Pay as you drive proposed for better infrastructure

With Australia’s population now more than 24 million and growing rapidly, the country’s under-funded infrastructure – especially its road and rail networks – are groaning at the seams.

From Sydney to Perth our cities’ roads are increasingly clogged, with traffic gridlock costing an estimated $16.5 billion in 2015, a figure that could soar to a staggering $53.3 billion by 2031 on current trends.

Australia’s roads are funded through a combination of fuel excise (46%), registration fees (20%), licence fees (2%), stamp duty (10%) and other taxes (22%). It’s a system that the Australian Government’s advisory body, Infrastructure Australia, condemns as “unfair, unsustainable and inefficient”.

Country drivers, for example, drive on frequently lousy, badly maintained roads yet fork out money at the fuel pump to maintain city roads that they’ll seldom, if ever, use.

Similarly if electric cars become a large part of the motoring mix in the next 10-20 years revenue from fuel excise will shrink dramatically.

User pays for better roads

Infrastructure Australia reckons it has a better way. It wants a user-pays system of road funding that links supply to demand by charging motorists directly for using the roads. It wants to phase this in over 10 years, starting with trucks within five years. Trucks would be charged according to their location, time and the distance they’ve travelled.

The pay-off for motorists would be the abolition of fuel excise and registration fees.

Compulsory tracking?

While some peak motoring bodies reckon the system would be fairer than fuel excise, the proposal raises some tricky issues for any government. The first of which is how it could be put into practice. Compulsory tracking devices in every car are the obvious answer, leading to changes to Australian Design Rules and mass retrofitting of existing vehicles to ensure they comply with the new regime.

Now tracking devices, such as the range offered by Fleetdynamics, are the perfect choice for businesses and individuals who need to keep an eye on their vehicles’ location and performance at all times. But a government department watching your vehicle’s every move is quite another matter, isn’t it?

Then there’s the question of the bureaucracy required to administer a scheme that demands the mass monitoring of every vehicle on Australian roads. What would that cost to implement?

Fairness and equity

But Infrastructure Australia’s proposal also raises questions of fairness and equity for people living in our cities’ far-flung outer suburbs travelling great distances in their cars with little or no public transport available. How will they be compensated for the extra cost of running their cars?

Infrastructure Australia might well argue that such charges are the key to providing better public transport, but good public transport infrastructure takes years to build. In the meantime those in Australia’s vast outer suburbs will be dependent on their cars for many, many years and could be paying plenty for the “privilege”.

There’s even a sting in the tail for public transport users. Infrastructure Australia wants to see them paying more for using it. The development of rail is crucial to reducing Australia’s increasingly choked roads. New roads will, quite literally, only get us so far. So the idea of building more rail, then effectively discouraging its use by raising the price seems a little curious.

There’s no doubt that Australia’s infrastructure is lagging behind our rapidly growing population. Infrastructure Australia’s proposals are nothing if not bold. It will be curious to see if future Australian Governments of either persuasion are tempted to implement measures which that famous British bureaucrat, Sir Humphrey Appleby, would probably describe as “courageous”.

The pros and cons of infrastructure funding

With our cities’ roads increasingly clogged and a lively debate likely at the next election over taxation, funding infrastructure promises to be something of a political hot potato.

Here’s a brief look at some of the pros and cons of some of the different ways of funding infrastructure:

Funding method
Pros
Cons
Comments
Fuel excise
Reflects road use without intrusive tracking. An “invisible” tax.
Tough on haulage companies. Ineffective should electric cars become popular. Flow-on effects can increase price of goods and services.
Popular in many European countries. Opposed by some motoring groups.
Tracking devices
Accurately reflects road use. Potential pay-off in vehicle theft recovery.
Intrusive “Big Brother” concerns. Potentially expensive to administer.
Proven technology used by fleet companies and individuals to maximise efficient driving.
More toll roads
Drivers pay for the road they use
Unpopular. Tough on drivers who are forced to use toll roads.
Requires technology and can lead to unpopular fines with their administrative costs.
Public Private Partnerships
Reduced burden on taxpayers. Can generate substantial funds.
Some serious failures resulting in under used and loss making transport facilities.
Have a proven record of generating considerable funds for infrastructure.
Congestion charges
Reduces road congestion
Very unpopular with motorists.
Used in many countries. Can be combined with Electronic Road Pricing.

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