 million in the same period. The TRB Annual ... Report for 1978/79 also shows that 1,420 persons were convicted for offences against the Commercial Goods Vehicles Act, who were fined a total of $99,458.00. These fines are paid into the Transport Regulation fund.

4.10 "E" licence~ are granted for periods of 12 months. Renewal assessments are sent to licence holders to remind them of the need to seek renewals. "D'' licences are granted for periods of 4 years, subject to payment of annual fees. This four year tenure has some ramifications in respect of licence holders operating in non-rail areas, who receive a measure of protection from duplication of service. Under present legislation these licence holders have a right to object to the grant of a licence to operate in competition. In the event of deregulation, it appears that measures would have to be taken to nullify the right to object, or remove the need for operating licences. If any bulk commodity is pre­ scribed as being subject to continuing regulation, "E" licence rights would have to be carriea forward, unless other arrangements are made. 4.11 The discretionary policy currently exercised by the Transport Regulation Board is primarily one of commodity regulation. Items such as cement sheets, uncrated glass, hides and skins, earthenware, drain pipes, new furniture, television receivers, motor body panels and perishable goods are automatically authorised for carriage on journeys by road transport outside the radius of licences by the temporary permit system.

4.12 The TRB apparently sees these commodities and products as not being suitable for conveyance by rail because of handling problems or susceptibility • to damage in transit. 1 9.

4.13 Road transport discretionary policy The existing discretionary criteria for the regulation of road transport is contained in Section 8 of the Commercial Goods Vehicles Act. It reads as • follows:- "Before granting or refusing to grant any licence the Board shall have regard primarily to the interests of the public generally including the interests of persons requiring as well as of persons providing facilities for transport of goods, and without restricting the generality of the foregoing requirement shall take into consideration: (a) the advantages of the service proposed to be provided and the convenience which would be afforded to the public by the provision of such services; (b) the existing transportation service for the carriage of goods upon the routes or within the area proposed to be served in relation to (i) its present adequacy and probabilities of improvement to meet all reasonable public demands; (ii) the effect upon such existing service of the service proposed to be provided; (c) the benefit to any particular district or districts or to the residents thereof which would be afforded by the service proposed to be provided;

(ea) the disadvantages suffered or likely to be suffered by any person engaged in any manufacturing or processing industry beyond the radius of 80 kilometres from the post office at the corner of Bourke Street and Elizabeth Street in the City of Melbourne by reason of the location of that industry, and in particular the relative cost and convenience to any such person of the available forms of transport for the materials used in such industry and the manufactured articles or products of such industry; 2 o.

(d) the condition of the roads to be included in any proposed route or area; (e) the character qualifications and financial stability of the applicant, and (f) any other relevant matters which the Board considers will affect the interests of the public." 4.14 The whole basis of road freight regulation in Victoria, except for that portion of the road transport task which is autho~ised by the "as of right licences" has evolved from the principles laid down in Section B. Paragraph (ea) suggests that only those users of transport who are engaged in any manufacturing or processing industry beyond a radius of 80 kilometres of Melbourne are entitled to benefit from the relative cost and convenience of competing transport services, road or rail, although the preamble to Section 8 requires the Transport Regulation Board to "have regard primarily to the interests of the public generally, including the interests of persons requiring as well as of persons providing facilities for transport of goods". In practice, it appears that with the exception of industries which qualify under paragraph (ea) of Section B, the interests of persons requiring transport have been subjugated, preferential consider­ ation being given to the "adequacy" of existing services (usually rail) and the effect on such service if a road licence is granted. 4.15 Although the expression "public interest" is not defined it seems clear that it has now ceased to have its original meaning. In the early days of transport regulation the ''public interest" was perceived as being the continuance of a viable comprehensive network of railway services. Competition from the motor truck had to be regulated in such a way that duplication of transport services was prevented; road transport was thus authorised in the role of feeder services or to provide services in non-rail areas. 4.16 Earlier in this report, brief comment was made • in the developments in road freight regulation in Victoria in the eight years since the Board of Inquiry into the Victorian Land Transport System. The report of the Board addressed the evolution of road freight regulation at length, and made recommendations as to its phased withdrawal. 21.

4.17 In 1980, the Victorian regulatory system, based on the TRB 1 s interpretation of Section 8, approved by Governor-in-Council, is still producing, in principle, measures which purport to have the "public interest", "adequacy of" and "effect on existing (rail) transport service(s)" as reasons for refusal to grant discretionary licences. Thus, for example, traffics such as wool, East Gippsland timber and miscellaneous mixed merchandise are still seen, primarily, as rail traffic. Industries related to these traffics, and consumers and users of these goods, unless they qualify under Bection 8 (ea) - decentralised industries - are denied the ability to select the cheapest, most convenient best quality transport most suited to their needs. By 1980, this amounts to discrimination against a relatively small proportion of the community. Perhaps the most serious anomaly is that the overall public interest or common good, is not being served, because none of the traffics mentioned as reserved rail traffic is producing revenue which is covering rail costs. The gap between rail revenue and costs of providing freight services is considerable, exceeding 45 cents in the dollar in some cases. This revenue deficiency and other aspects of VicRail freight operations are addressed in more detail later in this report. 4.18 Paragraph (d) of Section 8 of the Commercial Goods Vehicles Act required the TRB to consider the "condition" of the roads over the proposed route when considering applications for road licences. For all intents and purposes this appears to be an outdated criterion and not a contemporary cause for the restricted regulation of road freight transport, although some Shire Councils have requested continuation of this type of regulation in anticipation of commercial deregulation and the possibility of transfer of grain haulage from rail to road. 4.19 The Study Group addressed itself to the effect on the road system of deregulation of road freight transport in terms of road capacity. The appreciation is contained in Part VII of this report and is analysed 11 in Appendix "C • 22.

4.20 Country route services in non-rail areas

The Transport Regulation Board also ~egulates road freight services in country non-rail areas operating over journeys outside the 40 kilometres radius authorised in the "as of right" licences. An existing route service carrier, who is the holder of the discretionary licence ("D" licence) is protected under present legislation from competitive services whilst he continues to provide an adequate service within the meaning of the Commercial Goods Vehicles Act. 4.21 The Gippsland Transport Regional Consultative Committee expressed concern to the Study Group that route freight services authorised by "D'' licences and protected under existing legislation would be adversely affected on deregulation. The Committee expressed a fear that competition for the fixed volume of traffic offering for carriage, usually from the nearest railhead to small towns along the route of the licensed carrier, would render his position unprofitable, reduce frequency of service anq introduce a general state of unreliability. 4.22 The Study reveals that local services such as these have operated successfully for many years, in the face of open competition, in areas within operating radii for which ''as of right" EC licences have been available. In addition, in border areas, especially in the north-east and west of the State, local carriers have had to contend with competition by border hoppers. In these areas, services appear to have been maintained and in many cases transport users have had the benefit of better quality and lower cost services. 4.23 In regard to the transport of irregular consignments of small lots of freights to isolated towns and settlements situated away from the main highways, the Study Group is satisfied that private enterprise road transport, given the freedom to operate, will provide the necessary service. This particular subject was raised in discussion with delegates of the Victorian Road Transport Association. The delegates were confident in their expectations that the road transport industry would provide competitive services, establishing depots in the metropolitan area and in country towns, and operating collection and delivery services in local areas. 23.

4.25 Border hopping "Border hopping" represents an intolerable waste of fuel and transport resources. Although it is difficult to quantify the extent of the otherwise unnecessary movement of road trucks over the border, there is no doubt that there is considerable wastage of resources. It was reported to the Study that large areas of the State are serviced by "border hoppers", including Ballarat, Colac, Seymour, Maryborough and Castlemaine, all considerable distances from the State border. 4.26 The TRB submission reveals that about 140 semi-trailer loads (about 2,530 tonnes net) of freight is carried from Melbourne each week, destined for Victorian country towns, but operating as interstate transport to escape licensing and TRB regulatory policy. This represents about 7,000 trips per year. If the average, additional distance travelled to the border is 40 kilometres per trip, a conservative estimate, an annual total distance of about 280,000 kilometres is involved, using more than 150,000 litres of fuel. Added to this is the border hopping of wool, butter and forest products, also in large volumes in t~e course of transport from country areas of Victoria to Geelong or Melbourne. The Study Group estimates that upwards of 300,000 litres of fuel may be wasted each year by the practice of border hopping. 4.27 During the course of discussions with interested parties, statements were made that not all border hoppers regularly operate across the border, only doing so when there was a risk of being checked by enforcement officers of the T~B. On the other hand, there is evidence that a considerable quantity of Victorian freight is in fact being taken over the border, before final delivery is effected in Victoria. 4.28 The main motivation of a border hopper is to avoid restrictions under the Commercial Goods Vehicles Act. from a practical point of view, he must contain his incremental costs arising from the longer journey within the limits set by the freight rate of VicRail or other competitive border hoppers. The greater his delivery destination from the State border, the stronger is the temptation to cheat by running short of the border. 24.

4.29 The other motivation is to avoid motor registration fees, not applicable to genuine interstate operations. Apart from the loss of State revenue in cases where. trucks registered for exdlusive interstate use are used on intrastate journeys which do not attract the exemption afforded by Section 92, the practice of subterfuge is detrimental to the overall interests of the road transport industry, facilitating entry into the industry of those with insufficient capital, and encouraging unrealistic rate cutting.

4.30 Deregulatio~ will not change the position regarding evasion of motor registration fees. Offenders convicted of the offence should be obliged to pay the amount of fees evaded, plus motor reg­ istration stamp duty, in addition to a penalty. Existing penalties in the Motor Car Act fall well short of this. 25.

5. VICTORIAN RAILWAYS BOARD - SUBMISSION

5.1 Victorian Railways Board The VRB made a lengthy written submission to the Study Group setting out its views relating to road freight deregulation and paying specific attention to what it sees as VicRail's "role as a total transport service". 5.2 Drawing attention to the fact that in the financial year ending 30th June 1979, bulk commodity traffics of grains, Geelong cement, Latrobe Valley briquettes, fertilisers and timber (almost all of which was Gippsland timber) yielded $43.32 million out of a total intrastate revenue of $71.87 million for all types of freight, the submission urged a "need for a controlled progress towards deregulation" and that the "lifting of controls on road transport is carried out on a commodity basis over a transit­ ionary period of adequate duration". It further suggested that the railways "retain those bulk traffics - grain, superphosphate, cement, solid and liquid fuels ••.••••••• which rail can handle, provided that high volume is ensured (and) clearly provide the service at lower resource cost than any other mode". 5.3 The submission also observed that "because of the relatively small size of the total transport market (in Victoria) •••••••••• it is certain that rail costs cannot be kept down to an acceptable level if the limited amount of bulk business, which is best and economically suited to the rail mode, has to be shared with road transport". 5.4 Emphasis was placed in the submission on the argument that the road transport industry is not meeting its share of the costs of construction, maintenance and infrastructure of the road system. The submission argued that road operators "should pay their proper share". In another section of the submission, the VRB took a different approach suggest- ing that the "revenue supplement d to railways in respect of intra state traffic should reflect those elements of cost which the community at large bears substantially for road operators" drawing an analogy with "track construction and maintenance, signalling, safeworking and traffic control". 2 El.

5.5 Following another line in its argument for equal opportunities, VicRail paid attention to its aim of being in a position to provide a "total t.rans­ port service", claiming that it has been unable to obtain EM licences for its 35 road freight vehicles, being restricted to a radius of 40 kilometres of GPO Melbourne as against the BD kilometre radius under EM licence, available to road operator. Pursuing this claim of inequality, the VicRail said that "as a result of this unreasonable restriction (of 40 kilo­ metre radius of Melbourne) VicRail cannot provide the high standard of guaranteed government owned service which the communities in locations close to Melbourne, such as Geelong, Kyneton, Woodend, Yea, He a 1 e s v i 11 e , et c. • • • • • • • • des i re , and have a right to expect".

5.6 VicRail 1 s "common carrier" role under the Railways Act was also highlighted. The thrust of the VRB contention is that in the present day and age, the status of a common carrier, as defined in mercant­ ile law (the Railways Act is silent as to an inter­ pretation of the expression) is a burden, putting its competitive capability at a distinct disadvantage vis a vis road transport, which is free to "pick and choose traffic". 5.7 Further argument is that VicRail is in an invidious position regarding its restricted authority to operate its own road vehicles, its common carrier obligations, and lack of autonomy to set its own freight rates, having regard to practices in "other Australian States" and "overseas countries". It contends that "the VR Board must have the right to operate road vehicles throughout the State under the same conditions as its road competitors".

5.8 freisht ~olicy Under the heading "VicRail's Role as a Total Transport Service" the submission summarised frei t policy, seeing the task as falling into two categories:- " LCL (less than car load) and single wagon movements between multiple origins and destinations. Bulk or multiple wagon load movements between single origins and destinations. 27.

5.9 In reference to its concept of a total transport service, VicRail's submission states that "transport users desire a complete door to door service and are no longer prepared to deal with separate organisations who are each concerned with only one separate aspect of the transport and dis­ tribution function". The submission suggested that clients "want to be involved with only one trans­ action, and one documentation", and suggested that, accordingly, VicRail should be in a position and have the capability of providing a total door to door service. 5.10 Regional freight centres The first centre at Horsham was made operational in April 1976. There are now 35 centres located throughout those parts of the State served by rail. Overnight trains from Melbourne service the centres. Generally, bogie vans are used and there is increasing palletisation and unitisation of freight. These improved methods of handling and the use of bogie vehicles have "considerably reduced damage" to goods in transit, according to the submission. 5.11 VicRail's submission also points out that as a result of the development of freight centres the number of country stations receiving general goods have been reduced from about 550 to 35. At the same time about 40 off rail towns "not previously receiving a rail service have been incorporated into the freight centre concept". 5.12 Freight is delivered to the country consignee's premises at no extra cost except within the freight centre town itself. Collection from a country con­ signor is also at no extra cost, if the client's premises are not in the freight centre town. Comment­ ing on the regional freight centre system the VRB stated "that the •••••• concept has almost universally been well accepted" and claimed ''increased tonneage through the centres" •

• Making further comment, VicRail submitted "it is essential that a (VicRail) road service be developed at the Melbourne end, either by the use of contract road operators or by operating departmental road vehicles so that VicRail can offer a complete door-to-door service". 2 8.

