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Chapter 3 - Issues raised in submissions
3.1
On the whole submissions welcomed and supported AusLink
and the present bills. Submissions most strongly approved the overall boost to
funding; the promise of integrated assessment of road and rail investment needs
on key corridors; and the Commonwealth support for significant rail upgrading
on the east coast main line.
3.2
However submissions did raise some concerns, which are
summarised here.
‘Shared responsibility’ and bilateral agreements
3.3
The Commonwealth has, pre-AusLink, accepted full
responsibility for construction and maintenance of the National Highway System.
AusLink proposes to replace this with ‘shared funding’ of the National Land
Transport Network - that is, States and Territories must contribute. The White Paper
justifies this in several ways:
-
The AusLink National Network includes links that
were State or Territory responsibilities: ‘It is the unambiguous position of
the Government that such elements of the network should continue to attract
funding from States and Territories, at least in proportion to the benefits they
obtain.’
-
It is right that the parties contribute in
proportion to the benefits they obtain: ‘The Australian Government will invest
in those projects on the National Network that are of national priority and
have substantial national benefits. The Government has a clear expectation that
States and Territories will invest in those projects on the National Network
which provide benefits at the State or Territory level.’
-
If all parties have a stake it will encourage
better planning and reduce the risk of cost-shifting. [22]
3.4
The Department of Transport and Regional Services (DOTARS)
stressed that AusLink as a whole involves ‘large increases’ in funding for the
National Land Transport Network, and ‘...the Australian Government is continuing
to fully fund many projects on the new National Land Transport Network that
would have been on the former National Highway System, especially in rural and
remote areas.’[23]
3.5
Exact funding arrangements will require bilateral
agreements with the States and Territories. Negotiations are now underway.[24]
3.6
Many submissions were concerned that ‘shared
responsibility’ might lead to unclear responsibilities. They particularly
regretted the Commonwealth moving away from full responsibility for the
National Highway System. The Australian Local Government Association feared
that ‘if the states and NT have to find extra funds to maintain national
highways, this could lead to reduction of already low state expenditure on
lower category roads and subsequent cost-shifting to local government.’ The
Transport Workers Union argued that ‘the planning, construction and maintenance
of the national Highway network clearly rests with the Federal Government and
must remain so.’[25]
3.7
The Australian Road Forum thought ‘the change in
Commonwealth policy needs to be more fully explained within the context of a
co-operative national effort....’
Until this is in place, ARF believes it would be best not to
make significant changes in the distribution of notional responsibility.[26]
3.8
On the other hand, the Warren
Centre suggested that responsibilities would
be clearer if the Commonwealth was responsible for construction only, and the
States were responsible for maintenance, since ‘they are better able to fund
this latter work through user-pays systems such as fares, vehicle charges and
the like.’[27]
3.9
Unions were concerned about the Commonwealth’s
intention, foreshadowed in the White Paper, to use bilateral agreements to
insist that the National Code of Practice for the Construction Industry should
apply to all projects which the Commonwealth funds significantly.[28] For example, the Construction Forestry
Mining Energy Union argued that ‘the Government is
effectively saying that public contracts will only go to those States
that are prepared to adopt the Government’s political views on the matters
contained within the Code...’
That is not a proper basis for determining which States will
obtain the benefit of essential transport infrastructure...It is highly desirable
that the AusLink bill should afford protection against the Government attaching
its industrial relations “strings” to the funding of projects.[29]
Comment
3.10
In considering arguments about shared responsibility
and funding of construction versus maintenance, or funding of different classes
of roads, two issues arise:
-
What division of responsibilities is best in
principle, whether administratively or politically (for example, to encourage
cooperative project planning, or to reduce incentives to cost-shifting between
governments)?
-
How should the available funding be divided
between the various needs?
3.11
In principle these are separate issues. Statements such
as ‘the Commonwealth should retain full responsibility for the National
Highway, because the States will not be able to afford to contribute’ tend to
roll them into one.
3.12
The best division of responsibilities in principle
should be considered without regard to who pays what at present. If the best
division of responsibilities suggests that one level of government should
contribute more and another less than they do now, other areas of expenditure
or untied grants to states or local government can and should be adjusted to
compensate.
3.13
For example, if States are to contribute to maintaining
what was formerly the Commonwealth-maintained National Highway System the
Commonwealth, to maintain its proportion of the total road funding effort, will
have to either spend more in other areas, or increase untied grants. The untied
grants would presumably flow through to State-funded maintenance of the
highway, assuming that the present maintenance was needed and there was the
political commitment to continue this.
3.14
The Committee accepts
the Government’s arguments for shared responsibility at paragraph 3.3. The Committee
notes the Government’s assurance that AusLink, while it introduces shared
responsibility for the National Network, does significantly increase total
Commonwealth transport infrastructure spending.[30]
3.15
Much will depend on all governments approaching
bilateral agreements in a constructive and cooperative way. The principle of
sharing the total available budget among the various needs efficiently, without
being driven by which government happens to have nominal responsibility for
which item and how big its taxing and spending capacity is, will obviously
require more effort on research and planning, so that we know what the most
efficient pattern of spending on the various needs will be.
