Road pricing reform a priority, competition review finds

By: Brad Gardner

Review of competition policy in Australia wants people charged directly for the roads they travel on.

Road pricing reform a priority, competition review finds
Governments should change how they charge people for using the road network, a review of Australia's competition policy says.


Australia’s governments should introduce a national scheme that directly charges motorists for the roads they use, a review of the country’s competition policy framework recommends.

In findings that echo the work of former Treasury boss Ken Henry, the Competition Policy Review Draft Report advocates wholesale changes to the way governments cover the cost of building and maintaining the country’s roads.

The review wants the one-size-fits-all pricing method of registration fees and the fuel excise replaced with "cost-reflective pricing", whereby road users are individually charged based on their location, time of travel and congestion.

Under its recommendations, an independent regulator will oversee pricing, which will be linked to road construction, maintenance and safety costs.

The review claims the existing system is leading to inefficient road investment decisions and giving the trucking industry an unfair competitive advantage over rail freight.

"Reform of road pricing and provision should be a priority…Technologies are available that allow for more widespread application of cost-reflective pricing in roads, taking into account location, time and congestion," the review states.

"Revenue raised through road pricing should be channeled into road funds to promote more efficient road use and investment."

The review essentially suggests roads should be operated similar to electricity in that providers charge consumers directly for using the service and then invest the revenue raised in infrastructure.  

It emphasises the need for governments to work together on the reform to ensure it does not lead to increased costs to road users, adding that indirect charges (registration and excise fees) should be reduced as direct charging is introduced.

"This policy shift will require cooperation from all levels of government. As road pricing is introduced, the Australian Government should reduce excise and grants to the States and Territories. This would allow the reform to be fiscally neutral," the report says.

The review touches on the work of the Heavy Vehicle Charging and Investment project, which is investigating a new charging regime for the trucking industry.

An option on the table includes fitting tracking devices to trucks and charging them based on mass, distance and location.

"Considerable work has been undertaken by the Heavy Vehicle and Investment Reform project to progress both user charging and institutional reform. The challenge is now to agree on a model of implementation," the review says.

"Given the size and importance of the road transport industry for the economy and the importance of efficient road use and provision for urban and regional amenity and consumer wellbeing, much greater progress in this area needs to be made."

Supporters of road pricing reform, namely Australian Competition and Consumer Commission (ACCC) chairman Rod Sims and the Business Council of Australia (BCA), welcomed the draft review’s findings.

A final report will be handed to the Federal Government in March 2015.

The Government last year announced a review of Australia’s competition policy and appointed University of Melbourne professor Ian Harper to chair a panel of four to carry out the work.

The draft review makes recommendations covering a number of sectors, including governance, small business, retail and infrastructure, along with suggesting changes to competition laws.

"Australia’s competition policy needs to be fit for purpose and updated for the economic opportunities and challenges Australia will face in coming decades," Harper says.

"We face forces for change from increased globalisation, population ageing and new technologies, which are rapidly changing the way our markets operate."

A series of public consultation sessions will be held throughout the country to give people the chance to respond to the review panel’s findings.

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