6. TRANSPORT REGULATION BOARD - SUBMISSION

6.1 The Transport Regulation Board proposes the continuance of a truck licensing scheme, giving five alternative options as to radius of operations and .. issue of discretionary licences authorising State­ wide operations except for any bulk commodity which may be best suited for transport by rail. Another option is the grant of State-wide operating rights in res~ect of every goods vehicle. 6.2 The option most favoured by the Board is the progressive extension of road freedoms under the present legislation, to gradualise the effects on railway revenue and "sensitive public interests such as traffic cont;estion and environrnencal issues". Dther "significant br.nefits" could be gai cd iJy a pro ressive easin~ of road restrictiors, according to the Board, including the ability to monitor the effects of progressive deregulation, giving the Board opportunity to evaluate the consequences and aovise the Government accordingly • • 3 In re£ard to control of entry into the road transport industry, the TAB draus attention, in detail, to arguments for and against quantitative and qual­ itative licensing and operator competency. It dismisses the concept of quantity licensing as being neither desirable or practical. It submitted that "the administ­ ration of quantity licensing, other than in situations of a monopoly franchise as in the case of passenger services, carries complexities of such dimensions that any suggestion of precise control over outcome in terms of economic effects "on the Industry would have to be treated with caution••••••••• Arguments linking over­ capacity with rate cutting, overloading, excessive hours of driving and speeding, seem to have limited foundation as perhaps these are more related to individual economic objectives than to pressures stemming from overcapacity and hence lack of stability in the Industry. To link the two in a substantial way would be to suggest that a stable industry would see a cessation of such practices - a most unlikely situation". 29.

"Ease of entry into the 'as of right' section of the Industry is put forward by some as justification for entry controls. Bankruptcy is said to be high in the Road Transport Industry and licensing is seen by many to provide an avenue to insist on having a reasonable level of equity in plant and equipment to reduce the failure rate; but is intervention in the activities of individuals and firms justified if the objective is simply to protect them from making poor business decisions in a free enterprise system?" The submission st.ated that:- "This Board has not attempted to influence the supply aspects of road freight transport beyond applying the requirements of Section 8 of the Commercial Goods Vehicles Act to applications and objections. It has taken the view, and believes that experience has shown it to be correct, that market forces will dictate the responses and outcomes and that deliberate control over capacity is not necessary". 6.4 The Board points out that the expression "qualitative" licensing, as used in reference to the road transport industry, refers to the qualifications of the owner of the truck, not the quality of service he provides in terms of performance standards and specialisation in goods transport. The submission observes that "the idea of assessing whether a person is of good repute and a 'fit' person to enter a particular sector of the industry is not new to this Board ••••••• Drivers entering the taxi industry are screened on this basis and applicants for EM and EP licences are required to satisfy the Board they are of good character and have the necessary qualific­ ations and financial stability. However, the Board makes no pretence that assessments of this nature are probative and, added to this, there is a growing tendency to challenge an unfavourable outcome". It continued by stating that:- "The refusal of an application on grounds of prior convictions relating to commercial vehicle operations has its difficulties. Even if a licence were to be refused, there would be nothing to prevent a wife or a relative making the same application. This circumvention could occur on a larger scale in the case of a company by a change of name, a change of shareholding, or purchase of another company". 3 0.

"Whilst this discussion of the fit and proper person concept indicates that it is an area ~hich poses great difficulties, the Board would hesitate to sug t that it is a consideration that should be ent rely dispensed with. It should remain at least as an indicator of an applicant's acceptability .. based on his history of compliance with road law". 6.5 The Board also commented on the concept of operator competency regulations of the type practised in the United Kingdom, drawing attention to certain difficulties, especially those associated with the framing of competenty regulations. The submission observes that "the Board has had little experience in dealing with the issues associated with competency in the goods transport industry and would have to accept the views advanced by other authorities concern­ ing the complexities that may be encountered. At the same time, the fact that some evidence of competency is a requirement to gain entry to the industry in the UK and ECC countries cannot be disregarded, even though there may be fundamental differences between conditions prevailing in the EEC countries and Australia. Clearly, it is a matter that will require careful consideration in a system based on qualitative controls". 6.6 In relation to consideration of the financial stability of those aspiring to enter the industry, a consideration suggested by operator associations, the Board said that "assessment of the financial standing of an applicant also poses difficulties, however, it has not arisen as a major consideration in dealing with discretionary licences. financial stability is also one of the requirements included in criteria for issue of EM and EP licences, but generally there is little follow up on details provided. "for many years prospective purchasers of taxi licences were required to produce a range of document­ ation relating to assets and cash at bank, but exper­ ience has led the Board to attach less importance to this, leaving the outworkings of business decisions to take their course". 31.

The Board concluded its views on this aspect by saying that:- "The whole thrust of community attitudes towards confidentiality of private information, in an environment in which credit checks and other centralised information banks are often regarded as an infringement of people's rights, raises doubts about the screening process. •••••••• Further, a large public undertaking wishing to enter the road transport industry could present a formidable task". 6.7 The question of depot facilities and mainten­ ance workshops for truck operators received attention in the Board's s~bmission ••••••••••• "Scrutiny of depot facilities intended to be used by applicants for transport licences and of maintenance standards is also an initiative taken by licensing authorities in the UK and in terms of efficiency of operation and environmental considerations has much to recommend it. Standards which must be met relate to off-street parking space for the number of vehicles likely to use the premises, existence of facilities for servicing and maintenance of vehicles, undercover space for the conduct of administration, hardstanding for the operation of mechanical loading and unloading equip­ ment, etc". "While there is an ability to ensure these standards are met by applicants as a pre-licensing requirement, experience with the licensing of tow trucks over recent years has highlighted a ploy used by some tow truck applicants to enter into a leasing agreement for particular premises to satisfy the requirement that they have suitable premises from which to operate. Once a licence has been issued however, the premises are vacated, the lease termin­ ated and vehicles operated from an entirely different location".

"It is possible to frame legislation in such a way that a licence could be void under statute if an unauthorised transfer of operational depot took place, but when the number of depots on which checks .. might need to be conducted is considered, the chance of detection would be remote". 32.

"A equally important aspect which would need careful evaluation is the extent of the administrative task involved in inspection of depot facilities ~n conjunction with licence applications. The task would obviously be considerable, and unless a sub­ stantial staff was employed almost exclusively to , conduct depot inspections, quite long delays might be imposed before licence applications could be processed and determined". 6.8 Commenting on compulsory vehicle inspection, the Boa~d referred to a report entitled "Heavy Commer­ cial Vehicle Speed and Operational Safety Study", prepared in 1978 by a steering committee, on which it was represented, appointed by the then Chief Secretary's Department. In pointing out that the Committee did not favour a compulsory periodic inspection scheme because "of the low incidence of vehicle defect caused accidents and the difficulty of detecting those defects in any compulsory periodic inspection scheme", the TR6 submission draws attention to the results of special roadside checks of trucks at Seymour and Officer in 1979, providing the following details and comments:-

Road Safety Location Date Fault Percentage

Officer 13th July 58 Seymour 17th September 65 Officer 19th September 67

The Board's submission stated that "these results can be considered in conjunction with figures contained in a document Road Traffic Accidents Involving Casualties published by the Australian Bureau of Statistics in November 1979. These show that the percentages of commercial vehicles (utilities, panel vans, semi-trailers and other trucks) involved in both single and multi vehicle notifiable casualty accidents over the 1973-78 period inclusive were:-

« Year Percentage

1973 1 6. 1 1974 1 5. 9 1 975 1 5. 8 1976 1 5. 8 1977 1 5. 7 1978 1 5. 7 33.

In 1979, after a number of serious truck crashes in which the mechanical condition of the vehicles was frequently a contributing factor, the Government announced ita intention to have inspections of all such vehicles transferred from Authorised Inspection Stations to inspection stations to be operated by the Department of Motor Transport". 6.9 The Transport Regulation Board's submission mentions its experience in routine compulsory inspect­ ion of buses, taxis and tqw trucks over many years, and in enforcement generally. It offers the opinion that heavy vehicles should be subject to periodic inspections over and above the limited roadworthiness checks which are carried out at the roadside by highway enforcement officers without the aid of mechanical testing devices. 34.

7. EXTENT OF SHIFT OF FREIGHT FROM RAIL TO ROAD IN THE EVENT OF DEREGULATION

7.1 Extensive study and discussions with producers, management of secondary industries, road operators and marketing authorities reveals that the extent of the shift, when deregulation is implemented, may not be as great as some interested parties had feared. There are indications that some consignors and consign­ ees of 9eneral freight will continue to commit a sign­ ificant proportion pf their freight to rail transport using each mode to best advantage, playing one off against the other. 7.2 Loading and unloading facilities for grains and briquettes are railway oriented. Railway siding storages, especially for wheat and briquettes, and to a lesser extent cement, paper and timber, is another factor which will influence the choice of mode. 7.3 In the assessment of traffic shifts in the event of complete deregulation, the Study Group has noted that VicRail has to make more progress towards the optimum use of block trains carrying bulk materials from siding to siding or storage, so as to provide efficient transport of these commodities at the lowest possible cost. 7.4 The impact of deregulation on VicRail's revenue is expected to be minimal in the early stages, progress­ ively increasing as road operators equip themselves with additional vehicles, including specialised vehicles to carry bulk commodities. The rate of substitution of road services will be very closely related, as far as bulk traffics are concerned, to VicRail's ability to improve service and shed costs so as to maintain competitive rates. 7.5 During the course of its investigations, the Study Group visited railway regional freight centres at Morwell, Horsham, Orbost, Korumburra and Wodonga. It also observed the handling of miscellaneous less than car load (LCL) freight at Melbourne Goods Yard and held discussions with several country based VicRail Contractor carriers operating from freight centres. The Group noted the high labour force, especially at the Melbourne Goods Yard. According to VicRail documents, 90% of the direct cost of the rail movement of miscellaneoud goods is taken up by labour. 3 5.

7.6 In areas where transport regulation is effective the Study predicts that VicRail will lose about SO% of its LCL traffic because road transport operators will offer services at rates significantly lower than those currently charged by VicRail.

7.7 The principal intrastate traffics carried by rail which are subject to road transport restrictions are listed below, showing 1978/79 results in tonnes, revenue and as a percentage of VicRail 1 s total revenue of $71,87 million derived from the carriage of intra­ state freight. Percentage of Commodity Tonnes Revenue intrastate 000 000 revenue

Grains 2.752 2 5. 73 35,7 Cement 714 4.46 6.2 Fertilisers 594 3.74 5. 1 Briquettes 690 5.33 7.3

Totals 4.750 39.26 54.3

7,8 Deregulation should have no bearing on VicRail's business in the carriage of steel from New South Wales, minerals and quarry products, petroleum products, forwarding agents' traffic and overseas containers as VicRail is already openly competing, without the protection of road transport regulation •

• 36.

7.9 In summary, it is predicted that VicRail 1 s revenue loss during the first year of deregu~ation could be to the order of $10 million based on 19,78/79 revenue levels. The biggest loss in the first year will be LCL traffic. Based on patterns of transport choice which have emerged in recent years in border areas, it is estimated that LCL rail traffic will fall by about 15-20~ on average, reaching as high as 50% in Gippsland. 7.10 In respect of grains, the Study Group predicts a loss of up to 10% overall, but up to 20-25% for barley and oats. E3timations beyond the first year of deregulation are most difficult and would amount to guesswork. Further details are given in Appendix "C".

7. 11 Effect of deregulation on the road system The Urban Freight Group in its written sub­ mission, stated that there will be a "large increase" in road freight traffic "generally throughout the middle and outer suburbs as carriers travel directly between commercial and industrial areas and country and interstate destinations". Concern about increased road transport following deregulation was also expressed by the Northern Municipalities (Metropolitan) Transport Group and by several country municipalities. 7.12 The Study Group has made a detailed invest- igation as to the consequences of deregulation in regard to the roads system. As far as the metropolitan area is concerned, a shift of freight from rail to road in the event of deregulation will not perceptibly increase the volume of truck traffic. In some areas, especially in the vicinity of railway goods yards, there will be the beneficial effect of decreased congestion, brought about by dispersal of the task direct to the final destination from the originating source.

7.13 In country areas, except as mentioned in 7.14, the main effect will be confined to the main transport corridors, as deregulation of road transport simply provides users with freedom of choice of linehaul. Local distribution and collection of freight has always been carried out by road transport. 37.

7.14 Exceptions occur where deregulation of road transport may generate heavy volumes of bulk commodities from the point of production or storage on rail sidings movin through local towns or urban centres to and from t main transport corridor over roads which are the responsibility of municipalities. The sensitive areas have been identified as Geelong West (cement), the Portland township area (wheat) roads in grain growing areas, Commercial Road, Morwell (briquettes) and McDonald Street-Maryvale Road, Morwell (paper products).

7.15 Estimates of addit~onal truck movements brought about by the lifting of restrictions on road transport were calculated by the Study Group according to individual highways and localities. The data was then compared with CRB traffic census and other traffic counts to gauge the effect of deregulation on the roads system. 38.

