2009 Review of the National Transport Commission - ntc…DF8FB8FA-7BE6-0E97-ED71-4… ·...

2009 Review of the National Transport Commission

- SUBMISSION -

March 2009

Foreword America’s top public policy think tank, the Brookings Institution, recently released a report, A Bridge to Somewhere, on how America’s federal transportation program has lost focus and how it might get back on track. It highlighted the need for national strategies to address the challenges of ageing infrastructure, competing passenger and freight traffic, poor supply chain performance and environmental sustainability. Australia is also facing these challenges. However, we are one step ahead. The Brookings Institution recommended the establishment of a ‘national transport commission’ to coordinate the response to these challenges. Australian transport ministers have shown leadership here, as the National Transport Commission (NTC) is already well established in this space. Australian transport ministers have also committed to addressing transport challenges through the commitment to the reform agenda in the 2008 National Transport Policy Framework. This laid important groundwork for moving into the next phase of transport reform. Future policy challenges – growing urban congestion and more sustainable transport – are bigger and more complex than ever before. We need a cooperative national ‘whole of transport’ solution, which takes into account all modes and all users. Industry has already embraced a ‘paddock to plate’ approach to supply chains; governments need to move there too. We need to look further into the future. A reform agenda developed over a three year cycle does not encourage long-term thinking and planning. Australia has undertaken significant transport reform to date, and governments have acknowledged the ‘new thinking’ in the National Transport Policy Framework. The foundations to meet those transport challenges are already in place. We need to get on with the job.

Mr Nick Dimopoulos Mr Greg Martin Chief Executive Chairman

Table of contents EXECUTIVE SUMMARY............................................................................................................................... I RECOMMENDATIONS................................................................................................................................ II 1. INTRODUCTION – EVOLUTION OF TRANSPORT REFORM........................................................... 1 1.1. THE DEMAND FOR TRANSPORT............................................................................................................. 1 1.2. TRANSPORT AND THE ECONOMY .......................................................................................................... 1 1.3. REFORM IN A FEDERAL SYSTEM ........................................................................................................... 2 1.4. TRANSPORT REFORM – NRTC AND NTC ............................................................................................. 3 1.5. NATIONAL TRANSPORT POLICY FRAMEWORK ....................................................................................... 6 2. MAJOR NATIONAL TRANSPORT CHALLENGES – A NEW REFORM AGENDA REQUIRED...... 8 2.1. NATIONAL MARKETS ............................................................................................................................ 9 2.2. URBAN AGENDA ................................................................................................................................ 10 2.3. SUPPLY CHAIN PLANNING .................................................................................................................. 12 2.4. CLIMATE CHANGE AND ENERGY SECURITY .......................................................................................... 15 2.5. SAFETY ............................................................................................................................................ 17 2.6. THE WAY FORWARD .......................................................................................................................... 18 3. NTC ROLE FOR NEXT PHASE OF REFORM.................................................................................. 19 3.1. COST OF NOT REFORMING ................................................................................................................. 19 3.2. MOVING FREIGHT, MOVING PEOPLE (ALL MODES) ................................................................................ 20 3.3. STRATEGIC ADVICE CAPABILITY.......................................................................................................... 20 3.4. LONG-TERM PLANNING ...................................................................................................................... 21 3.5. REFORM ‘TOOL KIT’ ........................................................................................................................... 22 3.6. RESEARCH TO UNDERPIN REFORM ..................................................................................................... 22 3.7. LONG TERM REFORM AGENDA............................................................................................................ 22 4. NTC PERFORMANCE....................................................................................................................... 24 4.1. NTC HIGHLIGHTS.............................................................................................................................. 24 4.2. HOW NTC OPERATES ....................................................................................................................... 25 4.3. IMPLEMENTATION OF REFORMS.......................................................................................................... 27 4.4. MAINTENANCE AND EVALUATION OF REFORMS.................................................................................... 30 4.5. WORKING WITH INDUSTRY AND GOVERNMENTS................................................................................... 32 5. CONCLUSION ................................................................................................................................... 35 BIBLIOGRAPHY ........................................................................................................................................ 37

List of tables Table 1: Modes of transport and markets..................................................................................................... 2 Table 2: Agencies involved in transport policy ............................................................................................. 3 Table 3: Evolution of transport environment since establishment of NTC ................................................... 5 Table 4: Transport solutions paradigms ....................................................................................................... 6 Table 5: National Transport Policy Framework Working Groups................................................................. 7 Table 6: Projected avoidable costs of congestion in capital cities ............................................................. 11 Table 7: Port competition for trade and infrastructure................................................................................ 14

List of figures Figure 1: The safe system framework ........................................................................................................ 17 Figure 2: NTC work programme flow chart ................................................................................................ 27 Figure 3: Maintenance and evaluation process ......................................................................................... 30 Figure 4: Strategic engagement ................................................................................................................. 33

Appendices Appendix 1: National Transport Commission Act 2003 Appendix 2: Intergovernmental Agreement on Regulatory and Operational Reform of Road, Rail and

Intermodal Transport Appendix 3: National Transport Policy Framework: A New Beginning (vol 1)

List of abbreviations ABS Australian Bureau of Statistics ABARE Australian Bureau of Agricultural and Resource Economics ACCC Australian Competition and Consumer Commission AFM Advanced Fatigue Management ALC Australian Logistics Council ATC Australian Transport Council BITRE Bureau of Infrastructure, Transport and Regional Economics COAG Council of Australian Governments CPRS Carbon Pollution Reduction Scheme CSIRO Commonwealth Scientific Investigative Research Organisation GDP Gross Domestic Product IA Infrastructure Australia MDL mass distance location NRTC National Road Transport Commission NRSC National Road Safety Council NTAC National Transport Advisory Council NTC National Transport Commission NTPF National Transport Policy Framework OECD Organisation for Economic Cooperation and Development PBS Performance Based Standards RIS regulatory impact statement SCOT Standing Committee on Transport TACE Transport Agency Chief Executives

Executive summary Australians want personal choices and accessibility to services and places, predictable journey times and the right connections between cars, trams, buses and trains in the right places, at the right time. We all want a wider choice of products and services, with instant availability and lower prices.

Business is already leveraging its supply chains nationally and internationally across all modes to move goods more efficiently, but business faces fragmented government policies, planning and regulation. While transport reform has improved national consistency, productivity and safety outcomes, too often the benefits have been diminished by inconsistent implementation.

Significant opportunities exist to optimise the movement of people and goods, but this challenge extends well beyond regulation and makes reform more complex and difficult. In the context of a growing transport task, new thinking is needed for transport to address the challenges of the future, including:

• national markets – emphasised by the 2020 Summit; • urban agenda – economic development and urban liveability; • climate change – reduction of transport emissions within the emissions trading system; • world energy supply – reduction of the volatility of world energy supplies; and • transport safety – reduction of deaths and injuries and improvement of workplace safety.

Building on the National Transport Policy Framework, the NTC needs to be equipped and responsive to help governments deliver a coordinated response to those nationally significant challenges. Key recommendations include:

• a long-term national transport reform agenda to achieve national policy objectives, including a national moving people strategy;

• working with governments (including, but not restricted to, Infrastructure Australia) and industry to facilitate and coordinate long-term national planning along key supply chains;

• provision of strategic evidence-based policy advice (all modes and users) to ATC and COAG; and

• a re-commitment to national regulatory reform, focused on improved implementation.

A strategic national approach to transport policy and reform across all modes and users will complement – not replace – the roles of other agencies with explicit policy responsibilities (e.g. the Commonwealth in aviation and shipping and Infrastructure Australia in nationally significant infrastructure policy).

It is also important for complex reform to be supported by rigorous, evidence-based policy development and research. NTC, as an independent national body, can facilitate robust debate at ‘arms length’ on issues that can be too big or too hard for single governments to consider in isolation.

The submission outlines a way forward – where a national approach makes sense – to work with other organisations on better transport outcomes.

Successive inquiries and reports have called for a national transport plan across all modes and users. The NTC Review provides the opportunity to explore options, and the NTC Submission makes recommendations which strengthen and build on the existing arrangements in order to meet the future national transport challenges.

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Recommendations The NTC makes the following recommendations. To give effect and support these recommendations, case studies have been referred to in the submission.

Recommendation 1

The NTC should continue as a national reform body reporting to ATC.

Recommendation 2

The NTC be given the expanded remit to provide strategic policy advice on reform to optimise the whole transport system:

• across all modes, passenger and freight; • by working with existing bodies; and • where a national and whole of government approach will deliver best outcomes.

Recommendation 3

The NTC be given the function of providing ATC and COAG with broad strategic advice on ‘over the horizon’ and emerging challenges facing transport of national significance.

Recommendation 4

The NTC be given the expanded scope to develop national reforms utilising the whole reform “tool kit”, including strategic policy advice and reform, planning advice, regulatory and operational reforms.

Recommendation 5

ATC and COAG commit to an accelerated and renewed transport reform agenda. COAG (through ATC) to direct the NTC to develop, in consultation with key stakeholders including industry and all governments, a comprehensive national transport reform agenda based on:

• articulated national goals and objectives (measureable); • work programmes phased over 3 – 5 – 10 years; • implementation strategies with milestones, including a public reporting framework; and • an outcomes-based approach to implementation.

NTC to develop this reform programme within six months of ATC and COAG agreeing the NTC Review final report.

Recommendation 6

Any reform submitted to ATC for approval will include an implementation plan including an explicit statement of roles and responsibilities of the Commonwealth, states and territories, and the NTC in assisting governments to implement reforms. This must be approved by ATC.

Recommendation 7

NTC will advise the COAG Reform Council on whether the implementation of Agreed Reforms is consistent with the primary objectives of the reform as set out in the RIS. Should COAG and ATC consider the potential applicability of National Partnership Payments, or other ‘incentive’ measures to support national major transport reforms, NTC could be called upon to provide such advice.

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1. Introduction – evolution of transport reform

1.1. The demand for transport

The users of the transport system drive demand for goods and passenger services.

Consumers want a wider choice of products and services, with instant availability and lower prices. In response, manufacturers and distributors have leveraged their supply chains nationally and internationally, while outsourcing their logistics operations.

The contract transport and logistics sector has followed its customer base geographically and expanded its services. Outsourced activities now typically extend beyond transport and storage to inventory management, light assembly, managing returns and store-ready ticketing and packaging.

Rationalisation in the transport sector accelerated after state government-owned rail operations were privatised in the 1990s. Shipping lines, ports, forwarders and road and rail transport operators secured strategic infrastructure assets (ports, rail terminals, grain silos) and invested in technology to reduce costs, integrate services and deliver ‘whole of supply chain’ services.

The transport and logistics sector is likely to become more global, more sophisticated and reliant on technology.

The Australian community also expects high standards and personal choices of mobility in passenger transport. It wants predictable journey times and the right connections between modes in the right places at the right time.

In recent decades, governments planned major cities and urban transport around low-density suburbs and car use. Passengers need more long-term sustainable public transport alternatives as fuel prices and congestion increase, while expectations of safety, reliability and interconnectivity remain high.

Passenger and freight services operate on shared or linked networks. Different ownership structures for airports, shipping ports, roads and rail lines further increase the complexity of the policy challenges. Some transport chains are highly fragmented; others are vertically integrated.

