Road Pricing and Transport Infrastructure Funding: Reform Pathways for Australia Presented by Adjunct Professor John Stanley Institute of Transport and Logistics Studies (ITLS)

Scope of presentation Scale of Australian transport infrastructure backlog Integrated land use transport planning for priority formation (cities as example) Enhanced governance arrangements Ways of funding increased infrastructure spending (PT as an example) Conclusions

Infrastructure gap: Transport infrastructure investment: per cent of other Australian investment NIEIR estimate of infrastructure backlog in 2014 = $150b Note: Primary refers to agriculture plus mining. Source: Cat. no. 5204; NIEIR.

Integrated LUT planning process (Source: Stanley, Stanley and Hansen forthcoming)

Integrated land use transport planning for determining priorities: cities as an example. Land use development directions for compact growth Promoting agglomeration economies in the central city and in a small number of selected urban nodes Supporting precinct scale urban renewal more broadly Including unlocking capacity in the middle suburbs (esp. transit oriented development, through strategic transit corridors) Fixing a ‘hard’ urban boundary Supporting strong communities/neighbourhoods 20 minute neighbourhoods Improving the integration between city and regions Better managing growth in the peri urban area

Some supportive transport development directions Central area Mass transit to support agglomeration Tram/light rail, bus, walk, cycle for local Inner areas Tram/light rail, bus, walk, cycle Focus on place management Middle/outer areas Arterial road upgrades for circumferential movement Bus for trunk services feeding nodes/clusters and local circulation Connect growth areas to jobs (and seek local job growth) Increase walking and cycling opportunities Possible occasional circumferential motorway (beware of accentuating sprawl) A bigger role for local government in local mobility planning Particularly in low demand areas

Improved governance arrangements Long term Australian integrated LUT plans tend to be short term (not much beyond a government term) Unlike cities like Vancouver, Portland and Freiburg A function of our adversarial political systems A partnership between state and local governments, at sub-regional level, may deliver longer lasting plans Like in Vancouver The Greater Sydney Commission is an opportunity here Or perhaps our capital cities should have an elected mayor, like London The place for cities deals?

Road users do not pay their way on infrastructure Total road expenditures and Federal/State revenues 2000-01 to 2008-09 (current prices) (Source: Derived from BITRE 2011) No indexation; improved fuel efficiency)

Much less meet their other external costs

Criteria for selecting transport funding measures Revenue raising potential of the measure Predictability and stability of the revenue stream from the measure Equity – horizontal equity, which is concerned with treating similar people in a similar way, and vertical equity, which deals with the relative treatment of different socio-economic groups or groups that are distinguished on other grounds, such as particular personal capacities Transport behavioural impacts - concerned with the extent to which the revenue measure affects transport behaviour in strategically desired ways Strategic development objectives – how the funding measure impacts on, for example, the scale, type and location of development and how this aligns with strategic planning objectives, such as the achievement of more compact growth patterns Public acceptability – often a stumbling block and, therefore, critical for implementation Ease and flexibility of implementation - which includes governance considerations, such as whether new legislation might be required for implementation Accountability and transparency – key governance principles Efficiency of measure – in terms of loss of economic activity per each $ increase in measure revenue.

Funding increased transport infrastructure and services Three sources Users (e.g. PT fares; road user charges) Other beneficiaries (e.g. value capture) Government ‘The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing’ (Jean Baptiste Colbert, French economist and Minister of Finance under Louis XIV). http://www.google.com.au/imgres?imgurl=https://upload.wikimedia.org/wikipedia/commons/thumb/4/49/Colbert_mg_8447_cropped.jpg/220px-Colbert_mg_8447_cropped.jpg&imgrefurl=https://en.wikipedia.org/wiki/Jean-Baptiste_Colbert&h=260&w=220&tbnid=pVi6xbcOjY0kHM:&tbnh=186&tbnw=157&docid=RO74ysmjl4fjAM&itg=1&usg=__O-IWW-Hb66wha29yfy73RLEYNfA=

Australian road pricing today Only specifically charges heavy vehicles And only for attributable road infrastructure costs Through a combination of registration charges, based on axle configuration, and a fuel charge This system was established 24 years ago by the NRTC and improvement since has been glacial! Only deals with about 5% of the costs of road use Should cover all vehicles and all costs

Reforming road pricing Make all road users accountable for all the costs of their travel choices Quick fix = increase fuel tax ~15c/L and hypothecate it al to transport Then for the long term, set charges in a way that reflects external cost drivers Mass of vehicle Distance travelled Location (e.g. includes a congestion element) Implement through GPS, as per Singapore 2016 Needs a 2 year community consultation about what, why and how, including how regressive impacts will be avoided Remove fuel tax and registration Determine infrastructure requirements on the basis of these charges being in place Upgrade public transport to provide users a choice

Then reform public transport pricing Setting a target of break-even on operating costs, assuming road pricing in place, funding should be Fares to recover operating costs less external benefits (e.g. agglomeration benefits) less concessionary discounts (both reimbursed by government) Capital mainly funded from land value capture and government BRT stop in Gatineau, Canada.

Integrated LUT as the foundation Integrated LUT plans and associated shorter term implementation plans should Be partnerships between all levels of government, but particularly between state and local government at sub-regional level Set comprehensive transport priorities for capital and maintenance Include all local government transport elements Except for expenditure associated with new land development or local road maintenance funded by rates Funding of road infrastructure should be in accord with the preceding approach With revenues allocated back to the responsible level of government or paying for PPPs And provision for funding services (e.g. transit) that mitigate the external costs of road use (esp. until road pricing reform is in place) Local government should be a leading partner, working at regional level