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Transport Hikes Will Push Up Inflation and Interest Rates

6 March 2006

WITH Australian businesses already struggling with prices at the petrol pump, the timing couldn’t be worse for Federal and State Governments to be looking to increase trucking costs, the National Farmers’ Federation (NFF) warned today.

The National Transport Commission (NTC) is pushing for governments to impose truck registration increases of 35% (for B-doubles and road trains) and that the Australian Government should increase fuel taxes on heavy vehicles by 10.5% (or 2.1 cents a litre).

“Any move to impose such harsh new imposts on transport costs will undoubtedly be felt by consumers at the check-out,” Mr Charles Burke, Vice-President of the NFF and Chair of the Farm Business and Economic Committee, warned.

“The NTC has seemingly developed these proposals in a policy bubble, unable to take into account what is going on in the real world. The Australian economy is battling to absorb the effects of a major oil price shock, so the push to put extra charges and taxes on fuel and transport at this time is bizarre economic logic.

“However, Federal and State Ministers are not operating in this reality vacuum and should be all too aware of the strain high fuel costs are putting on businesses and consumers. The Reserve Bank has warned that inflation is now right at the limit of their 2-3% target range and the pressure is on for another interest rate rise in 2006.

“In the farming sector, high oil prices have already severely cut into farm incomes by spilling into the cost of transport, fuel, fertiliser and farm chemicals. As these proposed increasing transport costs feed into almost everything we buy, consumers will end up bearing the brunt of higher prices.

“This will add to inflationary pressure and may bring on higher interest rates sooner rather than later.

“Through our campaigning we have been encouraged that Transport Ministers are listening to what farmers and the trucking industry are saying on this potentially explosive situation. This issue is still hanging very much in the balance. Governments should defer any action on this matter, at least, until the current oil price shock subsides.”

Media Enquiries: Brett Heffernan on (02) 6273 3855 or 0408 448 250.

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