Government agencies, who control the policy levers, are structured by service function such as road, rail, ports, infrastructure investment, planning and public transport. The broad challenge is to respond to customer demand by developing integrated national policies across multiple portfolios to manage transport systems from a ‘whole of supply chain’ perspective and to enable productivity and service improvements for industry.

1.2. Transport and the economy

In Australia, the transport system directly accounts for approximately five per cent of Gross Domestic Product (GDP). If the broader transport and storage or transport and logistics systems are considered, the contribution to GDP is between 9% and 15% respectively1.

Productivity is the biggest contributor to Australia’s economic growth. The continued growth of Australia’s economy is therefore dependent on the free flow of goods and services and people. “The capacity to move products from place to place in the most efficient (that is the fastest, lowest cost, most certain) way is one of the key drivers of productivity growth across the economy.”2

GDP underestimates the contribution of transport to the economy and society3. Transport contributes to the delivery of economic, social and environmental outcomes. It enables people to access employment, education and health facilities, as well as ensuring groceries are delivered to supermarket shelves at the lowest cost.

1 Australian Logistics Council (2007), The Contributions of Transport and Logistics to the Economy 2 Paul Little, Managing Director, Toll Holdings, Infrastructure 2009, Delivering Transport Solutions in Challenging Times 3 Infrastructure Australia (2008) “Infrastructure Australia: Advising Government on Australia’s Infrastructure. A Report to the Council

of Australian Governments” p 22

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Table 1 provides an overview of the four modes of transport (aviation, shipping, road and rail), and the markets they serve. In serving these markets, modes may be competing.

Transport facts

• Transport businesses contributed 4.54% of total GDP in 2005-06 ($41.9 billion in 2004-05 prices) • The transport, postal and warehousing sector provided 537,000 jobs or 5.1% of total employment in

2006-2007 (ABS) • In 2004-2005 24% of domestic freight task was moved by coastal ships • Between 2000 and 2020 the total Australian freight task will double from 378 to 683 billion tonne-

kilometres (BITRE) • Total kilometres travelled by passenger cars in Australia’s eight capital cities are forecast to grow by

37% between 2005 and 2020 Source: BITRE

able 1: Modes of transport and markets T

Aviation Shipping/storage Road Rail

% of transport value added

13% 37% (including storage)

37% 13%

% of Australian employment

0.5% 0.2% 2.2% 0.4%

Principal tasks Long distance passengers

Container (import) Bulk commodity (export)

Personal (car) transport Public (bus) transport Non-bulk freight haul and distribution by trucks

Public (train) transport Bulk freight haul Non-bulk freight long distance haul

Tonne (billion km) N/A 122 168 189

Passenger (million journeys)

42 22 N/A 643

Principal locations Intercapital International

International Bass Strait

Urban and rural Urban (public trains) Regional (freight)

Source: Adapted from Australian Transport Statistics Pocketbook 2008, Australian Transport Statistics Yearbook 2007, Bureau of Infrastructure Transport and Regional Economics

1.3. Reform in a federal system “Unite yourself and preserve the union, and the benefits of the union will follow. It will require honest, earnest and patient effort, as well as tact and mutual consideration, and without these we shall not fulfil the promise of today” - Sir Edmund Barton, 1901

In a federal system, strong national institutions to deliver economic and social reforms are essential. Most policy areas will involve an interaction between commonwealth, state and territory and local governments.

Transport, like health, education and water reforms, spans all levels of government. The transport policy environment is crowded, with responsibilities devolved over a number of bodies. At commonwealth, state and territory levels, there are a number of agencies who are involved in transport policy.

Table 2: Agencies involved in transport policy

Infrastructure IA/Cth Dept

Funding Policy

Treasury Fringe benefits tax Trade Practices Act

Policy Excise

ACCC Economic regulator

Monitoring

Environment Carbon pollution

reduction scheme

Roads/Transport Agencies Policy

Public transport service delivery or Procuring public transport services

Treasury Funding

Shareholder government owned enterprises

Independent Regulators Economic regulator Safety regulators

Environment agencies/ regulators

Planning department

Roads Planning Bridges

Commonwealth State/territory Local

governments

ATC

SCOT

Inter- governmental

NTC

COAG

States and territories regulate transport operation, safety standards, weights and dimensions. In the past, differences between these regulatory systems meant that interstate road and rail operators faced inconsistent road rules, licence classifications, registration categories, charges, vehicle standards and driving hours, creating unnecessary inefficiency and cost.

In a federation it is ideal to achieve cooperation between all levels of government. There is a compelling case for creating national bodies which seek to obtain cooperation on an ongoing basis. This can be seen in water and energy reform. Such bodies build up expertise in both the subject area in which they operate and in the techniques of obtaining inter-governmental cooperation.

1.4. Transport reform – NRTC and NTC

The National Road Transport Commission (NRTC) was formed by an inter-governmental agreement in 1991 to develop and coordinate regulatory reform for nationally consistent road transport policies and laws. This was extended into rail and intermodal transport in 2004 when it became the National Transport Commission (NTC).

The Business Council of Australia’s report, A New Contract for Federal–State Relations, identified the NTC model as a success. But the limitations of cooperative federalism were also emphasised:

“governments may choose to diverge from the reform program or can considerably delay implementation of agreed reforms.” - (BCA 2006)

The NRTC/NTC, governments, industry and unions have learned considerable lessons over the past 18 years in developing, implementing and undertaking transport reforms.

The work undertaken by the NTC has also evolved to meet changing industry needs for reform. The NTC’s work has moved from discrete, technical and prescriptive projects, through to reform more tailored to meet changing industry needs, and a more sophisticated risk-based approach (see generations of fatigue reform - case study, pg 4)

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Case study: Generations of fatigue reform

1st generation – national laws relating to driver fatigue followed the international convention of setting limits on ‘hours of service’. Fatigue risk was ‘managed’ by ensuring that work was undertaken within the maximum driving limits. These laws focused on harmonisation and provided no flexibility for industry.

2nd generation – adoption of the Transitional Fatigue Management Scheme (TFMS). This allowed drivers to go up to two hours beyond the prescribed limits provided they undertook some approved training on how to recognise and manage fatigue symptoms, and undertook a specified medical examination, etc. This approach provided some flexibility for long distance operators.

3rd generation – known as Advanced Fatigue Management (AFM), this introduced the option of setting own hours of work and rest provided full risk management systems were in place, audited and verified. It offers maximum flexibility and opportunities for innovation.

The NTC’s early work to align fragmented regulations within modal sectors could be described as ‘picking the low hanging fruit’. The reform challenges are now more complex and demand an integrated and coordinated national policy response and more sophisticated stakeholder relationship management to secure national agreement and implementation.

For example, when governments consider productivity reform for heavy vehicles, they also want assurances that the trucks are safe, that they pay their way, they won’t damage roads and bridges, they compete fairly with rail; and transport ministers won’t face a damaging community and media backlash. If those linkages are not ‘tight’, governments’ predilection for asset preservation will prevail (see Performance Based Standards case study below).

Case study: Performance Based Standards (PBS)

Australia’s current prescriptive regulations, which govern a truck’s legal weight and length, stifle industry innovation and new technology take-up. They were based on empirical approaches which required a proposed vehicle to be designed and built and then tested or trialled on the road network. This approach was expensive for industry and did not guarantee success. It took many years from the time a vehicle was conceived to when it was allowed to use roads. Even then, there were significant differences between jurisdictional approaches.

PBS employs objective assessments of vehicle designs to determine how a vehicle built to a particular design would perform; how it would turn corners, tracks along roads, resists overturning, accelerates and maintains speed on slopes. Minimum performance standards were approved by the ATC.

A vital component of this reform is that jurisdictions have to examine their roads and bridges and specify networks that conform with each set of standards. This will enable a vehicle that has been assessed as passing a set of standards to be given automatic access to the corresponding network of roads.

Although members of the ATC and the most senior leaders of road and transport agencies regularly express strong support for PBS, there appears to be much resistance at the policy application and technical levels. Transport industry representatives have become frustrated with the inconsistency of approach and are no longer committed to PBS.

– David Anderson, Independent Chair of the PBS Review Panel

The next phase of transport reform will be challenging as the focus shifts from improving individual modes to lifting the performance of the national transport system as a whole. Reform development needs to holistically consider impacts on productivity, safety, pricing, network access and land use planning and investment.

Table 3 illustrates the evolution of the reform agenda and the role of the NRTC/NTC in pursuing productivity, safety and environmental outcomes. This submission focuses on the right model to meet Australia’s future transport challenges and the needs of transport users.

Table 3: Evolution of transport environment since establishment of NTC

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Evolution of the transport reform agenda

1991 – 1996 – strong Commonwealth Government commitment to a national transport agenda. This was reflected in a range of major reforms including:

• Establishment of National Rail – by agreement between the Commonwealth, NSW and Victorian governments

• Considerable work undertaken to establish a national track access authority (led to creation of Australian Rail Track Corporation)

• Commonwealth Government established the National Transport Planning Taskforce to assess the adequacy of transport infrastructure in Australia for the next 20 years

• Arising from this Taskforce, the ATC commenced work on a National Transport Plan

1997 – 2002 – slowing pace of national reforms

• Reforms continued to focus largely on light (primarily road rules, vehicle standards and driver licensing) and heavy vehicle reform

• Five major reports were released from 1997 (including two from the House of Representatives) which argued for a national approach to transport policy, planning and infrastructure investment

• The Commonwealth Government formally responded to these reports with the AusLink funding program, although there was still no national transport policy framework

Critically, the 2002 NRTC Review recommended the establishment of the National Transport Advisory Council (NTAC) to provide strategic analysis and advice to ATC on national transport priorities. The 2002 Review recommended an additional $3 million funding application to support the NTAC function. While ATC agreed to this recommendation, it was never implemented. 2008 – 2020 Summit – reinvigorated approach to national transport reform.

1991 1997 2002 2008 2020

NRTC/ NTC

• Interstate agenda

(uniformity & harmonisation)

• Heavy vehicles • Light vehicles

• Recommitment by COAG to national road reform agenda

• Expansion of Commissioners (to 5)

3rd NTC review

Broader reform agenda

Separately, five key reports called for: • A national

transport plan; • Cross-modal

approach • Establishment of

a national land transport advisory agency

AusLink established – a good start

• NTC created (rail and intermodal)

• Mandate limited to “regulatory and operational” reform

• Recommendation for National Transport Advisory Council to advise on strategic policy (not implemented)

2nd NRTC review

1st NRTC review

NRTC established

?

Focus still on cross border heavy vehicle

issues

Emerging national agenda

for transport

• National Rail, • National track

access • Competitive

neutrality (ports, rail)

New Federal Government

• National Transport Policy Framework

• Infrastructure Australia established

• Single national markets still a priority but new major challenges – climate change/oil security, urban agenda

1.5. National Transport Policy Framework

The NTC has strived to develop and encourage a more strategic policy response to national transport challenges. In 2004 the NTC commissioned Twice the Task which identified issues that needed to be addressed from the forecast growth in the freight task in Australia over the next 20 years.

Improving the Regulatory Framework for Transport Productivity in Australia (2006) was NTC’s response to Twice the Task. It provided a comprehensive way forward, which has shaped subsequent transport productivity and heavy vehicle road pricing reform.

