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

2. 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

3. 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.

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

5. 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

6. 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

7. 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?

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

9. Much less meet their other external costs

10. 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.

11. 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).

12. 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

13. 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

14. 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.

15. 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