HOPKINS, Mr Michael, Chief Executive Officer and Commissioner, National Transport Commission [14:40] CHAIR: Welcome. Information has been provided to you on parliamentary privilege and the protection of witnesses giving evidence to Senate committees. We'll go to questions, and I think we'll go straight to Senator McKenzie. Senator McKENZIE: I've got some questions about what I call the truckie tax but other people might call the heavy vehicle road user charge. The NTC recently led consultations to increase the heavy vehicle road user charge by six per cent, commencing on 1 July. Mr Hopkins : Yes. Senator McKENZIE: What additional annual cost to the trucking industry did the NTC calculate would be imposed by an above-inflation six per cent increase of the truckie tax? Mr Hopkins : I'd have to take that on notice; I don't have that detail. Senator McKENZIE: But you did lead consultations? Mr Hopkins : Yes, and I recommended to ministers in the middle of last year that, at that time, a six per cent increase was appropriate to catch up on some of the falling behind on cost recovery. Senator McKENZIE: Just explain that for the committee—falling behind on the cost recovery. Mr Hopkins : The road user charge is designed to raise a certain amount of revenue. That amount of revenue is determined by how much states, territories and the Commonwealth spend on road funding, and it's set in that year. A proportion of that total spend is worked out to be what will be collected via the RUC. What's happened over roughly the last 10 years or so is that, sometimes early in that cycle, the RUC got ahead of what was spent by states, territories and the Commonwealth, so it was frozen for several years. Senator McKENZIE: It was paused, yes. Mr Hopkins : Then, really as a result of COVID and the significant increase that states, territories and the Commonwealth spent on roads at that point, it meant that we're now somewhat behind. The fact that we calculate how much is raised via the RUC on what is spent in any given year means that the RUC calculation can be quite lumpy and can go up and down. Senator McKENZIE: You're saying the heavy vehicle road user charge is hypothecated to road funding in state budgets. Mr Hopkins : I wouldn't use the word 'hypothecated'. Senator McKENZIE: No; because I don't think it is at all. Mr Hopkins : It's calculated on the basis of— Senator McKENZIE: It's just tipped into consolidated revenue. Mr Hopkins : I suspect the rationale for that is because the expenditure on the roads has already been made. Senator McKENZIE: I think you need to talk to some truckies about the state of the nation's roads. Mr Hopkins : I do; I'm aware. Senator McKENZIE: You would appreciate that I think they'd argue it's not going where it's actually needed. My office has done some costings that the six per cent increase would actually add $483 million in additional tax for the transport industry over the first four years. Would that marry with your costings? Mr Hopkins : As I said, I don't have that number in front of me, so I'd have to take that on notice. Senator McKENZIE: Now that we're in a fuel crisis, and obviously you will have been aware of the industry's cash flow problems—not taking loads because they can't fill up the truck et cetera—do you think it's an appropriate action for ministers to think about freezing that whilst this fuel crisis is going on? Mr Hopkins : My understanding is that has happened. Senator McKENZIE: So this 1 July 2026, there won't be a six per cent increase? Mr Hopkins : That's right. In fact, my understanding is that was part of the Prime Minister's announcement three or four weeks ago. Senator McKENZIE: Three or four weeks ago—that's good. The industry has raised concerns about the way the heavy vehicle road user charge is being calculated. What work are you doing to actually revise the model? Because it's the compounding impact that seems to be an issue every single time. Mr Hopkins : The problem with the current model is that, because the amount of money that's collected in any given year is based on the expenditure in the previous year, it's very lumpy. So if states and territories decided to cut back on their road expenditure for budgetary reasons, the take would go down in that year. That would lead to a fair bit of volatility over time, so we're currently consulting through a regulatory impact statement with industry and the community about moving to a forward-looking cost based model. So rather than basing the 2027 total RUC on the 2026 expenditure, the 2026 expenditure would essentially be amortised over the life of the assets. It's a little bit more like a mortgage, but what it means is the people who are using the asset over, say, the 30-year life of that asset— Senator McKENZIE: Contribute to its maintenance over time? Mr Hopkins : Yes, but over the life of the asset until it's renewed. Senator McKENZIE: I might put some questions on a bit more of the detail on notice. The RUC increase is only delayed for six months and is still coming in on 1 January, as I understand it. Has there been any thought about that? Mr Hopkins : That's my understanding as well. Senator McKENZIE: Given the cash flow problems, when is the next transport ministers' meeting to consider this? Mr Hopkins : I think it's being considered out of session at the moment. There is a meeting in May but I think this is being dealt with out of session. Senator McKENZIE: And is it the position of the NTC to go ahead with the 1 January implementation or to continue the pause? Mr Hopkins : On the six per cent increase, our advice would be not be to proceed. Our advice would be to go through until 1 December and carry on a freeze. Senator McKENZIE: Sorry, just say that again. Mr Hopkins : To carry on a freeze, but it will be subject to what happens internationally. Senator McKENZIE: Carry on the freeze, yes, because it's not really in state transport ministers' personal interest to freeze this, is it, because they would get less money? Mr Hopkins : This is one of those cases where state transport ministers and state treasurers often have a different view. Senator McKENZIE: Yes, unfortunately—to