Department of Infrastructure Oil Depletion John Robinson Policy and Intergovernmental Relations 27 June 2007

Department of Infrastructure 2 Impacts of Increased Fuel Prices on Transport Short of a new cheap fuel source: –costs of car travel will increase –costs of freight movement will increase Results: –less disposable income –increased costs of consumer goods = poorer economic performance

Department of Infrastructure 3 Possible Secondary Impacts – Alternative fuels Increased effort in R&D of alternative fuels –Not clear what fuels might emerge, what they would cost, when they might be available, what they mean for engine technology

Department of Infrastructure 4 Possible Secondary Impacts – Alternative modes Increase demand for public transport –analysis suggests there would be (and has been) some shift to public transport Likely to be an increase in demand for walking/cycling –More short trips –Cheaper/readily available –Infrastructure implications

Department of Infrastructure 5 Possible Secondary Impacts - Changes in Road Transport Likely to be an increase in demand for more fuel-efficient vehicles –Implies transaction costs more rapid vehicle replacement shift in production pattern for vehicle manufacturers May reduce demand for road transport –Reduce non-discretionary travel, ie non- work trips –Increase car pooling

Department of Infrastructure 6 Possible Later Impacts: Land Use and Planning Property values –Inner areas/where there are alternatives likely to increase in value further –May increase gap between inner and outer suburbs Design for reduced motorised mobility (Melbourne 2030) –Higher population densities –Local availability of services –Walking/cycling/PT accessibility/connectivity Spatial shift in employment opportunities –Shift in business locations closer to pools of employees –Employees shift closer to work These changes may happen anyway

Department of Infrastructure 7 Journey to Work Patterns

Department of Infrastructure 8 Levers Available to Governments Taxes and fees –federal fuel taxes –State registration charges –State stamp duties –Emissions trading schemes But would varying these simply delay the pain of fuel price increases or even make the impacts harder to bare? Social Welfare system Transition assistance