Australia’s roads are full of giant cars, and everyone pays the price. What can be done?

Milad Haghani, The University of Melbourne

You may have noticed — there’s a car-size inflation on Australian roads that some have nicknamed car “mobesity”.

Most SUVs and utes from a decade or two ago look small next to today’s models.

As we head for a fifth consecutive year of rising road deaths and what could be the worst year for pedestrian fatalities in nearly two decades, it’s time to look more closely at what this means.

We already know bigger cars cause greater impacts in collisions.

But what’s less discussed is whether driving one also changes how we drive – if larger vehicles make us feel safer inside them, do they also make us take more risks behind the wheel?

What’s driving this trend?

Four in five new cars sold in Australia are SUVs or utes – more than double the share of 20 years ago.

This isn’t purely consumer-driven.

With no domestic car manufacturing, Australia imports vehicles shaped by global production trends, many of which trickle down from United States policies that reward larger vehicles.

Two subtle US policy features explain why.

First, the “SUV loophole”: under US law, most SUVs are classified as light trucks, meaning they’re subject to less stringent fuel-efficiency and crash-safety standards than passenger cars.

Second, under US fuel economy rules, fuel-efficiency targets are adjusted based on the size of the vehicle’s “footprint” — the area between its wheels. In practice, this means larger vehicles are allowed to consume more fuel while still meeting the target.

Together, these rules have encouraged American manufacturers to build and sell heavier SUVs and utes.

Large vehicles can deliver significantly higher profit margins than small cars.

These trends have resulted in more bigger cars being driven on Australian roads.

The combination of high car ownership, years without fuel efficiency rules, and the luxury-car-tax exemption that many utes qualify for has made Australia a highly lucrative market for large, high-emission models.

Marketing has played a significant role too: in 2023, car makers invested about A$125 million in SUV and 4×4 advertising in Australia – a 29% increase from the previous year.

The dangers of bigger vehicles

There’s a physical mismatch between large and small vehicles that usually transfers the danger from the occupants of the bigger car to everyone else.

While the risks of being hit by a large SUV or ute might seem self-evident, the question is how much greater those risks are.

Research provides a clear answer.

Car-to-car collisions:

  • Collisions between large SUVs and smaller cars show occupants of a smaller vehicle face about 30% higher risk of dying or sustaining serious injury.

  • A 500kg increase in vehicle weight is linked to a 70% higher fatality risk for occupants of the lighter car.

  • For every fatal accident avoided inside a large vehicle, there are around 4.3 additional deaths among other road users.

Car-to-pedestrian and cyclist collisions:

These differences help explain why US pedestrian deaths — once on a steady decline — have climbed back to their highest level since the early 1980s.

This is while most countries have reduced pedestrian fatalities.

Bigger cars, more risk-taking?

Evidence from multiple countries suggests driving larger vehicles may lead to more confident or risk-prone behaviour:

Policy can make a difference

Taxes and size-dependant registration fees could potentially offset some of the extra costs of heavier vehicles on roads surfaces, congestion and emissions, or regulate demand.

Two measures would make a tangible difference:

Licence testing by vehicle class

Many drivers obtain their licence in a small sedan but can legally drive a two-tonne ute the next day. Yet, larger vehicles demand different manoeuvring skills, longer braking distances and greater spatial awareness.

Requiring a practical test in a vehicle of comparable size to what the driver intends to drive (or a streamlined license upgrade for an experienced driver when upsizing) would acknowledge that added responsibility.

The reform would also carry a symbolic message: driving a heavier vehicle comes with greater responsibility.

Penalties scaled to impact potential

A ute or SUV travelling 10kmh over the limit carries greater kinetic energy and longer stopping distance than a small sedan.

A tiered approach – where fines or demerit points scale with vehicle mass – would better reflect the disproportionate risk that bigger cars pose.

If Australia is serious about reducing road trauma, these are the kinds of targeted, evidence-based adjustments that should be considered.The Conversation

Milad Haghani, Associate Professor and Principal Fellow in Urban Risk and Resilience, The University of Melbourne

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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What the RBA wants Australians to do next to fight inflation – or risk more rate hikes

Meg Elkins, RMIT University

When the Reserve Bank of Australia (RBA) board voted unanimously to lift the cash rate to 3.85% on Tuesday, the decision was driven by one overriding concern. It wants to stop the rising cost of living from becoming entrenched.