8. ATTRIBUTABLE COSTS Of HEAVY ROAD TRANSPORT

8.1 In its written submission, the Victorian Railways Board said that "other aspects of vital importance which must be resolved, in order to put the rail and road modes on an equal footing, before road freedoms are increased in Victoria, are

the determination of a workable and 'equitable method for ensuring that the operators or heavy transport meet their proper share of the additional road and other infrastructure costs brought about by their operations ••••••.•.•• " 8.2 In the report of the Board of Inquiry, Sir Henry Bland estimated taxes, road maintenance charges and fuel excise ertaining to heavy vehicles was collectively ~32 mi ion less than attributable costs in respect of vehicles of over 4 tonnes load capacity. VicRail's submission points out that on present day cost levels, the figure would be SB1 million, whereas the "railway revenue supplement for all intrastate freight in 1980 is about ~69 million". The submission does not appear to have taken State fuel tax payments into account. 8.3 The question of attributable costs of heavy road transport is complicated and involves these issues:- method of calculating attributable costs, including the extent of the road transport industry's overall liability, or joint costs, of building and maintaining roads of the required standards;

whether or not all Government charges paid by road operators, including sales tax on vehicles and parts. stamp duty, excise and State fuel tax. transport licence, drivers licence as well as motor registration fees should be seen as contributions to road costs; 3 9.

the proven impracticability of the system of road maintenance charges, assessed on the vehicle owners running records and a monthly written statement and payment after the event; the extra-territorial difficulties where vehicle owners resident interstate fail to meet their liabilities;

8.4 In Australia, government generally has seen fit to obtain a substantial proportion of taxation revenue through direct and indirect taxation on road vehicles used for all purposes including the haulage of goods, and to allocate funds to road construction according to priorities established by government, as well as to rail, in .the form of capital funds and revenue supplements. 8.5 The suggestion by the Victorian Railways Board that operators of heavy transport should meet additional charges, in order that rail can remain competitive in the charges it makes for carrying out the transport task, would merely result in higher costs to the consumer in direct transport charges and in indirect costs associated with continuance of regulation which has already been proved to be ineffective. 8.6 The suggestion is of course not new, and a study of the various Inquiries in Britain reveal similar attitudes by British Rail Authorities. Catch phrases such as "road haulage industry should meat its resource costs for infrastructure", "meat in full its community costs", etc., abound. Constraint of external market change by rule through regulation cannot succeed, and in the long term the customer will decide which mode of transport at what cost will carry out his transport task. 8.7 The Study Group sought a written opinion on this subject from the Country Roads Board. It is reproduced in Appendix "E". The opinion states that the "whole subject involves several complex issues •••••••• and there is no simple answer as to whether • the trucking industry is adequately re-imbursing government for the increased wear and tear caused to road pavements by heavy vehicles". The opinion 40. concluded by stating that "several detailed invest­ igations have been carried out in recent years and certain costs which can be directly attributed to truck use have been identified. Although such costs represent only a small proportion of the total costs involved, these studies do nevertheless indicate that in general the heavy trucking industry is in fact meeting its share of the additional wear and tear of road pavements". The Board has advised that it considers that the conclusions in the paper should be treated with extreme.reservationp for the following reasons:-

the Economics of Road Vehicle Limits (ERVL) Study data is now several years old and was a "statistical sample" approach to the problem of road damage;

the ERVL-based analysis only considered the additional pavement costs attributable to trucks and made no allowance for the add­ itional costs associated with truck turning movements, lower vertical grades for trucks, truck passing lanes or bridge costs; an approximate allowance only has been made for the effect of the increase from 36 tonnes to 38 tonnes in the maximum gross vehicle mass in Victoria; there has been no real allowance for damage to pavements which are already weak, e.g. thin pavements, poor drainage, poor quality materials; before any conclusions can be drawn on the relative contributions of particular classes of vehicles, it is necessary to distribute the joint costs appropriately;

• 41.

9. SUMMARY OF ISSUES RELATED TO ROAD FREIGHT TRANSPORT

9.1 A thread running through many submissions is an expression of reservation about deregulation of road transport, but there was little common ground. The Victorian Railways Board voiced concern about loss of revenue and seeks continued rights over bulk traffics, asks to be relieved of its so called common carrier obligations but suggests that it should be given equal opportunity to operate its own road vehicles in competition with privately owned road vehicles. 9.2 Associations representing road transport operators support oere~ulation but are concerned about existing over-capacity in the road transport industry, and claim that deregulation will exacerbate the position. Accordingly, they request control of entry into the industry - which means controls over the introduction of adcitional vehicles.

9.3 The Professional Transport Drivers' Association (PTDA) Victorian Branch, in its submission to the Study, suggested that the truck licensing system in Denmark, adopted there in 1973, might be suitable for Victoria.

9.4 The Association proposes the Danish licensing system as a model because under the system, the size of the national pool of trucks is limited and may only be increased if a new industry is established. This proposal, on page 42 of the PTDA submission, followeo comments on page 41 that competitive road transport operations "could completely erode the viability of the railway system", and that excessive competition within the road transport industry might "jeopardise the interest of clients in the long run". 9.5 The question of conservation of liquid fuel resources was posed as a major consideration and potential problem in a number of submissions. No party proposed less travel or decreased use of trans­ port resources, but there were many suggestions that railway transport represents the most efficient use of energy. 42.

9.6 The Transport Regulation Board proposes a continuance of truck licensing advancing several alternative systems, but favouring a scheme providing local "as of right" licences and "discretionary" licences for State-wide rights issued progressively to gradualise the effects of deregulation. 9.7 Intensified policing of legislation pertaining to speed, hours of driving, maximum vehicle mass, maximum axle loadings, maximum dimensions and safe loading,, each received attention during discussions with interested parties or in written submissions. Transport Region Consultative Committees and the Municipalities of South Gippsland, Alberton and Wodonga touched on one or more of these aspects of truck operation. 9.8 Environment problems arising from the deregul­ ation of road transport were a major concern expressed by the Urban Freight Group. Damage to country secondary and minor roads by increased freight traffic, and the risk of a higher incidence of road accidents involving heavy vehicles, were mentioned by several parties.

9.9 Compulsory periodic vehicle inspection was the subject of a firm recommendation by the Victorian Automobile Chamber of Commerce, supported by the Professional Transport Drivers Association. 9.10 The absence of uniform state legislation governing carrier's liability in respect of goods in his care during storage or transit was criticised by the Victorian Road Transport Association which also drew attention to the multiplicity of reculatory bodies in the road transport industry. 9.11 Operator competency regulations, in the interests of road safety and a better standard of business acumen on the part of road carriers, was a theme of the Transport Regulation Board, Victorian Road Transport Association and Professional Transport Drivers Association contributions. The Country Roads Board drew attention to the question that increased road traffic in local areas following deregulation might call for increased road funds by the Board itself and by municipalities affected. 43.

9.12 According to the Victorian Railways Board, if the objective of deregulation is to achieve economic distribution of traffic between rail and road, the latter industry should pay additional Government charges for the use of the road system, generally referred to as attributable costs. 9.13 The Transport Workers' Union and Victorian Road Transport Association called for improved traffic control for commercial goods vehicles in the Metropolitan area including better co-ordination of automatic traffic sionals and traffic management generally. The papers remarked an poor productivity caused by a number of factors, including industrial awards. 9.14 The Australian marketing Boards covRring wheat and wool focused on anomalies in the existing system of transport commodity regulation as did the Victorian Sawmilling Association and a Geelang based cement manufacturing company. The Grain Elevators Board supported freedom of choice of transport mode.

9.15 Industrial award matters were also drawn to attention by the Port of Geelong Authority in connection with the bulk loading of shipping of wheat.

9.16 The passibility that country based carriers would have difficulty facing monopoly motivated expansion by large metropolitan and national transport companies was voiced by the Gippsland and North Eastern Transport Re on Consultative Committees, and a number of other in rested parties. 9.17 Each of the arguments and issues outlined above in this Part will now be analysed in some depth. 44,

10. DISCUSSION

1 0. 1 Deregulation of road transport The Government announced in 1976 that it is committed to deregulation of commodity traffic. Accordingly, the Study Group addressed itself as to what it believes the form deregulation should take, having regard to the written submissions and represent­ ations during discu.ssions with interested parties, and evaluation of the results of its own investigations and study of material made available. 10.2 In the context of the road/rail freight tasK split, much has been said about the relative resource costs. Those opposing road transport freedoms claim that hauliers do not meet their share of the costs of the road system, its maintenance and infrastructure. For their part, road operators assert that by way of a multitude of taxes levied on their equipment and fuel, they make a collective contribution exceeding resource costs. These well known arguments were aired by both sides in submissions and representations. 10.3 The missing link in argument is that both railways and roads are community assets in the widest sense of the term. A common fallacy is that road and rail are essentially competing modes of transport, although the Study Group noted some acknowledgement, especially from the PTDA, and both rail and road have their own special respective roles. 10.4 The Professional Transport Drivers Association suggested that the carriage of grains, fertiliser, fuel, coal, cement, road making material and containers is especially suited to rail transport. The submission commented that "•••••••• these commodities all have common factors; they require no consolidation, they are not labour intensive to handle and they are usually predictable in volume flows which allows for optimum usuage of equipment", In supporting this concept, the Study Group points to experiences in overseas countries, 45.

10.5 Railway systems in the USA and UK have adjusted to this policy over the years. The road transport industry, regulated by State Utilities and the Inter­ state Commerce Commission, was admitted from the early days as a competitor to rail. Regulation was, and is now, designed to protect the road freight industry from itself. Quantitative licensing, having regard only to existing road transport services, is the primary objective of road transport policy in USA. The Carter Administration is committed to deregulation of road transport in the fight against inflation. 10.6 In the United Kingdom, the birthplace of transport road/rail regulation, all railway companies were privately owned until 1948, when they were nationalised by the British Parliament. 10.7 Despite road regulation, under legislation enacted in the early 1930s, the major British privately owned railway companies were receiving government subsidies in the several years immediately preceding Government take over. 10.8 Following the Beeching Report, 1963 ("The Re-shaping of British Railways"), the British Govern­ ment undertook widespread and far reaching rational­ isation, closing down hundreds of branch lines, stations, marshalling yards, goods sheds, locomotive depots and rolling stock sidings. 10.9 In both the United States of America and the United Kingdom rail freight operations are separate identifiable undertakings. Road freight transport licensing and regulation in the UK and USA is not designed to protect railway freight revenue, nor does it do so in practice. 4C.

10.10 The Study Croup appreci2tes historical, geographical, and magnitude of scale differences in the comparison of Victoria with USA and the Unite~ Kingdom. It draws attention to overseas experience to suggest that if the rail freight business in Victoria is oriented to the role to which it is best suited - the line haul of bulk commodities and containerised freight, it should be able to become financially self sufficient. The Study Croup can see no justification whatsoever for Government subsidy of rail freight services, in the general sense, where road trans~ort can provide similar services efficiently and at lower costs to the transport user. In Victoria, the Government subsidy or revenue supplement for rail freight services in 1979/00 is estimated at 9 million. Some of this supplement will be paid in respect of freight operations which could be performed by the road transport industry more efficiently and at a lower cost to users. 10.11 A paradox is that freight regulation is only effective in respect of grains and fertilisers, cement, wool from Geelong and wire and in the area between radii of 80 kilometres and about 150 kilometres of Melbourne, plus the Cippsland area, because of the subterfuge border hopping. Furthermore, petroleum products, fresh produce, household furniture and livestock have been unregulated for more than three decades. A range of goods and commodities, are automatically authorised for carriage by road transport by temporary permits issued by the Transport Regulation Board. 10.12 Other benefits of deregulation, the actual costs of which would need in-depth investigation outside the scope of this Study are believed to be considerable and include:- the cost to the transport user of the higher rail freight rates where the user is compelled to use rail;

the incidence of damage to goods in transit by rail (known to exceed S1 million per annum); 47.

loss of trade to interstate suppliers using unrestricted road transport. The East Gippsland timber industry and a Geelong cement manufacturer stated that this loss of business was a serious cause for concern; delays to goods in rail transit caused by industrial disputes; inconvenience caused by the need to lodge consignments at rail depots by a relatively early deadline, usually 3.00 pm to 4.00 pm, for overnight services; the cost to road carriers of making applications by telephone for TRB permits, remittance of p·ermi t fees by cheques through the mail and making representations, because of unusual circumstances, for permits for traffics, normally reserved for rail; the cost of legal proceedings in Magist­ rates' Courts, plus the cost of collection of fines, for prosecutions for failing to obtain a permit or operating without a licence. (There were 1420 prosecutions in 1978/79 for such offences); 10.13 Collectively, the above "hidden" costs of road freight regulation and the consequences thereof, are considerable and may well equal or exceed the amount of rail revenue "protected" by regulation. 10.14 A further consideration is the unfortunate discriminatory consequences of existing regulation, brought about by "border hopping". Gippsland, in particular, is disadvantaged by being subject to road transport economic regulation. 10.15 The Study Group therefore concludes that, in principle, economic regulation of road freight operations is untenable, but it makes the only qualific­ ation that for the time being, some measures may be needed to ensure that the bulk of the grains traffic continues to move by rail so as to preclude the risk of extensive shift to road transport and its con­ sequent impact on roads in grain growing areas. 4 8.

