An independent infrastructure body believes drivers should be charged for travelling on east coast highways to raise funds for critical infrastructure
By Ruza Zivkusic | July 6, 2011
Infrastructure Australia (IA) national coordinator Michael Deegan believes it’s time the transport industry starts paying toll on the east coast highways.
The independent infrastructure body is proposing to put tolls on at least three major highways, saying there is no ‘free lunch’ as funding is needed to complete infrastructure projects across the country.
IA has slammed governments’ lack of progress in planning and financing major projects that are needed to fix productivity as the upgrade of Pacific Highway in NSW to four lanes is unlikely to be completed by 2016 as expected.
Infrastructure Australia’s Communicating the Imperative for Action report to the Council of Australian Governments (COAG) is urging governments to commit to action on a range of fronts, saying residents “experience the consequences of poor infrastructure planning, investment and regulation in their lives.”
“Is it fair to leave the community with roads that aren’t finished?” Deegan says.
“That’s the dilemma that we find; people don’t want to pay but they want the improved service.
“I’m sorry but there’s no free lunch, we know the transport industry will debate this but then they won’t have their roads updated and who should pay for that if we live in a community where we don’t want to raise taxes?”
Budgetary restraints, historic levels of outlays on transport and other significant project commitments from within NSW and across the nation makes it challenging for the state and Australian governments to fund the Bruce Highway project, the report has found.
It has identified four key infrastructure-related challenges that the country faces; a decline in the rate of national productivity growth, the failure of governments to lead a community debate and agreement on necessary change in the way the nation funds the development and operation of key infrastructure, slow progress in pursuing regulatory and other reform and continuing weaknesses in the planning of infrastructure networks and in infrastructure investment decisions.
Australia’s
infrastructure has been ranked 22nd out of 139 countries assessed by the World Economic Forum’s 2010-11 Global Competitiveness Index.
Further investment is needed to meet the country’s infrastructure needs, the report adds.
“Our investment in our public infrastructure has declined as a proportion of Gross Domestic Product (GDP),” it says.
“Over the 1990s and into the last decade, Australia has invested less in public infrastructure as a proportion of GDP than other countries. This has been offset partly by private investment, not only in export-related infrastructure but also by the new private owners of assets previously owned by governments.”
It has also found the country is reluctant to increase government debt and is “uncomfortable” with the ‘user pays’ concept.
Deegan has described the governments’ planning system as “chaotic”, saying it takes too long to get planning approvals.
“We haven’t had people focus on preparing what they need to do with freight and we need the governments to lift their game.
“IA has been created just three years ago to focus on these issues; previously they had fallen into a vacuum between the Commonwealth state and local governments and with the creation of a single national body we’re working on those issues.”
The report is against recycling capital, such as selling poorly performing infrastructure assets that could be better managed by the private sector.
“The gap between our expectations and the financial capacity of our governments is most pressing in the transport sector; the infrastructure sector which remains most removed from a sensibly-structured system of user charging,” it says.
Several submissions to IA during the past year have focused on the development of large urban freight roads despite up to 90 percent of the projected traffic expected to be private vehicles, it adds.
“In several of cases the use of tolls to fund these roads was rejected. At the same time, the jurisdictions have asked for the Australian Government to meet the majority of the cost of these projects.
“Infrastructure Australia is highly unlikely to support the proposals for funding by the Australian Government.”
IA chairman Sir Rod Eddington says government reforms to infrastructure planning and delivery is ‘frustratingly slow’, which has impacted the country’s productivity.
“As the rate of productivity has slowed over the past decade the need for policy reform has grown,” he says.
“Productivity has slowed as a direct result of infrastructure shortfalls – time lost in travel, delays at ports, lost production due to water restrictions.
“Infrastructure that is properly planned and financed will improve productivity, economic development and help preserve a sustainable future for all Australians.”
IA has recently set up an Infrastructure Financing Working Group to identify new ways of financing infrastructure.
A key focus for IA over the next four years is financing reform and developing ways to secure private funds for investment in infrastructure, Eddington says.
“All governments need to communicate the imperative for action to their constituents and get on with the job.”
Infrastructure and Transport Minister Anthony Albanese welcomes the report, saying it reflects the changes and extra resources that were “foreshadowed in this year’s budget”.
“Progress over the last three years has been substantial, with total investment in Australia’s transport, water and energy infrastructure up 40 percent in just two years,” Albanese says.
“All levels of government need to step up the pace of regulatory and institutional reform in order to unlock increased levels of private sector investment while making sure we get the most of our existing infrastructure.”
Infrastructure Partnerships Australia (IPA) Chief Executive Brendan Lyon says projects like Sydney’s M5 motorway, Melbourne’s East West road link and rail solutions in Brisbane are important but have not advanced through IA’s pipeline to delivery because of a lack of government investment or thorough pre-planning.
“The report makes a strong case for governments across Australia to begin having a real discussion with the public about why change is needed, particularly through user pays, asset sales and a radically enlarged scope for private investment in public infrastructure,” Lyon says.
“The report should light a fire under a national discussion about how we can bridge the gap between the infrastructure that Australia needs and the infrastructure that taxpayers can afford.
“Everyone can see that Australia is not keeping pace with infrastructure investment and we need to consider what the game changers are to bridge the funding gap.”