Truckers Can Build Major Economic Recovery

At a time when fuel prices are undermining the economy, Road Transport Forum NZ has completed research confirming that policy changes allowing heavier, more productive trucks on our roads and bringing road user charges (RUCs) into line with other countries would kick off a major economic recovery. It would greatly increase GDP, create thousands of new jobs and make our roads safer for private motorists.

Forum chief executive Tony Friedlander said the research, carried out by Infometrics Consulting for the Forum, indicated that a reduction in freight rates of 10 percent would lead to a 3.7 percent increase in GDP, 33,000 new full time jobs and export growth of more than 1.5 billion dollars.

“This 10 percent reduction could be achieved if the Government allowed an increase in weights and dimensions for safer and more productive trucks. Major productivity gains would eventuate, leading to large reductions in freight rates. The research also shows that bringing our RUCs into line with other countries would have major benefits.”

Mr Friedlander said these research findings were very exciting. “They confirm the Forum’s long standing view that freight costs have a huge impact on economic growth and must be kept to a minimum to increase our standard of living and international competitiveness. This is a great opportunity for the Government to help build a major economic recovery.”

The economic model used in the research is designed to predict the state of the economy in 2002/03 and ascertain how it changes when subjected to some future shock. The first shock was the 10 percent reduction in freight rates caused by the use of heavier trucks. The second and third involved bringing RUCs into line with Australia and the United States. “These also showed substantial benefits for our economy, including increases in GDP and export competitiveness.”

The trucking industry could easily provide New Zealand with one of the most efficient freight services in the world. Major cost reductions and economic growth could be realised with these sensible policy changes.

Other research commissioned by the Forum last year demonstrated that New Zealand RUCs are the highest in the western world.

“They are 277 percent higher than in the US and 42 percent higher than Australia. This has a significant detrimental impact on our economy as it increases the cost of economic activity and inhibits exporters. We’re currently working with the Ministry of Transport on the allocation of roading costs. This must be dealt with as this research has shown how negative such high costs are on all facets of our economy.”

While these results show how important it is to keep road transport costs to a minimum, the Infometrics work also showed the negative economic impacts of price increases. “It illustrated that a major increase in RUCs would lead to 20 000 job losses, a 1.7 percent drop in exports and a GDP fall of 1.4 percent. All of these extra funds would then be needed for social welfare benefits and to compensate for the lower Government tax-take.”

Mr Friedlander said that the current RUC system also discouraged efficient use of the existing fleet. “The marginal costs of adding extra goods to existing loads are five times higher than the US and Australia. This means operators are currently encouraged to put more trucks on the roads, discouraging fuel efficiency and exposing private motorists to more trucks.”

He said policy changes in these areas were vital if New Zealand wanted an export-led recovery, economic development and thousands more people paying taxes rather than receiving benefits. “It’s only since the current fuel crisis that many people are realising how important road transport costs are. Trucks carry more than 80 percent of all goods transported by land in New Zealand, so the more this costs, the more consumers must pay at the point of sale and the more it inhibits exporters.”

Mr Friedlander said that while this point has been publicised recently because of the fuel crisis, people have been paying far too much for many years under successive Governments. “Our industry is not planning on following the actions of its European counterparts, but it does want the Government to recognise the opportunity shown by our research and take action. These policy changes are exactly what the country needs to help get itself out of the economic doldrums. It’s not only for the benefit of our clients, but for the benefit of all New Zealanders.”

ENDS

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