1 0. 16 VicRail's common carrier oblioation The Railways Act indicates that it is the requirement of Parliament that VicRail should act as a "common carrier". The expression is not defined in the Act, but advice given to the Study makes it clear that the use of the expression, in lay terms, is misleading. The perceived responsibility by the Victorian Railways Board to carry anything to any place (on the VicRail network) is based on a fallacy that the expression means what it says. Legal decisions show that it does nqt, and the Report of the Board of Inquiry in 1972 was quite specific on this matter. 10.17 Nevertheless, VicRail still sees its "common carrier" or service responsibilities to the public as a handicap, being obliged to carry low mass freight of high cubic volume on a tonnage rate basis. Thus, well known examples of the carriage of mobile machinery, water tanks and other high volume/low mass freight are shown to be excessively unprofitable. The Report of the Board of Inquiry included a number of comments under the headings "The Railways Public Service Responsibility" and "Common Carrier Responsibilities". In light of comments by the Board, it is surprising that VicRail persists with an attitude described by the Board of Inquiry as "quaint and puzzling" and a "carryover from last century which so bedevils Railways thinking". 10.18 To amend the Freight Rate Book to cater for the problem, in such a way that the freight rate for bulk light-weight articles is consistent with the actual cost of carriage, has been described as a daunting task. Less difficult for example, could be the problem facing VicRail of how to handle highly perishable commodities offered and accepted for carriage in the absence of refrigerated rail vehicles. 10.19 A quasi Government Department such as VicRail will always have difficulties, at local management levels, of interpretation of a Rate Book whether it is based on an outmoded or modern concept of freight charges. A possible overzealous attitude by staff, which would attract public complaint, or the converse, where well meaning staff may act in a way inimical to VicRail interests, are insufficient reasons why changes cannot be effected. 10.20 There is no evidenr,e that the "co;nmon carrier" status of VicRail h s had any measurable bearing on its financial fortunes ho~ever if VicHail should concentrate on provision of services for which it is best fitted, i.e., the carria~e of bulK commodities, under contract conditions, the so called "common carrier" Lur en would no lon~er seem to be a roLlem.

1 0. 21 Proposed VicRail operation of ils own road freiLht vehicles

The Victorian Railways woard's suomission reveals that it is already operating 35 road transport vehicles in the r~el• ourne area for the carriage of railway based LCL frcic]ht traffic. Stu''Y GrDU;-J observations show tret VicH il is ;:,lso hiriny truckE from a well known truck rental company to haul pantechnicons. In it submission, Lhe Loard sou ht the ri~ht to compete on equal looting, with road transport operators supplyin a door o Coor service, thus justifyiny ~hs need to o crate its own road vehicles. In justifying the need to operate its own roac vehicles the board saw fit to complain that their vehicles were restricted in operat1on to a 60 kilometre racius from Nelbourne, revealin£ ambitions far beyond the coordinated roa(/rail service currently o erating.

1L.7 In 8 s rerate r or t, the: S tu y Group recommends that VicRail shoold disenga6e itself tram LCL trafFic, excert in respect of lintJh ul by rai 1 service in cooperation Ll i U, f r e i ,. h t f o r LJ a r o e r s ,

1 (!, 23 Tf,e S tutly Cro questions the wisdom of VicRail's operations o its own road vehicles for the carria~e of freicht (as distinct from the use of rorHi vehicl s for the conveyance of Vicflail staff ensage in track works or ~ttendin breakdowns, tosether with Lheir tools, eouipmenl and materials). 11 t ten t ion is d r a Lln to the f o 11 owing cons Hi a r a ions : -

the operation of a fleet of large trucks (VicRail already has 35 such vehicles) is a formidable manauement task in its own ri ht and calls for a level of mana£erial autonomy and discretion more suited to private commercial enterprise; 50.

overhead costs are likely to be higher than for a comparable privately owned fleet; as a Government authority, VicRail would benefit from variuus tax concessions in the operation of road vehicles. The Victorian Road Transport Association, in representations, sees this as unfair and commented adversely; there are potential industrial relations difficulties in the area of demarcation; There is no justification for spending public money in the provision of equipment to operate in competition with an efficient road transport industry, or in supporting an organisation which already relies on revenue supplements to offset operating losses caused by obsolete handling methods and freight rate structure.

10.24 VicRail's objective to provide a total door to door transport service to attract business is recognised by the Study Group. Howeve~ the Study Group does not see the door to door transport service being carried out by the Victorian Railways Boar~ at a very high cost to the public of Victoria, through the very large financial losses being incurred as a successful business venture. As a cons uence the Study Group is of the opinion that VicRail shou cease providing such services whether they involve pick up and delivery to rail in the Metro­ politan area, or free delivery from country freight centres to customers who doubtlessly enjoy the privilege of receiving deliveries at taxpayers expense.

No justification can be seen for VicRail providing delivery services to country areas which previously did not have a rail service, or providing through road freight services, usin its own vehicles to any country areas including Kyne n and Broadford mentioned in its written submission.

Private enterprise is already servicing these centres and nearby towns such as Kilmore and Heathcote at competitive rates at no cost to the taxpayer of Victoria through subsidies or revenue supplements, or the provision of capital for purchase of road transport equipment and facilities. ,25 VieR il has ada~tGd itself to the ramltlc- ations of free interstate transport, actin~ success­ fully, as the line haul carrier on i tcrslate opera ions. IL houl~ 20 ttc same or intres ate freight, aojustin as neccss ry lec-,ving lBbour intensive collection, sortiny, consolidation and delivery of general merchandise to private enterprise. It has already involved itself with t.his line t1aul type of operation at ale, Uairns ale and Lallsrat. It shoulu therefore con entratc on the line h ul task, servin0 major centres.

10.2[ Gvercapacity in the roac freicht transport industry In the fiela of intrestate road frei ht operations the Study Group heard no actual evidence of overcapacity in terms of numerical stren t~. Indeed, of 12 , UC: vehicles on ti1e Transport Regul­ a t ion Board 1 ice n c e re c, is t er as at 1 s t Fe b r u 2 r y 198C, almost 110,0GC vehicl s are of load capacities of less than C tonnes. Lf those, more than CO,OCLi are operated by ancillary users, inclucins primary produc~rs. Another ,~UO are nominally specialised v eh i c 1 e s , opera tins, u n cl8 r [ H an u [ I 1 ice n c e s. f~ one of these 11G,UL trucKs are a threat to VicRail's curr nt business in any substantial way.

10.27 This n~mber of trucKs has been reached under the "as of rit;hL" licensin~j syslE;m, where supply and demand forceG deL8rmine numerical strenc,th.

10.2G Of the ualance of E,OOU trucks exceeding 8 tonnes load capacity, m ny are commitlet entirely LO metropolitan or ur~an c ntre operation, where the rnajor pro;;urti.on of ti1P total frni ht transport task in Victoria is located.

10.29 Gn the other hand, the present re ulatory system cnuses under-utilisation of road vehicles, because bacK loading or forward loading as the case may ue, is reserved as rail traffic. Ueregulation, espoci lly of LCL traffic, will absorb some of this under utilisation, and will eventually result in lower trAnsport costs to the consumer. 52.

10.30 Operator competency reculations

Elsewhere in this report, the Stuoy Grouo recommends the introduction of a form of operator competency rules designed to suit Australian conditions, The proposed rules are not calculated • to deliberately regulate the numberical stren~th of the road truck fleet, as it believes that normal free enterprise supply and demand conditions will set a natural level.

10.31 The rules are designed to encourage a degree of operator compe~ency and proficiency, which should discourage inexperienced aspirants and bring about an improved level of safe operations. The Study Group concludes that control of entry basec on quantitative conside~ations is unacceptable on the grounds tt1at it is incompatible with free enterprise and, in any case, poses a formidable administrative task of a kind, which, accordin~ to the TR5 submission, cannot work in face of community attitudes.

10,32 Operator competency is a matter which received considerable support from all interested parties. Several schemes, based on overseas practices, were advanced. Dr. K.W. Ogden, of Aonash Universi~y's Traffic Engineering Grouo, su gesteo the United Kingdom Certificate of Operator Competency Regulations as being of the type which may be appropriate.

10,33 After careful consicerati~n of ell suomissions and representations, the Study ~roup conclu~es that a system of operator competency r ulations in che road transport industry is highly desirable and woulc receive widespread supporl from within the industry and by the general public.

10.34 None of the oversees schemes are entirelt sGitable for Awstralian condiLio , tuc prcviLe useful guicelines. 53.

10.35 The Study Group, examining the concept of operator competency was cognisant of what it believes are practical limitations in Victoria, • hsving regard to the following:-

any scheme in Victoria should be demonstrably compatible with the provisions of Section 92 of the Commonwealth Constitution hct insofar as they relate to interstate road transport;

it should be of a nature designed to complement similar schemes in other States or be likely to be suitable for uniform legislation in other States;

standards should be designed by an advisory committee on which all segments of the industry are fully represented;

it should preclude arbitrary judgements relative to "fit and proper persons" or financial standing of aspirants;

10.36 To meet the above considerations, the Study Group believes that new competency rules should be an extension of the existing driver licensing qualifications and applicable only to those driving vehicles classified as "articulated", "heavy" and "truck and trailer combinations" in the ~lotor Car Act.

10.37 In view of all the circumstances, including the nature of the industry, its importance to the community and current industry practices and malpractices, the Study Group suggests the following guidelines for qualifications and testing:-

minimum age of say 21 years, for vehicles other than bulk tankers carrying petrol, LPG or other highly flammable volatile or corrosive liquids for which the minimum age would be 23 years;

minimum of 3 years as the holder of a current driver's licence; 54.

stringent tests of the applicanL's ability to drive the respective class of vehicle; comprehensive oral and written tests of knowledge of road law pertaining to commercial goods vehicles including maximum axle weights, dimensions, maximum hours of duty, minimum rest periods; an acceptable record as the holder of a driver's licence; basic understanding of vehicle systems; knowledge ·of safe loading practices;

for drivers of bulk petrol, lPG and other tankers carrying dangerous liquids, a knowledge of the Inflammable liquids and Gaseous liquids Regulations and other related regulations; the possibility of medical examinations at prescribed intervals for drivers of tankers carrying prescribed dangerous liquids or gases; 10.38 Qualifications as to prescribed minimum experience with heavy vehicles and medical fitness are requirements placed on applicants seeking positions with the Gas and fuel Corporation as drivers of lPG tankers. The Study Group also acknowledges that many transport companies apply their own particular standards in the selection of drivers. Nevertheless, it is believed that formal competency requirements will be welcomed by the industry.

10.39 Conservation of liquid fuel resources • This is an issue which was not controversial at the time of the Bland Board of Inquiry, but it has been advanced to the Study Group by several interested parties as grounds for increased regulation (and operating restrictions) on road transport rather than deregulation. It was also put that existing railway services should be maintained, (with attendant revenue deficiencies), to conserve liquid fuel resources. 55.

10.40 Many reports have been published about the relative fuel efficiency of transport modes, showin£ shipping and railways as the leaders. The Study strongly advocates the railway mode as being the most fuel efficient land transport mode on the basis of sioing to siding block trains. At the other end of the scale, lightly loaded passenger and LCL (miscellaneous merchandise) trains are not necessarily fuel efficient. The Study investigations have revealed for example, that LCL freight to Morwell avera es about 120 tonnes per day, sometimes less than t e tare weight of the railway vehicles used to convey it. Added to this is the fuel used in shunting.

10.41 The Study Group concludes that relative fuel advantage of the modes, as reflerted in normal commercial competitive enter~rise, will be best demonstrated if actual operating costs are passed on to the consumer. On this basis, use of fuel will be paid for by the customer. In terms of operating costs, block trains, siding to siding and full wagon loads according to or near the level of maximum load capacity of rail vehicles, will reflect fuel economies, handling economies and will be the ·avoured moce. Fer the same reasons that commodity re~ulation is untenable, regulation of road freight transport on the grounds of conservation of li~uid fuel resources 1s a most dubious proposition.

,42 Taking another view, economic or commodity deregulation aimed at achieving lowest cost transport to the community at large, should not be confused with conservation of fuel resources.

18.43 If regulation is to continue on the grounds that liquid fuel be conserved, it should be seen in this context, and not complica ed by other factors. This is already t,a~penin to some extent through government action as resards pr1cin and the crude oil levy, resulting in th increesinc purchase of fuel efficient four cylinder motor cars •

• 4t Given therefore thDt fuel con ervation is en objective fer continued regulation, e whole range of consi erations ener~ • The i lie pronosi ion .h t fuel us2ce by ccmmerc al ro d freight vehicles shoul te rcruleLe must seen ir pcrs ective. 56.

10.45 Protagonists of the road freight industry, users as well as proprietors, inhibited by fuel consumption regulation, would surely point to many other instances of poor utilis&tion. includin£ the railways. Furthermore, the Study Group is at a loss to see how fuel consumption regulation could be administered and enforced, short of rationing of supplies.

10.46 The Study Group has resorted to these hypothetical circumstances to advance its view that continued regulation, or increased regulation, of road transport on the grounds of conservation of liquid fuel is lacking in logic and would be highly discriminatory. 10.47 Enforcement and· compliance with legislation

Several interested parties drew attention to their concern about unsafe operating practices in the road transport industry. Transport region consultative committees for the North East and Gippsland, and several municipalities were especially critical, and called for increased enforcement. Operator associations referred to illegal practices, especially overloading and excessive hours of duty. It was alleged that the Melbourne- run is regularly completed in 12 hours, a schedule that must involve speeds above the legal limit. 10.48 The call for increased supervision of the industry appears to be justified, not only to improve safety, but to discourage deep seated industry practices, especially overloading, which are major causes of rate cutting and a generally depressed level of rates. Enforcement and regular inspection of vehicles is also related to environment issues such as excessive noise, exhaust emissions from diesel trucks, carriage of dangerous goods, insecure loading and the parking of large, heavy trucks overnight in residential areas. Each of these matters was voiced in represent­ ations to the Study Group. 57.

10.49 ~onopolisation of road freight industry by large companies A fear, expressed by interested parties, including those not engaged in the road freight ind­ ustry, that deregulation would open the way for large metropolitan based companies to establish themselves in country towns, was made to the Study Group.