3.16
The Commonwealth’s AusLink proposals for the first five
years are on the table. The Committee hopes
that this will allow the development of the first bilateral agreements to focus
on a suitable template of general conditions without the distraction of
competition among the States in relation to their shares of the total funding.
3.17
Concerns about cost-shifting also arise between State
and local government. It is a large part of the controversy over proposals to
close some smaller grain branch lines in New South Wales
where it appears that road transport would be cheaper than maintaining the
railway.[31] Many local communities,
apart from their concerns about the safety implications of more trucks on local
roads, fear that a rail maintenance saving to the State will become a road
maintenance cost to local councils, without adequate compensation.
3.18
In this case the same principles should apply. Which
option is most economical for the community as a whole (after including full
life-cycle costs and externalities such as road accident costs) should be
assessed objectively without regard to who pays what. If that suggests that there
should be a new division of responsibilities (for example, local councils spend
more on road maintenance), the money needed to carry out the responsibility
will have to follow. This would have to include arrangements to guarantee that
the funding stream will be secure into the future.
Arguments about the total level of funding
3.19
Since the 1970s investment in infrastructure has fallen
from about 7% to about 3.6% of Gross Domestic Product.[32] It is widely argued that it needs to
increase. Arguments about road and rail funding are part of that broader
argument.
3.20
The Australian Automobile Association quoted surveys
showing that most people would like to see more infrastructure spending in
preference to a government surplus.[33] The
Transport Workers Union advocated ‘innovative mechanisms’ for addressing the
infrastructure backlog, including ‘engaging the private sector on projects that
could potentially provide a return to shareholders.’[34] The Civil Contractors Federation
argued that government should not be afraid to borrow to fund infrastructure:
Public debt in Australia
is low by OECD standards and accordingly there is scope to use borrowings, not
for financing recurrent expenditure, but to finance long-term infrastructure
assets.[35]
3.21
These arguments extend easily to arguments for
increased spending on roads and railways. Engineers Australia’s Australian Infrastructure Report Card in
2001 gave national roads a grade of C and railways a grade of D minus. The
Australian Automobile Association argued that new AusLink funding is not as
great as it seems, and there is a backlog of economically viable road projects
of $4.4 billion in New South Wales,
$3.8 billion in Victoria,
and $2.2 billion in Western Australia.
Similarly, the Civil Contractors Federation claimed that ‘against the overall
need it is only a beginning and spread over five years the “new money”
component is relatively minor.’[36]
3.22
The Australian Rail Track Corporation in 2001 estimated
a cost of about $3 billion to bring the interstate rail network up to the Australian
Transport Council’s targets for speed, axle load and train length. The
Australian Council for Infrastructure Development in 2004 estimated an
investment backlog of $10 billion in roads and $8 billion in railways.[37]
3.23
AusLink aims to encourage private sector investment in
transport infrastructure. The White Paper argues that experience has shown that
private tollroads can be efficiently run and release government funding for
other worthwhile public infrastructure. It suggests that there are opportunities
for capturing increases in land value caused by transport improvements.[38]
3.24
The Australasian Railway Association (ARA) noted that
there is strong support for further private investment in rail infrastructure.
However the ARA was concerned that the AusLink framework ‘does not easily allow
for blended private public investment’:
It also has no apparent capacity for public investment in
privately owned infrastructure where there is a public benefit.[39]
3.25
The ARA also noted that because below rail and above
rail investments need to be well co-ordinated for maximum benefits, train
operators need to have track investment plans that are long term, transparent
and have clear timeframes: ‘Uncertainty in investment in track increases the
risk for above rail investments.’ Others also stressed the need for long term
certainty about funding.[40]
3.26
The Australian Logistics Council stressed that ‘it will
be important to ensure that infrastructure is not addressed in isolation...’
Logistics is a system and investment in infrastructure must be
matched by attention to reform and streamlining of regulations and by the
development of people with the skills to operate the system. These three areas, infrastructure, people and
regulation, must all be considered within the AusLink framework.[41]
Comment
3.27
The Committee agrees
with the need to upgrade Australia’s infrastructure investment. However
spending on things like roads and railways must compete for public funding with
other important areas of government responsibility such as defence, education
and health care. Deciding the right balance of expenditure between these widely
different goods is essentially a political, not economic matter, because of the
difficulty of comparing their very different, and often non-quantifiable, costs
and benefits. However orderly the cost-benefit study of a new highway deviation
is, whether it should take priority over a new operating theatre comes down
more to community values than economic analysis.
3.28
Similarly within the transport sector: showing that a road
or rail project is beneficial considered in isolation is only the first step in
showing what priority it ought to have for funding. The task of government is
to set priorities within limited budgets. The Committee
supports corridor strategies as a way of doing that in an economically sound
way.
3.29
While the Committee
agrees with submissions that there is nothing wrong with public borrowing to
fund infrastructure, this needs to be done with discipline to ensure that the
benefits which flow from the investment will be at least enough to pay the
interest. Direct private investment should also be encouraged, but that will
tend to be limited to situations (such as rail freight and urban tollways)
where it is practical to recover costs through direct user charges. Where benefits
are widely spread among the community at large or it is not practical to recover
costs commercially, it is necessary to make the investment publicly and pay for
it either through general taxes or through government levied charges on user
groups, if they can be identified fairly.