Stakeholders, including industry, through inquiries and reports had been calling for the development of a national transport plan or strategy. In December 2007, the Commonwealth Minister for Infrastructure, Transport, Regional Development and Local Government requested that the NTC prepare advice on addressing national transport challenges. ATC considered advice from NTC in February 2008. The document, A New Beginning for Transport (see Appendix 3) outlined a ‘new world’ paradigm for transport policy (see Table 4), which reflects changing industry and operating environments.

Table 4: Transport solutions paradigms

Old world New world

Cross border Nationally significant

Freight policy Moving freight and people on shared networks

Economic Economic, social and environmental

Freight corridors National supply chains

Build more infrastructure Build and better utilise existing infrastructure

Fragmented policies National and integrated transport policy and planning framework

Modal silos All transport modes

Inconsistent laws National laws

Short-term planning

Long-term planning to improve certainty

Considerable activity in safety ‘Safe systems’ strategic approach

Focus on ‘regulatory and operational;’ reform

Complexity of problems requires integrated policy response

ATC subsequently endorsed and led a National Transport Policy Framework (NTPF) to take a new reform agenda forward. Ministerial working groups (see Table 5, page 7) replaced modally-focused groups of senior officials reporting to the Standing Committee on Transport (SCOT).

The NTC is committed to a single national transport market and supports the proposals for national road, rail and maritime regulation administered by national regulators.

Given the timeframes, the NTPF was never intended to be a final policy document. It did, however, provide the impetus for significant reform and a more coordinated and holistic approach to transport policy on shared networks.

NTPF working groups, comprising senior government officials, have made significant progress. An opportunity exists to consolidate the achievements of the NTPF and adopt a more sustainable and robust model with continued focus on national reforms.

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Table 5: National Transport Policy Framework Working Groups

Working Group State/Territory

Economic Framework for Efficient Transportation Marketplace New South Wales

Infrastructure Planning and Investment Victoria

Capacity Constraints and Supply Chain Performance South Australia

Urban Congestion Victoria

Climate Change, Environment and Energy Western Australia

Safety and Security Queensland

Strategic Research and Technology Tasmania

Workforce Planning and Skills Northern Territory

Governance Commonwealth

Regulatory impact statements (RIS) are being progressed for consideration by the Council of Australian Governments (COAG) in 2009:

• a National Road Safety Council (advising ATC on road safety implementation); • a single national system of heavy vehicle regulation, registration and driver licensing; • a single national system for maritime safety regulation; and • a single national rail safety regulatory and investigation framework (led by the NTC).

2. Major national transport challenges – a new reform agenda required

Transport does not operate in isolation of other events, developments and challenges faced by the rest of the economy and the community. For policy makers, the key message is that the transport system is not an end in itself; rather it contributes to the delivery of other outcomes.

Since the previous Review in 2002, high-level challenges have emerged which pose significant future challenges for all Australian governments:

• National markets – the 2020 Summit emphasised the importance of seamless national markets;

• Urban agenda – how governments will pursue economic development and urban liveability agendas in major cities;

• Climate change – how the transport sector will contribute to reducing greenhouse emissions, including the introduction of the emissions trading system;

• World energy supply – how the transport sector will cope with the increasing volatility of world energy supplies; and

• Transport safety – as the transport task grows, how policy makers will drive real change to reduce deaths and injuries and improve workplace safety.

The national transport reform agenda has so far excluded passenger transport and urban issues even though cars, buses, trams and trains operate on shared or linked networks. As observed by the Brookings Institution, congestion in major cities such as New York and Los Angeles has become a drag on the national economy, in particular in the dense urban core and in and around the ports.4

These challenges require strong, national, strategic responses. This review offers an important opportunity for governments to build on past reforms, to strengthen existing institutions and to develop new national goals and objectives to move transport forward.

Climate change & energy security

Supply chain planning

Urban agenda

National markets

Safety

4 Brookings Institution (2008) “A Bridge to Somewhere: Rethinking American Transportation for the 21st Century” p 42

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2.1. National markets “If Australian businesses are to compete and succeed, they cannot afford to be tied down by the red tape, complexity and duplication that block the emergence of a seamless national economy”. - Speech, Finance Minister, the Hon Lindsay Tanner MP, 10 June 2008, Lunchtime Address to the Centre for Economic Development Australia

Economic capacity and productivity is best enhanced through the creation of a truly national efficient, sustainable and inclusive economy supported by seamless regulation. This requires setting national goals for transport which minimise overlaps and bottlenecks and improve competitiveness. This in turn requires clarification of roles, responsibilities and accountability between different levels of governments.

National markets ensure that the right transport asset is used on the right infrastructure. They promote efficiency in the provision and use of infrastructure services and better support a long-term sustainable network by identifying infrastructure barriers and ensuring funds are available to address the bottleneck. This eliminates wastage in spending and promotes innovation through competition.

National markets extend beyond headline policies on regulation. It includes many aspects of government involvement in society – from environmental health and safety rules through to axle weights for heavy vehicles.

The national markets for transport in Australia are incomplete. Considerable distortions result in higher transportation costs and poor social outcomes such as increased pollution.

The rail market has suffered from insufficient investment and a regulatory framework which arguably has not supported the efficient utilisation of rail.

Similarly, the market for roads does not support efficient outcomes. The market is largely separated into light and heavy vehicles, although both share the same network.

The light vehicle charging framework bears little or no relationship to the cost of usage (see Urban agenda section, page 10).

Heavy vehicle charges recover historic cost, but provide no price signal for the true cost of road use and what the true demand is for various parts of the network to road providers. Further, funding arrangements for capital investment and maintenance costs are uncertain from year to year which means asset owners adopt a more protectionist approach to access.

The domestic shipping market also operates in a complex environment. Domestic private fleets compete with foreign flag vessels that can undertake domestic voyages through the Single Voyage Permit system. Foreign flag vessels operate at cheaper rates due to differences in Australian and international regulations, such as employment costs and the taxation treatment of crew and vessels.

While it is important to utilise the vessels available to move freight, domestic coastal shipping is exposed to peaks and troughs of demand caused by the ad hoc availability of foreign ships. This has created poor investment signals for the domestic coastal shipping fleet.

The incomplete nature of the national market has meant that productivity of our transport network has stagnated and is now in decline. Whilst the transport task will continue to grow in the future, it will be important to ensure that our transport assets are working hard and delivering more value.

What are the policy issues for government?

There are two key features of a national market:

• pricing frameworks; and

• institutional and legal structures.

National modal pricing structures

Supply chain participants operate in price distorted modes (road, rail and coastal shipping) leading to uncertain and biased modal decisions, inefficiencies, poor planning and potentially inappropriate capital investment by government and industry.

COAG and ATC have agreed that the introduction of mass distance location (MDL) pricing will lead to better usage of and investment in the road network. MDL pricing will allow transport operators to make better informed route, vehicle and modal choices, and network providers can similarly make better decisions on investment and maintenance.

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While MDL pricing reform has largely faltered under a confused governance framework, NTC is making considerable progress on the development of an incremental pricing scheme. This is the first step towards broader MDL pricing.

Pricing reform should not be limited to heavy vehicles, which represent only 27% of the total road fleet and 17% of total road costs. Light vehicle pricing reform will inform investment decisions across the entire network.

As with roads, developing more flexible rail access prices can increase efficiency and resource allocation within the sector and improve cost recovery. Currently, rail pricing does not accurately reflect factors such as time of day, demand for particular train paths and temporary capacity constraints.

Governments should ensure that the objectives and underlying legislation governing the actions of regulators does not impede efficient pricing.

Development and adoption of commercially based pricing and investment return frameworks for transport related government owned infrastructure and corporations (adjusted for community service obligations where deemed necessary) will ensure accurate pricing signals are sent to the transport marketplace.

This should lead to sound, and more appropriate capital investment decisions being made by government and industry. It should be noted that this must done in a coordinated manner for road, rail and sea to ensure timeliness and consistency. Failure to coordinate will lead to short-term modal price distortions.

Institutional frameworks

Pricing can only be a successful policy lever if it is applied to all vehicles and is supported by institutional arrangements. The lack of a pricing signal promotes ‘asset protectionism’ rather than optimising asset use and does not direct expenditure where the demand is greatest. Asset owners should be able to respond to price signals with certainty in funding (on a historical or forward estimates basis).

Prices must also be subject to some degree of independent calculation or scrutiny. Those who incur expenditure on what is effectively a monopoly should be subject to independent price setting processes to ensure that prices are efficient.

The role of the federal, state/territory and local governments also require clarification. In a world where road users pay for the use of the road network, it will be important to clearly identify where access and community service obligation decisions are made.

2.2. Urban agenda “If talented people, quality jobs, innovative firms, advanced universities, planes, trains and automobiles make the world go around – then metropolitan areas are the axis.5” - Brookings Institution.

Australia’s urban areas are growing at some of the fastest rates in the developed world. As a result, the nation is now one of the most urbanised populations in the world.

Australian capital cities contributed 78% of the nation’s economic growth between 2001 and 20066. To remain productive economic hubs, our cities need to provide for the efficient movement of people and goods and services.

Improving the Regulatory Framework for Transport Productivity in Australia7 warned that a failure to address the growing land freight task would create freight bottlenecks; particularly around urban ports, railheads and freight centres.

Australia faces a number of urban passenger transport challenges – growing congestion, mounting travel demand, increasing greenhouse gas emissions and rising fuel prices – and yet Australia is one of the few OECD countries without a national ‘moving people’ strategy.

Australian cities have been planned largely around car use, leading to urban sprawl beyond existing public transport networks and significant growth in car passenger travel. In contrast, the mode share of metropolitan public transport patronage in some cities has been declining, at least until recently.

5 Brookings Institution (2008) p 4 6 IA ibid p 40 7 National Transport Commission (2006)

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General increases in income levels and higher expectations of travel standards have reduced the attractiveness of public transport. Today only 10% of city trips in Australia are undertaken by public transport.

Combined with an anticipated 30% growth in car travel, urban congestion is likely to cause considerable travel delays, but the cost to society is probably greater than the cost to an individual.

Measures to manage urban congestion and support economic growth are, therefore, nationally significant.

Table 6: Projected avoidable costs of congestion in capital cities

2005 estimate 2020 estimate 2005 – 2020 growth

Sydney $3.5 billion $7.8 billion 123%

Melbourne $3.0 billion $6.1 billion 103%

Brisbane $1.2 billion $3.0 billion 150%

Perth $900 million $2.1 billion 133%

Adelaide $600 million $1.1 billion 83%

Canberra $110 million $200 million 82%

Hobart $50 million $70 million 40%

Darwin $18 million $35 million 94%

Total $9.4 billion $20.4 billion 117%

‘Review of Urban Congestion, Trends, Impacts and Solutions’, COAG Competition and Regulation Working Group 8

The provision of passenger services plays an important role in addressing social exclusion Access to passenger transport facilitates travel and access to work, school, health services, recreation, study and to see family and friends.

A long-term increase in fuel prices has led to growing public transport use and social exclusion of outer urban residents; particularly where past planning decisions have not properly considered the movement options of people and goods.

Internationally, the viability and sustainability of cities has emerged as a policy priority.