10,50 Investigating this claim, the Group examined developments in country areas of Victoria adjacent to the State border, where regulation has been ineffective for many years because of the ramifications of Section 92 of the Commonwealth Constitution Act. It found that large national companies operating Australia wide services specialising in overnight delivery of parcels traffic, charging high rates, are providing a network of services around the State to and from Melbourne. At major country centres, they employ locally based contractors for collection and delivery. The companies rely on the freedoms of Section 92 by engaging in border hopping. These services, developed in the last 5 or 6 years, do not carry high volumes of parcels. They are services which have been vigorously promoted, mainly at the expense of VicRail. No country employment opport­ unities have been lost because of this development. 10.51 In the heavy haulage business in border areas, local proprietors have prospered, The Study Group could find no evidence of monopolisation by metro­ politan based operators. 10.52 In Gippsland, where the Transport Regulation Board has been able to maintain effective regulation of the transport of commodities, and at Ballarat, where regulation was effective until 3 or 4 years ago, metropolitan based operators have established branches, but there is no evidence of monopolisation. Rather there was abundant evidence of the highly competitive nature of the industry.

10.53 The Study Group concludes that deregulation will not lead to monopolisation, Indeed, a system free of economic regulation is the best bulwark against monopolies in the road transport industry. 58.

1 o. 54 Compulsory periodic inspection of goods vehicles

The Victorian Automobile Chamber of Commerce, Victorian Road Transport Association, Professional Transport Drivers' Association, Transport Regulation " Board and Transport Region Consultative Committees each suggested that a compulsory inspection system should be considered. The Victorian Automobile Chamber of Commerce favours a network of licensed privately owned testing stations, similar to the existing system of testing stations for the issue of certificates of roadworthiness. The Professional Transport Drivers' Association and Consultative Committees prefer testing stations manned by government inspectors.

10.55 Examination of .literature made available to the Study shows that compulsory periodic inspections, usually on an annual basis are accepted practices in overseas countries and in ~ew South Wales and the Australian Capital Territory.

10.55 In a report published in January 1980, the Commission of Enquiry into the New South Wales Road Freight Industry made an interim recommendation that heavy vehicles should be required to pass inspection twice yearly, instead of annually, as was the practice at the time the report was written. 10.57 On the other hand a report by Wilbur Smith and Associates Pty. Ltd., published in December 1978, entitled "Heavy Commercial Vehicle Speed and Operational Safety Study" recommended that "current heavy commercial vehicle mechanical inspection programs in Victoria be continued and that further vehicle inspection schemes specifically directed towards heavy commercial vehicles not be introduced at this time". 10.56 Elaborating on the recommendation, which was endorsed by the Road Safety and Traffic Authority, it was stated that "potential benefits from ado~tion of any additional vehicle inspection schemes are small because of the low incidence of vehicle defect caused accidents •••••••••• ". 59.

10.59 In its report, the Commission of Enquiry in New South Wales observed that vehicle (truck) maintenance standards were questionable "casting, serious doubts on the existing inspection scheme and on the attitudes and abilities of operators so far as vehicle maintenance is concerned, Many operators • admitted to the Enquiry that such deficiencies are widespread and claimed that they are a result of the stringencies of the market". 10,60 For its part, the Study Group, looking at the consequences of road freight deregulation, the general state of the road freight industry, and the safe operation of goods vehicles, particularly those carrying dangerous goods, was primarily concerned with commercial vehicles, 10.61 The Study Group has been advised that there is insufficient data to suggest that in Victoria mechanical deficiency in heavy goods vehicles is a cause for concern. According to information supplied by the Road Safety and Traffic Authority (Heavy Commercial Vehicle Speed and Operational Study, 197B, page 203) less than 3 percent of heavy commercial vehicle accidents were considered to be caused or primarily influenced by mechanical component failure, representing about 0,2 percent of total road casualty accidents.

10.62 Implementation of a comprehensive system of compulsory vehicle inspection (all types) at inspection centres across the State would require very significant c ita! outlay estimated at $20 million for a basic networ • 10.63 This Study Group also concludes that potential benefits from the adoption of a compulsory inspection scheme are small because of the low rate of accidents attributable to mechanical defects, The establishment costs and ongoing costs of a compulsory scheme make it prohibitive in the circumstances.

10.64 The Study Group also supports the ROSTA recommendation that random inspections of heavy commercial vehicles be intensified, In discussions, representatives of the Road Safety and Traffic Authority expressed a considered view that widespread random testing by trained officers is desirable because of the deterrent and preventive aspects accrueing from this kind of inspection and will ensure continuation, and possibly improvement, of current vehicle maintenance levels. 60.

10.65 It appears that the Transport Regulation Board, already involved in compulsory periodic inspect­ ions of buses, taxis and tow trucks could play a major role in the random inspection of heavy trucks. Advice given by senior officers of Victoria Police indicates that the Police Department is not in a position to intensify the level of its present efforts in .. this task.

10.66 There are anomalies in existing legislation in that inspectors of the Transport Regulation Board are not empowered to issue notices, under Section 21K of the Motor Car Act, prohibiting the use of a defect­ ive motor car until a certificate of roadworthiness has been issued at a licensed testing station. TRB inspectors have no legal power to issue traffic infringement notices. This means that the driver of a defective truck checked by Police may be given a notice under Section 21K of the Motor Car Act or be served with a traffic infringement notice. If checked by an inspector of the Transport Regulation Board, there may be no alternative to prosecution on summons. 10.67 In the opinion of the Study Group, this state of affairs is undesirable and needs attention. It is outside the scope of this Study to examine the legal aspects of the situation. 10.68 Multiplicity of Enforcement Authorities The VRTA submission listed nine Government Instrumentalities and Departments, including Victoria Police, which are concerned with enforcement and/or licensing related to the road transport industry. Three of these, the Police, TRB and CRB are involved in road enforcement. The Environment Protection Authority also carries out road duties connected with noise and emission control regulations, The Department of Agriculture is concerned with fruit fly and animal health regulations. • 10.69 Examination of the VRTA proposal, which envisaged amalgamation of functions, reveals that certain specialist roles may only be carried out by the Instrumentality or Department concerned. These functions are the task of officers administering and enforcing highly technical regulations which require the constant supervision and responsibility of the related Statutory Authority. 61 •

These include:-

Forests Commission yrant of licences to cqnduct logging operations

CRB issue of permits for over­ dimensional and overweight vehicles

Department of licensing of flammable liquid Minerals and Enercy and LPG tankers

Department of fruit fly control and animal Agriculture health

Department of operation of mobile cranes­ Labour and Industry and fork lifts and licensing of drivers and operators

10.70 The VRTA's concern about the unnecessary checking of trucks by enforcement officers is under­ stood by the Study Group. Apart from duplication and waste of resources, such practice is frustrating to truck operators and harmful to relations between the industry and the Authorities. The matter was therefore examined in some detail. 10.71 Only Police, and officers of the Country Roads Board and Transport Regulation Board have the legal power to intercept and check a vehicle using a highway. An officer authorised by a municipal council may intercept and check a truck within his municipality to ascertain whether the vehic complies with Motor Car Act limitations governin axle weight, gross mass width, length, height and w ther the driver of the truck is maintaining a current log book and is complying with hours of driving limits. 10.72 The Group found that the probability of inter- ception by CRB or TRB officers is very low as each Board employs a small force of inspectors engaged in these duties. Multiple interceptions of a truck engaged in the one journey, even for a longer trip say from Melbourne to the State border, are most unlikely. 62.

10.73 In a discussion with the Chairman and Members of the Country Roads Board the Study Group was advised of the Board's concern about the need to adequately enforce legislation governing maximum axle loadings, gross mass and dimensions of commercial vehicles. The Board sees the protection of roads and bridges of vital importance, an issue which will be drawn into increased importance in the event of deregulation of the road transport. The Board's opinion is that it is unrealistic to expect Victoria Police to assume full responsibility for this enforcement task, in view of the wide range of law enforcement for which Victoria Police is responsible. The Board expressed a strong view that it should have its own enforcement group, specialising in the enforcement of legislation designed to protect roads and bridges, under day by day control of the Board.

10.74 The Study Group also held discussions with Victoria Police, represented by the Deputy Commissioner (Operations) Assistant Commissioner (Traffic) and the Chief Inspector (Traffic Policy and Information). 10.75 The general views of Victoria Police, as understood by the Study Group are that:-

if the Police were solely responsible for all of the road enforcement, including the weighing of trucks, checking dimensions as to height, width, length and the inspection of log books and other duties performed by inspectors, such duties would have, by necessity, to be related to other pressing priorities; duties performed by inspectors are of a specialised nature. They can be handled by Police, but Police duty priorities are such that there can be no guarantee that a corresponding level of attention could be given in terms of man hours; protection of road pavements and bridges is a specialised task which should be in the hands of the road construction and maintenance authority, the Country Roads Board. The Police will assist in this role when in a position to do so; 63.

enforcement of the legislation administered by the Transport Regulation Board - tow trucks, taxis, school buses; route service buses, is also of a specialised nature the main responsibility for which should remain with the Board. It is also experienced in the matters concerning driver's log book, hours of driving, rest periods, safe loading and other related matters; Police released from motor regist­ ration duties will be absorbed into the overall Police responsibility - protection of the person and property, crime prevention and detection and traffic duties;

10.76 Transport Regulation Board inspectors are engaged in a variety of tasks connected with the operation of commercial vehicles of all types - taxis, route service buses, school buses, tow trucks and goods vehicles - including licensing of vehicles, certification of drivers, supervision of route bus services and checking prescribed items of vehicle equipment such as taximeters, fire extinguishers and other accessories. h considerable task undertaken by Board inspectors is the compulsory annual lnspect­ ion of all licensed passenger vehicles, including taxis and tow trucks.

1U.77 Following discussions with the Autl1orities, and ~lose examination of their duties and resoonsib­ ilities, the Study Group concludes that firstiy, the absorption by Victoria Police of CRB and TRB enforcement responsibilities is impracticable as Police, because of their wide ran£e of responsib­ ilities, and many demands on their resources, are not in a position to ensure the necessary level of attention and secondly, amalgamation of CR8 and TRB enforcement groups would tend to reduce the day by day control each Board exercises over its inspectors in terms of deployment and enforcement policy.

10.78 It is important that the greatest possible coordination of activities by CRB and TRB enforcement personnel be achieved and maintained and that, in turn, appropriate coordination and consultation with Victoria Police is carried out. Continued joint development by the CRB and TRB of two way radio communications throughout the State will facilit­ ate every day coordination between the two groups. 64.

1 o. 79 Truck Licensing Following the adoption of deregulation of road freight transport, the Study Group sees no need for a licensing system for commercial goods vehicles. Continuation of local operating licences such as the EA or EB or State wide discretionary licences are proposed by the Transport Regulation Board to "gradual­ ise" the effect of deregulation. The Study Group sees continued difficulties with this proposal. It will perpetuate the permit system for carriers who desire, temporarily, to operate outside local areas. If past practice is any indication, operators will opt for a local licence at the cheapest fee, paying permit fees when it is necessary to conduct a journey outside the local area. This appears to have been the practice .under the existing licence system because only 551 EM licences (80 kilometre radius of Melbourne) were on issue at 1st February 1980, whereas there were 25,826 EA licences on issue (40 kilometre radius). Current annual fee for an EM licence for a vehicle over 16 tonnes capacity is $750. The fee for a comparable vehicle under an EA licence is $150. 10.80 A licensing system of this nature would also call for the checking of trucks to ensure that they are within the radius, or are authorised by temporary permit to be outside. 10.81 If the Transport Regulation Board's proposal to continue with the determination of applications for State wide discretionary licences is accepted, applications would be subject to Public Hearings. The Study Group finds difficulty in seeing on what grounds such applications could be denied, save for any restrictions on the carriage of bulk commodities the Government may deem necessary. 10.82 Similarly, the Study Group cannot support the VRTA contention that applicants for vehicle licences, which are related to the owner of a vehicle, should satisfy the licensing authority that he is of "good character", has the "necessary" qualifications and "financial stability". Each of these depend on value judgements on an unknown criteria. The Group notes the TRB opinion that this type of screening has proved to be of no practical value. The question of what constitutes a good character is especially controversial. A test of financial stability is equally daunting, whether the applicant is a private individual or a large corporation. 65.

10.83 The Victorian Road Transport Association drew attention to the position of ancillary operators including primary producers and decentralised industries. It contends that if these business~s desire to engage in the hire and reward field, hand­ ling back loading to contain costs, they should pay the same registration and licence fees as professional carriers. The Study Group concurs with the VRTA proposition. After all, the carriage of materials or goods in each direction leads to the maximum utilisation of trucks that all operators are seeking to achieve. 10.84 The Study Group concludes that there should be no djstinctions in the registration charges applicable to vehicles used in the course of trade. The Group recommends that the commercial vehicle licensing system should be abolished and, following through this concept of complete deregulation of the commercial activities of the road freight industry, encompassing ancillary vehicles as well as those used by carriers for hire or reward, it is consistent to also abolish the special scale of registration fees levied in respect of vehicles and trailers owned by primary producers for use solely in connection with the owner's business as a primary producer. 10.85 The owners of all trucks, whether professional carriers, primary producers or other classes of ancillary users, would then be free to engage in the carriage of third party goods at any time, improving vehicle utilisation and efficiency and reducing costs. 10.86 The Study Group has noted that the commercial goods vehicle licensing and permit system, a tool of regulation, produces $6.54 million annually in revenue, providing about 85 percent of the cost of the Transport Regulation Board admin­ istration. This impost on road freight transport adds to the cost of transport and produces inflationary effects on the consumer cost of goods. 10.87 The cost of Transport Regulation Board activities in the licensing, regulation and inspection of passenger vehicles, including taxis, school buses and tow trucks, should be allocated against these enterprises. 66.

