06/12/2016 - 16:13

Feds drive road funding change

06/12/2016 - 16:13

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WA motorists will be affected by any changes to road funding. Photo: Attila Csaszar

The federal government is moving towards changing the way road usage is priced, a reform backed in last year’s Harper competition review.

The Perth Freight Link heavy haulage charge could be just a taste of what’s ahead for Western Australian motorists if the federal government proceeds with a move away from reliance on fuel tax and registration fees toward user-pays road funding.

Prime Minister Malcolm Turnbull flagged a shift in road funding in the government’s annual infrastructure statement last month, following a recommendation in last year’s Harper Review of competition policy.

That report identified improvements in the efficiency of road usage nationally as a top reform priority.

Some Australian capital cities have widespread toll usage, with roads built under public-private partnerships, including Melbourne’s City Link, while variable tolls with higher prices during peak periods exist already on the Sydney Harbour Bridge.

Perth is yet to implement such charges, although a toll on freight vehicles was touted to help pay for Roe 8 when that road was announced.

However, Royal Automobile Club of WA general manager of corporate affairs Will Golsby has warned that a move to road tolls should not be just a tax grab.

“Mechanisms including road user charges or the introduction of toll roads should only be considered as part of a genuine and broader reform of the taxation collected from motorists, and not just be imposed on top of existing charges,” Mr Golsby said.

“Western Australian motorists are already paying more than their fair share.

“For every dollar Canberra collected in taxes from WA motorists last year, just 48 cents was returned to road infrastructure in WA.

“In previous years and under successive federal governments the funding returned from Canberra to WA has been even less.

“An in-depth cost-benefit analysis of the social and economic impacts of road user charges must be undertaken before such a charge is considered; and the community must also be directly engaged in the discussion.”

According to data provided by RAC, WA received road funding equal to only 33 cents out of every dollar of fuel tax collected here during FY2011.

Costs argument

UWA Business School economics lecturer Shawn Chen said one of the key arguments offered by proponents of a move to user charges rather than fuel tax was that electric cars would not be charged under the current system.

But that argument is an oversimplification, he said.

“Fuel tax reflects the environmental costs and costs of road usage,” Dr Chen told Business News.

“The tax collection cost is low.

“The argument is not sensible, that it is not fair that the electric car does not pay the cost for the road usage, because environment cost can be the main concern.

“Road-user charges reflect the road usage costs but (do not) provide incentives for environment-friendly technologies and vehicles.

“The problem (with) user charges is that the administration costs and compliance costs could be very high.”

To meet both environmental and revenue objectives, it might be best to use a mix of both policies, he said.

Long-term change

The Council of Australian Governments is leading the first step in the process, with federal, state and territory leaders meeting to discuss collaboration on policy issues.

Work started on heavy haulage charges in 2007, with reforms to introduce heavy vehicle charging well under way, according to the federal government.

The next step would be a more widespread roll out, Mr Turnbull said in last month’s infrastructure statement.

“Reforming the way that we pay for roads can help us provide better transport and a fairer, more efficient and more sustainable system of funding,” Mr Turnbull told parliament.

“We have now committed to work with the states and territories and consult with communities to consider a more sustainable and equitable system of road pricing and funding for all vehicles.

“Governments and the community need to be comfortable that any new system of road pricing is fair and the benefits outweigh the costs before any change is made over the longer term.”

In the interim, Mr Turnbull was keen to talk up the government’s infrastructure investment, including $1.2 billion on the Freight Link.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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