Free Rego in NSW if you spend $25 per week on tolls
The NSW Government has announced a new scheme for free car registration for eligible toll road users
Key Facts & Initial Thoughts
* NSW drivers need to spend at least $1,300 per year on tolls = $25 per week
* People need to remember they take holidays, get sick, and may travel overseas for work. E.g. $1,300pa / 48weeks = $27.08 p/w. However, if you travel in Sydney, $27 in tolls is easy to spend in 2 or 3 days.
* Free rego from July 1, 2018. Govt. will backdate calculations from July 1, 2017 to work out eligibility for free rego.
* Applies to private use standard cars, utes, four-wheel drives and motorcycles. Appears trucks and business vehicles not part of scheme.
* Free rego worth $127 for motorcycles up to $715 for Cars 2505kg – 2794kg, such as Toyota Land Cruiser, Nissan Patrol.
* The scheme is estimated to cost the NSW Government $100 million in the first year.
* Price recall: One important factor affecting Price Recall is that when physical cash is not used for a particular transaction, consumers are less likely to recall the price they paid for that transaction. Not sure if the government considered this, but a backlash of this scheme is that many consumers will now go through their accounts and see what the actual toll they paid was. They may be in for a shock which will be alleviated somewhat by the free rego.
More questions to think about
* How will it work with multiple vehicles, or selling & buying a new car – assume will use the tag account but then which car would get the free rego?
* Why is the government promoting toll usage & not public transport? Are the trains and buses full?
* Does government pricing intervention ever work? Look at what happened to the cost of childcare, housing including first home owner benefits, healthcare, electricity, etc.
* Should I buy shares in toll companies?
The scheme itself will attract plenty of attention initially. The included will be excited and the excluded will be annoyed.
People are struggling with mandatory-like service charges (MLSC’s), such as energy and transport costs including tolls, which are required to survive normal daily life. They can turn off the air-conditioning, or drive through the backstreets to avoid the tolls, but in a modern society, why should they?
MLSC’s take up a large portion of people’s cash flow and a helping hand from the government can’t hurt if tolls and other MLSC’s do not raise their prices. If they do, is the Free Rego really Free?