the impact on trucking industry. Thank you so much. Senator ANANDA-RAJAH: Mr Hopkins, I want to ask you the same question that I asked Dr Parsons before. What do you perceive as the biggest data gaps in the freight logistics system, and how are these limiting productivity? Mr Hopkins : It's a good question. I think the struggle is to find good data about what moves where. That sounds sort of fairly obvious, but we've had successive tries over the last couple of decades that I'm aware of through BITRE and more recently through the Commonwealth's freight data hub to collect some of that data. I would say there is still a reticence on industry's behalf to provide data that they often see as commercial in confidence. in the heavy vehicle sector as well, there is a concern about how that data might be used and that some information might be used for enforcement purposes, enforcement of the heavy vehicle national law. It's not, but I do understand that that is a concern in some parts of industry. Senator ANANDA-RAJAH: Why is this information important? I don't know anything about logistics, so you'll have to explain to me why this information is valuable. Mr Hopkins : For the heavy vehicle sector, mostly for planning purposes and, from government's perspective, for planning for the heavy vehicle network. Understanding what gets moved where at what times is absolutely critical. For the rail sector, it's a bit more complicated because, as Dr Parsons said, there's always a number of players. You're operating on 17 networks. People talk about this. Whenever people talk about the Australian rail network, there's a little voice in the back of my mind that says, 'It's not a rail network; it's 17 networks in a trenchcoat pretending to be pretending to belong.' Senator ANANDA-RAJAH: I know. It sounds like it is all joined up. Mr Hopkins : In rail, understanding the interfaces between networks is a major issue, as is having a better idea of freight demand and flows on the rail network, especially as freight moves through cities. Moving freight across the ARTC network and the rural network is relatively straightforward but scheduling when those trains hit metropolitan networks to get to ports gets very messy very fast. Having a much better idea of what boxes are on trains and what gets moved and how quickly things need to be moved would be really important data. Senator ANANDA-RAJAH: I feel like optimising this would need a quantum computer. Senator McKENZIE: A hundred per cent. Senator ANANDA-RAJAH: This is really tough. Mr Hopkins : If I can descend into anecdotage, I had a tour of the Queensland Rail control centre where they control the trains. One of the things that struck me—quite shocking—was the fact that getting a freight train through a metropolitan network like Brisbane is seen as a challenge by the train controllers. It's not programmed because they need a lot of flexibility because of the time that trains come in, the time that a freight train that might be 900m long takes to get through the network, so the guys—and they are all guys in the control centre—consider it a personal challenge. The fact that it's considered a personal challenge and not something that is programmed or scheduled is quite amazing. Senator ANANDA-RAJAH: That sounds very manual. Is there not AI? Well, let's move to the next one. What kind of innovations is the industry looking at? I mean, artificial intelligence would be one. We've touched a little bit upon low-carbon fuels. I mean, it does bother me that we are such a diesel-dependent nation. I think that just makes us a big fat target for all kinds of global volatility. I mean, that's a much longer project, right, to kind of move away as much as possible from diesel? But what kind of innovations is the sector looking at? Mr Hopkins : I would say the use of AI for things like scheduling is probably a long, long way away. I don't think anybody in the rail industry would contradict me if I said that, in terms of technology adoption, it's a fairly conservative industry. Senator ANANDA-RAJAH: Yes, right. Mr Hopkins : The big change at the moment, though, occurred during the middle of last year when transport ministers agreed to a single digital train control system platform for Australia. We were at risk of making decisions that would mean different networks couldn't actually talk to each other but we now have a position of national standards. So if anybody wants to introduce digital train control onto the network, it will need to comply with a certain standard. What that means and if— Senator ANANDA-RAJAH: Are we sure that's not going to introduce red tape and delays and cost? I mean, it sounds great on paper, but how is that going to actually be implemented to not cause other bottlenecks? Mr Hopkins : We're talking about signalling systems that have lifespans of 30 to 50 years, so this is a project that will take some time and will need to be done network by network. But what it will do is shift the train control from lineside signalling—if you think about what we've got at the moment, it's essentially traffic lights—and brings all of the smarts and GPS technology into the trains. It will mean that trains can run much closer together while still maintaining safety. So you'll get much more return on the investment in a given train line. Senator ANANDA-RAJAH: That sounds really interesting. This is my final question. The heavy vehicle national law amendments coming into force mid this year will include a five per cent increase in mass limits and an increase in maximum vehicle length to 20 metres. What is the NTC's estimate of the productivity gain from these two changes alone? There may be others that I'm unaware of. Feel free to elaborate. Mr Hopkins : My apologies—they're not numbers that I have in front of me, but I'm happy to take that on notice. Senator ANANDA-RAJAH: Wonderful. Thank you. That's fine. CHAIR: Senator Kovacic. Senator KOVACIC: Thank you, Mr Hopkins, for your time today. For a little bit of framing, the Heavy Vehicle National Law Review commenced in 2019, ministers agreed to the reform package in 2022 and the bill passed in Queensland