3.30
An arbitrary preference for private investment over
public borrowing is not advisable, since it may bias investment in favour of
the types of projects which most lend themselves to private funding, when other
projects that require public funding might be just as beneficial.
Giving adequate priority to
maintenance
3.31
It is natural that if the total capital stock increases
at a linear rate, the cost of maintaining what exists already, relative to the
cost of increasing it further, will increase. As well, it is argued that many
roads and bridges built in the 1950s, 60s and 70s are coming to the end of
their lives, and ‘the chickens are all roosting at once’.[42] In recent years there have been
suspicions that some privatised rail track owners have been economising costs
unsustainably by deferring maintenance. In large part the present debate over
the future of grain branch railways, especially in New
South Wales, is caused by inadequate maintenance in
the past.[43] Maintenance deferred too long
can increase the eventual expense of restoration disproportionately.
3.32
Submitters were particularly concerned about the
maintenance backlog on the existing network, especially on local roads.[44] For example, Engineers Australia was
concerned that AusLink might be too focussed on new projects:
Existing infrastructure
is, in some cases, in a disturbing state, especially rail and local roads. The
emphasis of AusLink is on the development of new projects. However, existing
investment in infrastructure, and overall system performance, needs to be
safeguarded as well. We believe it essential that the national infrastructure
programming methodology adopt a whole of life analysis approach when
prioritising investment in the expanded National Land Transport Network.[45]
3.33
The Australian Automobile Association (AAA) quoted
estimates by the Bureau of Transport and Regional Economics (BTRE) that the
maintenance needs of the National Highway would be $360 million a year by
2014-15. On this basis the AAA thought that planned AusLink maintenance funding
is insufficient:
Increased funding needs to be allocated to maintenance... the
government needs to identify and report on the asset value of the National
Network so that the appropriate level of maintenance spending can be identified
and account for depreciation of the asset.[46]
3.34
The Western Australian Government was concerned that
the Commonwealth’s proposed maintenance funding formula might favour the more
populous states.[47] The ACT Government
noted that maintenance funds are not indexed whilst performance outcomes sought
are constant: ‘This will potentially see costs and risks shifted to States and
Territories in the longer term.’[48]
3.35
Monto Shire Council stressed the need to plan capital
expenditure and future maintenance together in order to optimise the present
value of the investment.[49] This is
relevant, for example, in the debate over the future of grain branch railways
which are in poor condition because of deferred maintenance. The high cost of
restoring them may tempt governments to turn to road transport; but the ongoing
road maintenance costs must also be considered.
Comment
3.36
The Committee agrees
with the importance of prioritising maintenance needs appropriately. The
proportion of the budget that should go to maintenance as opposed to new
projects needs to be assessed in an economically sound way. It is perhaps
tempting to put more of the money into new projects because they are more
visible. Conscientious governments should try to resist the temptation to
overfund new projects and underfund maintenance because of that. Inadequate
maintenance prejudices the whole network.
3.37
As to the proposed ‘Commonwealth responsibility’ for
maintenance, the comments at paragraph 3.10ff apply. The fact that there are urgent
maintenance needs does not necessarily mean that it should be the Commonwealth’s
responsibility to meet them. It does mean that the division of funds between
governments should match the division of responsibilities so that where the
responsibility lies, the spending capacity is found, subject to the constraints
of the total budget.
3.38
The Committee notes that under AusLink the Commonwealth
is committing $300 million per year to road maintenance in the five years to
2008-09, compared with $289 million per year on average in the five years to
2003-04.[50]
Need for clear principles for prioritising projects
3.39
The White Paper promises a new approach to prioritising
projects in a transparent, orderly way through corridor strategies and the
National Land Transport Plan. However in the bill the Minister’s discretion to
approve and fund projects is extremely wide. The sections that could be
regarded as guiding the Minister’s discretion are brief, rudimentary and
expressed at a high level of generality.[51]
The intention is obviously that more detailed guidelines will be developed at
the administrative level.
3.40
According to the White Paper corridor strategies will
allow managing the total transport needs of a corridor by the most efficient
means available, rather than a modally based approach’.[52] DOTARS advised:
The development of corridor strategies will be supported by a
range of rigorous studies to determine needs, deficiencies and future
investment priorities. For each corridor, the following assessments will be
made:
- how the corridor needs to perform to
meet future demands safely and effectively;
- relative benefits of, and synergies
between, transport modes;
- consistency with, and contribution
to, national priorities; and
- how to maximise private sector
involvement and potential for public private partnerships.