State governments have recognised the need for action and committed new funding to public transport. National government funding for public transport is commonplace in many OECD9 nations.

Historically, the Commonwealth Government has spent little on public transport. In the 30 years to 2004, it had invested $2.2 billion on rail and $1.5 billion on public transport, compared to $58 billion on roads.

The Commonwealth recently signalled a renewed interest in urban transport by establishing a Major Cities Unit within the Infrastructure, Transport, Regional Development and Local Government portfolio. Many of the projects under consideration by Infrastructure Australia relate to metropolitan transport.


Passenger transport poses policy challenges for governments keen to:

• remove regulatory and policy impediments to the safe, efficient and environmentally friendly movement of people;

• use economic and pricing signals that equitably price the costs and benefits of various transport modes;

• utilise the best available technology; and

8 December 2006, pg 5 9 Organisation for Economic Cooperation and Development

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• invest astutely in the right infrastructure, buses, trams and trains needed to move people around Australia.

Lines of responsibility for managing the broad range of urban transport issues – including funding, policy, planning, maintenance and taxes – often cut across government departments with competing interests. Progress has been made by governments individually, but a more coordinated and integrated approach can better support national transport objectives. The establishment of Infrastructure Australia brings greater discipline and consistency to the way infrastructure projects are evaluated and funded.

Potential opportunities for a more coordinated approach could include:

• national objectives and strategies for people movement, linked to regional strategies to underpin the next generation of investment in passenger transport;

• best practice transport governance structures – for regulators, government agencies and service providers across all modes – to ensure urban transport works more effectively as an integrated system;

• minimum standards for transport access;

• a common technology platform for integrating ‘smart card’ technology on any transport mode in any city;

• elimination of taxes that distort behaviour and encourage car use;

• widely available real-time information for individual decision making;

• strategic investment in vital public transport;

• high density urban planning along public transport corridors, funded by the sale of development rights, while increasing public transport capacity (e.g. Hong Kong metro);

• road pricing to optimise the use of urban infrastructure;

• better integration of all modes (road, rail, cycling, walking, etc); and

• coordinated local programs such as TravelSmart, HOT10 lanes and car parking co-located with public transport nodes.

Some policy options, such as road congestion pricing and governance reform, may require tough, politically-sensitive decisions for government.

Currently the price signal for car use is weak. Arguably, less than 50% of the costs are variable and there is little incentive to consider alternative public transport. As an example, a congestion charge provides a clear price signal to support informed decisions about transport choices and may ultimately influence broader decisions such as where an individual may live relative to where they work.

COAG has endorsed a road pricing reform plan for heavy vehicles. This focuses solely on the 72,000 articulated trucks and 445,000 rigid trucks, not Australia’s 11 million cars. Without efficient road pricing for cars, the potential national benefits of reform on a shared network will be diminished (see National markets section, page 9).

The provision of transparent, independent advice to governments through a national ‘moving people’ strategy is the best way to facilitate an informed, coordinated and effective policy response to those challenges.

2.3. Supply chain planning “To work (coastal shipping) needs high levels of integration at either end of the journey and seamless interface with land transport.” – Paul Little, Toll Chief Executive, ALC Forum 2009

Australia’s business community has recognised the powerful potential of optimising its supply chains to support business growth.

A supply chain is defined as the network of consumers, retailers, distributors, transporters, storage facilities, suppliers and producers that participate in the purchase, sale, delivery, and production of a 10 HOT lanes are tolled lanes that operate alongside existing highway lanes to provide users with a faster and more reliable travel

option.

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particular product or service, or class of products or services. The supply chain encompasses the movement of goods and services from point of production or import to point of sale or export and includes all facilities used between these points.

Former Woolworths CEO Roger Corbett offered a scathing assessment of Australia’s supply chains at an Australian Food and Grocery Council gathering in 2000. He said the 24 hour, 21st century supermarket business is serviced by a 19th century, 9 to 5, Monday to Friday supply chain. Australia’s retailers subsequently stripped billions of dollars from the cost of distributing product, and improved on-shelf availability, by overhauling their supply and distribution networks.

Domestic companies now see demand-driven ‘lean’ and ‘agile’ supply chains as a competitive advantage. Businesses are re-engineering their supply chains so they are responsive to consumer demand for wider product ranges, cheaper goods and instant availability.

While many industries have leveraged significant efficiencies through supply chain planning and optimisation ‘from paddock to plate’, government planning and policy making continues to operate largely across modal, geographic and functional silos. The emergence of capacity constraints during periods of strong economic growth has increased pressure on governments to consider their role in supply chain efficiency.

In its submission to Infrastructure Australia, the Minerals Council of Australia made the following observation:

“Many solutions to these capacity constraints will not require additional spending; rather they require better federal-state co-operation, the elimination of duplicative and contradictory regulatory processes, institutional and intellectual capacity building, and more appropriate competition policy settings.”

NTC’s Rail Productivity Review and intermodal, grain, coal and livestock and meat supply chain studies, managed by NTC under the NTPF, are currently being finalised. The supply chain planning and policy issues arising from those reviews are outlined below and will be further tested through consultation before recommendations are presented to ATC.


Coordinated planning

International trade is critical to Australia’s current and future prosperity. The issue is not just about trade gateways but also the quality of the domestic network to allow the final transportation of goods and services to firms and consumers.

Industry has identified the lack of coordinated and integrated long-term planning at a national level as a key productivity impediment.

Planning is currently undertaken at the local, state and Commonwealth government level (e.g. Victoria’s freight strategy and the Commonwealth AusLink scheme), which has delivered significant benefits. However, there is no long-term framework for facilitating planning and investment at a national level across all the interfaces and levels of government.

The lack of a long-term view can result in short-term policy responses, such as ‘one-off’ support packages for regional rail lines. This can lead to poor asset utilisation and under-investment over the long term. It focuses policy responses on the symptoms of poor planning, rather than getting the underlying framework right (see National markets page 9).

The failure to plan nationally in the past led to Australia’s ‘break of rail gauge’ problem. Currently, the failure to coordinate planning at a national level risks the emergence of transport bottlenecks, poorly located urban intermodal terminals, under-investment in strategic land transport linkages, encroachment of urban housing development and passenger-freight rail network conflicts.

Only a relatively small amount of domestic freight utilises coastal shipping. Infrastructure bottlenecks, particularly around ports can impact on that competitiveness.

Australia’s major shipping ports are located within cities and compete for international trade and infrastructure investment. Long-term land-use planning should support a sustainable network of ‘nationally significant’ ports, terminals and infrastructure links to meet forecast future capacity.

The case for a national ports and terminals strategy to coordinate planning and investment has been made by industry stakeholders; including submissions to Infrastructure Australia’s national infrastructure audit. The call for a ports strategy is also consistent with directions proposed by the recent Parliamentary Inquiry into Coastal Shipping. The forecast significant growth in container movements in Australia’s major intermodal ports is depicted in Table 7.

Table 7: Port competition for trade and infrastructure

Booz 2008: port competition for trade and infrastructure (figures are TEUs)

An opportunity exists for a national body such as the NTC to facilitate coordinated planning across all modes and levels of government, working with Infrastructure Australia (see Working with industry and governments, page 31). This could be expanded into urban and interstate people movement (as part of a national moving people strategy).

Case study: Integrated national planning

The north-south rail link is currently under-utilised because of passenger rail bottlenecks in Sydney. This bottleneck, therefore, impacts on transport decisions and investment all along the east coast of Australia. While the development of the Southern Sydney Freight Line is welcome, the emergence of further passenger–freight conflicts in other cities is expected as the passenger and freight task grows.

Supply chain coordination

Coordination along the supply chain is primarily a concern for industry. A number of industry-led coordination models have begun to be developed through the introduction of logistics teams (e.g. Hunter Valley Coal Chain Logistics Team and Port Botany Rail Logistics Team).

Poor information flows along the supply chain can create dysfunctional supply chain behaviour. In some circumstances, industry may experience difficulties developing a strong coordination model to effectively address supply chain failures (e.g. misaligned investments, inefficient pricing and poorly coordinated operational practices).

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A key role for government is to monitor supply chains and provide a credible ‘last resort’ threat to intervene, and be prepared to intervene, if self-regulation fails. If an intervention is needed, this is best done in a consistent and transparent manner, recognising the role of national companies operating in national supply chains.

Technology platforms

The transport sector relies heavily on the telephone, radio, fax and email communications. A number of different technology portals are emerging to improve the transparency and transfer of information; however, an uncoordinated approach risks fragmentation and incompatibility – as previously experienced with toll roads and passenger transport ticketing.

These concerns are apparent across all modes – road, rail and shipping – where industry pressures for processes to be streamlined can lead to short-term planning in rolling out new technologies. A better emphasis on national long-term planning could address these concerns and ensure the national compatibility of new platforms to build integrated supply chains and efficient markets.

Further work is recommended on the feasibility of national supply chain technology platforms based on open standards. For example, the KOMODA in Europe proposal aims to encourage co-modality through an integrated e-Logistics platform across the continent11.

2.4. Climate change and energy security “It is not an exaggeration to claim that the future of human prosperity depends on how successfully we tackle the two central energy challenges facing us today: securing the supply of reliable and affordable energy; and effecting a rapid transformation to a low-carbon efficient and environmentally benign system of energy supply.” - International Energy Agency12

Climate change

Greenhouse gas emissions have grown significantly in all developed nations. For example, transport emissions in the European Union have grown 32% to 2004 (from 1990). United States and Canada’s transport emissions have grown 29% and 33% respectively to 2005 (from 1990). This failure has occurred despite significant programs, such as the European Union member countries having pursued a raft of innovative technology and transport actions.

“Transport is the now the worst performing sector under Kyoto and seriously jeopardises the achievement of the Kyoto targets.” - European Federation for Transport and Environment13

In line with trends overseas, transport is the fastest growing emissions category in Australia. The transport sector contributed 14.4% of total emissions in 2005 and is the third largest sectoral contribution behind stationary energy and agriculture.

Between 1990 and 2005, carbon emissions grew by 30%. The Department of Climate Change14 forecasts that these emissions will grow 67% to 2020 (from 1990). The Commonwealth Government has committed to a long-term objective of reducing Australia’s overall emissions by 60%.

Transport emissions are dominated by the road sector which is responsible for 87% of these emissions15. Emissions from passenger transport are dominated by passenger vehicles. Commercial and heavy vehicles are responsible for the majority of emissions in freight transport.

The Department of Climate Change16 estimates current transport measures will reduce Australia’s total emissions by 0.6% in 2020.

11 www.komodaproject.com 12 International Energy Agency (2008) “World Energy Outlook 2008: Executive Summary” p 3 accessed at

http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf 27 January 2009 13 European Federation for Transport and Environment (2006). How Clean is Your Car Brand? T&E Brussels 14 Department of Climate Change (2008). Transport Sector Greenhouse Gas Emissions Projections 2007, February 15 Infrastructure Australia (2008) “Infrastructure Australia: Advising Government on Australia’s Infrastructure. A Report to the Council

of Australian Governments” p 36 16 Department of Climate Change ibid

http://www.komodaproject.com/

http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf

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Energy security

The transport sector is 98% dependent on oil for its energy needs. This makes transport extremely vulnerable to oil price volatility and security of supply. Further, there is likely to be significant flow-on effects to end users, as was evidenced in mid 2008 when world oil prices reached a record $US140 a barrel. Transport, mining and agriculture are the sectors most impacted by oil price volatility.

