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COAG ROAD REFORM PLAN :: CRRP STAKEHOLDER MEETING :: DATE
COAG ROAD REFORM PLAN
Driving Australia’s Road Reform
South Australian Local Government Roads and Works Conference
Neil Aplin, CRRP Project DirectorThursday 25 August 2011
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Welcome to the infrastructure restaurant
Does Sir have his Annual Entry receipt? Good.
Tonight the Chef has prepared three courses of food. As is our policy, we don’t guarantee what that is just yet, but you will enjoy it… whatever it turns out to be!
What I can reveal is that there is a chance that the food has been spoiled, owing to the broken fridge, and it may be uncooked, due to the oven not working. Funding from our patrons precludes our spending on maintenance however, you have come on a special night!
Tonight we are using this years new chairs! Ooh la la!
As usual, the cost is upfront… will Sir be paying by cash or card?
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
The road infrastructure restaurant
Would you remain a customer?…
would you like to be an owner?
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
How would you fix this situation?
The owners still need their revenue to run their shops
- better reflect their costs;
- allow them to better meet the needs of their customers; and
- to enable the revenue needs to be shared across all the shops in the chain in a ‘fair’ way.
They need to simultaneously satisfy their
- owners and their customers
- so do road authorities (and our culture)
“Must shift from Asset Managers to service providers”Gary Liddle, Chairman CRRP
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Under funding road networks can stall the economy
Source: Transporting Australia’s Future Oct 2010
Relationship between investment and productivity growth.
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Australia and heavy vehicle productivity
Australia’s road network is playing ‘catch
up’ in accommodating
larger vehicles.
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Multifactor productivity
Source:BTRE_TruckProductivity_March2011
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Growing freight task
0
20
40
60
80
100
120
140
160
180
200
1960–61 1965–66 1970–71 1975–76 1980–81 1985–86 1990–91 1995–96 2000–01 2005–06
Year
Bil
lio
n t
on
ne k
ilo
met
res
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
% t
ask
by
veh
icle
typ
e
Total Task Light % of Task Rigid % of Task Articulated % of Task
Larger vehicles increased their share of the freight task with reforms in standards.
Source: BITRE
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Challenges for road freight infrastructure
• Sufficient capacity in the freight network to handle the growing freight task, – through utilisation of existing infrastructure and the provision of new
infrastructure
• Optimising the use of existing network infrastructure
• Sometimes called ‘sweating’ the asset
• Improving access for freight to origins and destinations on local roads, managed by local governments (last mile issues)
• Upgrading existing infrastructure to maintain access or allow access by more productive vehicles
• Move from Asset managers to Service Providers
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
What should a road market do?
COAG identified 2 key objectives (the CRRP Objectives)
• Promote the more efficient, productive and sustainable provision and use of freight infrastructure; and
• Ensuring that national heavy vehicle road prices promote the efficient, safe and sustainable use of infrastructure, vehicles and transport modes.
Issues: how best achieve these objectives?
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Federal Government
Current road funding arrangement
State Roads - Arterials
National Highways
Local RoadsLocal Government Funds local roads through rate revenue & developers contributions
Registration charges
Fuel excise
No direct revenue from road use charges
Funds state roads
State funds – local roads
• Regional Road Block & REPAIR
•Special programs – urban bus routes
Federal funds for arterial roads
Federal funds for national highways
Federal funds – local roads
Untied – FAGS (via state)
Tied – Black Spots, Roads to Recovery
State Government
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Registration Charges
(Prime Mover/Truck & Trailer Charges)
+
Road User Charge
(Fuel Based)
Current HV Charging System MDL Charging System
HV Charge is based on actual usage of the road network taking into account:
Mass of Vehicle (or its components)
Distance Travelled (km)
Location(e.g. road type)
MDL pricing – What does it mean?
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
‘Closing the loop’
Road service provider
Revenue
Activity Based Charge
Expenditure
‘User pays’
Road Spending
Improved linkage between revenue and expenditure
Lower operating costs
Roads are maintained to an efficient standard
CSO’s
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Possible funding options
Model option Explanation
Option 1 (base case): status quo
on funding
Minimum required to implement pricing option/s. Agreement to maintain funding at current split and funding coming out of general revenue.
Option 2: Maintenance costs associated with HV traffic given direct to road suppliers
Direct funding for HV maintenance costs. This should Increase revenue certainty and flexibility.
Option 3: Maintenance and Capital expenditure costs associated with HV traffic given direct to road suppliers.
Direct funding for total HV costs. This should give even greater revenue certainty and flexibility.
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Issue identification: pricing reform
What key issues does road reform raise for local government?
Heavy vehicle use of local roads
The benefits of pricing reform are likely to depend on:
- availability of alternative routes and
- how often heavy vehicles use local roads
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Funding reform: benefits
By removing disincentives and providing accountabilities promote more efficient maintenance and investment in road infrastructure i.e. the right infrastructure for the freight task is built and funded at lowest cost.
- optimisation of road network quality
- optimisation of vehicle operating costs
- reduced life cycle cost of road provision
- fewer inappropriate access restrictions
- efficient planning and road provision
- improved road expenditure accountability
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Other key issues
Community service obligations
• Funding of CSOs not linked to revenue from road charges
• Impact of removing cross subsidisation in current charging system
• Opportunity for increased transparency
Incentives
• Aside from pricing and funding reform what else is required to promote usage, funding and investment decisions that increase heavy vehicle productivity
• Ensure that system minimises incentives not consistent with COAG reform outcomes e.g. gold plating (more investment than is optimal) or running down the network (less investment than is optimal)
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Implementation issues for consideration
• Governance and institutional framework;
• Price setting arrangements;
• Commonwealth – State financial relations;
• Linking road user revenue and road funding;
• Local government and CSO funding;
• Information collection and use;
• Data collection options;
• Alignment with existing systems and national initiatives;
• Alignment with intelligent transport systems; and
• Compliance and enforcement.
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Key challenges
• Partial market reform - CRRP only involves heavy vehicles
– Most roads are built for all vehicles
– Infrastructure funding by heavy vehicles alone could lead to inefficient investment
• Community Service Obligations and other subsidies (both funding and pricing)
• Achieving national agreement
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Challenges for road freight infrastructure
• Sufficient capacity in the freight network to handle the growing freight task
• Optimising the use of existing network infrastructure
• Improving access for freight to origins and destinations on local roads, managed by local governments
• Maintain access or allow access by more productive vehicles
• Changing cultures
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Where to from here?
• Submissions being reviewed on Preliminary Findings Consultation and the supplementary Evaluation of Options Papers
• Final CRRP to COAG Report
• Submission due to COAG by February 2012
• CRRP website – stakeholder information portal www.roadreform.gov.au
• Contact Neil Aplin 03 9095 4455
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
Questions
COAG ROAD REFORM PLAN : SA Local Government Roads and Works Conference : August 2011
www.roadreform.gov.au