3.41
DOTARS advised that all jurisdictions have agreed to
adopt a standard methodology for project assessment, and pilot strategies are
now under way for the Sydney-Melbourne, Adelaide
urban, Brisbane-Cairns and Adelaide-Perth corridors. DOTARS promised that ‘the
input and views of non-government stakeholders will be sought during the
development of the corridor strategies...’[53]
3.42
Submissions generally welcomed the promise of more
holistic corridor planning. For example, the Australian Trucking Association
said:
The development of agreed investment appraisal guidelines, which
include the need to assess both public and private investment opportunities,
should provide a rational basis for government investment, whether from
recurrent expenditure or debt funding, or in partnership with private
investment.[54]
3.43
However some submitters were concerned that the bill
leaves too much discretion to the Minister in approving projects. Others were
concerned that the first five year plan has been settled in the absence of
corridor strategies, and without any clear statements of reasons about the
chosen priorities. For example, the Civil Contractors Federation was concerned
that:
The identification and prioritisation of projects lacks
transparency or a clear methodology (although the development of a cost-benefit
based approach is promised). Such a methodology needs to be completed
quickly. Also, the degree to which
funding decisions are discretionary in the hands of a Minister is not
preferred.[55]
3.44
The Australian Automobile Association (AAA) ‘would have
liked to have seen the increased transparency and the application of benefit
cost analysis which was promoted in the White Paper to have been applied to the
project selection prior to the
commitment of funding.’[56] The AAA ‘looks
forward to seeing the benefit-cost ratios of all AusLink projects made
available in the near future.’[57]
3.45
The Sustainable Transport Coalition WA urged the need
for triple bottom line assessment including environmental, social and economic
costs and benefits. It argued that this should include giving due attention to
future oil vulnerability:
The economic and social consequences of oil supply shocks and
escalating fuel prices... must make this a key factor in planning and funding
land transport infrastructure.[58]
3.46
Concerns about the need for clear transparent project
selection criteria arise particularly in relation to Strategic Regional
Projects. For example, the Australian Local Government Association said:
ALGA is concerned that many of the guidelines and processes for
the operation of the SRC are yet to be released. It is important that that the SRC
administrative arrangements are simple, efficient and transparent and should
clearly specify how SRC projects are selected in terms of criteria, priority
and timing.[59]
Comment
3.47
The Committee affirms
the need for disciplined, transparent, publicly available project assessment
guidelines. The Committee looks forward to
seeing the National Land Transport Plan and the corridor strategies which will
guide this.
3.48
The Committee is
sympathetic to concerns about the commitment of such large amounts of money in
advance of the project assessment methodology that AusLink promises. However, the
Committee notes DOTARS’s assurances that the
White Paper projects were the outcome of exhaustive consultation, both with the
states and through submissions to the AusLink Green Paper:
The department received some 550 submissions in a very open
process of discussion with a whole range of parties.... The states put forward to
us what their priority projects would be on the network in the lead-up to the preparation
of the white paper... I think it is fair to say that from our dealings with the
states on the whole we have picked up the bulk of their priority projects, if
not all of their projects, in this five years.... The timing of our payments to
some of those projects may differ to what they would have hoped, but on the
whole my experience has been that all the states have seen this as according
with their own priority needs.[60]
3.49
The Committee suspects
that submitters would not suggest that the AusLink funding boost should be
postponed for two or three years to allow corridor strategies to be completed.
The Government’s approach is a necessary compromise between the urgent need for
a boost to transport infrastructure funding, and the fact that setting in place
new planning systems will inevitably take time.
3.50
The Committee stresses
that in the longer term it is the unified project assessment methodology that
is most important element of AusLink. The success of AusLink will depend on
continued effort, and the Committee urges the
governments to make this a priority.
3.51
The Committee is
pleased to note that the Commonwealth and State/Territory transport ministers
in November 2004 agreed to a set of national guidelines on how projects will be
planned, brought forward, and assessed on a common basis across the country.[61] The Committee
will take an ongoing interest in reviewing progress on the national plan and
corridor strategies.
3.52
Clear project assessment criteria are particularly
necessary for the Strategic Regional projects, to avoid accusations that the road
funding decisions are influenced by political considerations.
Non-economic considerations
3.53
The Commonwealth funds rural local roads which would
probably score poorly in a formal cost-benefit analysis in comparison with
urban arterial roads. This funding appears to be for social policy reasons to
do with supporting rural communities. Some submissions were concerned that too ‘economic’
an approach to project appraisal will militate against these:
Prevailing practices in government
transport agencies suggest that such assessments will be biased to proposed
road projects where high traffic volumes or significant delays dominate all
other considerations. As such, it is unlikely a strategic project in a rural
area will out-rank a project in an outer urban area or in a major regional
centre.[62]
3.54
As well, it must be said that prioritising projects on
economic criteria may cut across concepts of giving each State, region or council
its ‘fair share’ of funding according to some formula. It may happen that the
economic analysis suggests that funding should go with priority to a particular
area, simply because that area has been most under-funded in the past in
relation to need. For example, arguably this applies to upgrading the
Melbourne-Sydney-Brisbane railway.
3.55
The Western Australian Government was concerned that ‘such
an approach will not adequately take into consideration social and equity
objectives, benefit the more populous States, and penalise those States that
have historically been a good custodian of their transport infrastructure.’[63] The Local Government Association of
Queensland thought that ‘funding must be allocated equitably across states and
regions...
...there should be no nationally competitive process - The total
strategic funding pool should initially be divided on the same individual
council allocation as the core component to determine a state and then regional
shares...’[64]
Comment
3.56
In the Committee’s view there is a need for social
policy considerations to be factored into funding decisions. For example, it is
essential to keep up the effort in maintaining rural local roads for the sake
of the overall prosperity and social cohesion of Australia’s regions. However
the goals must be clear, the criteria transparent, and projects must be prioritised
in a disciplined way with reference to their social purposes just as they
should be with reference to their economic purposes.