It is recognised that Australia’s oil prices are largely influenced by international drivers. For example: • increasing global demand in India and China; • uncertainty about the real magnitude of global oil reserves; and • increasing volatility in oil prices arising from non-economic influences, such as terrorism and

location of oil supplies in unstable countries.

The design of Australia’s transport infrastructure is predicated on the availability of cheap and plentiful fossil fuels17. However, Australia’s oil self-sufficiency is forecast to decline from 85% to 40% by 202018. Concurrently, national demand for oil is forecast to increase by 50% between 2000 and 202019. The Australian Bureau of Agricultural and Resource Economics (ABARE) has estimated that this reduction in self-sufficiency will have a negative balance of trade impact of $7 – $8 billion per annum by 202020.

What are the policy issues?

The international community needs to develop an effective global response to climate change.

For the Australian transport sector, how can we address climate change and energy security?

The Commonwealth’s proposed Carbon Pollution Reduction Scheme (CPRS) will use price signals to encourage people towards lower emission energy sources21. Price signals are expected to transform the stationary energy sector with lower emission technologies and renewable fuels increasing market share over the short to medium term. In the transport sector, there will be moves to lower emission technology but a reduction in absolute emissions is not expected over the short to medium term.

Even with a carbon price on transport fuels, a range of other market failures will exist and all governments need to consider complementary measures that can address these. Governments need advice on possible pathways to transition to a carbon-constrained future that can also address energy security issues (see EcoBus case study). There are also existing policy failures such as incentives inconsistent with the broader government objectives. There are a number of ways that government can intervene – education, investment, and regulation – but it is not clear what the options and their impacts are.

It is also essential that climate considerations are integrated into national transport policy development and placed on an equal footing with other imperatives such as economic and safety initiatives.

Case study: EcoBus: Perth fuel cell bus trial

Hydrogen used in fuel cells has the potential to reduce greenhouse gas emissions, to improve the security of supply of transport fuel, and to stabilise fuel prices.

The Western Australian Government conducted a trial of three hydrogen fuel cell EcoBuses over three years supported by a supply and refuelling infrastructure. The purpose of the trial was to determine the critical technical, environmental, economic, and social factors that needed consideration in relation to the introduction of hydrogen as a sustainable transport fuel.

The three EcoBuses travelled approximately 258,000 km, consumed over 46 tonnes of hydrogen and carried over 320,000 passengers. 300 tonnes of tailpipe carbon emissions were avoided by not operating conventional diesel buses.

17 IA ibid p 33 18 CSIRO (2002). Energy and Transport Sector Outlook to 2020, September 19 CSIRO ibid 20 CSIRO ibid 21 ibid p 36 (NW comment: check if source is IA)

2.5. Safety

Since 2004 over eight thousand people have died, and many more have been seriously injured while using the road or rail systems of Australia. During this period, road safety policy has been directed by the National Road Safety Strategy 2001 – 2010, which sets a national target of a 40% reduction in road deaths per 100,000 population between 2001 and 2010.

NTC and industry developed a complementary National Heavy Vehicle Safety Strategy to target specific heavy vehicle safety issues and a package of model Rail Safety legislation, regulation and guidance material to provide a consistent national risk-based approach to rail safety issues.

Rail safety reform, and significant elements of road safety reform, have been based on a general duty to operate safely. The general duty is imposed on all relevant parties under safety provisions in the model rail safety legislation or chain of responsibility provisions (e.g. Heavy Vehicle Driver Fatigue Reforms).

Recent developments in transport safety reform include the proposed establishment of a National Road Safety Council (NRSC), the role of in-vehicle safety technology and growing alignment between performance-based transport regulation, and occupational health and safety law, particularly in the area of applying general safety duties. The NTC has promoted and led the establishment of the NRSC.

Within the road safety environment, the ‘safe system’ approach (see Figure 1) has become the guiding principle for policy development in Australia. A safe system is one where the likelihood of a crash is reduced, or at least minimises death and serious injury. The safe system approach identifies the shared responsibility of system designers, providers and users in achieving this outcome.

Figure 1: The safe system framework

Safe travel

Admittance to the system

Understanding crashes and risks

Safe speeds (lower speeds more

forgiving of human error)

Physical forces on road users stay within human

tolerance

Safe vehicles Safe roads and roadsides

(more forgiving of human error)

Education and information supporting

road users

Enforcement of road rules

Alert and compliant road users

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In consultation with stakeholders, the draft NTC Strategic Plan 2009/10 – 20011/12 proposes to develop a National Safe Transport Systems Reform Plan to identify future opportunities to improve transport safety (complementing the new National Road Safety Strategy being developed by ATC).

This will consider the role that regulation, infrastructure, human and engineering factors can contribute to improved safety under the safe system for road users, and the risk-based co-regulatory rail environment.

Policy responses may need to identify and remove barriers to implementing a safe system. The responses are likely to require much closer interaction between relevant disciplines including infrastructure design, behavioural science, vehicle design and regulators, as well as measures to build demand for safety. Specific measures may include enhanced corporate social responsibility for transport safety, infrastructure design, driver fatigue reform for light commercial vehicles, railway level crossing safety, and better alignment between road and rail safety activities and occupational health and safety standards and obligations.

Workforce planning

As a result of an ageing workforce, a poor public image and comparatively less attractive working conditions (e.g. long hours away from home) than other industries, the transport sector is forecast to face a shortfall of 10,000 workers over the next five years22. Attracting workers and ensuring that those workers have the right skills to perform safely in the transport industry is an issue that governments, unions and industry need to work cooperatively on.

The Workforce Planning and Skills Working Group has developed a framework for national coordination to address this issue. This will help to identify where government has a role. NTC strongly supports this initiative and will continue to work within this framework and develop national reform where necessary.

2.6. The way forward

These are significant challenges facing transport, and all of Australia. Issues not even on the agenda in the NRTC Review in 2002 now have the ability to substantially affect the productivity growth of the transport sector and the Australian economy. To meet these challenges, Australia needs a high level commitment to a long-term reform agenda and the right institutions and frameworks in place to make sure that governments and industry bring about the next phase of transport reforms.

22 Workforce challenges in the transport industry, Senate Education, Employment and Workplace Relations Committee, August

2007

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3. NTC role for next phase of reform “Moreover, the next phase of transport reform in Australia will be much more challenging than what has gone before. When the reform process began, a lot could be achieved by simply focusing on improving the efficiency and productivity of individual transport modes.

But, going forward, there needs to be a much stronger focus on lifting the performance of the national freight transport system as a whole and achieving outcomes that are economically, environmentally and socially sustainable in the longer term.” - Productivity Commission

3.1. Cost of not reforming “Were Australia to abandon a commitment to reform, the magnitude of the required adjustments and their associated costs might well be larger not smaller. That is, ongoing reform can facilitate the development of a more resilient economy that is less susceptible to shocks…” - Productivity Commission, Review of National Competition Policy Reforms, 28 February 2008

As outlined previously, the ‘low hanging fruit’ of transport reform within modal silos have largely been addressed. The challenges facing transport over the coming decades are bigger and more complex and require a higher level of reform commitment from governments and industry to address them.

If COAG’s National Reform Agenda is fully implemented, the Productivity Commission estimated an increase in GDP over time by around $17 billion or nearly 2%. Reform in road and rail freight transport accounts for around one fifth of that total.

The NTC outlined several further reforms in the National Transport Policy Framework, and transport was among the ‘hot spots’ identified by COAG in April 2007. Many of these were identified in the ‘Major challenges’ (page 8).

In addition to addressing new challenges, there is still a great deal of cross-border regulatory inconsistency in the transport industry which will need to be addressed to achieve any major productivity improvements. A new study by the Australian Logistics Council states that the cost of lost productivity caused by inconsistent regulation far exceeds $100 million per annum23. Although considerable work has been done, there is more to do. As the Productivity Commission observed, road freight reform to date has “merely scratched the surface of opportunities”24.

A failure to improve current reform priorities and processes, combined with an inability to address the emerging major challenges, will affect the ability of the transport sector to deliver ongoing improvements to productivity, efficiency and safety. Transport is also affected by reforms across other portfolios – while those policy areas keep moving, the transport industry will be stymied if there is a failure to keep up with the pace of reform.

The next phase of reform needs to be embraced, otherwise this will affect:

• productivity within the transport industry;

• ability to address infrastructure bottleneck and capacity constraints;

• ability to improve environmental performance of the transport industry;

• further safety improvements; and

• liveability of major cities.

Failing to keep up the pace of reform can also create the risk of the benefits from previous reforms dissipating and industry to backslide. The continuation of the NTC as a national reform institution is vital to the ongoing progress of the transport industry.

23 Australian Logistics Council (2009) ‘Cross Border Regulation in Australia’, pg 5 24 PC Review of National Competition Policy Reforms 28 February 2005, pg 211

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Recommendation 1


3.2. Moving freight, moving people (all modes)

The ‘Major Challenges’ section (page 8) identified two key challenges facing the transport industry as the emerging urban agenda and national supply chain planning.

NTC’s current remit of road, rail and intermodal reform constrains the formal provision of advice on broader strategic policy issues. Reform to optimise the transport system overall will be diminished if governments consider planning and policies in modal, user and geographic silos.

For example, road freight transport reform impacts on the comparative competitiveness of rail and domestic shipping. In the context of passenger transport, national policy settings could influence the potential for investment in public transport versus roads; or air transport capacity versus high-speed rail.

‘Joining the dots’ across modes and users will help to ensure the national transport system works smarter together. A more strategic national approach to transport policy and reform across all modes and users would complement – not replace – the roles of other agencies with explicit policy responsibilities (e.g.: the Commonwealth in aviation and shipping and Infrastructure Australia in infrastructure-use policy).

The thinking about what ‘national’ means has also changed. An issue is not just ‘national’ if it crosses a border, or interfaces with the Commonwealth’s constitutional responsibilities. A ‘national issue’ is one which the community feels is important to, or impacts on, a significant proportion of Australians such as urban congestion or the productivity of economically important supply chains, irrespective of the level of government formally responsible. Addressing a national challenge in this sense would require a united approach by all levels of government.

This submission outlines a way forward – where a national approach makes sense – to work with government agencies, the Australian Competition and Consumer Commission, Infrastructure Australia and other bodies. This also includes working more closely with organisations developing technical policy (e.g. Austroads, National Marine Safety Committee) to support national objectives.

Recommendation 2



3.3. Strategic advice capability “A critical part of their [governments] role is to anticipate and manage emerging challenges” - Business Council of Australia - Reshaping Australia’s Federation: A New Contract for Federal-State Relations

To deliver effective and lasting reform, ATC and COAG will require strategic advice on direction, priorities and policies to improve the national transport system.

The NTC’s current remit of ‘regulatory or operational reform’ is one subset of reform. Limiting the NTC’s scope to regulatory reform does not allow it to fully develop responses to current and emerging issues.

To achieve the best national transport outcomes, the NTC should be given the expanded scope (in addition to providing advice on regulatory reform) to also provide broader strategic policy advice, planning and coordination across governments. This should be underpinned by the ability to direct research to give effect to proposed reforms.

