Treat roads like electricity and water, economist says

Governments should price roads by introducing metering similar to electricity and water sectors, economist says

By Brad Gardner | July 29, 2010

Governments should price the road network by introducing a metering model similar to the electricity and water sectors, an economist says.

David Adams from the technical and management support firm, AECOM, has used his address to this year’s National Electronic Tolling Committee (NETC) to urge sweeping changes to road pricing in Australia.

Similar to mass-distance-location charging, Adams says a metering system is ideal because it charges people based on their consumption practices, meaning those who constantly use the road network will pay more.

"I’m a low road user. I don’t want to pay registration. I want to pay for the road I use," Adams says.

"I’d sign up for a voluntary metering trial."

However, Adams says pay-as-you-go pricing will need to be supported by a fixed fee to ensure roads which do not experience large amounts of traffic can still be funded.

"You don’t just charge on usage. You want to make it a mix between a fixed and variable fee," he says.

The Council of Australian Governments (COAG) is currently looking at mass-distance-location pricing and is due to release its findings at the end of next year.

Under this method a heavy vehicle’s road charge will vary depending on the load it is carrying, how far it is travelling and where it is travelling to.

Treasury Secretary Ken Henry endorsed the scheme in his recent tax review and called for it to be fast-tracked.

Adams backed Henry’s findings, which included a congestion charge and an end to the fuel excise, but questioned if they would be implemented.

"He didn’t have a government with the guts to follow through," Adams says.

By introducing a metering system, Adams says governments will also help people make decisions about consumption practices.

Displaying his electricity bill to the audience, Adams says it allows him to work out how best to reduce his fees because it details peak and off-peak use and previous usage levels.

"Those sorts of things allow me to make decisions about how I use the network," he says.

Adams anticipates governments will pay more attention to road pricing reform in the coming years because will recoup less in fuel excise due to the introduction of fuel efficient and electric vehicles.

"Nothing focuses a government’s attention like a decreasing tax base," he says.

But Adams says it is unlikely the country will see reform for at least 15 years, referring to the amount of time taken between the recommendation and implementation of the goods and services tax (GST).

The Australian Trucking Association (ATA) is opposed to mass-distance-location charging, fearing it will put too much burden on the industry.

The group claims it will cost $1 billion to introduce and $800 million in annual ongoing costs because operators will need to install GPS tracking units in their vehicles.

It wants a fuel-based registration scheme so that operators using more of the road network will pay for it through higher fuel costs.

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