Australian Infrastructure Audit submission

Transcription

1 14 August 2015 Transurban appreciates the opportunity to respond to Infrastructure Australia s (IA) Australian Infrastructure Audit, released in May We commend IA for highlighting the critical transport infrastructure challenges facing Australia and recognising that the funding system for land transport represents one of the most significant opportunities for public policy reform in Australia s infrastructure sector, with potential for a broader pricing system based on user-pays principles. As one of Australia s largest providers of urban road transport, Transurban agrees that congestion is the dominant challenge facing our cities as efficient and sustainable infrastructure is critical to maintaining Australians quality of life. A decline in our cities liveability is inevitable without major investment in our transport systems and an overhaul of the current transport funding model. Reliant on fuel excise receipts, our century-old, funding model does not generate the funding needed to meet Australia s infrastructure needs now 1, let alone begin to address the backlog of critical transport projects. We consider the current system to be not only inefficient but also unsustainable as more fuel efficient cars will increasingly impact the revenue raised through fuel excise; and unfair as the current suite of taxes and levies are regressive with significant impact for lower socio-economic groups. That is, the driver of a late-model fuel-efficient vehicle is paying far less in fuel excise than the driver of a less-efficient older vehicle despite having a similar impact on congestion and infrastructure. Our comments relating to specific audit findings are outlined on the following pages. 1 Bureau of Infrastructure, Transport and Regional Economics, Australia Infrastructure Statistics Yearbook Transurban Limited ABN Level 23, Tower One, Collins Square, 727 Collins Street, Docklands Victoria 3008, Australia T: +61 (0) F: +61 (0) W: transurban.com 1

2 Audit Finding 4: Inadequate attention is being given to the level of service Australians need and expect from their infrastructure, how much different service levels cost, and how they will be paid for. Transurban commends IA for highlighting the need to establish service level expectations for infrastructure. This is critical for transport network planning. In our industry, service levels are important as a pointer to upgrade capacity on some roads and use pricing signals to manage demand on other roads. There is a significant piece of work that needs to be commenced to understand the levels of service the community wants and needs, which will in turn indicate spending requirements and appropriate pricing. Audit Finding 11: Infrastructure decision-making must place a high priority on productivity growth. This can only be achieved through efficient management of existing infrastructure, rigorous and disciplined evaluation of investment initiatives, and efficient delivery of new projects. Integrated and efficient land transport networks are vital to the productivity and liveability of our cities. The role of transport infrastructure in enhancing economic development outcomes is well understood by policy makers. Infrastructure projects or policies that address transportation needs can reduce travel time, improve travel time reliability and create a smoother flow of traffic facilitating increased competition 2. Globally, Australia has been one of the leading markets for private sector participation in the delivery of major infrastructure. This has led to great innovation in delivery models where the public and private sectors have worked effectively together to the benefit of the Australian economy. For example, a recent report by KPMG commissioned by Transurban showed that Australia s toll road network had provided $52 billion in direct economic benefits over 10 years across Australian business and households 3. Direct benefits in business productivity from vehicle operating cost savings, travel time savings, reliability gains and wider economic benefits were worth $24 billion the report found. The private sector will continue to have a role to play in the development of transport infrastructure if Australia is to meet the needs of our expanding cities. 2 KPMG 2015, Economic Contribution of Australia s Toll Roads, transurban.com 3 Ibid 2

3 Audit Finding 14: There is also a gap between expectations about infrastructure quality, and the willingness or ability to pay. There is a need for serious public discussion about infrastructure service levels and funding. We cannot keep building our way out of congestion and have to change the attitudes that existing infrastructure is free. In reality most of the infrastructure we have today was paid for and funded by previous generations of Australians; but it is expensive to run 4, and needs urgent repairs and expansion to meet the needs of our growing cities. We agree with IA that public discussion about infrastructure service levels and funding needs to be started and believe this should happen as soon as possible. Audit Finding 28: Current level of public sector expenditure especially in the transport sector, which remains largely funded by government rather than user charges may be unsustainable in the face of increasing budget pressures to fund welfare and health services. Australia s ageing population, along with a forecast doubling of Sydney, Melbourne and Brisbane s populations by 2050 will generate unprecedented competition for government funding at a time when efficient infrastructure networks will be essential to ensure our living standards and the productivity of our cities. Transurban believes that it is imperative that Australians understand the implications of continuing with the current funding model and welcomes IA s audit report for highlighting the grounds for concern that our infrastructure networks and services are not meeting community expectations. In the independent market research commissioned by Transurban in , 98 per cent of respondents found traffic congestion in their city concerning, while 42 per cent found it very concerning. Sixty-five per cent wanted more road infrastructure and only one in five were happy with the pace of new development. 4 Infrastructure Partnerships Australia, Road maintenance: options for reform, September EY Sweeney 2014, User pays is Australia ready, transurban.com/connectedcities 3

