Transcript of Interview, ABC Radio AM
13 March 2014
Chris Uhlmann: A user pays system to better fund roads and rail in Australia is just one of the ideas in a draft Productivity Commission report. And if you're driving to work and struggling to make sense of what that might mean, it could make your trip more expensive in future.
The Commission says $1 billion could be saved each year by changing the way governments select and finance new infrastructure projects. But as Naomi Woodley reports, it's warning that private sector finance shouldn't be considered as a magic pudding which can fix the current system.
Naomi Woodley: The Productivity Commission is taking a dim view of the state of infrastructure planning, financing, and funding in Australia. In a draft report, it takes a swipe at the previous government's National Broadband Network as a prime example of a poorly-executed program.
Jamie Briggs:Â The draft report makes clear that the system left by Labor is broken and desperately needing of reform.
Naomi Woodley: The Federal Assistant Infrastructure Minister Jamie Briggs says the Productivity Commission has been asked to look at ways to encourage private financing and cut construction costs.
Jamie Briggs:Â We've got $36 billion allocated over the forward estimates to improve Australia's infrastructure. We want to get the best value for that money, that's why we commissioned this report.
Naomi Woodley: The Productivity Commission says there is capacity for governments to fund some projects through sovereign debt or higher taxes, but acknowledges that's not likely. It warns that private sector financing is not a magic pudding, and ultimately that users will have to pay. The report draws attention specifically to road users, saying that while there'll always be a role for government funding, well-designed user charges should be used to the fullest extent that can be justified.
Jamie Briggs says that doesn't necessarily mean high or more tolls on major roads, but instead a more efficient use of money collected in another way.
Jamie Briggs:Â You pay every time you fill up your car a fuel excise, which is allocated in a sense to upgrading the road infrastructure, although not directly. So the point is, in a sense, it (the Productivity Commission) is saying that we should look at the most effective way to collect it.
Naomi Woodley: But the Commission is advocating user charges where possible. It says Commonwealth funding to states should be contingent on a range of things, including rigorous cost-benefit analysis and net public benefit, and that the relevant government efficiently used opportunities for users and other beneficiaries to fund the infrastructure.
Jamie Briggs:Â We want Australians to pay the least amount of tax required to ensure that they've got the best-functioning economy they can have and, in that respect, if we can get better value for the taxation that is taken to be used on infrastructure, to be used on a range of services, we will look at that.
Naomi Woodley: The Commission makes a range of recommendations, including the sale of state-owned ports and electricity networks, the scrapping of industry participation plans to encourage the use of local supplies, and stricter industrial relations guidelines to encourage better practices. Jamie Briggs says they're designed to promote debate.
Jamie Briggs:Â What we're talking about here is working better with the states to plan and choose projects which will ensure we get better value for taxpayers into the future.
Naomi Woodley: The Productivity Commission is calling for feedback on its draft, and will provide the final report to the government in late May.
Chris Uhlmann: Naomi Woodley reporting.