Sarah Close, PwC Transport - Future strategy for road supply and charging
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Transcript of Sarah Close, PwC Transport - Future strategy for road supply and charging
PwC Transport
National TransportRegulations Reform 2013Case study: Strategy for roadCase study: Strategy for roadsupply and charging in Australia
June 2013
June 2013
Purpose of the strategySection 1
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1National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
Industry sought an independent review
Section 1 – Purpose of the strategy
• Identified disconnect between road charges and road investment
PC
• Identified disconnect between road charges and road investment• Propelled issue onto national agenda
CRRP
• Found that more direct heavy vehicle charging could yield benefits• But only realised if integrated with funding and expenditure reforms
HVCI
• Currently preparing a RIS of supply and charging reform models• More long term, theoretical focus to date: mass distance location charging
2006
2010-2012
2013→
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• Focus to date has been on charging more than supply/investment
• ATA sought an independent review to guide the trucking industry
• Practical approach that considered timeframes for change.
2National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
Current situationSection 2
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3National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
Australia’s heavy vehicle sector
Section 2 – Current situation
Growth in Australia’s road freight task (1980-2030, billion tkm)
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• Critical to the production and distribution of a diverse range of commodities
• 70% of domestic freight is transported by road (t)
• Road freight task expected to double by 2030 and triple by 2050 (ntk).
Road freight vs. regulation of other sectors
Section 2 – Current situation
Natural monopolies (electricity, water) Key differences for road freight
• Have been tightly regulated for the last 20years
• Independent assessment of efficient costs
• Use-based charges
• Achievement of standards
• Overseen by national regulators
• Non-excludable
• Non-rivalrous
• Social / community
• No examples of full regulationinternationally
• New Zealand has come the closest.
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Road supply: complex distribution of funding
Section 2 – Current situation
CommonwealthNation Building (NB) Program:
• Road investment ($1,956 m)• Black spot ($60m)• Heavy vehicle safety & productivity ($20 m)• Roads to Recovery (18 m)
Road-related expenditure$17.9billion
(administration, enforcement,arterial and local roads)
State
Payment for workon arterials
NB: Roads to Recovery($332 m)
SA Local Roads ($16 m)Regional and Local
NB Off-networkprojects ($225 m)
• Roads to Recovery (18 m)
Building Australia Fund ($312 m)NB Plan for the Future ($27 m)
FIRS ($69 m)
($11,887 m)
Road-related revenue$18.8 billion
• Fuel excise ($11,247 m)• Federal Interstate Registration Fees
(FIRS) ($69 m)• Vehicle registration fees ($5,294 m)• Stamp duty on registration fees
($2,167 m)
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Local
on arterials($705 m)f
Identified Local RoadsGrants (paid through
the States)($641 m)
Regional and LocalCommunity Infrastructure
Program ($189m)($6,469 m)
Heavy vehicle charging
Section 2 – Current situation
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• 60% of charges are allocated by the Commonwealth (fuel excise)
• Remaining 40% is paid directly to states (high annual registration)
• Some distortions due to increasing interstate freight.
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Problems with the current situation
Section 2 – Current situation
Road supply issues:Case for more demand-ledinvestment• Lack of national cohesion in road supply
decisions• Lack of accountability and transparency• Does not meet diverse needs of road users• Poor incentives for heavy vehicle access• Disjointed access for heavy vehicles• Uncertainty about how to treat CSOs
Road charging issues:Balancing charging reform withreality• Road user charges do not reflect costs of
use• Cross-subsidisation within vehicle classes
and across time• Over-recovery and distortions• Limited behavioural response to charging• Practical constraints on charging revenues
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• Uncertainty about how to treat CSOs• Lack of demand data to inform investments
• Practical constraints on charging revenues
Key findingsSection 3
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Recommended road supply and charging model
Section 3 – Key findings
Short term (0-3 years) Medium term (3-6 years) Long term (7+ years)
1. Three-tier road freightnetwork + service standardsand access levels
2. Reporting, benchmarkingand review of road costs
3. Transparent formula forallocating funding to roadsuppliers
4. Improve cost reflectivity
1. Reporting, benchmarkingand review of efficient roadcosts – tied to funding
2. Further improve costreflectivity of road charges– majority fuel-basedcharge
1. Potentially establish national roadfund to assess demand data andsubmissions for Tier 1 and 2investment plans
2. Continue with a fuel + registrationcharge until strong business casefor variable charging emerges:
• Can and will detailed dataobtained through variablecharging be used to improveinvestment decision-making?
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4. Improve cost reflectivitythrough adjustments toPAYGO
investment decision-making?
• Is added cost, time andcomplexity warranted?
Key findings/learnings
Section 3 – Key findings
1. Understand why roads is one of the last monopolies to undergo micro1. Understand why roads is one of the last monopolies to undergo microeconomic reform: diversity of users as well as road network infrastructure
2.There is a case for more demand-led investment in roads used by heavyvehicles: critical to meet future freight growth through productivity,however linkages with light vehicle investment to be resolved
3.Better alignment of charging is promising if detailed data can be used toimprove investment decision-making and other benefits justify cost, timeand complexity.
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Thank you
Further questions, please contact:Further questions, please contact:[email protected]
The strategy prepared for ATA is available at:http://www.truck.net.au/industry-resources/future-strategy-road-supply-and-charging-australia
This publication has been prepared for general guidance on matters of interest only, and doesnot constitute professional advice. You should not act upon the information contained in thispublication without obtaining specific professional advice. No representation or warranty(express or implied) is given as to the accuracy or completeness of the information containedin this publication, and, to the extent permitted by law, PwC Australia, its members, employeesand agents do not accept or assume any liability, responsibility or duty of care for anyconsequences of you or anyone else acting, or refraining to act, in reliance on the informationcontained in this publication or for any decision based on it.
© 2013 PwC Australia All rights reserved. In this document, “PwC” refers to PwC Australiawhich is a member firm of PricewaterhouseCoopers International Limited, each member firmof which is a separate legal entity.