3.57
On the matter of a cost-benefit approach to distributing
money versus ‘fair shares’, the Committee
comments: there may well be a tension between these motives. A strict ‘fair
shares’ approach militates against ‘nation building’ projects, since they
inevitably involve one particular area getting more than its ‘fair share’ this
time round. This would be undesirable. For example, upgrading the Melbourne-Sydney-Brisbane
railway should not be put off simply because it does not benefit Western
Australia.
3.58
On the other hand, a competitive application system,
taken down too far towards the local level, becomes administratively
cumbersome. Formulas for distributing funding to states or regions rely on the
assumption that on average their needs are similar, and the money will be as
well spent in one region as another. In the case of local road grants this is
probably a reasonable assumption.
3.59
Strategic Regional Projects stand somewhere in the
middle. The White Paper proposed that they would be funded by competitive
applications, but including some concept of ‘fair shares’ among States. The Committee
notes that as an election commitment the Government decided to allocate the
strategic regional allocation promised in the White Paper ($400 million over
four years) to councils by a formula similar to the Roads to Recovery formula.
The Government also committed an extra $150 million for strategic regional
projects. DOTARS advised that the
Government has not decided how to allocate the part of this which has not
already been committed.[65]
3.60
The Committee notes
also the argument of Monto Shire Council that ‘continuity of funding to local
governments is essential in ensuring sound asset management practices’.[66] At the local level formula based
shares are more likely to ensure this.
Need for efficient charges for use of infrastructure
3.61
Efficient charges for the use of transport
infrastructure are an essential prerequisite to economically sound
decision-making about priorities for infrastructure investment. If use is
underpriced, for example, use will be greater than is economically optimal. An
investment which reduces costs per user will then seem to be more beneficial
because there are more users; but it may simply be causing the growth of
sub-optimal economic behaviour.
3.62
Heavy vehicles pay to use public roads through
registration fees and fuel excise. Rail train operators pay access charges to
track owners.
3.63
Heavy vehicle road use charges are based on a formula for
distributing road costs among the various road users devised by the National
Transport Commission (NTC - formerly National Road Transport Commission). Whether
the charges adequately cover costs which should be attributed to heavy vehicles
(such as road wear) is disputed.
3.64
The Australian Trucking Association argued that heavy
vehicles pay 110% of the costs allocated to them. The Rail Tram and Bus Union
claimed that heavy vehicles underpay. The Railway Technical Society of
Australia noted that ‘there is a strong debate about the adequacy of the level
of road pricing for heavy trucks and the structure of the present charges.’[67]
3.65
The Bureau of Transport and Regional Economics (BTRE)
in 2003 said that ‘current heavy vehicle infrastructure pricing arrangements
achieve the objective of recovery of aggregate attributed costs, including
capital costs (108 per cent)’.[68] This
refers to costs attributed to heavy vehicles as a whole under the NTC
methodology. An important qualification in respect of the heaviest vehicles is
mentioned at paragraph 3.69 below.
3.66
Arguments that heavy vehicles do not pay their way have
two strands. Firstly, critics point out that the cost elements which are the
basis of the NTC charges exclude some costs, such as heavy vehicle registration
and enforcement costs, and external costs such as congestion, pollution and
crash costs (excluding externalities favours road over rail because external
costs are higher for road than for rail).[69]
3.67
Secondly, critics argue that the NTC’s detailed
methodology for attributing costs to classes of road users is inappropriate in some
ways.[70] For example, ‘non-separable’
costs, which are regarded as including the cost of building a minimum possible
standard of road, are allocated across vehicle classes according to total
vehicle kilometres travelled. Some argue that these costs should be allocated
according to Passenger Car Units (a measure of the road space a vehicle takes
up). This would increase the proportion of the cost borne by heavy vehicles.
3.68
In relation to this the BTRE notes that ‘the
appropriate choice of road use parameter, and consequently the share of road
expenditure attributable to heavy vehicles, is not certain...’
For example, in the first determination road maintenance
expenditure was attributed according to ESA [equivalent standard axles]-kms
whereas in the second determination road maintenance expenditure was allocated
by AGM [average gross mass]-km. The effect of this change was that larger heavy
vehicles paid a smaller share of road maintenance costs under the second
determination than previously.[71]
3.69
Regardless of these arguments, it seems to be agreed
that the heaviest vehicles and the most fully loaded vehicles do not pay their
way, but are subsidised by lighter heavy vehicles (if one argues that heavy
vehicles as a whole do pay their way) or by other road users (if one argues
that heavy vehicles as a whole do not
pay their way).[72] The BTRE, which as
noted says that heavy vehicles as a whole do recover costs attributed to them under
the current methodology for attributing costs to classes of road users,
qualified this by saying:
The arrangements achieve only 90 per cent recovery for the
heaviest vehicles. [73]
3.70
The AusLink Green Paper noted that averaging provisions
in the NTC methodology mean that ‘those trucks that carry greater than average
loads and travel greater than average distances bear less than the costs
attributed to them by the NRTC’.[74]
3.71
Another difficulty in setting charges is that using fuel
excise as a charge for marginal road wear costs is not ideal, because as
vehicle load increases fuel use increases at a declining rate, but road wear
increases at an increasing rate.[75]
This favours the heaviest vehicles. Mass-distance charges have been suggested
as an alternative. [76]
3.72
These points are significant for competitive neutrality
because it is the heaviest vehicles that compete most directly with rail.
