Rail targets road on infrastructure

Submission to Productivity Commission inquiry into public infrastructure backs mass distance location charging

Rail targets road on infrastructure
The Productivity Commission is looking into infrastructure funding

The traditional disconnect between road and rail over infrastructure funding has continued in submissions to the Productivity Commission’s (PC) inquiry into public infrastructure.

While the Australian Trucking Association (ATA) focused on the "disjointed" nature of federal and state road provision and the need for transparency, accountability and oversight of road provision authorities, the broad rail industry has called for mass distance location charging, an initiative that the ATA opposes.

The PC, which is examining the provision, funding, and financing of major public infrastructure and the scope for reducing the costs associated with such infrastructure, will release a draft report in March and the final report on May 13.

The ATA submission was particularly about the scrutiny shortfall but notes that funding models involving the private sector can have flaws.

"With 48 per cent of projects failing to meet baseline timeframes, costs and quality objectives, considerable work is needed to fix flaws in project governance," it says.

"While public private partnership investment can provide a stream of financing for public infrastructure it comes with possible extra costs in establishing contracts and associated extra transparency and accountability. Private financing is also unlikely to solve the pervading issue of community service obligation (CSO) road and low volume road provision.

"Implementing marginal cost road user charges would cause unintentional welfare effects, due to the vast population spread in Australia and the associated costs with this dispersion."

Meanwhile, a joint submission by Asciano, Aurizon, the Australian Rail Track Corporation (ARTC) and the Australasian Railway Association (ARA), starting from an assumption that road infrastructure charging does not equate with costs, backed the direction of National Transport Commission (NTC) and  Heavy Vehicle Charging and Investment (HVCI) Reform Project stances.

The four say: "In order to realise the full extent of the available productivity gains, pricing reform and supply side (investment) reform should be integrated from the start of the reform process through the concurrent introduction of:

  • Pricing reform with the introduction of direct mass distance location (MDL) charging, using a building block model for calculating the cost base
  • Supply side reform with revenue from charging being dedicated to funding infrastructure based on committed investment plans and service standards.

"Pricing reform based on accurate, cost reflective user charging, would provide effective price signals that are critical to ensuring road users have an incentive to utilise infrastructure more efficiently, with more efficient use influencing priorities for future investment."

The Australian Logistics Council (ALC) also backs MDL and the HVCI thrust "so long as such funds that are collected are actually invested in the infrastructure used by the vehicle (that is, the revenue ‘follows the freight’) and not diverted into consolidated revenue for use for other purposes and that any payments made to a road owner in the form of a CSO payment is transparent".

It wants Infrastructure Australia to take over the process, with trials and case studies and then develop road pricing recommendations for governments.

The ALC is also looking for a tax reform wide enough to consider the Henry tax review’s call for a National Road Transport Agreement.

The submission can be found here.

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