For some, like self-funded retirees, the rate rise was good news. Higher interest means their savings and term deposits will earn more. But for many others, including first home buyers who might have stretched themselves just to get a foot into the housing market, it was a very bad day.

RBA Governor Michele Bullock acknowledged that, saying:

I know this is not the news that Australians with mortgages want to hear, but it is the right thing for the economy.

She warned the alternative – letting inflation keep rising – would be even harder for more Australians.

So what’s the psychology behind the RBA raising rates now and leaving the door open to further hikes if needed? And what does the central bank hope Australians will do in response?

The price squeeze you’re feeling

There’s a striking gap between how the RBA describes the economy and how most Australians experience it.

On paper, things look healthy: unemployment is low, wages are growing.

But as Bullock acknowledged on Tuesday, the daily reality has felt very different.

The price level has gone up 20% to 25% over the last few years, and people see that every time they walk into a supermarket, or they go to the doctor, or whatever – that’s I think what’s hurting people.

That relentless price squeeze is not something you forget, even when the rate of increase starts to slow.

What’s driving inflation up?

The headline consumer price index (CPI) hit 3.8% in the year to December, well above the RBA’s target band of 2–3%. The “trimmed mean” – the underlying measure the RBA watches most closely – rose to 3.3%. Both are too high and moving in the wrong direction.

Bullock singled out three factors contributing to inflation. Each behaves differently and requires a different response.

Housing was the single largest contributor to inflation in December, up 5.5% over the year. That includes rents, which rose 3.9% (or 4.2% stripping out government rent assistance), as well as insurance, utilities, and new construction costs, which rose 3% as builders passed through higher labour and material costs.

There is an irony here. Rising interest rates are intended to cool demand, but they slow housing construction. Limited supply of housing is what’s pushing rents up in the first place.

“Durable goods” are the things we buy to last, such as cars, refrigerators, washing machines, televisions and furniture. Demand for many of those has been higher in the past year.

“Market services” are items such as restaurant meals, taxis, haircuts, gym memberships, medical appointments and holiday travel.

The RBA watches these carefully, because these are services priced by supply and demand in the domestic market. Those prices tend to be “sticky”: once they start rising, they don’t come back down easily.

Wages are also a big part of market services inflation. If the people providing those services are earning more, the cost goes up.

How rate cuts made shoppers relax

This is where the behavioural psychology gets interesting.

The RBA cut interest rates three times in 2025. Each cut sent a signal, whether intentionally or not: it’s OK to spend a bit more.

And spend we did. CommBank data shows Australians spent A$23.8 billion over the two-week Black Friday period, up 4.6% on the year before.

It’s a cautionary tale about “rational expectations”. Each rate cut potentially fuelled the belief that more would follow.

If people feel like they can afford to spend, then they spend. Businesses, sensing demand, may raise their prices to match. That’s exactly the self-fulfilling dynamic central banks worry about.

The 3 ways the RBA hopes we’ll react

When prices go up, as they have been, workers ask for bigger wage rises to keep up. To pay higher wages, businesses lift prices to protect their profit margins. Together, that can create a “wage-price spiral” that becomes very hard to break.

The RBA will be hoping Australians respond to this rate rise in three ways:

  • spending less

  • saving more

  • not asking for big wage rises (although they’d never phrase it that way).

RBA Governor Michele Bullock described raising interest rates as “a very blunt instrument” to bring inflation down, and noted setting rates is “not a science. It’s a bit of an art, really […] We’ve just got to respond as best we can.”

The RBA can’t undo the price rises that have already happened. It can only try to slow down further increases.The Conversation

Meg Elkins, Associate Professor in Economics, RMIT University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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Franchise businesses have long been plagued by scandals. Domino’s is just the latest

Jenny Buchan, UNSW Sydney

The blue and red boxes with white dots are immediately recognisable as containing Domino’s pizzas. The pizza chain is Australia’s largest and is run as a franchise, with the ASX-listed public company Domino’s Pizza Enterprises holding the Australian master franchise rights.

Industry analysts IBISWorld calculate Domino’s has 4.2% of the fast food and takeaway market in Australia.

But recent reports suggest all is not well with many of the store owners, who are struggling with rising costs and declining profitability.

Troubling reports

The central issue appears to be what the federal government describes in its code of conduct as the “the imbalance of power between franchisors and franchisees”.