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In recommending the establishment of NTC in the 2002 NRTC Review it was noted that “[M]aintaining the direction and momentum of reform requires ATC to have a strategic (broad-based and long-term) view of directions, priorities and policies for the national transport system.” ATC agreed to this recommendation which supported the establishment of the National Transport Advisory Council (NTAC).

NTAC was never established, and no other body explicitly undertakes that function. NTC has stepped into that space through the reports Twice the Task, Freight in a Carbon Constrained Economy and, more broadly (at the direction of the Commonwealth Minister) advice on a National Transport Policy Framework.

The initial recommendation in the 2002 NRTC Review was that the strategic policy and advice function should be a separate body, but was noted in the review that the two functions could be later merged into one.

The need for strategic policy capacity is even greater now and a practical option is to formalise and expand NTC’s role, while leveraging on specialist expertise within government agencies. The NTC also has a significant body of corporate knowledge relating to transport reform, across road, rail and intermodal transport modes, and has been informally contributing to the broader policy debate surrounding transport. The NTC has built significant networks with industry, unions, transport associations, governments, academics and research bodies to underpin further work. A single national body also reduces the number of interfaces for industry.

The NTC has demonstrated capacity to significantly enhance the way Australia’s federation operates in the transport area, and has pioneered methods of obtaining cooperation. For a body like the NTC to achieve results, it is important that it is seen as being a national body that acts in the national interest, rather than an extension of a single government.

Recommendation 3


Strategic policy capacity is essential to develop a long-term national transport agenda and to provide ongoing advice to transport ministers on emerging transport challenges. Independent advice on ‘horizon issues’ can assist governments in acknowledging, analysing and developing strategic national responses.

The Australian Davos Connection Infrastructure 21 “From Incrementalism to Transformational Change” paper said:

“The policy needs to clearly articulate a vision for what we want our urban and freight transport systems to look like in 2050. This vision will provide an important background and guiding set of principles for evaluation of infrastructure proposals. The lack of vision will inhibit long term and transformation planning.”

It is important for difficult reform to be supported by rigorous, evidence-based policy development and robust engagement processes to test stakeholder reaction to policy options. A strategic policy capability would provide governments with an independent, robust debate at arms length on issues that can be too big or too hard for individual governments to consider in isolation.

As the environment changes and public debate becomes more informed and mature, windows of opportunity to drive reform emerge.

3.4. Long-term planning

Infrastructure bottlenecks and urban congestion cannot be addressed solely through regulatory barriers and policy reforms. Long-term planning is an important subset of policy development and an integral part of transport reform. Recognising the links between land use and transport policy is important. “Decisions about land use and transport need to be taken in a more integrated way, to ensure they support a common policy objective framework”25.

25 Proceedings from Australian Davos Connection Infrastructure 21 “From Incrementalism to Transformational Change”, October

2008

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Planning decisions have national ‘flow on’ effects. A planning decision made in one state can have implications for others, such as aligning capacity along intermodal supply chains. Land use decisions are frequently made before there is a full understanding of the potential impact and effectiveness on transport. Further, solving today’s problems is a key part of planning but, if it is allowed to drive the planning process, the opportunity to shape the future will be lost.

In developing reforms, and as part of developing a new transport reform agenda, NTC reform should explicitly consider planning impacts (e.g. rest areas and driver fatigue reform). This function should be undertaken in close consultation with Infrastructure Australia, and other relevant government or other bodies.

3.5. Reform ‘tool kit’

There needs to be recognition that there are problems which sit outside the framework of regulatory intervention, and recognition that reducing the regulatory burden and moving towards industry self-regulation will be a significant part of moving transport forwards.

Having the capacity to utilise tools other than regulatory intervention will be important to future reforms.

Other policy tools available to governments include advocacy, education and spending and taxing powers. Although the NTC may not have the powers to implement or action all of those, there needs to be recognition of the need to develop effective policy responses.

Recommendation 4

The NTC be given the expanded scope to develop national reforms utilising the whole reform ‘tool kit’ including strategic policy advice and reform, planning advice, regulatory and operational reforms.

3.6. Research to underpin reform

An important part of being able to undertake evidence-based strategic policy advice is the ability of a national body to direct its own strategic and research agenda and draw on international best practice.

NTC currently undertakes specific research in the development of specific reforms. In order to provide robust and independent strategic advice to governments on current and emerging transport issues, it is vital that the NTC is able to initiate its own research, providing it is consistent with national objectives and underpins the national reform agenda. NTC may choose to ‘purchase’ research from existing agencies such as BITRE26 or other bodies.

The NTC is supportive of the work being undertaken by the Strategic Research Working Group to develop a strategic national research agenda to coordinate transport research that is linked to national objectives. NTC believes the current approach is ad hoc and often runs contrary to national objectives.

3.7. Long term reform agenda

The National Transport Policy Framework played a role in refocusing the transport reform agenda underpinned by national objectives and policy principles. Australia needs to take the next step and develop a robust long-term roadmap for transport reform (see National Competition Policy case study). The NTC recommends the development of a new reform agenda which:

• undertakes an analysis of the challenges facing transport today, and those which could emerge in coming years based on research, analysis, international experiences and industry changes;

• clearly articulates the ‘vision’ for transport – a clear statement of national goals;

• sets out a ‘roadmap’ to achieve those goals; and

• establishes measures and performance targets to achieve those goals.

26 Bureau of Infrastructure, Transport and Regional Economics

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Development of this agenda can only be delivered by NTC with the capacity to undertake the strategic advice including policy, planning and underpinned by research as outlined above.

Case study: National Competition Policy

In 1995, the state, territory and commonwealth governments committed to a large reform – the National Competition Policy (NCP). The NCP was based on a blueprint which had been developed in the Hilmer Report. The NCP focused around structural, regulatory and governance reforms to government businesses in industries such as gas, water and electricity. States and territories were provided with incentive ‘competition payments’ for implementation of agreed reforms.

The NCP reforms undertaken were successful for many reasons including: • high level commitment of first ministers through COAG; • clearly articulated goals and objectives; • long term reform planning; and • measurable outcomes and strong reporting/evaluation.

To further build on the momentum from the National Transport Policy Framework, the NTC recommends that a new reform agenda be established to help guide and plan the reform into the future.

Recommendation 5

ATC and COAG commit to an accelerated and renewed transport reform agenda.

COAG (through ATC) to direct the NTC to develop, in consultation with key stakeholders including industry and all governments, a comprehensive national transport reform agenda based on:


NTC to develop this reform programme within six months of COAG and ATC agreeing the NTC Review final report.

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4. NTC performance The NTC has undertaken an impressive body of work which has delivered real benefits to Australian transport users. Analysis of NTC reforms undertaken since late 2003 shows that the reforms – in terms of productivity and safety – will deliver net benefits of between $2.9 billion and $3.5 billion over 10 years27.

4.1. NTC highlights

Since the NRTC Review in 2002, some highlights of NTC reform include:

Strategic

• the National Transport Policy Framework setting out transport challenges and a policy reform agenda

• ‘Twice the Task’ report for a transport productivity reform agenda

Safety

• ‘Chain of Responsibility’ laws to target the cause of heavy vehicle speeding, mass and loading, fatigue

• model Rail Safety legislation and associated reform package • Compliance and Enforcement model legislation • Heavy Vehicle Driver Fatigue reform package • Australian Dangerous Goods Code 7th Edition • national Australian Road Rules • national Australian Vehicle Standards Rules • National Heavy Vehicle Safety Strategy • Intelligent Access Program (IAP) model legislation • revised Assessing Fitness to Drive standards and new National Standard for Health Assessment of

Rail Safety Workers • Safe Payments report

Productivity

• COAG-endorsed new heavy vehicle charges determination • Performance Based Standards • quad-axle policy • 26 metre B-double policy • Concessional Mass Limits

Environment

• vehicle emissions and fuel standards • engine brake noise standards • Freight Transport in a Carbon Constrained Economy discussion paper

27 This figure was determined based on the net benefits from the regulatory impact statements prepared for NTC reforms since the

previous review. This included reforms such as Heavy Vehicle Driver Fatigue, Mass Concessions for Heavy Vehicles and Heavy Vehicle Speed Compliance. Regulatory impact assessments are reviewed by the Office of Best Practice Regulation (OBPR). NTC received advice from OBPR that it had successfully complied with all COAG regulatory impact statement requirements during 2007/08. The OBPR plays a central role in monitoring and improving the quality of regulation on behalf of the Australian Government and COAG.

The NTC is developing other significant reforms; many coming out of the ATC endorsed NTPF, including the development of a RIS for a rail safety regulatory and investigation framework and the consolidation of national heavy vehicle laws.

4.2. How NTC operates

Funding for NTC is contributed by all governments with states and territories contributing 65%, and the Commonwealth Government providing 35%. The 65% contribution provided by the states and territories is calculated on the basis of population.

The NTC is governed by five commissioners and a Chief Executive28. Commissioners, a Chair and Deputy Chair are appointed by the Commonwealth Minister, upon nomination by ATC. Commissioners are appointed for three year terms.

The NTC reports to ATC. The Chair of the Commission attends ATC meetings as a non-voting member. The NTC submits an annual report including financial statements for each financial year to ATC. The Act states that the NTC is not a Commonwealth Authority for the purposes of the Commonwealth Authorities and Companies Act 1997.

Australian Transport Council (ATC)

National Transport Commission (NTC)

Standing Committee on Transport (SCOT)

Transport Agencies Chief Executives (TACE)

National Transport Policy Framework Working Groups

Responsibilities and functions of the NTC

The NTC has responsibilities, functions and powers as set out in the National Transport Commission Act 2003 (Act) and the Inter-Governmental Agreement for Regulatory and Operational Reform for Road, Rail and Intermodal Transport (IGA) as provided in Appendices 1 and 2. In summary, NTC’s role is to:

• develop uniform or nationally consistent regulatory and operational arrangements for road, rail and intermodal transport;

• develop road use charging principles for heavy vehicles;

• monitor and maintain agreed reform; and

• focus on safety, productivity, environmental issues.

In undertaking the development of reforms the NTC is required to consult widely with stakeholders. The NTC is not a regulator, enforcement body, administrator or legislator.

28 NTC Act s 11

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Operation of inter-governmental agreement

The IGA currently sets out a number of matters which are pivotal to how the NTC operates, develops and undertakes reform and interacts with stakeholders and government agencies. While specific recommendations with regards to the drafting of a new IGA are not sought, the NTC seeks to make the following comments:

• The current IGA stipulates the NTC develops ‘model legislation’. Since the establishment of the NRTC/NTC both ‘model’ and ‘template’ law approaches have been used, but there is no compelling evidence that either approach delivers better outcomes. The best approach would be to allow flexibility on a per reform basis to apply the most appropriate legislative tool.

• The current voting arrangements in the IGA should remain unchanged.

• A more flexible mechanism be established for ministers to formally request and fund NTC to undertake work in addition to the approved work programme.

The NTC, or successor body, should be actively involved in the process of drafting any new instruments establishing the body or powers of this body.

Strategic plan and work programme

Reform priorities and the day-to-day work of NTC are guided by the three year rolling strategic plan and the annual work programme as approved by ATC.

