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Reforming Remote and Regional Road Funding in Australia

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Publication no: AP-R526-16 Pages: 103
Published: 22 August 2016


This report examines the current funding and financing arrangements for regional and remote roads in Australia and considers the implications of road funding reforms.

The project was undertaken in three stages:

  • Stage 1 developed a snap shot of current and historic road related revenue, expenditure and funding in Australia
  • Stage 2 assessed the limitations of current funding arrangements for remote and regional roads, highlighted by a number of case studies
  • Stage 3 analysed a number of alternative remote and regional road funding options.

The project considered the practice of economic evaluations as applied to remote and regional roads, and the implications of possible heavy vehicle charging reform for regional and remote road funding.

Two broad categories of alternative funding options were considered: improving the targeting of road charging to the ultimate beneficiaries of remote and regional roads; and introducing dedicated funding for remote and regional roads. Policy options that could be introduced as part of a direct user charging reform, to address likely revenue insufficiency problems for remote and regional roads.


Table of Contents

Summary
1. Introduction
2. Stage 1 Summary
3. Current Road Network and Governance Arrangements
  • 3.1 Overview of the Road Network
  • 3.2 Current Road Governance Arrangements
  • 3.3 Limitations of the Existing Road Governance Arrangements
4. Revenue Collected from Road Users
  • 4.1 Revenue Collected by the Commonwealth Government
  • 4.1.1 Fuel Excise from Vehicles
  • 4.1.2 Federal Interstate Registration Scheme
  • 4.1.3 Total Revenue Collected by the Commonwealth Government
  • 4.2 Revenue Collected by State and Territory Governments
  • 4.2.1 Registration Revenue
  • 4.2.2 Other Revenue Sources
  • 4.2.3 Total Revenue Collected by Road Agencies
  • 4.3 Total Revenue Collected by Road Type and Area Type
  • 4.3.1 Total Government Road Related Revenue
  • 4.3.2 Total Revenue by Road Type and Area
5. Road Expenditure in Australia
  • 5.1 Arterial Road Expenditure
  • 5.1.1 Total Expenditure on Arterial Roads
  • 5.1.2 Capex on Arterial Roads
  • 5.1.3 Maintenance Expenditure on Arterial Roads
  • 5.1.4 Other Opex on Arterial Roads
  • 5.2 Local Road Expenditure
  • 5.2.1 Total Expenditure on Local Roads
  • 5.2.2 Maintenance Expenditure on Local Roads
  • 5.2.3 Capex on Local Roads
  • 5.3 Analysis of Total Expenditure by Road Type and Area Type
6. Funding for the Road Network
  • 6.1 Funding Provided Specifically to Local Governments
  • 6.1.1 Financial Assistance Grants – Local Roads Component
  • 6.1.2 Roads to Recovery
  • 6.1.3 Road Agency Funding to Local Roads
  • 6.1.4 Total Funding Provided to Local Roads
  • 6.2 Other Commonwealth Road Funding Programs
  • 6.2.1 Infrastructure Investment Programmes
  • 6.2.2 Other Commonwealth Road Funding Programmes
  • 6.2.3 Summary of Commonwealth Funding
  • 6.3 Analysis of Total Funding
7. Conclusion: Funding, Expenditure and Shortfalls
8. Stage 2 Summary
9. Limitations of Current Road Funding Arrangements for Remote and Regional Roads
  • 9.1 Asset Management Practices Are Less Efficient Under Existing Road Funding Arrangements
  • 9.1.1 How Do Road Funding Arrangements Affect Asset Management Decisions?
  • 9.1.2 Distortions to Road Expenditure Prioritisation are Creating Inefficiencies
  • 9.2 Case Study 1: Cost Inefficiency in the Gippsland Region
  • 9.3 Summary
10. Limitations of Typical Road Project Cost Benefit Analysis for Regional and Remote Roads
  • 10.1 Quantifying the Benefits of Regional and Remote Road Investment
  • 10.1.1 Research into Wider Economic Benefits of Transport Investment in Urban Regions
  • 10.1.2 Additional Economic Benefits of Investing in Remote and Regional Roads
  • 10.1.3 Additional Benefits That Should Be Considered as Part of a Regional and Remote Road Project Assessment
  • 10.2 Case Study 2: Regional Specific Benefits Are Important to The Tanami Road Upgrade Assessment
  • 10.3 Case Study 3: Wider Benefits Were Important to the Assessment of the Fitzgerald River National Park Improvement Project
  • 10.4 Summary
11. Implications of Heavy Vehicle Road Charging Reform for Remote and Regional Roads
  • 11.1 Implications of Linking Direct Road Charging and Funding for Regional and Remote Roads
  • 11.1.1 Scope to Fund Remote and Regional Roads from Direct Road User Charges
  • 11.1.2 Given Inability to Fund Regional and Remote Roads, Direct User Charging Will Require Explicit Recognition and Funding for Community Service Roads
  • 11.2 Implications of Changes to the Structure of Heavy Vehicle Charges for Remote and Regional Roads
  • 11.2.1 Summary of Proposals to Reform the Structure of Heavy Vehicle Charges
  • 11.2.2 Direct Road Charging and Implications for Regional and Remote Areas
  • 11.3 Summary
12. Stage 3 Summary
13. Economic Principles for Road Pricing and Funding Options
  • 13.1 Economic Principles for Road Infrastructure Pricing
  • 13.2 Options for Funding Roads
  • 13.3 Problems with Current Arrangements for Funding Remote and Regional Roads
14. Improved Targeting of Charging to Remote and Regional Road Beneficiaries
  • 14.1 Targeted Access Fees to Fund Remote and Regional Roads
  • 14.1.1 Description of the Option
  • 14.1.2 Circumstances Where Applicable
  • 14.1.3 Benefits, Costs and Risks
  • 14.1.4 Assessment
  • 14.2 Developer Contributions
  • 14.2.1 Description of the Option
  • 14.2.2 Circumstances Where Applicable
  • 14.2.3 Benefits, Costs and Risks
  • 14.2.4 Assessment
  • 14.3 Targeted Land Use Charges
  • 14.3.1 Description of the Option
  • 14.3.2 Circumstances Where Applicable
  • 14.3.3 Benefits, Costs and Risks
  • 14.3.4 Assessment
15. Dedicated Funding of Remote and Regional Roads
  • 15.1 Cost Reflective Charges to Fund Remote and Regional Roads
  • 15.1.1 Description of the Option
  • 15.1.2 Circumstances Where Applicable
  • 15.1.3 Benefits, Costs and Risks
  • 15.1.4 Assessment
  • 15.2 Postage Stamp Pricing, Universal Service Obligations and Community Service Obligations to Fund Remote and Regional Roads
  • 15.2.1 Description of the Option
  • 15.2.2 Circumstances Where Applicable
  • 15.2.3 Benefits, Costs and Risks
  • 15.2.4 Assessment
  • 15.3 Dedicated Government Funding Pool for Remote and Regional Roads
  • 15.3.1 Description of the Option
  • 15.3.2 Circumstances Where Applicable
  • 15.3.3 Benefits, Costs and Risks
  • 15.3.4 Assessment
  • 15.4 Opportunities for Private Investment in Remote and Regional Roads
Appendix A Methodology for Allocating Revenue and Funding
  • A.1 Methodology for Allocating Revenue
  • A.1.1 Allocating Revenue by State
  • A.1.2 Allocating Revenue by Road Type and Area Type
  • A.1.3 Calculating Revenue Per Kilometre
  • A.2 Methodology for Allocating Funding

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