10.88 Tow trucks

No reference was made in written submissions to tow truck operations or accident towing although the quest~on of enforcement of tow truck activities was briefly mentioned during discussions with the Deputy Commissioner (Operations) of Victoria Police. 10.89 Every truck fitted with a winch or crane used or intended to be used for the lifting, carrying or towing of motor cars falls within definition of "tow truck'' in the Commercial Goods Vehicles Act, requiring a licence issued at the discretion of the Transport Regulation Board. 10.90 Perusal of the Act indicates that special measures peculiar to tow trucks have been designed to protect the interests of owners of cars damaged in traffic accidents in the towing, storing and disposal of a damaged car. Other provisions seek to achieve orderly parking of tow trucks at accident scenes. Regulations pursuant to the Act deal with the behaviour of tow truck drivers. 10.91 The legislation embraces a whole range of tow truck activities, including trade towing (i.e. the towing of damaged or disabled motor cars from a place of storage or from a garage to a workshop or a panel beaters shop. 10.92 The Study Group is advised that applications for additional tow truck licences are vigorously opposed by the motor car repair industry and existing tow truck operators. The result is that in the metropolitan area especially, additional or new licences are not usually granted, in line with Transport Regulation Board policy of several years. 10.93 In effect a numerical control over the total number of tow truck licences is being practised. The Study Group understands that the rationale for this is:- there are sufficient numbers of licensed tow trucks in all suburbs; an excessive number of trucks causes over attendance at the scene of accident; 67.

drivers of damaged cars are harassed by tow truck drivers competing for the job;

the tow trucks add to traffic haza~ds caused by the accident; 10.94 Numerical or quantitative licensing control over the tow truck industry may lead to:- denial of the right of any competent person to seG up a motor repair business as a tow truck is an essential "tool of trade" in the procurement of work and in the collection of dama~ed vehicles from depots or garages; a commercial value being ascri ed to a licence for th urpose of transfer to another person; protection of existing businesses, irrespective of efficiency, goodwill, rates or charges, and behaviour of proprietors or employees to the disadvantage of customers; 10.95 The excessive numbers of tow trucks attending accidents, the alleged disorderly behaviour of some tow truck drivers, the prevalence of the practice of payment of spotters' fees, the high cost of repairs and high levels of insurance premiums are obvious reasons why some form of strict control should be exercised over this segment of the motor repair business. 10.96 However the existing quantitative licensing system is not working. Indeed it is difficult to see how an ideal numerical balance of trucks can ever be achieved, having regard to the nature of the industry, a feature of which is the peakiness of demands for its services • • 10.97 The Study concludes that numerical or quantitative control should be abandoned but that the existing regulations pertaining to qualitative criteria be reviewed to ascertain whether or not any improvements are necessary. The Study also concludes that a proper standard of behaviour and business ethics by tow truck drivers competing for work at accidents and the orderly parking of tow trucks is of utmost importance. Other matters of importance to the community include operator competency and safe operation of the tow truck. Each of these 68. could be included in the review.

1 D. 98 Carriers other than third property damage This subject, closely related to the concept of a common carrier, was raised by the VRTA. The Carriers and Innkeepers Act 1958, perused by the Study Group, which deals with the limit of liability by a common carrier, is out of date. VicRail also expressed concern about its statutory responsibility as a common carrier. 10.99 The Study Group believes that in the interests of freight transport users and of carriers, including VicRail, every effort should be made to bring draft legislation proposals, now under consideration by the Government, to early fruition. 10.100 Traffic management, closure of suburban streets to heavy vehicles The Transport Uorkers' Union and the Victorian Road Transport Association in their submissions alluded to the costs arising from delays to commercial goods and passenger vehicles caused by traffic congest­ ion. The Urban Freight Group urged the routing of heavy vehicles away from residential areas. The Study Group believes that the subject of traffic management in the metropolitan area and in major urban areas is of significant importance, affecting all classes of vehicles. Accordingly, it has prepared a report on the matter, entitled "rletropolitan Roads", which has been submitted separately. 10.101 Easy availability of hire purchase finance and access to vehicle leasing schemes During the course of the Study, there were several references by interested parties about an alleged high rate of bankruptcies, business failures and repossession of trucks by finance companies in cases where instalments under hire purchase schemes were in serious arrears. The general tone of the comment was that it is too easy to become a truck operator, and that trucks may be acquired on minimum deposits under hire purchase or under leasing agree­ ments. In view of the concern expressed to the Study Group, especially by the Professional Transport Drivers' Association, and Victorian Road Transport Association, members of the Study Group interviewed 69. the senior management of a national finance company specialising in the provision of finance in the hire purchase of vehicles and in leasing contracts. 10.102 Management explained company policy and described procedures under which applicants for hire purchase finance are interviewed. Special attention is given to the client's earning prospects, ability to meet the proposed commitment and existing commit­ ments and the general financial circumstances of the client. 10.103 It was pointed out that repossession by the finance company, a costly procedure, is a last resort, undertaken after all other possible methods of payment, including extension of time, has been tried. 10.104 Clients seeking leasing agreements are also interviewed and counselled, with special emphasis on the existence of cartage contracts yielding earnings sufficient to meet liabilities, including the lease.

10.105 Specific data of the incidence of business failure in the road transport industry is not readily available but the Study Croup heard evidence that lon distance owner drivers, usually subcon ractors encaced on interstate work, are experiencinu difficulties locause of marginal cartagc rates brought about by excessive competition within the industry, 10.105 The Study Group concludes hat in a free enterprise society, the rovloers of finance and those seeking finance must inevitably take risks. Existing consumer protection legislation and regulat­ ions governing hire purchase contracts provide protect­ ion for the financier and the client. The purchase of second hand trucks is subject to certain provisions of the ~otor Car Traders Act designed to protect the interests of the customer. There is no evidence that additional legislation is necessary. 7 D.

11. CONCLUSIONS

11 • 1 D~reoulation of Road Freioht Transport The Study Group has concluded that the existin system of regulation of road freight should be termina d as soon as possible, and that consideration should be given to repeal of the relevant provisions of the Commercial Goods Vehicles Act that are designed to afford protection of rail services and some licensed road services (reference paragraph 4.10). 11.2 The Study Group has noted that in June 1980, comparative road/rail f~eight rates for the carriage of grains to seaboard terminals from storages up to about 400 kilometres away are about equal. The Aust­ ralian Wheat Board, custodians of wheat and, under the provisions of the Victorian Wheat Marketing Act, responsible for all matters connected with the handling, transfer and shipment, considers that it would be quite impracticable to attempt to haul large quantities of wheat by road transport. Under its charter however, the AWB is bound to have regard to the transport of wheat at the lowest cost, consistent with efficiency. 11.3 In a separate report, the Study Group has examined the rail movement of grains, and has recommended measures to improve rail efficiency to reduce the costs of tran ort of grain and put VicRail in a commercially competi ve osition for this traffic. This upgrading and ration sation of railway services will take some time to achieve. 11.4 To preclude the risk of large quantities of grains being transported by road in the meantime, to the overall disbenefit to the community, it is desirable that legislative provision be made enabling the Governor­ in-Council, on the recommendation of the Minister of Transport, to impose a restriction on the carriage of grains by road to storages and terminals at Geelong and Portland except where road transport is authorised by the Minister or the Transport Regulation Board for temporary periods because of unusual circumstances or breakdown or stoppage of rail transport services. 71 •

11.5 This proposed power to impose restrictions on the road transport of grains to seaboard terminals could be related to any commodity or class o~ traffic, as the Minister may see fit from time to time, and similar to the restriction related to the carriage of aviation turbing fuel by road to Melbourne Airport, contained in Section 5(8) and Section 13(3) of the Commercial Goods Vehicles Act. 11.6 The Study Group therefore has concluded that consideration should be given to legislation amending the Commercial Goods Vehicles Act 1958 enabling the Governor-in-Council, on the recommendation of the Minister of Transport, by proclamation to declare that on or after a specified date the carriage of prescribed goods by road transport may be restricted or prohibited under specified conditions, or that such restriction or prohibition may be lifted. 11.7 Licensing of trucks The licensing of trucks and the permit system is almost entirely related to the economic regulation of road transport. On deregulation, the need for such licences is removed. 11.8 The Commercial Goods Vehicles (Aviation Fuel) Act No.9313 1979 restricts the carriage of aviation fuel by road transport to Melbourne Airport although at the time of writing this report the Act had not been proclaimed. In the absence of a licensing and permit system Act No.9313 would be ineffective and would therefore need revision. 11.9 The Study Group therefore has concluded that the existing licensing system for commercial goods vehicles should be abolished. 11 • 1 0 Operator competency regulations The Study Group has concluded that a system of operator competency regulations, applicable to every driver of a "heavy vehicle", "large trailer combination" or "articulated" vehicle, as defined in Section 2 of the Motor Car Act, should be introduced. 72.

11.11 This is a proposal which has the strong support of the industry. The proposal is designed to bring about a system of operator competency, applicable to the driver, whether or not he is the owner of the vehicle. It is recommended that the scheme should be an extension of the existing driver licence qualifications under the Motor Car Act and be oriented towards safe operation of vehicles, including the handling and securing of loads, in such a way that drivers of vehicles re stered solely for interstate use are brought within the scope of the regulations. This recommendation is similar to one contained in a report by the Commission of Enquiry into the NSW Road Freight Industry, published in January 1980, 11.12 In making this proposal, the Study Group is aware of the ramifications of the free trade provisions of Section 92 of the Commonwealth Constitution. For this reason its suggestions as to the operator competency standards are entirely related to safety aspects and to the driver of the vehicle, The Group points out that the High Court has consistently upheld the rights of the State to le slate for and to enforce safety related measures, in respect of interstate and intrastate vehicles alike, provided there is no discrimination against interstate vehicles. 11.13 The Professional Transport Drivers' Association and the Victorian Road Transport Association also urged a system of proficiency standards related to the operator or owner of a truck. Criteria included business acumen, management skills, insurance, carrier's liability and vehicle maintenance. In Australia, because of Constitutional consideration, proficiency standards of this nature cannot be made mandatory in respect of interstate transport. The Study Group advocates this type of training as a desirable addition to the operator competency concept described above. However it is not an option to the operator competency concept, 11.14 Policing of legislation pertaining to commercial goods vehicles. The Study Group considers that the enforcement of le alation dealing with overloading, height, width and length dimensions, speed, hours of driving, rest periods and safe loading should be intensified. 73.

11.15 The Study Group heard considerable criticism, especially from Munic alities and Transport·Reg~on Consultative Committees about the failure of a proportion of drivers in the road freight transport industry to comply with regulations designed to • achieve a level of road and public safety and protection of bridges and road facilities. 11.16 The Study Group is satisfied that these practices, including excessive speed and overloading, are a significant cause of excessive competition within the industry detrimental in the long run, to the industry and transport users alike. 11.17 During the course of its visits to country areas, the Study Group could not fail to see many instances of heavy trucks exceeding the speed limit of 80 kph, applicable to this class of vehicle. It appears that special enforcement measures are needed in this respect. 11.18 It appears the deregulation of the road freight industry will reduce the enforcement responsibility of the Transport Regulation Board. The extent of this reduction is dependent on the form deregulation takes and whether or not the Group's recommendation that commercial goods vehicle licensing should be abolished is adopted. In any event a diminishing role in the enforcement of the regulatory provisions in the Commercial Goods Vehicles Act could be offset by increased attention to random inspection of heavy vehicles. This may involve some re-training of personnel and the provision of portable testi equipment, the cost of which seems well justi ed. 11.19 The Study Group considers that the Transport Regulation Board should be requested to increase the level of random inspection of heavy commercial vehicles and that consideration be given to authorising TRB inspectors to issue traffic infringement notices and notices under Section 21K, Motor Car Act, to drivers of commercial vehicles of a tare weight of 2 tonnes or more. 74.

11.20 The Study Group considers that the existing system of control of entry into the tow truck industry, insofar as it relates to numerical or quantitative considerations, should be abolished. 11.21 The Study Group is aware that in July 1979, the Transport Regulation Board held a Public Inquiry into the tow truck industry in the Melbourne metro­ politan area and that subsequently, the Board made recommendations to the Minister of Transport. 11.22 Evidence available to the Study shows that the existing tow truck di~cretionary licensing scheme is not achieving any worthwhile purpose from the point of view of the general public and those members of the public requiring the services of a tow truck. 11.23 Instead of quantitative licensing of the tow truck vehicles, more emphasis should be ascribed to qualitative criteria, including operator competency and safe operation. 11.24 A proper standard of behaviour by all tow truck drivers at the scenes of accidents is of importance to the public. 11.25 The Study Group also considers that, in relation to tow trucks, existing regulations dealing with driver behaviour and other provisions designed to protect the interests of owners of cars damaged in accidents should be reviewed to ascertain their effectiveness. 7 5.

12. RECOMMENDATIONS

1 2. 1 It is recommended that:- The existing system of regulation of • road freight transport be terminated as soon as possible and that consideration be given to repeal of the relevant provisions of the Commercial Goods Vehicles Act designed to afford protection of rail services, and some licensed road services. Consideration be given to legislation amending the Commercial Goods Vehicles Act 1958 enabling the Governor-in-Council, on the recommendation of the Minister of Transport, by proclamation to declare that on or after a specified date the carriage of prescribed goods by road transport may be restricted or prohibited under specified conditions, or that such restriction or prohibition may be lifted. The existing licensing system for commercial goods vehicles be abolished. A system of operator competency regulations, applicable to every driver of a "heavy vehicle", "large trailer com­ bination" or "articulated" vehicle, as defined in Section 2 of the Motor Car Act, be introduced. The enforcement of legislation dealing with overloading, height, width and length dimensions, speed, hours of driving, rest periods and safe loading be intensified. The Transport Regulation Board be requested to increase the level of random inspection of heavy commercial vehicles and that consideration be given to author­ ising TRB inspectors to issue traffic infringement notices and notices under Section 21K, Motor Car Act, to drivers of commercial vehicles of a tare weight of 2 tonnes or more. 76.

