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Community Service Obligations Framework for the Roads Sector

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Publication no: AP-R545-17 Pages: 142
Published: 14 June 2017

This report examines the application of community service obligations (CSOs) to the roads sector and provides an overview of the potential options which could be utilised in the development of a Community Service Obligations framework.

In this report, a road is defined as being subject to a community service obligation (CSO) when government obliges a public or private road infrastructure service provider to provide a minimum level of service, associated with specific government policy objectives, that it would not otherwise provide on a commercial basis.

Road service levels have evolved over time in response to a variety of factors, including explicit and implicit policy objectives and social benefit–cost analysis. While most state governments are able to articulate base levels of service in the Heavy Vehicle Road Reform (HVRR) framework, that is not the case for the small number of local governments that we consulted for this report.

The preferred method proposed to estimate a net CSO cost is via a net avoidable cost approach based on the additional or incremental costs and revenues associated with the requirement to achieve a higher level of service than would be provided commercially. A key implementation issue is the level of disaggregation of road categories for estimating profits and losses. Two potential options are to estimate profits/losses for each road or road segment or to base the estimate on road-use data and expenditures/ costs for defined road categories.

CSO arrangements will require establishing new institutional and governance frameworks.

This webinar, presented on 29 June 2017, provides an overview of how Community Service Obligations could be applied to the roads sector and how establishing a CSO framework could help clarify road funding arrangements. Community service obligations can be broadly described as an obligation imposed by government on an entity to undertake specific activities that it would otherwise not undertake commercially. Download the presentation slides.

Table of Contents

1. Structure for Examining Community Service Obligations
2. Defining CSOs
  • 2.1 Australian Governments
  • 2.1.1 Federal and State Governments
  • 2.1.2 Local Governments
  • 2.1.3 Other Sectors
  • 2.2 Reasons for CSOs
  • 2.3 Defining CSOs for Roads
3. Identifying CSOs
  • 3.1 Framework for Identifying CSO Roads
  • 3.1.1 Broad Framework
  • 3.1.2 Applying the Framework to Develop Minimum Standards
4. Government Policy Objectives for Roads
  • 4.1 Key Insights from the Review of Government Objectives
  • 4.2 State Government Overview
  • 4.2.1 Consultation Approach
  • 4.2.2 State Government Policy Objectives
  • 4.3 Local Governments
  • 4.3.1 Consultation Approach
  • 4.3.2 Local Government Policy Objectives
  • 4.3.3 Local Government Broad Objectives
  • 4.3.4 Local Government Policy Objectives and Levels of Service
  • 4.3.5 Legislative Requirements
  • 4.4 New Zealand
5. Levels of Service
  • 5.1 Review of Road Agencies’ Current Practice and Findings
  • 5.2 HVRR Level of Service and Road Categorisation
  • 5.2.1 HVRR Level of Service
  • 5.2.2 HVRR Road Categorisation
  • 5.3 Summary of All State and Local Governments’ Categorisations and Levels of Service
  • 5.3.1 Road Categorisation
  • 5.3.2 Levels of Service
  • 5.4 Levels of Service in the Roads Sector in New Zealand
  • 5.4.1 Background
  • 5.4.2 One Network Road Classification
  • 5.5 Levels of Service in Other Australian Sectors
  • 5.5.1 Postal and Telecommunication Services
  • 5.5.2 Water
6. Estimating the Net Cost of CSOs
  • 6.1 Approaches to Estimating the Net CSO Cost
  • 6.1.1 Standard Approaches
  • 6.1.2 Estimating the Net CSO Cost When There Are Minimum Service Levels
  • 6.2 Applying Estimation Methodologies to Roads
  • 6.2.1 Worked Examples of Estimation Approaches
  • 6.2.2 Estimating Revenues and Costs
  • 6.3 Illustrative Example of Estimating the Net CSO Cost for All Australian Roads
  • 6.3.1 Scenario 1: Estimating Revenue Using Current Charges
  • 6.3.2 Scenario 2: Estimating Revenue Using Direct Charges
  • 6.4 Illustrative Example of Estimating the Net CSO Cost for Road Categories within a Road Agency’s Jurisdiction
  • 6.4.1 Key Assumptions and Data Sources
  • 6.4.2 Estimated Net Profit/Loss
  • 6.5 Illustrative Examples of Estimating the Net CSO Cost for Specific Roads or Road Segments
  • 6.5.1 Three Roads in the Northern Territory
  • 6.5.2 Three Roads in South-Western Victoria
7. The Structure of CSO Arrangements
  • 7.1 Level of Disaggregation of Road Types for Estimating CSOs
  • 7.1.1 Segmentation of Road Networks for CSO Purposes
  • 7.1.2 Road Categorisation
  • 7.2 Funding CSOs in the Roads Sector
  • 7.3 Funding USOs and CSOs in Other Sectors
8. CSO Implementation Issues
  • 8.1 Determining the Agreed Minimum Levels of Service
  • 8.2 Road Categories
  • 8.3 Cost Data
  • 8.4 Integration of the CSO Framework with Heavy Vehicle Road Reform
  • 8.5 Institutional and Governance Arrangements
9. CSO Examples
  • 9.1 Ergon Energy Queensland
  • 9.2 Forestry Tasmania
  • 9.3 Telstra
  • 9.4 Australia Post
  • 9.5 Rural Irrigation Water
Appendix A State and Territory Government Policy Objectives
  • A.1 Queensland
  • A.2 New South Wales
  • A.3 Victoria
  • A.4 Tasmania
  • A.5 South Australia
  • A.6 Western Australia
  • A.7 Northern Territory
Appendix B HVRR Basic Parameters for Access, Ride Quality and Safety
  • B.1 Basic Parameters for Access
  • B.2 Basic Parameter for Ride Quality
  • B.3 Basic Parameters for Safety
Appendix C State, Territory and Local Government Levels of Service
  • C.1 State Governments
  • C.1.1 New South Wales
  • C.1.2 Victoria
  • C.1.3 Tasmania
  • C.1.4 Western Australia
  • C.1.5 Northern Territory
  • C.1.6 Queensland
  • C.2 Local Governments
  • C.2.1 Blayney Shire Council
  • C.2.2 Cassowary Coast Regional Council
  • C.2.3 Corangamite Shire Council
  • C.2.4 Mornington Peninsula Shire Council
Acronyms and Abbreviations

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