Topics / Charges / Options to improve PAYGO (policy work complete)

This project analyses options to improve the current ‘pay as you go’ (PAYGO) methodology

Options to improve PAYGO (policy work complete)

  • Scoping > 
  • Analysing issues > 
  • Analysing options > 
  • Implementing

Purpose

This project analysed nine options to improve the current ‘pay as you go’ (PAYGO) heavy vehicle charges methodology.

The PAYGO methodology is used to make recommendations to the Transport and Infrastructure Council (the Council) on annual registration charges and fuel-based road user charges (RUC) for heavy vehicles.

In November 2015, the Council requested that the NTC ‘investigate and report back to it with options to advance the methodology to better balance heavy vehicle charges and government revenues’.

On 1 July 2016, we released a discussion paper outlining nine options to achieve this outcome. The options considered were:

  • adopting a forward looking ‘life cycle’ cost base approach
  • revising the cost base using forecast budgets of financial costs
  • ring-fencing heavy vehicle charges revenues
  • introducing an ‘unders and overs’ account
  • turning heavy vehicle charges into a tax
  • continue to freeze revenues
  • re-examining the heavy vehicle cost base allocators
  • re-examining the amount of local government expenditure excluded from the PAYGO cost base
  • changing the heavy vehicle charge setting process: independent price regulation.

We consulted on these options with the Commonwealth, state and territory governments and representatives from the heavy vehicle and rail industries. We received 16 submissions to the discussion paper which helped us form our advice to the Council.

Our findings and recommendations are contained in the policy paper: Heavy vehicle charges – Options for improving the accuracy and stability of the PAYGO heavy vehicle charges methodology.

In developing policy, we worked with the Commonwealth Department of Infrastructure and Regional Development and state and territory road agencies to consider consistency with broader road reform objectives and ensure that our recommendations were aligned with the Heavy Vehicle Road Reform (HVRR) project reform pathway.

Next steps

Our discussion paper identifies nine potential options which seek to address the current PAYGO system’s limitations. These options are not mutually exclusive, and more than one can be implemented simultaneously. We have also developed criteria to assess whether the options are likely to achieve the desired outcomes.

Background

On 6 November 2015, the Council decided to freeze total revenue from RUC and registration charges at financial year 2015-16 levels for two years until 1 July 2018. At this meeting, the Council also instructed the NTC to investigate and report back to the Council on options to advance the PAYGO methodology.

On 4 November 2016, transport ministers agreed to continue the ‘freeze revenue’ approach. The approved heavy vehicle charges will apply from 1 July 2017 for 12 months.

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Reports open for comment

Contact us

Project Manager Brook Hall
Last Updated: 8/3/2017