The Australian Financial Review has reported troubling claims in two key areas:

  • Domino’s appears to have doubled the margin on the key food ingredients it sells to franchisees and increased its advertising levy, according to a letter from store owners represented by the Australian Association of Franchisees. This could reduce their profitability

  • Domino’s Australian chief operating officer, Greg Steenson, reportedly encouraged franchisees in a presentation to take advantage of restructuring schemes that allow insolvent companies to continue to trade by negotiating repayment plans with the tax office and other creditors.

In a letter to Domino’s quoted in the report, the franchisees said their earnings have remained flat for 15 years, and have not kept up with inflation.

A long history of disputes

A former franchisee told a parliamentary inquiry into the franchising model the margin squeeze meant

franchisees can be ripped off by [Domino’s Pizza Enterprises] when forced to buy supplies at a higher price than they could get through their wholesalers.

He said the cost of food, labour, rent and other fixed costs had risen, but in 2019 pizzas were still sold at 1990s prices. “Nobody is left to pay for this but the franchisees,” the former owner said.

According to the Financial Review article, the cost of supplies remains a problem for franchisees. Time will tell whether Domino’s proposed 70 cent increase in pizza prices will help.

In response to questions from the Financial Review, Domino’s said the food margin had not “materially changed” in five years, despite volatility in ingredients prices.

Government reviews found the previous regulations had loopholes that did not sufficiently protect franchisees. There have been a string of high-profile disputes involving auto services company Ultra Tune, coffee chain 85 Degrees Coffee, Pizza Hut and others.

Following a 2024 inquiry, changes to the code of conduct were introduced this year.

Advertising costs on the rise

Advertising expenditure comes from what is now known as a “special purpose fund” in the code of conduct. Franchisors need to provide franchisees with disclosure about how the money is spent.

In 2017, the consumer regulator Australian Competition and Consumer Commission fined Domino’s A$18,000 for allegedly slipping on its obligations to advise franchisees about its marketing spend.

Ensuring franchisees have a genuine say in how their increased contribution is spent could help to address any imbalance of power between Domino’s and its franchisees.

Franchisees reportedly now pay 6% of their earnings to Domino’s for marketing and advertising, up from 5.35%. That is in addition to 7% of gross sales paid as royalties, and other costs for email and bookkeeping.

What insolvent means

The insolvency law for small businesses is explained by the Australian Taxation Office as a process that enables financially distressed but viable firms to restructure their existing debts and continue to trade.

The press reports say the franchisees of about 65 Domino’s stores were on repayment plans with the Australian Taxation Office. Many franchisees own two or more outlets.

Under the Corporations legislation, companies on these repayment plans may be trading insolvent, or believe they will become insolvent. Insolvent means they cannot pay their debts when they fall due. If this is the case, a key question that needs to be answered by Domino’s is whether their franchised outlets can become profitable.

In another media report, Domino’s was quoted as saying it disputed the number of stores on repayment plans, adding it was a “significantly smaller” number of franchisees.

The company was contacted for comment but did not respond before deadline.

What this means for the stores

So what does this mean for Domino’s store owners who may be trading insolvent?

Under the law, the restructuring process allows eligible small business companies:

  • to retain control of the business, property and affairs while developing a plan to restructure with the assistance of a small business restructuring practitioner
  • to enter into a restructuring plan with creditors.

If a company proposes a restructuring plan to its creditors, it is taken to be insolvent. This is a game changer for the franchisee and its creditors.

Franchisees receive protection from creditors who want to enforce rights under existing contracts. A franchisee’s creditors include suppliers, its landlord, employees, the tax office and the franchisor (in this case, Domino’s).

Currently these store owners are protected from any creditors pushing them to pay their debts. The restructuring process gives the store owners some breathing room while the debt negotiations take place.

The imbalance of power persists

Despite government inquiries and reviews, it seems the imbalance of power between the Domino’s franchisees and their franchisor persists.

But Domino’s can’t afford to stay the same. Franchisees need to make a profit. The move to enter restructuring could be a temporary band aid.

Domino’s largest shareholder and executive chairman, Jack Cowin, was appointed in July after the former chief executive left after just seven months. Cowin understands the franchised fast food sector and has pledged to lead a cost reduction program that will improve the profitability of stores.The Conversation

Jenny Buchan, Emeritus Professor, Business School, UNSW Sydney

This article is republished from The Conversation under a Creative Commons license. Read the original article.

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