parliament in November 2025. Commencement is expected in mid-2026. That's seven years to reform one law. What are the structural features of the industry that make things like this so slow? What can we do to improve that? Mr Hopkins : I don't think it's a structural issue with the industry. To be blunt, I think it's a product of federation and the need to negotiate a common agreement across nine governments. The other challenge with the HVNL reform was that it was scoped to be extremely broad. The fact that we issued something like seven 70-page discussion papers in the first 12 months should have told us that that tack was probably not quite the right one. If I contrast that with, say, the review of rail safety national law we conducted in 2024—that was completed in 2024. We are currently consulting on the regulatory changes for that. The big lesson for me out of heavy vehicle national law reform was, 'Don't try to eat the elephant all at once, and be very careful about how you scope things.' Senator KOVACIC: And this elephant in particular was extra big. Is that pretty much— Mr Hopkins : That's true. It was a very big elephant. I would add that there were components, particularly access regimes, where we realised fairly early on that the challenge was not necessarily in the law. It was elsewhere—the administration of permits by the regulator and by states and territories. Obviously, infrastructure is a huge contributor to that as well. That was carved out fairly early, so there was a separate bit of work to do that. Senator KOVACIC: I get the bit about federation and the systems and the processes of the states. Was there any additional duplication outside of that that we perhaps could have taken out to make this process a lot simpler and faster? Mr Hopkins : I don't think there was duplication, but I would say—as I said at the beginning—that trying to do six streams of work at once was probably not the right way to do things, in retrospect. Senator KOVACIC: The other question I had comes off the comment you made about the 17 networks in a trenchcoat pretending to be a single network. How much productivity are we losing as a country each year because rail freight can't move seamlessly across the five state networks? Is there a realistic timeframe for genuine interoperability on the national network? Mr Hopkins : We have done some financial modelling and some economic modelling on the benefits. Again, I don't have those numbers in front of me, but I'm more than happy to provide those on notice. I don't want to walk away from the fact that this is a huge task and we're trying to tackle this in many ways at once. One of the first things we're doing is a uniform approach to standards. The rail industry has had a standards body for about a decade, and we did a review of the success of that last year—this is the Rail Industry Safety and Standards Board. I think 12 per cent of their standards were being used, which suggests that 88 per cent of them were a bit of a waste of time. Because of the co-regulatory model that underpins rail safety national law, it means that operators—and I will correct you, Senator; it's not state networks here. There are more infrastructure managers and more networks than there are states by quite a long way. Senator KOVACIC: Okay. Mr Hopkins : If it were just state governments, at least we'd be dealing with eight. But in this case there are 17. Senator KOVACIC: This is the 17 that you talk about. Mr Hopkins : And those are the 17 on the National Network for Interoperability. Regarding the reforms that we have underway, first of all I mentioned the changes to signalling. We are currently consulting on changes to the Rail Safety National Law to give the regulator a greater ability to rely on some standards. We're creating a new category, which will sit under Rail Safety National Law, of mandatory standards. Rail Safety National Law has served us well in the safety of the network. What it hasn't necessarily done is encourage interoperability in the way that was first hoped. This will be an area where we need to be a little bit more prescriptive to be able to apply uniform standards. The other thing I haven't mentioned yet is rolling stock access to those networks. At the moment, each of those infrastructure managers across the country will run the same tests on a locomotive before it enters the system. It's the equivalent of having to do a roadworthy of your car in every state that the car drives through. That's a significant brake on productivity because we've got a situation where we know we have some rail operators who operate rolling stock in one jurisdiction that would love to run it on the other side of the country but don't, because the costs and the uncertainty of whether that rolling stock will be approved is just too onerous. To get a locomotive approved may cost up to $1 million, so you can imagine why that reluctance exists. The outcome of that is it means we've got, even today, some rail operators buying the very best of 1990s technology because they know it's already been approved. Senator KOVACIC: In your experience and judgement, what is the single biggest structural barrier in the current regulatory framework—distinct from technical rules—preventing faster heavy vehicle and rail productivity gains? Would that be these 17 networks, or do you think there is something else that is a significant barrier? CHAIR: Last question, sorry. Mr Hopkins : It is the lack of interoperability and harmonisation particularly across those 17 networks, but broadly across the other networks as well. In the heavy vehicle sector, as I mentioned at the beginning, the biggest challenge is access and that's both administration of the permit system and available infrastructure. Senator McKENZIE: Because Tassie's got an electronic kind of approval— Mr Hopkins : Yes. Senator McKENZIE: and it sounds really cool. Mr Hopkins : And the Tasmanian system is being used as the basis for the national one. Senator McKENZIE: Good. CHAIR: Thank you very much for being there today. We look forward to your responses on notice by 7 May. Proceedings suspended from 15:02 to 15:15 .