The existing system of control of entry into the tow truck industry, insofar as it relates to numerical or quantitative considerations, be abolished. • In relation to tow trucks, that existing regulations dealing with driver behaviour and other provisions designed to protect the interests of owners of cars damaged in accidents be reviewed to ascertain their effectiveness. 7 7.

APPENDIX "A"

List of organisations having made written submissions dealing with or related to deregulation of road transport

Albury - Wodonga Development Corporation Australian Institute of Petroleum

Australian and ~andos Cement Holdings Limited Australian Fertiliser Services Association Australian Industries Development Association Australian Railways Union (Victorian Branch) Australian Wheat Board Australian Wool Corporation Blakistons Limited City of Broadmeadows City of Echuca Country Roads Board Evans, Mr. J.D. Flemington Association Ceelong Harbour Trust Commission Ceelong Regional Commission Grain Elevators Board Hicks, r•lr. s. Hi llary, f~r. D. Leongatha Chamber of Commerce and Industry Loddon - Campaspe Regional Planning Authority Marmalake Receival Zone Committee Monash University, Department of Civil Engineering, Transport Group Northern Municipalities Transport Group Perrett, Mr. G.lJ. 78.

Neal, Mr. A.E. Phosphate Co-operative Company of Australia Ltd. Portland Development Committee Professional Transport Drivers' Association Road Safety and Traffic Authority Selkirk Brick Pty. Ltd. • Shires of Alberton, Buln Buln, Deakin, Drouin, Dunmunkle, Korumburra, Morwell, Mount Rouse, Narracan, Rochester, South Gippsland, ~arragul and Yea South Gippsland Conservation Society State Electricity Commission The Victorian Stock Agents' Association Transport Regulation Board Transport ~orkers' Union of Australia (Victorian Branch) Urban Freight Group Victorian Chamber of Manufactures Victorian Employers' Federation Victorian Farmers and Graziers Association Victorian Railways Board Victorian Road Transport Association Victorian Sawmillers' Association ~estern Victoria Transport Committee Country ~omans Association (Leongatha Branch) 79.

APPENDIX "8"

Dissection of commercial qoods vehicles as to licence classification end load capRcity February 1980

Licence Up to U.5 0.51-2.0 2.01-4.00 4,C1-:.J.D C.C1-B.C Type Tonne Tonna Tonne Tonne Tonne

EA G,461 5,92C t+,245 e23 2,015 EB 406 1, 2 94 373 1 05 179 EC 1, 7[]2 3,972 1 '67 3 567 1 , 324 EF r:; 9 11 27 EC [J 21,268 G,U45 462 EGS 19,349 EH 2,r:eo 1 , 7 5 1 , 304 562 990 EI 324 849 391 123 1 52 H1 30 75 139 23 68 EP 9 G 4 1 8 ET 5 24 29 48

Sub-Total 30,357 38,159 14,211 2,725 4,828 01 203 507 351 149 560 02 199 1 , 57 8 416 113 374 03 40 304 t13C 1 00 87 04 65 482 277 43 60 05 5 7 7 2 Other 0 4 12 2 4 3 Sub-Total 516 2,890 1 , 483 409 1, 086

Sub 30,873 41 , 04 9 1 5, 6 94 Sub-Total 3,134 5,914

ED 7,781 4,610 3,706

Grand 41 , 04 9 23,475 7,744 Total 30,873 9,620 so.

Page 2. APPENDIX "8"

Licence 8.01-10.0 10.01-13.0 13.01-16.0 Over 16 Type Tonne Tonne Tonne Tonne Total

EA 540 1 '32 8 454 1 '04 0 25,826 EB 56 182 58 11 8 2,771 EC 637 1 '03 2 375 791 12,073 EF 52 304 38 21 501 EG 27,775 EGS 19,349 EH 206 284 178 444 7,806 EI 95 212 55 179 2,380 EM 1G 57 25 118 551 EP 7 7 2 4 57 ET 35 79 48 285 553

Sub-Total 1,644 3,485 1 '233 3,000 99,642

01 235 455 197 450 3' 1 07 02 123 157 92 172 3,224 03 61 77 57 56 1 '212 04 9 24 20 71 1 '051 05 1 3 2 27 Other 0 5 8 7 30 75

Sub-Total 434 724 375 7 81 8,696 Sub Sub-Total 2,078 4,209 1 '606 3,781 108,338

EO 482 785 227 148 17,739 Grand Total 2,560 4,994 1 '833 3,929 126,077 81.

APPENDIX "C"

Shift of freight from rail to road in the event of deregulation •

This analysis is conducted by examining each of the major commodities and groups of traffic carried by rail,· having regard to a number of factors including the nature of the commodity, current rail and road freight rates, its suitability for a particular mode and the expectations of shippers or consignees in terms of quality of service and freight rates. During the· course of the Study, several manufacturers and other users of freight transport services made candid sta~e­ ments about their intentions as to selection of mode of transport if given freedom of choice. ~ithout exception, transport users indicated that they required the ability to choose the appropriate mode according to prevailing circumstances. Quality of service - prompt delivery and careful damage free handling - is often more important than marginal savings in freight rates. It is on these factors that the Study Group makes its predictions as to the extent of shift expected after deregulation is implem­ ented, and the effect on rail finances and the road system. figures given, both revenue and tonnages, are based on 1978779 rail revenues and volume for the respective commodity or group of traffic. 82.

FERTILISERS

Rail revenue of about $3.68 million per annum is derived from the carriage of superphosphate. If road transport is deregulated, the carriage of grains and superphosphate will become much more inter-related • than previously as competitive road rates could be struck on the basis of superphosphate as back loading. If grain is not deregulated, the lifting of all restrictions-on fertilisers will have no appreciable bearing on VicRail 1 s proportion of existing traffic. Under present circumstances - mainly the low railway freight rate and the regulation of grains traffic, there should be no loss of traffic. Removal of reg­ ulation of grain traffic ,and/or an increase in rail rates, will affect th~ position. Fertilisers carrie to properties between 1EO kilometres and 400 kilometres from the works at Ceelong and Portland woulo be an attractive proposition for road hauliers if they secured wheat loading to the seaboard terminals. This ould amount to 18 percen of rril fertiliser traff c. The potential loss of rail rovenu is ther - fore 330,lOO. 83.

Details of grains (intrastate} handled by VicRail for the 1978/79 financial year are as follows:- • Tonnes

lJheat 2,139,9 0 2C,519,UUO Bnrley t:u7, 70U 3,938,7[0 Gats 14t:,90C 1,2811000

2,752,500 ~;25,736,700

Note:- Averaoe gross rail tonna~e 1971-1979 was-2,17L,G00 tonnes Grains traffic movino in Victoria is subject to reoulation by the TRB. Road movement is authorised on advice from a committee of officers re~resenting VicRail, AUB, G[G nd TRG which monitors the rosition of local stor2ses and transport cemands, especially during the "overflow periods" durin~; the harvestin£ of bumper crops. Road movement is also permitted from the area of the closed Hamilton to Noradjuha railway line and within 00 kilometre radius of Portland. This experience reveals that road trans ort is competitive with existing rail rates at dis es between 150 and 4CO kilometres from main storages at Geelong and Portland. Beyond this distance rail's advantage over road transport is demonstrated by its che er tonne/kilometre costs, giving it an apprecia le advantage, increasing with distance. Railways oriented local storage, loading and unloading facilities, together with the attitude of the Australian Uheat Board, shoulc be restraining influences on any significant disposition to shift wheat by road transport. On the other hand it is likely that there will be a considerable shift of barley and oats to road transport, especially in the longer term. This would include transport operations by contract carriers from farms and local storages to malsters and manufacturers of stock feeds and breakfast cereals. 84.

The Study Group has recommended that some form of road transport controls over the movement of grains to the Geelong and Portland terminals should be retained for the present to allow VicRail to introduce further rationalisation and modernisation measures before it is placed in open competition for this traffic. Deregulation will thus apply to wheat sales to flour mills, stockfeed manufacturers and miscell­ aneous users, which amounts to 525,000 tonnes per year. The premises of the$e users are mostly adjacent to railway sidings but it is estimated that about 25 percent of the traffic will shift to road transport, representing a loss of about $1 million in railway revenue. Flour millers, stockfeed manufacturers and other users of wheat ar~ dispersed, and are supplied from a widespread area. Accordingly, road transport operations would be correspondingly scattered over a large area precluding the risk of unacceptable concentrations of trucks in local areas. On the basis of opinions and views offered to the Study in the course of discussions with interested parties, the Group estimates that about 25 percent of barley and oats currently being carried by rail will shift to rail within 2 years of deregulation, causing a revenue loss of Z1.3 million. Total railway revenue loss on grains traffic is about ~2.3 million, provided control of road transport to the seaboard terminals is maintained. 85.

WOOL TRAFFIC

It is certain that rail will lose considerable volumes of wool traffic on deregulation. Because of "border hoppers'' rail is currently handling only • 40 percent of pre-sale wool. Road transport will take its pick, leaving odd consignments of skirtings, crutchings, for rail transport through regional freight centres.

It is also ~!ear that road transport is competitive in the carriage of post-sale wool from Geelong. Another factor is a tendency towards larger, highly compressed bales of post-sale wool, of weights up to about 450 kilograms. This type of high density packaging is attractive to road transport. It is noted that the current average rail rate per tonne for wool is $13.48. As far as road transport is concerned, wool is an opportunity for back loading. Using other commodities as guidelines, VicRail will have to reduce to an average of 10.00 per tonne, or face reduced volume. Whichever course is followed, revenue loss of }300,000 appears likely. 86.

PAPER PRODUCTS

APM Ltd., Maryvale is using rail transport for a total of 100,000 tonnes (inwards and outwards) • annually. It is understood that special contracts between the Victorian Railways Board and APM Ltd. are in force and that further contracts, involving the use of VicRail warehouse space in the Melbourne area, are being negotiated. The new VFNX rail trucks (prairie wagons) appear to be successful. If railways can continue to provide hi~h quality service at competitive rates~ this traffic, at present movin from siding to siding in block trains, should be ld. 87.

WIRE PRODUCTS (ex Geelong)

The manufacturing company at Geelong, which receives its raw materials from New South Wales, is required to use rail transport for the carriage of its wire products in Victoria although the plant is not situated adjacent to a railway siding • • Because of the double handlin~ and short haul to Melbourne, it appears probable that VicReil will lose this traffic. It is estimated that about 100, CC to 120,000 ~onnes of materi2l is involved, representing VicRail revenue of almost SCO,COD. The traffic, on road, would require about 17 vehicle movements per working day in each direction alons the Princes Freeway West. This presents no traffic problem. BB.

SUMMARY - (a) EFFECT ON RAIL REVENUE

•

On the basis that grains traffic to the seaboard terminals would 40ntinue to be regulated for the time being, rail revenue losses in the first year after the lifting of all other road restrictions are estimated according to the following summary:-

Grains 2.30

LCL traffic 3.05

Fertilisers .33C

lJool .300

Geelong Cement 2.40

lJire Products (Geelong) .750

Gippsland Timber • 87 "

AREAS IN WHICH BORDER HOPPING AND ~ SUBTERFUGE INTERSTATE MOVEMENTS OCCUR

(Contained In Fl~:\·:d 1971/72 LIMITS Bland Report)

o.. I Welpevp ~ 2r- 1 "_..,,. ----\ ~1980 LIMITS 2J..o<:r--- 35 lf ~ ~uy .. •lle ' 1 1 Pa1cJ'Ie.,oll.oclil~ -22-J-~Speed \ 27 ~ 'An~•;i'· ' 21i 't Mo~>e\O~.m' \-? -30 ~ {~oomel.,.t .,...,.....,- \ AS 25 fhlll'!bo•tr"

JeHt•tJ.,3''

aJ ,:·· tO

pauJa J6

0 40 80 120 Kilom•tree

~ ss Distances in Kilometres l ~ ~- t:S 90.

APPENDIX "E"

•

COUNTRY ROADS BOARD

ROAD COSTS AND TAX PAYMENTS ATTRIBUTABLE TO TRUCKS

SUMMARY:- This paper compares separable pavement costs on Victorian arterial roads with federal and State fuel tax payments and motor registration fees

GRAEr~E BOTH TRANSPORT ECONOMIST ADVANCE PLANNING DIVISION

3 0 t h ~1 a y 1 9 8 0 91.

ROAD COSTS ATTRIBUTABLE TO TRUCKS

Pavement design and road damage Road pavements are designed and constructed to bear a certain number of axle loads of a specific magnitude before reaching a state of deformation and/or roughness at which they are judged to be providing an unacceptable quality of ride to the road user. An axle load heavier than that for which a pavement was designed ~es substantial a~celeration of the normal pavement deterioration process and could be classed as "damage'', but not the mere increase in the number of design axle loadings resulting from growth in truck~·

Separable pavement costs This report mentions an analysis based an "separate'' pavement casts. These are the additional pavement casts directly attributable to use of roads by a specified type of vehicle, and which would not be incurred if that type of vehicle did not use the roads. The analysis makes no allowance far additional pavement requirements to accommodate truck-turning movements at intersections, lower vertical grades for trucks, truck passing lanes or bridge costs. The ATAC study of separable pavement costs far trucks In February 1977 a committee was formed to advise the Australian Transport Advisory Council (ATAC) on the implementation of feasible and practical alternatives to the system of road char s then in use in Australia. The Committee was er the chairman- ship of the Victorian Director of Transport, Mr. G.J. Meech. As part of the investigation, the Country Roads Board (CRB) was asked to produce an estimate of the separable pavement costs which could be attributed to· various types cf trucks using the National Assoc­ iation of Australian State Road Authorities (NAASRA) Economics of Road Vehicle Limits Study (ERVLS) data and systems. 92.