4 Audit Finding 30: The country needs to consider a broader system of transport pricing, both for road and public transport. Transurban believes that Australia needs a transport funding model that is built on a principle of those who benefit, pay, while ensuring fairness across the community. A user-pays system presents tangible benefits for governments, taxpayers and road users alike, creating a more sustainable and fairer funding structure. A sustainable funding model would allow us to plan ahead and encourages more efficient use of infrastructure while lessening the long-term investment burden. A user-pays pricing system would reflect the actual cost of using infrastructure be it roads or public transport - and use pricing signals to encourage more efficient use of existing infrastructure. It would remove the inequitable subsidy from non-drivers and those who cannot afford the most fuel-efficient cars. Developed to its full potential, a road-user pricing system could also target congestion on roads or include coordinated pricing with other modes of transport, such as public transport. The market research commissioned by Transurbanshowed that twice as many respondents favoured a user-pays system for the funding of road infrastructure rather than a flat fee arrangement (66 percent vs 34 per cent) 6. Twice as many respondents said that a user-pays system is fairer for all motorists rather than a flat fee (57 percent vs 31 percent) and four times as many Australians favoured a user-pays model to fund new road infrastructure rather than increased licence fees or higher petrol taxes (60 per cent vs 15 per cent). Going by the results, drivers show a willingness to pay for what they use. For reform to progress, a number of critical components will need to be considered. We will have to upgrade our infrastructure to ensure our road and public transport systems are integrated. We need a user-pays system that incorporates inter-modal (ie all modes of transport) and intra-modal (eg staggered work times by employers) considerations to encourage more efficient use of transport networks. We also need to ensure the system is fair and equitable and does not penalise those who can least afford it. 6 EY Sweeney 2014, User pays is Australia ready, transurban.com/connectedcities 4

5 Audit Finding 48: [T]he cost of congestion in our capital cities estimated at $13.7 billion in 2011, is expected to increase to around $53.3 billion in 2031, or around 290 per cent, in the absence of additional capacity and/or demand management. Transurban s traffic modelling shows that if we continue under the current funding regime, Australian cities will face debilitating congestion levels. For example, by 2035 Sydney motorists will spend 110 hours a year in traffic on average, while on some of the very worst routes motorists could be spending up to two hours for what is a 40-minute trip outside of peak hours 7. Audit Finding 62: As well as being the largest infrastructure sector, transport is also the most challenging with relatively high projected growth in demand, a low proportion of user-based funding. Reforming our transport funding model is no longer something we can simply talk about in theory. Various user-pays systems are being implemented or trialled across the world and Australia must start taking steps to determine what system might be practical here. Transurban has started this process with a road usage study being conducted in Melbourne over the next year. Through the study, Transurban will provide tangible data that will help progress options for a sustainable funding model. The study will be conducted across the whole Melbourne road network, involve 1,200 volunteer participants and trial various user-pays models including: a distance-based per-kilometre charge one-off charge based on anticipated kilometres price-per-trip or access charge The exercise will also explore other models being employed throughout the world including time-of-day pricing on the network and a cordon charge for entering the CBD. A pilot program was started in August with 60 participants as a precursor to the full study, which is due to start in October The study will compare alternative user-pays models that could be considered in place of the current fuel excise and registration model, and gauge drivers preferences for these different schemes. 7 Transurban 2015, Two Futures, transurban.com/connectedcities 5

6 We believe by undertaking exercises such as this, the private sector can play a meaningful and proactive role outside of political timeframes and perceived agenda. As we continue to refine our experience and understanding of how road pricing should be implemented, we will openly communicate with government and Australians, and constructively help industry and policy makers reform the way we fund roads. We look forward to sharing the results with Australians. Transurban believes the path to an effective road-pricing system does not lie in theoretical debates but through real-world testing, the engagement and involvement of road users, and an evolutionary approach to system design. By taking steps down this path we will shift the focus from what cannot be done, to what can. As the challenges of funding shortfalls, traffic congestion and social perception of pricing inequity grow so will the impetus for change. Australia must start taking practical steps towards a more sustainable, efficient and fair transport funding solution to ensure the ongoing productivity and liveability of our cities. Transurban looks forward to the release of Infrastructure Australia s 15-year Australian Infrastructure Plan and the opportunity to provide further feedback. Regards Scott Charlton Transurban CEO 6