Preparing for disruption by driverless and electric cars

by on March 16, 2018


MOST governments and regulators will admit they were taken by surprise by Uber, yet with many car companies expecting to have driverless cars in the early 2020s (two years away), a lot of questions remain unanswered. The chief executive and commissioner of the National Transport Commission, Paul Retter, acknowledged as much at the Australian Logistics Council Forum in Sydney last week. Equally, electric cars (driverless or not) present a major tax question. Smart governments would be preparing for the disruption.

Australia’s position is made worse because it is a federation. The states jealously guard several key things: revenue from car registration; power over traffic enforcement; power to set the traffic rules; and power over compensation for personal injury on the road.

The last one is particularly contentious as the present ACT jury studying the system attests. Governments are sensitive to high premiums (which many motorists confuse with government-imposed registration fees). And they are concerned by the powerful insurance lobby which in the early years of this century successfully browbeat state governments to cut victims’ compensation rights.

Now emerging technology presents an opportunity to sweep away this mish-mash of eight sets of driver licensing, vehicle registration and injury compensation schemes overlaid by a national fuel tax and national vehicle importation rules.

Now there is no domestic car industry and all vehicles are imported, it would be sensible to have federal vehicle registration based on the federally mandated standards for imported vehicles.

There is so much integration now with the state demerit-points systems and the road laws, we may as well have one Australian driver licensing and road-law scheme which the states can continue to administer.

The Feds might be able to use its international trade power to do this, but it would be better if the states co-operated.

How do we get the states to agree? By the usual two methods the Feds get the states to agree on any uniform action: bribery and blackmail. Join the scheme or your funding dries up.

Enter the technology. Telematics are so sophisticated now that you can tell where a vehicle travelled and when. It is already happening with trucks and they have been retro-fitted. If you mandated them for cars, you could then work out a road-user charge (linked to registration and payable, say, quarterly) based on where, how far and when the vehicle travelled.

Each state would be paid according to how its roads were used. NSW, for example, could sting people more for travelling in the Sydney, Newcastle or Wollongong CBDs between 7.30am and 10am or 3.30pm and 6.30pm.

This stuff is coming anyway. With electric cars, fuel-tax revenues will plummet.

In the trucking industry, the telematics are getting so sophisticated that some companies are asking the Tax Office for diesel tax rebates for the fuel they use when they are in private loading bays or even on tollways. The rebate was mainly for farmers using vehicles off the public road system on farms.

The best and fairest way to get rid of the fuel-tax rebate is to abolish fuel tax and replace it with road-user taxes which technology can do.

The telematics are now so good that insurance companies in Europe are giving drivers with lots of offences a chance of keeping their low premium. The telematics box can send information to the insurance company every time a driver breaks the speed limit. Maybe such a thing could be used universally. If you break the speed limit by more than a certain amount or a certain number of times, your registration fee goes up – a sort of permanent, ubiquitous speed camera.

Changes in personal-injury insurance for driverless will require similar radical thinking. At present compensation for road injury depends on proving the driver of the other vehicle or the driver of the vehicle in which you were a passenger was negligent.

And compulsory third-party insurance covers any driver of that car for the damages from being sued for negligence.

Of course, if there is no driver, it is a bit difficult to prove the driver was negligent. So clearly the insurance and tort-law systems will have to change if the injured are to be compensated.

Common law used to impose absolute liability on any who allowed anything to escape from their land which caused damage or injury. That was abolished in Australia in the 1990s. Maybe something like it will have to be revived for driverless cars. The owner of the car would be liable irrespective of fault for any injury the car caused, including to its now non-driving owner.

A further question will be the liability of the manufacturer of the driverless cars. It might have to be for the life of the car, but manufacturers might argue that they should not be liable if the car has not been properly serviced of if is navigation system has been compromised by a third party.

Going back to Uber, the insurance question had not been worked out when Uber hit the streets. Neither had the enforcement of the criminal sanctions for driving an unlicensed taxi. The police had more important traffic measures to enforce.

This time, Retter told the ALC forum, the NTC is determined not to allow any driverless vehicle on the road until the regulatory base had been worked out.

There is a cart-and-horse problem here, if you will excuse the anachronistic metaphor. Insurance companies and governments will not be able to work out compensation scheme in the absence of data, and you cannot get data without the driverless cars being on the road.

It may be that we start with existing premiums in the hope, or perhaps knowledge, that they will come down dramatically as human error decreases with driverless cars and telematics work in effect as a permanent speed and red-light camera camera on those vehicle that continue to have a driver.

Incidentally, on of the panels at the ALC Forum was asked how long it would be before a driverless B-Double would be seen on the Hume Highway. The answers ranged from two to 30 years.
CRISPIN HULL
This article first appeared in The Canberra Times and other Fairfax Media on 17 March 2018.

{ 0 comments… add one now }

Leave a Comment

You can use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>