3.73
Rail access charges usually comprise a ‘flagfall’
charge per train plus a charge per tonne-kilometre. According to the BTRE track
owners report positive returns on assets, however it is likely that the
returns, while they may cover track maintenance, may not be enough to cover
track renewal and investment needed in the long term: ‘It follows that current
charges may not reflect the economic cost of providing rail freight
infrastructure in the long run.’[77]
3.74
In the case of some lightly built and poorly maintained
New South Wales grain lines, it
appears that access charges cover only a very small proportion of the cost of
maintaining the asset.[78] On the other
hand, the NSW Farmers Federation argued that ‘current road freight rates
offered by some companies to attract grain into super sites do not reflect the
actual cost of moving grain and are not sustainable over the longer term.’[79] This complicates the issue of deciding
whether it is more economic to upgrade or close smaller lines.
3.75
The discussion above refers mostly to long distance
freight transport. Efficient pricing is also needed in urban areas. The
Australian Automobile Association stressed the need to ‘address the issue of
transport pricing sooner rather than later, and how it might helpfully address
the congestion problems in our major capital cities.’[80] This refers to proposals for ‘congestion
pricing’, so that vehicles which drive in the most congested areas, or at the
most congested times, pay more to reflect the costs they impose on others.[81]
Comment
3.76
The Committee affirms
the need to continue working towards efficient pricing of access to
infrastructure as a prerequisite to sound corridor strategies and related
matters such as deciding the future of grain railways. The Committee
acknowledges the work of the National Transport Commission in this regard and
notes that the Commission is now working towards its third heavy vehicles road
pricing determination with a view to bringing proposals to the governments in
2006.[82]
Improving urban transport infrastructure
3.77
Some submitters argued that the Commonwealth should be
more involved in improving urban transport infrastructure, since its quality
intimately affects the efficiency of the long distance freight movements which
are AusLink’s focus. The Civil Contractors Federation said:
The inherent competitive advantage of road transport, at least,
is the capacity to move passengers and freight from a multiplicity of origins
to destinations with great flexibility. The proposed legislation does little to
address new road funding, maintenance and remediation in the urban and regional
catchment areas at either end of the national corridors.[83]
3.78
Some extended this idea to argue that it should include
improving urban public transport infrastructure as a way of moderating road
congestion. The Western Australian Government argued that ‘AusLink, in its
present form, can only be considered a freight policy and not a comprehensive
transport policy while it is not more inclusive of all modes of transport such
as public transport and cycling infrastructure...’
In reality, lack of alternatives in passenger transport is of
profound importance to freight as the two tasks compete for space on the same
network.[84]
3.79
The Rail Tram and Bus Union argued that ‘urban public
transport infrastructure requires urgent federal support, as it receives in all
other federal OECD countries’. The Chartered Institute of Logistics and
Transport in Australia
suggested that Roads to Recovery should include public transport.[85] The Sustainable Transport Coalition WA
said:
If the aim is to enhance transport efficiency for national benefit...
then other measures should be eligible for funding. For example, improvements
to urban public transport services or a behavioural travel demand management
program could reduce commuter traffic to the benefit of freight transport
efficiency...[86]
3.80
The AusLink White Paper considered and rejected such
arguments, saying: ‘the Australian Government’s position on public transport is
clear: it is primarily a State and Territory Government responsibility...’
The Australian Government considers that State and Territory governments
are best placed to deal with the metropolitan and local complexities of public
transport. The Australian Government’s role has focused, and will continue to
focus, on interstate connectivity and trade and commerce between the States and
with other nations.[87]
3.81
The White Paper argued that ‘even if service
improvements on public transport could be achieved, it would still not be
enough to significantly affect growing road congestion.’[88]
3.82
However it appears that these issues are still on the
table. DOTARS reported that in November 2004 the Australian Transport Council
decided to commission work ‘on the key issue of urban congestion.’ As well,
corridor strategies ‘will examine issues impacting on the efficiency of the
urban links on the National Land Transport Network, including the role of
public transport.’[89]
Comment
3.83
The efficiency of urban passenger transport, and the
efficiency of the freight transport which is the focus of AusLink, are
intimately connected, since trucks and cars use the same roads, and freight and
passenger trains share the same tracks.[90]
3.84
The Committee notes
that Strategic Regional Projects under the AusLink bill can include any road or rail projects which are not
on the National Land Transport Network (clause 54). Although the criteria at
section 55 seem to assume that they will be rural and regional, the Minister is
not limited by these criteria. They could include urban projects. The Committee
suggests that any move in this direction should relate to projects that support
the goals of AusLink.
3.85
As for the arguments about urban public transport: to
say that improving public transport will not significantly affect road
congestion may be true overall, but it does not prove that improving public
transport is unimportant. In favourable corridors, in conjunction with
congestion pricing of road use, it may help. In the long term, by increasing
the public transport mode share, it may hope to at least moderate the growth of traffic and therefore reduce
or postpone the pressure for new roadworks. This also depends greatly on having
urban planning policies which shape city growth in ways that allow public
transport to work efficiently. Urban planning issues are a State
responsibility.
