Getting road pricing right

We highlighted this as a policy priority because there is a growing consensus among industry and government that there needs to be a closer link between road usage and road expenditure. Furthermore, more needs to be done in a holistic manner to set road user charges at an appropriate level that generates an expected revenue for the provision of a service – in this case, the provision of reliable, efficient, productive and safe road infrastructure. It is fair to say, getting to this point in the reform process has been a long and arduous journey.

In recent years, four separate expert reports have called for change. Namely, the Productivity Commission, Infrastructure Australia, the Harper Review and the National Commission of Audit. At the same time, two separate, federally led taskforces have attempted to push this issue along, those being the COAG Road Reform Program and the Heavy Vehicle Charging and Investment Reform project.

Now, the Federal Government is once again attempting to progress this initiative, with both the Federal Department of Infrastructure and Regional Development and the National Transport Commission (NTC)  undertaking separate pieces of work on heavy vehicle road reform.

The Commonwealth has established a Heavy Vehicle Road Reform project (HVRR) to progress potential reform options. Separately, the NTC is exploring options to improve the accuracy and stability of the Pay As You Go (PAYGO) heavy vehicle charges and methodology.

In a recent submission to the NTC on its discussion paper into the issue, ALC recommended that both bodies work closely together to eliminate inconsistent outcomes and improve cross agency coordination, and to ensure productivity is a priority outcome in any change to the current system. NTC’s work in this area is in response to a decision taken by the Transport and Infrastructure Council to investigate and report back to it with options to advance the heavy vehicle charges methodology to better balance heavy vehicle charges and government revenues.

With the logistics industry and the overall Australian economy absolutely reliant on an efficient road network, this reform needs to be undertaken with due care and consultation with industry. In our election priorities document, ALC stressed the need to ensure that any revenue raised is used on infrastructure investments that will enhance productivity outcomes on the National Key Freight Routes and not used to raise general revenue.

More specifically, ALC is looking to the newly elected Coalition Government to focus on three key areas. Firstly, to ensure that the principles guiding the development of the road pricing model are clearly articulated. The principles guiding the development of the new road pricing system should be finalised and publicly available as soon as possible.

Secondly, to ensure that industry groups, including ALC, are involved in discussions as possible funding models are developed. Proposed funding models cannot be presented as a fait accompli in a regulatory impact statement, as industry must be involved in all aspects in the development of the road funding model to ensure its workability and thus early implementation.
And thirdly, the Government must determine that any community service obligation payment payable to a road owner for investment in productivity improving infrastructure on a National Key Freight Route is budget funded.

The need for action in this area underscores ALC’s broader advocacy efforts for the Commonwealth to develop a National Land Freight and Supply Chain Strategy. Such a strategy would evaluate the adequacy of the institutional framework supporting freight networks and recommend reforms and investments that will move the efficient movement of freight. This would potentially incorporate road pricing.

Work in this area should be viewed as the next step of the economic reform agenda and in the same context as the white papers that have transformed many of Australia’s economically critical industries. Australia’s logistics industry, which represents 8.6 per cent of the nation’s GDP in 2013 and directly contributes $131.6 billion to Australia each year, deserves nothing less.

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