Australian Logistics Council Conference
17 August 2016
Melbourne Park function centre
The work that your sector is doing to improve safety through the supply chain is of vital importance. But of course it's not necessarily easy, particularly, to achieve the required coordination and consistency of approach and by definition, a supply chain involves many different stages and participants. So the Australian Logistics Council is doing really important work leveraging your many members and your rich web of relationships. Holding this summit of course is just one example of that work, bringing together subject matter experts, industry participants and other stakeholders to work through some of the issues which arise from the chain of responsibility laws.
Another piece of work that you've done is issuing during the election campaign the document Getting the Supply Chain Right which sets out very clearly what you see as the key priorities. It highlights structure, planning, rail, road pricing, safety and technology and there's a very good alignment with the issues that Darren Chester and I, in the infrastructure portfolio space, are taking forward and just last night, in fact, I was speaking to the Sydney Institute about road pricing and just a few weeks ago, Darren spoke to the Australian Trucking Association about our focus on road safety. I know he was planning to cover similar ground today and I'll make some comments on his behalf.
So, today I want to discuss firstly the vital importance of the heavy vehicle industry and the logistics industry to our economy. I want to talk about the importance of road safety and finally I do want to touch on the chain of responsibility legislation. But if I come firstly to the heavy vehicle industry, it's such an important part of the social and economic fabric of our nation. In the mid 1990s when I returned to Australia from completing an MBA in New York, I spent a year working with corporate strategy team at TNT. It was a very educational year. For example I first heard the term bitumen Boeing which I understand was freight priced on the basis that it would be carried by air to meet tight delivery time frames; but actually carried by road. I have every confidence that that would never happen today.
It certainly opened my eyes to the tough, competitive conditions in the road freight industry and the importance of the industry. According to your organisation statistics, the logistics industry added $131 billon to our national economy, nearly nine per cent of GDP and in 2013/14, the road freight task across the nation was approximately 200 billion tonne kilometres and that's growing very strongly. Now, the Turnbull Government recognises that we have a vital role to play in delivering the roads, working with state governments, that your industry uses so in return freight can move around more efficiently and they can drive improved productivity across our economy.
The US Interstate Highway system which commenced construction in the 1950s is a great example of how better roads drive better productivity. One economic study found that that highway system generated 31 per cent of the annual productivity increase in the US economy throughout the 1950s at a time when productivity was growing very strongly indeed. Thanks to that highway system, more efficient companies could better serve a national market and one economic study found that the consequence of the sharp cost reductions in all but three of 35 industries as transport became cheaper and more efficient.
One good local example of the productivity benefits from road infrastructure is the upgrading of the Pacific Highway. This has been underway for a number of years and about 60 per cent of the distance from Newcastle to the Queensland border is now four lanes and that's delivered time savings of 90 minutes on a typical trip. When the highway's completed in 2020, when the four lanes is completed, it will save 2.5 hours on a typical trip and it's not hard to see the productivity benefits of that. If a trip takes less time, then a given truck can do more trips per week, per month, per year. That means the fixed costs like the capital cost of the truck and the driver's pay are spread across the greater amount of freight carried, and the cost per unit of freight correspondingly drops.
And that's a benefit that cascades throughout the economy; that is productivity improvement in action and that's one reason why the Turnbull Government is committing several billion dollars to the vital upgrade of the Pacific Highway which after all, connects our largest and our third largest city centres. Similarly we're investing $2.9 billion in the Western Sydney Infrastructure Plan, a whole series of roads to support the imminent arrival of Western Sydney Airport in the mid-2020s. We've invested- we've committed $1.5 billon to the Victorian infrastructure upgrades including $500 million towards the Monash Freeway upgrade and a further $350 million for the M80 Ring Road.
We're investing millions in the Bruce, the Midlands and Pacific Highways, towards the Perth Freight Link, the Great Northern Highway and the Northern Australia Roads Programme. The $248 million Heavy Vehicle Safety and Productivity Programme is not only improving productivity for freight operators but also safety for both heavy vehicle drivers and other motorists by installing road safety barriers, widening road shoulders, installing better lighting and tactile line marking, improving signage and increasing the number of rest periods. Our $500 million Black Spot Programme has saved countless lives by upgrading dangerous intersections or sections of road across Australia.
This community-led program allows anyone to nominate a black spot that they suggest needs an upgrade. Last year there was a total of 267 black spots projects approved for funding to improve the safety of road sites which had been identified as high risk areas for serious crashes. And the Commonwealth Government administered over $50 million to support projects to improve road safety and identify the crash sites.
Yet despite this significant investment, the national results we're seeing on road safety are disappointing. So I do want to talk about road safety, which is an area where Darren Chester is providing passionate and committed national leadership. When Darren spoke about road safety at the recent Australian Trucking Association conference, he expressed a concern that as a nation, we may have become too complacent about our road toll. We are forging ahead with building better transport infrastructure, but sadly that does not seem to be translating to fewer fatal accidents on our roads. Our overall performance in recent times does not keep pace with the achievements of other developed countries. As Darren observed in his recent speech, he used a timely Olympic analogy, based on our achievements in the road safety area, we would not be in contention for a medal.
The concern appears to be that as a nation we seem to be simply accepting there's a price to pay for a modern transport system, and that we're prepared to pay a price of around 1200 lives a year. I think we'd all agree to pay such a price is absolutely unacceptable, and we must strive to do better. From an economic perspective, road trauma costs something in the order of $30 million a year, but an infinitely greater and longer lasting cost is the social impact of 1200 lost lives, not to mention countless injuries.