The results of this investigation were included in the Meech Committee report and later publicly reported in a paper at the 9th Australian Road Research Board (ARRB) Conference in 1978.* The paper.reported Australia-wide results in 1976/77 travel costs based on ERVLS data collected in 1974/75. A discussion of economic efficiency, equity and alternative forms of charging for use of roads was also provided. A copy of the paper is Appendix "A" to this report. Victorian separable pavement costs (197c/77 values) In addition to the published figures based on a nation-wide study, analyses were also conducted at a State level, the results for Victorian arterial roads (Functional Classes 1, 2, 3, 6 and 7) being:-

Truck travel on Separable Costs For Truck arterial roaLI s 1avement costs ~rterial roads type in 1976/77 (cents per in 1976/77 (million truck km) truck km) values (::m)

2 axle rigid 111 9 1 • 3 1 5. 0 3 axle rigid 228 1 • 1 2. 5 4 axle rigid 25 1 • 2 0.3 3 axle articulated 160 2. 8 5. 1 4 axle articulated 237 3.3 7.8 5 axle articulated 128 3.4 4.3 6 axle articulated 11 2.9 0.3

Totals 1 928 3 5. 3

* lJebber J.R., Both G.J. and l

Method of updating to current values Both the travel figures and the separable costs require updating to 1979/80 values. In th€ case of travel two approaches could be adopted:- (a) The 1979/80 travel projections used in the original ERVL analysis. The resulting total travel is 2,313 million truck kilometres (6.6 percent per annum simple growth rate). (b) Use of an estimate of actual 1979/80 travel based on recent traffic count, freight movement and fuel usage figures. The resulting estimate is 2,100 million truck kilometres (3.0 percent per annum simple growth rate). The latter approach has been adopted as being more realistic. To update to 1979/80 prices the change in the CRB Composite Direc ~arks and Salaries Index between the 1976/77 and 197 9 financial years (14.3~) has been combined with the change in the value of the index between 31st December 1978 and 31st December 1979 (12. ) to produce an updating factor of 1.28 Victorian separable pavement costs (1979/BO values) The resulting updated table for Victorian arterial roads is:-

Truck travel on Separable Costs For Truck arterial roads pavement costs arterial roads type in 1979/80 (cents per in 1979/80 (million truck km) truck km) values ( Sm)

2 axle rigid 1220 1 • 7 20.7 3 axle rigid 249 1 • 4 3.5 4 axle rigid 27 1 • 5 0.4 3 axle articulated 1 96 3.6 7.0 4 axle articulated 258 4.2 1 0. 8 5 axle articulated 138 4.3 6.0 6 axle articulated 12 3.7 0.4

Totals 2100 48.0 (say 50) 94.

Comment on accuracy of latest estimates

In the above calculations travel growth was assumed to be the same for all truck types, whereas 4 axle rigid and the 5 and 6 axle articulated categories probably increased at a far higher rate than average. However, no data is readily available to confirm this feeling. The effect is probably not very significant as the unit separable costs for rigid trucks are fairly constant (and similarly for articulated trucks).

Another as~ect is that the unit separable costs make no allowance for the effect of increased permissible axle masses which came into effect in November 1976. If the ERVL Study estimates are used a Victoria total of ~4 million is obtained for rural arterial roads. Assuming urban arterial roads are about ~rd this figure gi~es an amount of around §5.3 million, thus lifting the total VicLorian separable costs on arterial roads to about :s4 million (i.e. 4C.e + 5.3).

The relevance of the seoareble cost r~sLl~s As mentioned previously, the ERVLS analysis was limited to the pavement costs on the arterial road system. Only trucks with at least duel roar tyres were included anrl buses were oxcludec'.

In addition, the se arable ~avcrnonL costs analysis makes no allowance for trucks' c~n ribution to air pollution, noise and vibration, accidents ano the vehicle operating and time costs of other road users.

The separable avement costs for trucks, which were estimated y the ATAC investication at around ~200 million for Australia in 1~~C/77, compared with an estimate (~ffleck 197E) of ;1,~GV million for total road costs. Of the romainin~ 1,bCC million "joint" *costs trucks obviously contributed, but to an unknown extent.

* The costs are "joint" only in the sense that they have not been separated by some other method cf categorization, e.g. vehicle-km, tonne-km, person-km, etc. Affleck F.N. & Associates (1976), Road User Charges in Australia. Report for the AustraliBn Transport Advisory Council. 95.

The neral conclusion is that the ERVLS- based analys s tells something relatively p~cisely about a tenth of total Australian road costs, b~t provides nothing on the remaining nine-tenths of the road costs. In addition, the ERVLS data base is now five years old and during that time, very signifi ant changes have ken place in the heavy vehicle fleet. 96.

TRUCK TAX PAYMENTS

Business Franchise (Petroleum Products) Act 1979

On 1st September 1979, a State fuel tax in the form of a business franchise scheme commenced. At current wholesale prices of around 30~/litre, the tax (7.1%) on distillate ++ used in trucks is equivalent to about 2.1~/litre.

Vehicles greater than 3,000 kg tare mass + are estimated to consume nearly all the automotive distillate and about 6 percent of the motor spirit "taxed" under the Act.

The franchise fee receipts in the ten months of 1979/80 are likely to be $47 million. If the scheme had operated for a full 1979/80 year the total receipts would have been at least $55 million, of which vehicles greater than 3,000 kg tare mass would have contributed an estimated $10.5 million (comprising $8 million on distillate and $ , million on motor spirit).

For 1980/81 the likely range of business franchise fee receipts is $70 - $75 million, of which the large vehicles would contribute S14 - $15 million. This compares with Road Maintenance Charge payments of just under $10 million per annum in recent years.

++ Some of the smaller trucks have petrol engines but for the purposes of this paper any difference in tax payments will be ignored.

+ Very approximatGly equivalent to those of carrying capacity greater than 4,100 kg which previously paid Road Maintenance Charges. 97.

Commonwealth fuel excise and crude oil levy The current rate of Commonwealth customs and excise duties on fuel used in road vehicles is 5 • 1 5 5 ~~ 1 i t r c • The crude oil levy is ostim2 cd to raise · 2,5C million in 1~79/G and ( current rates) mora than :2, C millio in 19r 1. On a ~olumo~ric nd onnR c basis abou ~ ~crcen of ~ha 1 vy can be attributed to fuel used in road vehicles, this boinc uivalent to .~5~/litre in 197S/8 2nd at least 7. >/li trG in· 19 .C/"1.

To':c;l fuel t;:;x ?J8''mcnts

T 8 lJ 1 s 1 c n c 2 s h o hi , f o r e e c 11 t r u c k t y ;_, c , total fuel ax pay~en for Vie orien arterial roac:s ::ne: cyr:cnls on e cr.nts/ ruc!:::-kilo~ctre lla_sis.

;,s "r ult of the restructurin~' of rootor re stration fees on 1st J nuery 19 D, totcl rG istration rE'c:ei~>t hnvc beEJn rm uccd by about :~.[' mi ion ir. 197 G c:nrJ arouncl :2c million in 1JG 1. Within this rostrucluring, vehicles renter than 3,00 k~ tare ss and re istered at the commercial rat re ostimn e to ~2/ around 3.3 mill on in 197 and 14,7 million in 198 1. Thi compares w ~h ~12.2 million in 1978/79. For the seven categories of trucks included in the ERVLS an;::Jlysis typical nnnual "commercial" registration fees range from loss than ~4GC for 2 axle trucks to over :1,200 for 6 axle trucks. For vehicles travel! ng the average annual distances for their axle category the fees represent an additional charqe of from 2~~/kilometre for 2 axle · 1 1 trucks down to 1¥ - 1i~ I kilometre for G axle trucks.

It should be noted that vehicles used solely for interstate trade are exempt from registration f8eS under Section 92 of the Australian Constitution. These vehicles number around 3,500 and the loss of revenue to Victoria is about t2} million per annum. In addition, thnre are at least 10,000 goods vehicles of over 3,000 kg tare owned by primary producers who only pay a flat t100 annual registration fee. The cost of this concession would be of the order of ~2 million per annum. 98.

Constitutional and political difficulties

In the absence of a tonne-kilometre tax and with the Constitutional inability to charge vehicle registration fees to interstate operators, a State fuel tax (in the form of a business franchise fee scheme) is the only feasible means for a State to obtain revenue from all operators of trucks. The level of the fuel tax is limited by the need to avoid substantial fuel price differentials between States.

In this context, it should be noted that the NSW Labor Government has refused to reintroduce * a State fuel franchise scheme, thus giving NSW truck operators a "free ride" as well as restricting the extent to which the.thr~e adjoining States can raise revenue from truck operators.

* A NSW fuel franchise scheme operated from 1974 to 1976 but was used solely to raise general government revenue. 99.

·COMPARISON OF ROAD COSTS AND TAX PAYMENTS

Separable costs versus fuel tax payments Figure 1 shows in diagrammatic form the separable pavement costs and fuel tax payments for each of the seven types of Victorian trucks in 1979/80. For all types the separable costs are exceeded by the fuel tax payments, especially for the smaller vehicles. The total fuel tax payments for all trucks are about 3100 million and tKe separable costs SSO million. The most important contribution to the total fuel tax payments is the Commonwealth crude oil levy. It is argued by some economists that the levy should be regarded as a scarcity price for oil and therefore it should not also be regarded as a road-user charge for recouping separable costs. In favour of the argument they would point out that the levy applies to all oil irrespective of usage, whereas customs and excise duties are specifically levied only on fuel for use in road vehicles and may thus legitimately be regarded as a road user charge. Excluding the crude oil levy To determine the effect of this argument Figure 2 reproduces Figure 1 without the crude oil levy. It can be seen that all articulated vehicles are now shown to be paying G.6 to 1.1~/truck kilometre than the separable payment costs caused by them. a group would just be covering total pavement costs on arterial roads. Including motor registration fees

It should be noted that in neither case are motor registration fees shown. As mentioned previously for vehicles travelling the average annual distances for their axle categ ry the fees represent an additional charge of from 2 ~/kilometre for 2 axle trucks down to 1~ - 1~~/kilome re for E axle trucks. 100.

Contribution to joint costs

While the above comparisons indicate that truck tax. payments are either just covering se2ar2ble costs or substantially exceeding those costs, there remains the c,uestion of whether they are making 2n appropriate contribution to ,joint costs. As shown by Affleck, at an Australia level "joint" costs are possibly eight times the magnitude of separatle costs. No unique methodolo~y exists to fairly a~portion these joint costs to particular classes of vehicles. 1 0 1.

CONCLUDING REMARKS

This whole subject involves several complex issues and there is no one simt>le 2nsuer as to whether the trucking industry is ad uately rei.mbursing 90vernment (road P.uthori ies) for the increased wear and tear caused to roc,d pavements by heavy vehicles.

Several detP.iled investi9ations have been carried ·out in recent years and certain costs which can be directly attributed to truck use have been identified. Although such costs represent only a small proportion of the total costs involved, these studies do nevertheless indicate that in general the heavy trucking industry is in fact meeting its share of the additional wear and tear of road pavements. TABLE 1

Fuel Travel in Total fuel fuel tax Qayments ($m) Truck consumption 197 9/8 0 consumed type rate * (million (m.li tres) ( 1/1 DO km) truck km) Excise Crude lev) State Total (5.155~/1) (6.45~/1 (2.0~/1) (13.5)

2 axle rigid 32 1 , 22 0 390 2 o. 1 2 50 1 7.8 53.0 3 axle ri d 38 249 94 4.8 6. 1 1.9 1 2. 8 4 axle rigid 39 27 11 0.6 0.7 0.2 1. 5 3 axle artic. 38 1 96 74 3.8 4.7 1.5 1 0. 0 4 axle artic. 44 258 11 4 5.9 7.3 2.3 1 5. 5 5 axle artic. 46 138 64 3.3 4. 1 1.3 8.7 ....>. 6 axle artic. 43 12 5 0.2 0.2 0.1 0.5 0 .rv Totals 2,100 7 52 3 8. 7 48.5 1 5. 1 102.3 (say 1)

* As in fig.4, Webber et el ~ 4.905 TA

Truck Fuel consumption rate F ax payments (~/km) type (1/10[; km) Excise Crude levy- State Total (5.155!1/1) (6.45rt/1) (2.0~/1) (13.6~/1)

2 axle rigid 32 1.65 2.05 0.65 4.35 3 axle rigid 38 1. 95 2.45 0.75 5.15 4 axle rigid 39 2.00 2.50 0.80 5.30 3 axle articulated 38 1 • 95 2.45 0.75 5.15 4 axle articulated 44 2.25 2.85 0.90 6.0 ....> 5 axle articulated 46 2.35 ::.oo 0.90 6.25 0 6 axle articulated 43 2.20 2.80 0.85 5.85 .u:i 104.

LEGEND

Separable pavement costs-VICTOR lA 8 State fuel tax

Crude oil levy

Excise duty

6

~ (!) -E 0 ~ ..!!! u ~ (!) > ..... Q) a. 4

VI c -Q) u

..

RIGID ARTICULATED

FIG. 1 Separable Pavement Costs and Fuel Tax Payments For Commercial Vehicles (1979/80 rates and prices.) 1 0 5.

LEGEND

Separable pavement costs -VICTORIA

State fuel tax

Excise duty ·

6

....~ Q) E 0

~

~ .~ ..c Q) >

~ Q) 4 a.

...."'c Q), u

2+----

o~--~~~~~~~~~~--~~~~~--~~"-~~~--~------­ No. of axles 2 3 4 4 5

RIGID ARTICULATED

FIG. 2 Separable Pavement Costs and Fuel Tax Payments for Commercial Vehicles (1979/80 rates and prices.)

F. D. Allun10n, Go11ernmen1 Printer. Melbourne