The strategic plan is developed through stakeholder consultation and a systematic assessment of national benefits, risks, resources and the ‘strategic fit’ of proposed reforms. An appropriate balance is sought between reform projects and tactical work to support implementation and maintain existing reforms.

The proposed draft 2009/10-2011/12 strategic plan responds to changes in the external environment, including the National Transport Policy Framework, and the outcomes of recent supply chain and rail productivity reviews. It also highlights gaps in the reform agenda identified in this submission.

Progress reports against the approved work programme are published on NTC’s website.

NTC has revised its internal processes to ensure that projects on its work programme are ‘nationally significant’ and meet longer term transport reform priorities.

NTC believes that a comprehensive transport reform agenda requires the development of a strategic plan which looks over a three year, as well as a five to 10 year, term to ensure that the strategic plan is more focused on longer term deliverable national goals. A long-term strategic plan would align to the national goals and objectives outlined in the national transport policy framework.

Process for development of reforms

The NRTC/NTC has established and refined the procedures, processes and mechanisms for developing transport policy reforms. The flow chart (page 27) reflects NTC processes for developing a proposed reform once it is included on the approved work programme.

Figure 2: NTC work programme flow chart

Revise legislation & RIS

Draft discussion paper

Seek public comment

Prepare RIS with policy options

ATC approval

Propose

Draft legislation & RIS

Seek public comment

Engage stakeholders

Develop final recommendations

Draft Revise

Implementation by states and

territories

Approx 18 months (excl. implementation)

Consult stakeholders

Commission recommendation

Finalise

4.3. Implementation of reforms

Implementation of agreed transport reforms is arguably one of the most controversial and difficult elements of the national transport reform process. NTC is often the target of ‘grass roots’ industry frustration for inconsistent implementation by states and territories. For example, road transport operators expressed dissatisfaction with the fragmented implementation of heavy vehicle driver fatigue reform in 2008.

“Doesn't matter what the rules are as long as they are the same Australia wide so we know where we stand, as it is now it's just bloody stupid!” - Stakeholder Survey 2008

These concerns are not new. The 2002 NRTC Review noted that:

“there is concern with the rate and consistency in uptake of reforms governments. The timing and implementation of many reforms has lagged behind expectations”.

The 2002 NRTC Review made no specific recommendations for changes to the IGA or the Act to support or strengthen implementation provisions.

NTC’s role in implementation

The NTC has no explicit role in implementation of agreed reforms. In practice however, the NTC’s role following an ATC vote can be considerable (see Heavy Vehicle Driver Fatigue case study, page 28).

How the NTC becomes involved in these activities varies. Providing technical support and advice to state agencies to assist with their legislative processes is a natural extension of the NTC role. At other times, the NTC undertakes activities to support national consistency at the implementation stage.

NTC decided to develop national communications material to support the implementation of major reforms such as Performance Based Standards (website, information kits and CDs) and Heavy Vehicle Driver Fatigue (see case study). This is a comprehensive approach to support consistent messages and information to industry. The communication materials are made available for the states and territories to re-package and re-brand to meet their own needs (although this is not always adopted).

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Case Study: Heavy Vehicle Driver Fatigue

To support implementation of the Heavy Vehicle Driver Fatigue reform, NTC funded and developed: • a national communications plan to support the implementation of the reform; • a comprehensive website information resource; • separate information kits for the truck and bus and coach sectors; • training tools (PowerPoint presentations with speaking notes); • driver aids (trip planners and ready reckoners); • regular news alerts; • trade media advertising (three stages: awareness, preparation and implementation); • DVD resource (led by South Australia); and • guidelines and policies to accompany the legislation/regulations.

NTC also assisted in answering queries of senior officials and parliamentary counsel in developing state legislation; and established the Fatigue Authorities Panel (FAP), and performed as the ‘secretariat’ for the FAP.

This role in the implementation required a great deal of NTC staff time and funding. NTC received positive feedback on its fatigue website and educational material, highlighting the importance of a greater national role in facilitating implementation.

“The information contained on the NTC website provided me with good information which allowed me to address new fatigue reform measures to our drivers and warehouse staff.” - (Stakeholder Survey 2008)

NTC faces pressure from governments and industry to extend its role into implementation support (e.g. the Fatigue Authorities Panel). As the NTC is not explicitly funded to undertake this work, a long term involvement in implementation can come at the cost of other reforms. NTC has to make judgement about where it can add value and when to exit reform implementation because of competing needs and limited resources.

Inconsistent or delayed implementation

Once a reform is approved by ATC it becomes an Agreed Reform at which point governments are expected to implement29. Section 12 of the IGA outlines the principles for implementing reforms.

Ideally, Agreed Reforms would be implemented within 12 months of the ATC approval, although in reality, all reforms are subject to the allocation of resources by individual governments. NTC recognises that national transport reforms compete for the resources of departments (who are also trying to administer large policy, program and service delivery functions), parliamentary counsels and legislative timetables.

National consistency or the principle of the ‘same outcome in the same situation’ is highlighted as a key principle for the development of transport reforms. However, section 12.2 of the IGA allows for variations to the model legislation in exceptional circumstances. There is no definition as to what can be considered an ‘exceptional circumstance’.

While it is important to ensure that states and territories maintain their sovereignty to decide how reform is legislated in their own states and territories, Agreed Reforms are substantially undermined by a lack of uniformity. Industry remains frustrated by the inability to achieve national outcomes and the full benefits of reforms are not achieved.

29 Ministers can indicate it will not be implemented in their government.

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Case Study: Rail Safety Legislation

NTC developed the national model Rail Safety Bill 2006 and national model regulations in conjunction with representatives of jurisdictions, the rail industry and rail unions.

The Council of Australian Governments (COAG) set an original deadline of July 2007 for implementation by jurisdictions. Only Victoria met that deadline. COAG then revised the deadline to December 2008 and in that time only South Australia and New South Wales passed the legislation, with Queensland introducing a Bill into Parliament.

Recent consultation reveals growing industry dissatisfaction with the staggered implementation dates and the local variations arising where the legislation is implemented.

To achieve the full benefits of reforms, there must be improvement to the rate and consistency of implementation.

Implementation issues need to be considered during the development stage of the reform, and not after it has been approved. The NTC recommends that in submitting a reform to ATC an ‘implementation plan’ accompanies the final reform documents, and as such, ATC formally approves the implementation plan.

An implementation plan would:

• assist governments plan the resources required for implementation during the reform process, not after;

• set out the ‘tools’ required to implement the reform (e.g. enforcement guidelines);

• enable better planning to clarify implementation roles;

• establish the need for national communication plans and resources to support implementation; and

• clarify timelines for implementation.

This would clarify the role of the NTC and identify additional costs of implementation tasks. If governments want NTC to undertake an increased role in implementation, this work should be funded on a per reform basis above current funding levels.

Recommendation 6


The NTC also considers it important that there is increased transparency around state variations to model reforms. The true costs of those variations should be made apparent in order to correctly assess the regulatory impact of the reform. The NTC does acknowledge that in some cases, variations which are made by states and territories are necessary due to the operation of other laws (such as criminal law). In these cases, the variations are unavoidable.

In some circumstances variations highlight the strength of the ‘competitive federalism’ principle. Variations undertaken by a state or territory, and trialled there, can highlight an improvement which can later be picked up by other states and territories. The Queensland Fatigue Management Pilot scheme is a good example of this, where an approach by individual state led to the development of a national reform, in this case, Advanced Fatigue Management.

Transparent reporting of the potential costs and benefits of variations may assist other governments, industry and the NTC in developing reforms.

National Competition Reforms (see case study in the Strategic advice capability, page 20) were considered successful because reform outcomes were linked to incentive payments.

In December 2008 a new Inter-governmental Agreement on Federal Financial Relations was agreed to by governments. Part of this new agreement was the ability for the Commonwealth to provide National Partnership Payments to states and territories “to support the delivery of specified projects, to facilitate reforms or to reward those governments that deliver on national reforms or achieve service delivery improvements”30. This could be applied to transport reforms in the future.

Recommendation 7

NTC will advise the COAG Reform Council on whether the implementation of Agreed Reforms is consistent with the primary objectives of the reform as set out in the RIS.

Should ATC and COAG consider the potential applicability of National Partnership Payments, or other ‘incentive’ measures to support national major transport reforms, NTC could be called upon to provide such advice.

4.4. Maintenance and evaluation of reforms

Since the establishment of the NRTC/NTC, a substantial body of regulatory reform has been produced. These reforms have taken a variety of shapes, including the development of model legislation, guidelines, rules and standards.

NTC recognises that this is a dynamic industry and that reforms need to be continually assessed and reviewed to ensure their ongoing effectiveness and relevance. The 2002 NRTC Review noted that maintenance and evaluation will become a growing part of the NTC’s work programme.

In the 2002 NRTC Review Report, it was stated that “a key task for the NRTC is to review past reforms to examine their ongoing effectiveness, and identify requirements to initiate new rounds of change.” This commitment was then supported by ‘maintaining’ and ‘reviewing’ reforms specifically highlighted in the IGA as an area of high priority for the NTC.

In response to this the NTC has developed a three part process.

Figure 3: Maintenance and evaluation process

ATC VOTE

IMPLEMENTATION

MAINTENANCE OF MODEL LEGISLATION

IMPLEMENTATION EVALUATION

EFFECTIVENESS REVIEW

ATC approves

reform

12 months after implementation

complete by majority of governments

5 and 10 year intervals following

implementation of reforms

Maintenance

For most reforms that involve model legislation or guidelines, the NTC establishes a maintenance project when that reform is approved by ATC. All those reforms are in ongoing 12 month rolling maintenance processes.

The maintenance process is designed to ensure that the model legislation (or other written and approved document) remains current to meet the needs of governments. The maintenance process does not consider new policy or implementation issues; it is designed to ensure that the reform remains up to date.

30 ‘National Policy and Reform Objectives’, Intergovernmental Agreement on Federal Financial Relations

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Implementation evaluation

After an Agreed Reform has been implemented by the majority of governments for 12 months, the NTC undertakes an implementation evaluation. This evaluation looks at whether governments have implemented the model law and to what extent the local law is consistent with the model legislation. It is a clause by clause process to discover whether the intent of model laws is implemented consistently irrespective of whether it has been implemented through legislation or other methods (e.g. guidelines, policies or procedures).

An implementation evaluation report is produced and submitted to ATC. This report is then published on the NTC’s website.

Effectiveness review

At five and ten year intervals following the implementation of an Agreed Reform an effectiveness review is undertaken by the NTC. An effectiveness review is conducted by an in depth stakeholder consultation process to identify whether the reform has been effective in meeting its objectives, as identified by the regulatory impact statement for the reform.

Effectiveness reviews are also submitted to ATC and published on the NTC website.

Maintenance continues to run throughout both the implementation evaluation and the effectiveness review. Any changes which are identified to the model law through the implementation evaluation or effectiveness review are referred to the maintenance process for action.

Case Study: Heavy Vehicle Driver Fatigue Reform

The Heavy Vehicle Driver Fatigue Reform will be one of the first reforms to have some additional information against which effectiveness of the reform can be measured. During the development of the Heavy Vehicle Driver Fatigue Reform an extensive survey of drivers was undertaken in relation to fatigue and driving. These responses will be measured against responses from a new survey during the effectiveness review.

