Call to reform road taxes and charges

Road costs for congestion and vehicle-caused pollution are expected to hit $20 billion by 2020 – double the 2005 figure.  And those costs are not being paid equitably by those who create them.  

Traffic Jam

So it is time, according to La Trobe University economist Professor Harry Clarke, for Australia to move to a system where motorists meet those costs more fairly as they use our roads.

In a paper he will present today (Wednesday 23 July) to a conference on ‘Australia’s Future Tax System: A Post-Henry Review’, Professor Clarke calls for comprehensive electronic pricing of congestion in the two major cities, Sydney and Melbourne.

‘And we should be prepared to comprehensively price the less congested capital cities as well,’ he adds.

Traffic accident costs represent around four per cent of Australia’s GDP.  These should also be captured by levying fixed charges which reflect the accident related experiences of different categories of drivers, and by levying a per kilometre charge to reflect traffic accident exposure, he says.

Likewise, heavy vehicle damage to roads – a substantial cost for all levels of government.  These too should be paid for through direct charges that reflect the damage caused by such vehicles, based on their loaded mass, the type of roads they use and the distance they travel.  

Professor Clarke says the Productivity Commission, in its 2007 report, showed that road repair costs are paid for on average by heavy vehicles which create them, through registration charges.   

‘However, this way of recovering costs is very inefficient. Once a fixed charge is paid, there is no incentive for a vehicle to restrict the damages it causes. This means that trucks which are unused or which travel on highly durable roads pay the same contribution to costs as those used intensively and which operate on low durability roads.  

‘Trucking freight growth is expected to grow strongly over the next 20 years, so these inefficiencies will become increasingly important.’  

Professor Clarke argues the advent of new Intelligent Transport Systems (ITS)* enables local government to price these journeys, giving them the chance to charge for access to smaller local roads and then use this revenue to improve road infrastructure.   

Overall, he says this proposed new way of levying taxes and charges should not result in an increase in taxes paid by the community. Instead, he argues, it will encourage incentives and efficiencies that will realise cost savings that can be passed on to motorists through cuts in other taxes and charges.  

> Contact: Professor Clarke, Tel: 03 9479 1732,


* NOTE: La Trobe University’s Centre for Technology Infusion is helping in the global development of new ITS technology.

Last month the University, working with the Australian Automotive Co-operative Research Centre (AutoCRC), signed a $260,000 agreement for research and training in advanced automotive technology and transport engineering related to this field with two of China’s leading universities, Tongji University in Shanghai and Tsinghua University in Beijing.

La Trobe Deputy Vice-Chancellor (Research), Professor Tim Brown says Intelligent Transport Systems are a high priority world wide.