3.86
Efficient transport investment requires better road
pricing. This will probably mean significant new charges for using urban roads
at the most congested times and places. This is unlikely to be politically
acceptable without serious improvement to public transport networks, so that
more motorists have other choices.
3.87
Serious improvements to public transport infrastructure
- particularly rail extensions - are costly, tend to come in large, indivisible
packages, and have very long payback periods. They are hard to program within
State-sized budgets, and easy to shelve in favour of more incremental roadworks.
However this outcome is not necessarily optimal in the long term.
3.88
The Committee does not
suggest that the Commonwealth should take over the States’ basic responsibility
for urban public transport. However there may be a case for Commonwealth assistance
to major projects such as rail extensions which are unlikely to happen, or
unlikely to happen soon enough, without the involvement of the bigger budget
which the Commonwealth commands.
Extending Roads to Recovery to public transport, rural airports runways etc.
3.89
Submissions were divided on whether Roads to Recovery
money should be used for things like cycleways, pedestrian facilities, public
transport or rural airport runways. Some were concerned that this would reduce
funds available for roads. For example, the National Farmers Federation said:
Despite the Roads to
Recovery program, there remains inadequate funds available for the
maintenance and upgrade of rural roads. As a result, any change to the program
which would dilute the resources available for road upgrades should be strongly
opposed.[91]
3.90
Some accepted the value of these other things, but did
not think they should be mixed with Roads to Recovery. The Australian Local
Government Association said:
ALGA considers the prime purpose of R2R is to reduce the local
roads maintenance backlog and thus suggests that any such wider funding should
essentially be limited to the current provisions for cycling and walking
facilities, where these are proposed by a council. However, with the increasing
pressures on public transport, there is growing justification for federal
involvement in a new dedicated public transport program.[92]
3.91
Others supported greater flexibility, mostly on the
grounds that local communities should be able to make their own choices. For
example, the Municipal Association of Victoria ‘would support the broadening of
the scope of R2R criteria to enable local councils to have a degree of choice
in relation to their transport-related priorities.’[93]
3.92
The Warren Centre pointed out that limiting eligible
cycleways to those ‘associated with a road’ (as at present) favours on-road
cycleways which must have road thickness pavements, whereas it might be
possible to build an off-road cycleway with a thinner pavement much more
cheaply.[94]
3.93
The Australian Airports Association argued strongly
that Roads to Recovery money should be available for rural airport runways and
ancillary aeronautical equipment. The AAA argued this on the grounds that:
-
since the Commonwealth handed responsibility for
these airports to local government in the 1990s, local councils have not been
able to afford to maintain them adequately;
-
in remote areas upgrading airports may be less
costly than upgrading roads;
-
communities should be able to choose their
priorities.[95]
3.94
Others argued against extending Roads to Recovery to
airports, again because it could reduce money for roads. The National Farmers
Federation thought that any initiative to upgrade airports should be considered
separately.[96]
3.95
DOTARS noted that Roads to Recovery money can already
be used for pedestrian and cycling facilities associated with a road. It advised
that government policy is that ‘public transport is the responsibility of the
states’. It noted that local councils may use their untied grants to meet other
needs such as the needs of rural airports.[97]
Comment
3.96
The Committee notes
that pedestrian and cycling facilities associated with a road can already be
funded under Roads to Recovery. The AusLink bill does not change this, as the
definition of ‘road’, which includes these things, is unchanged.[98]
3.97
The Committee accepts
the Government’s argument that councils may use their untied grants for
purposes such as maintaining rural airports. However the Committee
is concerned by the evidence that in practice many councils find it difficult
to afford this. The Committee suggest the Government
should keep this issue under review. There may be a case for compensation where
one council is responsible for maintaining an airport which is used by others
in the areas.
3.98
Public transport infrastructure (as opposed to
operations) controlled by local councils would probably be limited to
bus-related roadworks and bus shelters and interchanges. Bus-related roadworks
could be funded as roads. In relation to other facilities, the argument that
local councils may use their untied grants would also apply.
Whether there should be a National Transport Advisory Council
3.99
The AusLink White Paper advised that the Australian
Transport Council ‘intends to establish a National Transport Advisory Council
to provide strategic analysis and advice to ministers on the long-term
development of the national transport system....
The council will focus its analytical and advisory work on three
important transport policy areas agreed by Ministers:
- developing advice on priorities for national infrastructure
investment
- advice on reforms to support modal integration
- advice on strategies, policies and options for infrastructure
pricing.
The structure and detailed operations of the Council have not
yet been agreed by the Australian Transport Council. The Australian Government
will discuss with the States and Territories the extent to which a National
Transport Advisory Council might be appropriate for progressing some of the strategic
planning issues associated with AusLink and the development of future versions
of the National Land Transport Plan.[99]
3.100
Since then it appears that the ministers have had
second thoughts. DOTARS advised that in November 2004 the Australian Transport
Council ‘took a decision that it was not the right time to establish such a
council, that the issues did not warrant such a council being effective at this
point, that they would prefer to work through existing Commonwealth and state
mechanisms to do further work and that they would review that decision in about
12 months time.’[100]
3.101
Almost all submissions strongly supported establishing
a National Transport Advisory Council including stakeholder representation. For
example, Engineers Australia thought that relying on existing State/Federal
working groups would lead to too ‘narrowly focused’ advice:
At present, the government’s internal advice comes from bodies
with a narrow division of responsibility (on the basis of transport modes),
which leads to advice that is narrowly-focused. It is our view that a single
body be given responsibility for providing advice on all transport modes, to
provide greater integration.