Outcomes-based review

In order to achieve the most efficient and effective review process, the NTC will establish objective measures and benchmarks where appropriate, to undertake comprehensive reviews of Agreed Reforms against objectives and outcomes. These objective measures should be presented to ATC with the final reform package.

The NTC is continually reviewing the maintenance and evaluation processes to ensure that they are efficient and effective in ensuring reforms continue to meet their primary objectives, and the needs of governments and industry.

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4.5. Working with industry and governments “I’m not in the business of game-playing or point-scoring. I’m in the business of NTC working with its stakeholders as part of the solution. We are on the same side.” – NTC CEO Nick Dimopoulos (NatRoad conference 2007)

NTC believes effective and strategic stakeholder engagement will lead to more equitable and sustainable outcomes by giving stakeholders the opportunity to be considered in decision-making processes. It is also an important process in building trust and managing risks.

The NTC is given the powers in the exercise of its functions to consult with:

• government and government bodies;

• representatives of industries, including road transport industry, rail industry, the related logistics industry and unions;

• representatives of people who live in regional or remote areas of Australia; and

• other interested people, bodies and organisations.

This includes the engagement of customers and ‘end users’ of transport services, unions and industry associations. The IGA also confirms that “the Commission will need to work cooperatively with representatives of industry to progress Proposed Reforms”.

NTC’s stakeholder engagement is undertaken at two levels: through formally established advisory groups, and specific stakeholder engagement on a per reform or project basis.

The NTC has three formal advisory groups: the Industry Advisory Group (IAG), the Bus Industry Advisory Group (BIAG) and Transport Agencies Chief Executives (TACE). Although TACE is an advisory body, this forum tests the level of support and indicates the likely advice to respective ministers for each reform.

The transport industry is diverse and highly competitive. The industry is primarily represented by national, state and sector focused transport associations, (government funded) state freight councils and unions for each mode.

The emergence in recent years of the Australian Logistics Council and groups like the Victorian Transport Association has added a more holistic ‘supply chain’ perspective to engagement on reforms. Other stakeholders such as the National Farmers Federation, large non-aligned transport companies and freight users also participate actively in the reform process.

Given the tight margins in the transport sector, smaller operators are often too busy ‘making a living’ to become actively engaged in the reform process, despite the impact of those reforms on their operations. NTC uses a range of channels (depending on the reform) to engage this sector.

In engaging Commonwealth, state and territory governments on reform, industry stakeholders raise a potential conflict that, because of NTC’s funding arrangements, the nine governments are in effect shareholders rather than stakeholders (despite the role of a governing Commission). For NTC’s proposed reforms to proceed, these same governments must agree to the reforms (through ATC) and then implement them.

NTC’s stakeholder engagement processes have evolved to keep pace with the increasing complexity and sophistication of reforms. The unanimous rejection by the ATC of the Third Heavy Vehicle Charges Determination in 2005 was a watershed for the NTC. It was a realisation that the ‘one-size-fits-all’ stakeholder engagement process was unsustainable (see case study page 33).

NTC has sought to shift stakeholder management from a reactive risk management approach to a more proactive and transparent two-way strategic relationship (see Figure 4). At the reform or project level, NTC has abandoned the practice of running separate government and industry advisory groups.

In recognising that the impacts of reforms are not wholly constrained to transport operators, NTC is engaging with other stakeholders with a relevant interest in reform outcomes. This includes central agencies, broad industry sectors (e.g. mining, agriculture, retail), drivers, the community and local government. NTC is re-evaluating how its advisory groups are engaged to encourage effective two-way communication between stakeholders on strategic and technical issues.

Case Study: Heavy Vehicle Charges Determination

Following the Third Heavy Vehicle Charges Determination (which proposed significant registration charge increases), Commissioners initiated an independent review of the stakeholder engagement processes. The review indicated that:

• there were highly polarised views regarding the determination amongst all stakeholders (industry and government);

• there was a need for more effective engagement with stakeholders at senior levels, and improved understanding of political sensitivities; and

• there was a need to be flexible in responding to the timing of decision making.

Commissioners subsequently approved the ‘New Model of Cooperation’ underpinned by following principles:

Understand before acting: Build and maintain relationships with key stakeholders through regular ‘check-in’ discussions to improve mutual understanding on transport issues.

Involve before deciding: All stakeholders impacted by a reform should be consulted to develop policy and, where possible, resolve differences before formal public comment is sought.

Discuss before implementing: Use public consultation to seek wider public views on issues which could not be resolved during the policy development process.

Share before announcing: Ensure there are ‘no surprises’. Generally, stakeholders should not learn of key policy decisions and statements through the media or other channels.

In contrast to the Third Heavy Vehicles Charges Determination, Ministers voted unanimously to support the 2007 heavy vehicle charges determination. This was underpinned by early engagement (leading to significant policy changes), transparency, clear policy principles and ‘plain language’ communications to emphasise the linkage between productivity and safety.

Consistent with NTC’s objective of strategic engagement, a joint government-industry standing advisory council could evolve over time. This would, however, require greater maturity of engagement, confidence and trust between stakeholders than presently exists.

Figure 4: Strategic engagement

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Relationships with other agencies

As seen in the ‘Major challenges’ (page 8), transport faces external and internal challenges. The big external challenges such as urban congestion and climate change require a whole of government response to ensure the problems are tackled as a whole and not in separate parts by separate agencies. The NTC has strong relationships with transport agencies, road agencies and is involved with the Motor Vehicle Environment Committee. In order to deliver the next phase of reforms, the NTC needs to be able to extend and establish formal and informal relationships, with other agencies.

Case study: NTC and Infrastructure Australia

Infrastructure Australia was established in 2008 to: “Infrastructure Australia will develop a strategic blueprint for our nation's future infrastructure needs and - in partnership with the states, territories, local government and the private sector - facilitate its implementation.

It will provide advice to Australian governments about infrastructure gaps and bottlenecks that hinder economic growth and prosperity. It will also identify investment priorities and policy and regulatory reforms that will be necessary to enable timely and coordinated delivery of national infrastructure investment.” - Infrastructure Australia website

Much of the current work from the National Transport Policy Framework involves recommendations which relate to better use or planning of infrastructure. The NTC and IA will need to work closely together to ensure an integrated approach to infrastructure development.

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5. Conclusion “Significant on-going investment in transportation infrastructure is required to underpin continued economic prosperity, environmental sustainability and social cohesion. Australian Governments have a critical role in setting policy, planning, regulating and, in many cases, funding transportation investments and on-going operations.

Rising to the challenges will require a Future Transport Vision and a National Transport Policy, both of which are currently lacking at a national level.” – Australian Davos Connection Infrastructure 21 “From Incrementalism to Transformational Change”

Governments, industry and unions have made significant progress together towards national transport reform. Together we have built institutions such as the NTC, and the mechanisms to develop reforms to drive improved productivity, safety and environmental outcomes.

This submission has outlined the significant major challenges ahead for transport which are bigger and more complex than before. It makes the case for genuine national policies and stronger strategic policy leadership.

To meet the emerging transport challenges, we need to strengthen existing institutions, and look to commit to a new transport reform agenda.

At the direction of ATC, the NTC, with its expertise and demonstrated capacity is well placed to lead the development of a national and strategic transport policy. This strategic policy development will build on the previous work undertaken by the NTC on the NTPF with further integration and enhancements. The strategic policy needs to clearly articulate a vision for Australia’s urban and freight transport systems over the next 20 – 30 years and of the way we would like to live.

The lack of such vision will inhibit long-term and transformational planning, particularly of how cities should develop in the future. Decisions about land use and transport policy need to be taken in a more integrated way, to ensure they both support a common policy objective framework.

The submission highlights a number of important areas for reform and the NTC believes that the following recommendations strengthen and build on the existing arrangements and give effect to meeting the national transport challenges.

Recommendation 1


Recommendation 2



Recommendation 3


Recommendation 4

The NTC be given the expanded scope to develop national reforms utilising the whole reform ‘tool kit’, including strategic policy advice and reform, planning advice, regulatory and operational reforms.

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Recommendation 5

ATC and COAG commit to an accelerated and renewed transport reform agenda. COAG (through ATC) to direct the NTC to develop, in consultation with key stakeholders including industry and all governments, a comprehensive national transport reform agenda based on:


NTC to develop this reform programme within six months of ATC and COAG agreeing the NTC Review final report.

Recommendation 6


Recommendation 7

NTC will advise the COAG Reform Council on whether the implementation of Agreed Reforms is consistent with the primary objectives of the reform as set out in the RIS. Should COAG and ATC consider the potential applicability of National Partnership Payments, or other ‘incentive’ measures to support national major transport reforms, NTC could be called upon to provide such advice.

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Bibliography Affleck Consulting and Meyrick and Associates (2002), Review of National Road Transport Commission Act 1991

ANZSOG (2007), Federalism and Regionalism in Australia: New Approaches, New Institutions?

Australian Davos Connection Infrastructure 21 (2008) From Incrementalism to Transformational Change

Australian Logistics Council (2009), Cross Border Regulation in Australia

Brookings Institute (2008), A Bridge to Somewhere: Rethinking American Transportation for the 21st Century

Business Council of Australia (2006), Reshaping Australia’s Federation: A New Contract for Federal–State Relations

Business Council of Australia (2005), Infrastructure Action Plan for Future Prosperity

Catherine Althuas, Peter Bridgman and Glyn Davis (2007), The Australian Policy Handbook

COAG, Competition and Regulation Working Group (2006), Review of Urban Congestion Trends, Impacts and Solutions

CSIRO (2002). Energy and Transport Sector Outlook to 2020

Department of Climate Change (2008), Transport Sector Greenhouse Gas Emissions Projections 2007

European Federation for Transport and Environment (2006), How Clean is Your Car Brand? T&E, Brussels

House of Representatives Standing Committee on Environment and Heritage (2005), Sustainable Cities

House of Representatives Standing Committee on Infrastructure, Transport, Regional Development & Local Government (2008), Rebuilding Australia’s Coastal Shipping Industry: Inquiry into coastal shipping policy and regulation

House of Representatives Standing Committee on Transport and Regional Services (2007), The Great Freight Task: Is Australia’s transport network up to the challenge?

Infrastructure Australia (2008), Infrastructure Australia: Advising Government on Australia’s Infrastructure. A Report to the Council of Australian Governments

Inter-governmental Agreement on Federal Financial Relations (2008), National Policy and Reform Objectives

Inter-governmental Agreement for Regulatory and Operational Reform in Road, Rail and Intermodal Transport (2003)

International Energy Agency (2008) World Energy Outlook 2008 (accessed at http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf 27 January 2009)

National Transport Commission Act 2003

NTC and Meyrick and Associates (2006), Twice the Task

NTC (2008), National Transport Policy Framework Volume I & II

Productivity Commission (2005), Review of National Competition Policy Reforms

Productivity Commission (2006), Road and Rail Freight Infrastructure Pricing

Senate Education, Employment and Workplace Relations Committee (2007), Workforce challenges in the transport industry

Sir Rod Eddington (2006), The Eddington Transport Study

http://www.worldenergyoutlook.org/docs/weo2008/WEO2008_es_english.pdf

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