Australia’s transport funding challenge

By Jennifer Perry

Australasian Railway Association (ARA) chief economist Ash Salardini told Rail Express that the new coalition – the Transport Reform Network (TRN) – calls for the end of transport infrastructure that is funded by tax payers, along with funding decisions that are driven by “political expediency.”

“Australian governments no longer have the funds and the Australian economy cannot afford the wasted productivity of current approaches to transport infrastructure,” Salardini says.

While the introduction of Infrastructure Australia (IA) and state-based entities such as Infrastructure NSW, will slowly address the challenges and waste caused by politically expedient infrastructure decisions, Salardini says nothing has been done to address Australia’s critical infrastructure funding gap.

Current approaches to infrastructure provision will continue Australia’s infrastructure backlog – a backlog that Infrastructure Australia (IA) prices at several hundreds of billions of dollars – as well as putting severe strain on national and state budgets.

“This backlog means that by 2020, road congestion will cost Australia’s GDP $20bn,” Salardini says.

“It will also further deteriorate Australia’s manufacturing base where manufacturers will offshore not just due to a high dollar but because of inefficient freight transport networks – and leave our cities and communities crippled by snarling traffic.”

User pay system
The TRN is calling on the Federal Government to show leadership in bringing governments and the community together to review and reform current approaches of raising and allocating revenues in the transport sector, and specifically argues for a user pay system of infrastructure provision.

A user pay system would charge commercial users of transport infrastructure, such as heavy vehicles, directly for their use of transport infrastructure.

“Directly charging users ensures that there will be enough revenues raised to maintain and provide adequate transport infrastructure, eliminating the need for significant tax payer subsidies for the provision of infrastructure,” he says.

“Importantly, a user pay system will also provide significant incentives for the private sector to invest in transport infrastructure, creating a stream of revenue that can be directly linked to the investment.

“Given the steady demand for the use of transport infrastructure, a move towards a user pay system could attract the hundreds of billions of dollars stored in superannuation and managed funds. This would again benefit government budgets, removing the need for multi-billion dollar government funded infrastructure."

A user pay system would also match the provision of infrastructure to demand.

“Revenues will flow to pieces of infrastructure in high demand, automatically identifying where upgrades and new infrastructure will be required,” he says.

“This is a vast improvement on the current system, where infrastructure provision is equally governed by demand and political considerations.”.

The launch of TRN – on August 29 at the Sydney Town Hall – will be an event of national significance with over 500 policy makers, industry and community leaders attending.

Members of the TRN include the ARA, the Property Council of Australia, Roads Australia, Infrastructure Partnerships Australia (IPA), and up to 30 other companies and industry organisations.

For more information on the coalition and the launch visit: www.roads.org.au/events/show/204

PPP in Transport
12th-13th September 2012
Radisson Blu Plaza Hotel Sydney
www.informa.com.au/ppptransport