PC throws down infrastructure reform gauntlet

Date: 15.07.2014

Governments warned of waste and political disfunction, while road funds idea and ATA position are backed

PC throws down infrastructure reform gauntlet

The PC support dedicated roads funds for transport infrastructure

The Productivity Commission’s final Public Infrastructure report calls for complete reform of systems and assumptions surrounding infrastructure spending, warning of enormous financial waste without it.

While reinforcing many of the points made in its March draft report, including road pricing for all and the dangers of over-reliance on private funding, the final report, which weighs in at more than 800 pages, also puts the case for a roads agency similar to the UK Highways Agency, to oversee expenditure, depending on the success or otherwise of dedicated apolitical road funds to support a long-term road expenditure programs.

The report gives a relatively positive response the Australian Trucking Association’s (ATA) three-tier road network concept for heavy vehicles and road agency reform proposals.

"These proposals appear to focus on improving investment decision making and outcomes in the supply of road infrastructure through a better allocation of road revenues and strengthened governance arrangements for road agencies," it says.

"This focus is broadly consistent with the objective of the governance and institutional reforms …"

It also notes the failure of Dutch vehicle telematics and direct road user charging proposals and likely of the Heavy Vehicle Charging and Investment (HVCI) reform project here.

"The Commission understands that, in the near term, TIC’s senior officials group — the Transport and Infrastructure Senior Officials' Committee — will oversee a reform process that focuses more on supply-side initiatives, such as improving each jurisdiction’s documentation of road assets and expenditure.

"It appears that, as a consequence, the specific charging model developed by the HVCI reform project will not be pursued.

"The Commission remains of the view that a shift to more direct charging in the longer term has the potential to make the community better off. But complex reforms require an institutional base, accepted by all parties, to advance effectively agendas like direct pricing."

But the central argument puts the onus on government to get its house in order and, in an echo of points made by the Bureau of Infrastructure, Transport and Regional Economic, it also champions rigorous and transparent cost-benefit analysis as an essential part of decision-making.

"A key message of this report is that there is a fundamental need for a comprehensive overhaul of the poor processes currently used in the development and assessment of infrastructure investments particularly, but not exclusively, by governments.

"The costs of poor project selection and delivery will be exacerbated if governments decide to increase their infrastructure investment programs without reforming their governance regimes.

"All other desirable or aspirational objectives — project pipelines, increased private financing, cost savings and even user charging and pricing reform — ultimately depend for their efficacy on having a much-strengthened and widely-applied set of credible and welfare-enhancing reforms."

The full report can be found here.