The Irish road haulage industry could be in for a tough 2003 as a result of Finance Minister Charlie McCreevy's recent Budget, writes John Loughran

In delivering his Budget speech on Wednesday December 4, Finance Minister Charlie McCreevy lost the trust and respect of many hauliers around the country irrespective of political allegiances.
The kudos he gained just two short years ago when he reduced excise duty on diesel by 6 pence (7.6 cent) was finally wiped out in what has been described by many commentators as a stealth Budget. Last year's increase of almost 4 cent per litre is still fresh in the memory.

In the wake of the fuel protests in September 2000 a Task Force, coined the Taoiseach's Task Force was established to
address the problems facing Ireland's road haulage industry. The task force was seen by many as the ideal 'vehicle' to expound the cause of the haulier.

It was generally felt, with the establishment of the task force that the road haulage industry, through the Irish Road Haulage Association had finally been accepted as an important link in the chain that drives the economy. It was also felt that the Government, through the establishment of the task force, was willing to enter into a partnership approach with road hauliers.

Minister's McCreevy's recent Budget shows that a partnership approach between hauliers and the Government is as far away as ever. In some respects it has gone off the horizon altogether.
The minister's decision to add three cent per litre to the cost of diesel -finally wiping out the gain of 2000 - and to increase Vehicle Registration Tax will hit road haulage operators hard. It has also eroded what little respect remained.

Hauliers were still coming to grips with the gravity of the minister's speech when Environment Minister Martin Cullen added another nail in the coffin of the road haulage industry when he announced that motor tax will increase by 12 per cent with effect from January 1.
Finance Minister Charlie McCreevy did a "Pontius Pilate" on the issue and refused point-blank to break the news in his Budget speech along with the diesel and VRT rises. He said it was up to Environment Minister Martin Cullen to announce the news because the extra revenue generated would go into the Local Government Fund and not into the central exchequer.

Two days after the Budget, Minister Cullen made the announcement and said the 12 per cent increase in motor tax would be ring-fenced for use on non-national roads. When Minister Cullen announced on December 9 that that local authorities around the country would receive a total of euro 626.3 million from the Local Government Fund, an increase of 6.4 per cent on the 2002, it was obvious that the Minister had given a hollow promise.
Despite the 6.4 per cent increase, it now seems likely that local authorities will be forced to cutback on vital roads maintenance schemes and increase service charges in order to fund the benchmarking pay awards. Funds that the minister earmarked for the non-national roads programme, will be used to fund local authorities' commitments under the benchmarking awards, it would now appear.

To pour oil on the fire (or should that be diesel) Minister McCreevy flew a significant kite in the Budget when he signalled his intentions to introduce some form of carbon energy tax this time next year. The employer's body IBEC has slammed the proposal saying that a carbon tax (petrol, diesel, coal) could result in job losses and could cost Irish business tens of millions of euro. While the Minister did not go into the specifics on how the tax would work, it is ridiculous discussing the introduction of such as tax at a time when the EU is drafting directives to tackle carbon dioxide emissions, which may not involve taxation.

The Budget was also bitterly disappointing in terms of the roads programme. The roads programme will receive an additional euro 209 million next year, bringing the total allocation up to euro 1.25 billion in 2003.
However, the National Roads Authority has stated that it will re-examine its list of priority road building projects in light of the allocation.

The NRA will proceed with 12 major road-building schemes next year, while another 22 schemes have gone through the statutory planning process and are now awaiting funding. It now appears only four of those schemes will get the green light next year.
This year alone the haulage industry has been hit with an increase in insurance premiums in the order of 40 per cent.

A further increase across the board of 20 per cent is being widely tipped for next year.
It has been estimated that the cumulative effect of these increases will add as much as euro 8,000 to the operating costs of every truck in the country - at a time when haulage companies are already going to the wall.
For arguments sake let us assume that the road haulage industry is operating on a net profit margin of 10 per cent in a 50-week year. An operator would need to generate an extra euro 80,000 per annum per truck without incurring additional costs just to stand still. That equates to an increase in revenue of euro 1,600 per truck per week.

Yes indeed, there are tough times ahead for the industry