One issue we are particularly concerned about is the lack of uniform, consistent data across the country on road trauma. Of course, there are some aspects of road safety where the news is more encouraging, such as the heavy vehicle industry. The heavy vehicle crash rate is down, despite a much increased freight task. The heavy vehicle industry has done a lot of work on safety over the past few decades, and this is showing results.
In December last year, I had the chance to visit a Toll Group depot in Western Melbourne for a briefing on key operational issues including safety. The scale of technology being used is very, very impressive. I also had the chance to try a driver simulator, where I managed to knock over some traffic lights while completing a particularly ineloquent right hand turn. But I took away a clear sense of the effort and investment going into driver training and safe operations, and the use of technology, including telematics to improve outcomes. They've built on an earlier visit I've had to the Rio Tinto innovation centre in Brisbane, where amongst other things I saw the technology that company is using to monitor drivers and alert them when indicators like drooping eyes are indicative the driver may be falling asleep.
I think all of us see that the promise of improved technology leading to improved safety outcomes is very, very exciting. The data over the last decade shows an almost 20 per cent reduction in heavy vehicle fatalities. It's a strong result, and one that your industry should be commended for. Nevertheless, in the 12 month period to March 2016, 204 Australians were killed in 186 heavy vehicle crashes, and for articulated trucks, this was an increase of around 4.3 per cent compared to the previous 12 months. And it's consistent with the overall trend with the number of deaths in road crashes having risen by 11.2 per cent in the same period.
Let me turn to one of the priorities that Darren Chester is working on which is the interaction between heavy vehicles and other vehicles on the road. In his time as Minister for Transport and Infrastructure, Darren's been a strong advocate for driver education. Of course, we've had many outstanding driver education campaigns, through the TV commercials and using other communications tools. But one area where we could do better is education targeted at the smaller vehicle operators – motorcyclists and cyclists – to learn how to better interact with trucks. And I know Darren has already had some discussions with peak bodies in the trucking industry who are pushing for better education of light vehicle drivers on how to share the road more safely with heavy vehicles. They're rightly seeking a national commitment on this because, as the research shows in a significant number of cases, the fault for the accident did not lie with the heavy vehicle drivers. The Government is considering this idea and we look forward to discussing it in more detail with industry.
Another area where the Turnbull Government has worked together with the sector has been in the decision to abolish the so-called Road Safety Remuneration Tribunal. This body was never about road safety. It was a deal between the Transport Workers' Union and the Labor Party to grow union membership and put owner drivers out of business. There was absolutely no sound evidence to indicate employee truck drivers were less likely to be involved in an accident than owner drivers. And making owner drivers charge more for their services than employee drivers wouldn't make them drive more safely; it would just price them out of the market so they wouldn't be driving at all.
Safety was and is at the heart of the Turnbull Government's decision to abolish the Road Safety Remuneration Tribunal. We thank the Australian Logistics Council and the many other industry members, as well as the major operators, who lobbied hard for that decision. A key part of the decision was for the money saved by abolishing the Tribunal to be directed to the National Heavy Vehicle Regulator for practical, achievable safety initiatives. For this financial year, in addition to a comprehensive safety work program already underway, including the roll out of electronic work timers, the National Heavy Vehicle Regulator has three main areas of focus for this funding. They are to expand the current heavy vehicle monitoring capability and better target those in the industry who undercut through noncompliance; to fast track the development in distribution of chain of responsibility guidance material, so that all parties in the supply chain, not just the drivers, understand their responsibilities and liabilities under the law; and, thirdly, to fast track the development and registration of industry codes and practice to make it easier for owner operators to comply with their obligations.
In recent months we've announced that the National Heavy Vehicle Regulator will use the funding to establish a national camera system to identify drivers and operators who do not comply. And, earlier this month, the National Heavy Vehicle Regulator announced the commencement of a national health check of our fleet. The National Roadworthiness Baseline Survey means that for the first time we can aim for a single approach and set of rules to assess vehicle compliance standards. Out of this two month survey will come a snapshot of the fleet's conditions. It will identify risk factors and it will help to develop a national risk-based inspection approach that will show up high risk systems, vehicles, or operators.
I do want to emphasise very strongly the importance of thinking and acting nationally when we are considering the safety. Collecting data nationally will enable us to develop consistent inspection regimes and enforcement across Australia. Just as we need a national approach to road safety, heavy vehicle safety must be seen as a shared responsibility. Road accidents involving trucks aren't usually the sole responsibility of the driver; drivers only have so much control. The Turnbull Government recognises that there are many links in the chain and the acts or omissions of someone in any one of those links can influence the safety of a journey. That's why we support the strengthening of the chain of responsibility regime in the heavy vehicle national law.
Bringing in a primary duty of care means everyone, from the consignor to the loader, will need to look at their safety obligations in a more holistic way. It will not be sufficient just to tick the boxes you think will apply to you and hope the rest takes care of itself. The legislative changes have been approved by transport ministers and are likely to be introduced into the Queensland Parliament in October. Because these are complex and far-reaching changes, we need to make sure everyone understands what they mean and everyone is ready to put them in practice. Therefore, these chain of responsibility amendments will not take effect until the Government is confident that industry is ready for it. The National Heavy Vehicle Regulator is there as a resource and I encourage operators to engage with the National Heavy Vehicle Regulator and actively seek information on the implications of these changes to the law for your own operation.
Let me conclude by thanking you for the opportunity to speak to you today and, again, express regret on the part of Darren Chester that he can't be here but convey his strong commitment to road safety and to working in your industry in relation to the chain of responsibility and other issues. Improved road safety is a long game and the Australian Government is in it for the long haul; we're strongly committed to working with you to make improvements. There is nothing more important than improved safety, for those in the industry, for other road users, and for our nation. So, good luck in your important deliberations for the rest of this conference. Both my colleague Darren Chester and I look forward to hearing of the outcomes.