No use complaining – we must start explaining

When the Grattan Institute released ‘Stuck in Traffic? Road Congestion in Sydney and Melbourne’, it set off a predictable chain of events that fits the usual pattern of public conversations about the way Australians use our road network.

The report itself actually considers several possible mechanisms for dealing with the rapidly spiralling challenge of traffic congestion in the nation’s two largest cities, including increases to CBD parking charges and time-based variations to public transport fares.

However, it was the proposal for congestion charges in and surrounding the Sydney and Melbourne CBDs that attracted the most coverage, and swift opposition.
The ink was barely dry on the report before politicians of all political hues emerged to proclaim their unswerving opposition to congestion charges – which were just as predictably rebadged as a ‘congestion tax’, or better still, a new ‘car tax’.
Granted, the Grattan Institute’s report is far from perfect, particularly from the perspective of the freight logistics industry.

In particular, the report’s insistence that new freeway infrastructure in inner city areas won’t help alleviate congestion doesn’t entirely gel with experience. Road congestion may be bad now, but just imagine how much worse it would be if Sydney and Melbourne hadn’t built the Harbour Tunnel and CityLink projects two decades ago.

Trying to tackle congestion by only seeking to control demand without addressing infrastructure supply is rather like the interminable debate around Australia’s public debt, and whether it’s a spending issue or a revenue issue.

Of course, in truth, it’s both – we spend too much and, in many respects, we raise revenue inefficiently. This problem will only be solved if both sides of the equation are examined, and policymakers are prepared to make tough calls, including thinking the previously unthinkable.

If we are going to have a road network that is able to meet the demands of a 21st-century economy, we are going to have to rethink not only the way we use roads, but also the way we price roads.
Blunt instruments such as fuel excise charges and registration fees are no longer raising sufficient revenue to support the road we need today – let alone the network we will need in the future.

Apart from anything else, more fuel-efficient and electric vehicles are now on the road, which means revenue from fuel taxes is less than it once was.
This is having a particular impact on heavy vehicles, which are being slugged with higher tolls and road-use charges, as government scrambles to make up the revenue shortfall.

As such, it is imperative that we move to a fairer, more efficient road pricing and investment model, under which users pay according to where and when they travel. Technological enhancements, such as GPS tracking, now make it easier than ever to monitor vehicle use and travel patterns.

It is time to use these technologies as the basis of a fairer, more responsive approach to road pricing that delivers road infrastructure investment to where it is most needed – not merely to where it is most politically expedient.
Of course, to be truly effective, road-pricing reform will eventually have to apply to all vehicles – not just heavy vehicles. Although this may be politically contentious, it is necessary to deliver the right investment outcomes for Australia’s future transport needs.

This means a concerted effort on the parts of governments and industry to highlight that a new road-pricing model will be accompanied by compensating reductions in vehicle registration fees and fuel taxes. Unless the wider public clearly understands that trade-off, reform has little chance of success.

To help foster public confidence in a reform of this scale, it is appropriate to have a respected, independent umpire in charge of making pricing decisions.

In ‘Freight Doesn’t Vote’, the ALC’s major submission to the Federal Government’s Inquiry into National Freight and Supply Chain Priorities, we state that the Australian Competition and Consumer Commission (ACCC) is the most appropriate body.

However, to ensure its effectiveness as an independent economic regulator for the transport sector, it would be prudent for the ACCC to appoint a specialist commissioner to deal with transport and logistics issues. There is a precedent for this – the ACCC has a commissioner in place to deal specifically with agricultural issues, for instance.

Further, the ACCC should establish a specialist unit to identify regulatory issues in the transport sector, working closely with industry stakeholders and state and local governments to ensure a pricing approach that delivers the right investment outcomes.

None of this will be easy, especially as the issue isn’t easily summarised in 140 characters. But it is in the interests of all in the transport industry to work with governments and help demonstrate for all vehicle users that there are real benefits in a more transparent, more efficient road-pricing system.

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