Engineers Australia
strongly believes that an independent advisory body is essential to the AusLink
process. We believe that the advisory body needs to include representatives
from the private sector, as well as Federal, State and local government
representatives.[101]
3.102
The Australian Road Forum ‘would also like to see more
effective consultation between governments and industry stakeholders...’
In part, that has not been possible simply because of the number
of stakeholders that are on the job, if you like, and the fact that there is no
effective means of ever bringing them together.[102]
3.103
Only the Australian Logistics Council did not support
creating a new body, but this was not because it thought the proposed
activities are unnecessary, but because it thought the Australian Logistics
Council could carry the role.[103]
3.104
It appears that the proposed role of the advisory council
would be more higher level stakeholder consultation and priority setting than
detailed project analysis. It is unclear how much it would be involved at the
middle level of working out corridor strategies under the National Land
Transport Plan. Engineers Australia
suggests that the role of the council would be to provide a national
perspective on matters including:
- strategic development, best practice and
standards;
- cross-jurisdictional issues and impacts;
- relationships and interaction between
different forms of infrastructure;
- the application of the principles of
ecologically sustainable development; and
- overall balance of infrastructure
provision.[104]
3.105
Engineers Australia suggested a framework ‘which
combines a top-down approach which establishes the appropriate level of funding
in relation to need and resources, at a strategic level, and conducts a
bottom-up technical analysis of candidate projects – and then matches the two
via a needs analysis and some form of optimisation process.’[105]
Comment
3.106
In the Committee’s view it is essential to have a forum
for co-ordinating policy on the three areas suggested in the White Paper as
roles for the council’s advice: investment priorities, modal integration, and
infrastructure pricing. It is essential for it to include industry and other
stakeholder representation.
3.107
The Committee has
concerns about whether existing Commonwealth/State working groups can carry
this role. The Committee notes the strong
support for the proposed council among almost all the key interest groups who
submitted to this inquiry. The Committee
supports reconsidering this matter, as the transport ministers’ resolution implied.
The Committee hopes and expects that ‘review
in 12 months’ will involve a genuine review.
Research and information
3.108
The bill allows for funding ‘transport development and
innovation projects’ (part 4) and ‘land transport research entities’ (part 5).
The White Paper proposed that of the $8.6 billion five year
Commonwealth commitment to the
National Network, one per cent will be spent on research and technology:
The Australian Government will consider technology-based
solutions as part of, or as alternatives to, the construction of new
infrastructure or as increases to the physical capacity of existing
infrastructure. Funding support for applied research and development will also
be considered.[106]
....These funds
could be used for:
- the
development of transport data sets
- research and
development
- planning,
investigations and feasibility studies
- the
development and trialling of new technologies and practices.
Funds are
earmarked to contribute to improved corridor planning, the development and
trialling of innovative technological applications, and as Australian
Government contributions to national research organisations. The Government
will also contribute funding towards enhancing the development and analysis of
nationally important data on the National Network.[107]
3.109
Submissions supported an improved research effort. The
Australian Road Forum noted that road research today is ‘at greatly reduced
levels’, and is ‘generally reactive in nature’, compared with what it was in
the 1960s and 70s. It welcomed AusLink’s commitment to research. [108]
3.110
The Sustainable Transport Coalition WA argued that the
definition of ‘research’ in the bill appears more restrictive than the
definition in the Australian Land Transport Development Act 1988, which the AusLink bill will
replace. It thought that ‘areas worthy of greater research attention include
land use and behavioural measures that could reduce urban car dependence,
transport energy including vulnerability to peaking oil supply, and smarter
freight logistics.’[109]
3.111
Submissions stressed the information needs to enable
the best management of the national assets in roads and railways. The
Australian Road Forum said that ‘Australia
lacks a transparent system of national road accounts which aggregates the road
infrastructure expenditure of our various levels of government’. The Australian
Automobile Association argued that ‘the Government needs to identify and report
on the asset value of the National Network so that the appropriate level of
maintenance spending can be identified and account for depreciation of the
asset.’[110]
3.112
The Committee notes that the Australian Transport
Council in November 2004 endorsed a National Transport Data Framework. This ‘adopts
a high-level strategic planning focus with the aim of advancing a better
approach to assembling data to meet long-term strategic planning of transport
infrastructure....’ It recommended an incremental approach to establishing the
framework, and stressed the need for it to be owned by all jurisdictions.[111]
3.113
The working group report on this noted that in general ‘basic
road infrastructure data is extensive and reasonably consistent, but the
position with respect to road-usage data appears to be mixed. Comparable data
on rail asset condition is not yet available... Basic information on intermodal
transport facilities is even less readily available.’[112]
3.114
The Committee supports work towards better data to
inform planning transport infrastructure. In the case of rail, it will be
important to have protocols to ensure that the move to corporatisation and
privatisation in recent years does not fragment information-gathering of
industry-wide importance.
Recommendation
3.115
The Committee recommends that the bill should be passed.
Senator the Hon. Bill
Heffernan
Chair
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