2GB Sydney Live

Interview

PFI09/2016

14 March 2016

Topic: Road pricing

Ben Fordham: In the studio this afternoon Paul Fletcher, the Federal Minister for Major Projects. Mr Fletcher, good afternoon to you.

Paul Fletcher: Good afternoon Ben.

Ben Fordham: How do you reckon that will go down in Western Sydney? We know the importance and the emphasis that is placed on Western Sydney when it comes to election time; there are always major commitments for Western Sydney. How you reckon tradies, all sorts of people in Western Sydney would feel at the notion of being charged per kilometre?

Paul Fletcher: Well Ben I think you've very effectively summarised the concerns that people might have, and essentially what we would need to be satisfied about if we were to take it forward. So let's just talk about where we are. Infrastructure Australia put out a report three weeks ago or so, the 15-year plan for Australian infrastructure. One of the things they talked about was roads and the way that we all pay for roads today. So today there's about $15 billion of fuel excise that's collected. So every time you fill up at the pump you're paying around 40 cents a litre and that goes towards, in the main, the cost of roads, maintaining them and building new ones. There is $5 billion a year of registration charges, state registration charges. So we are paying for roads today. The question we have to ask is, if we were to have a road pricing system—I emphasise that word if—would it be fairer? Would it reduce congestion? Would we get better roads? Now Infrastructure Australia says they think it's worth looking at. The Henry review into taxation in 2010, they thought it was worth looking at. The Productivity Commission in 2014, they recommended having a look at it; even the Harper review into competition. So there's a lot of experts who've recommended it. There's a long way to go from that, I hasten to add.

Ben Fordham: But is any government going to take away the fuel excise, considering the amount of money that the Commonwealth receives from the fuel excise, let alone rego fees. I mean, we know that governments don't rush to get rid of taxes, do they?

Paul Fletcher: Well the whole point is you'd only introduce a system of charging people to use the roads, a pricing system if it replaced the existing forms of revenue which pay for the roads today.

Ben Fordham: Therefore, you'd have to charge them a hefty fee to use the roads to make up that considerable amount of money that's currently being collected by the fuel excise and rego fees.

Paul Fletcher: And so what we'd need to know is who would be better off, who would be worse off. So specifically what Infrastructure Australia recommended as a next step is to do a detailed study to say “how would this work?” Because there are a whole lot of details we'd need to understand that we just don't know right now: what would the pricing be? Who would be better off, who would be worse off? You talk obviously about people in Western Sydney, many of whom are making the commute into the CBD or across other parts of Sydney, spending a lot of time in their cars and spending a lot of money on fuel. So yes it's true that people in Western Sydney typically are doing longer distances than people from other parts of the city, but the question is if they're no longer having to pay for that fuel excise, then what would the impact be on them.

Ben Fordham: Well I mean I'm thinking, and I mean I haven't gone to the kind of levels and lengths that you have of studying this, but- and when I say Western Sydney I'm thinking about south-western Sydney, north-western Sydney, let alone the bush, people who live in the bush and still have a need to come into the city, whether they're coming in for work, or coming in for medical reasons, or family visits, or anything else; if you're paying …

Paul Fletcher: Or people in Melbourne which is growing very rapidly, or Brisbane, any of our big cities which are growing very rapidly.

Ben Fordham: Sure there's a benefit in getting rid of some of those other charges, but if you're paying per kilometre it's going to be people living further away from the centre of the city who are going to pay it the most.

Paul Fletcher: But it's also people living further away from the centre of the city who will save the most because of the savings on fuel excise if we're not charging fuel excise anymore.

Ben Fordham: That's a fair call.

Paul Fletcher: So Ben, you make a good point, there's a lot of detail to be worked through here. So the Turnbull Government is certainly not saying this is something we're introducing any time soon. What the Prime Minister and I said when we released the Infrastructure Australia 15-year report a few weeks ago was if we were to go down the road pricing path it's a 10 to 15-year journey. The first thing that Infrastructure Australia has recommended that we have a look at is doing a much more detailed study to say how would this system work? Would people be better off? Would it reduce congestion? Would it be fairer? Would we get better roads? So that's the point we're at, and the kind of questions you're asking are good ones. We certainly need to understand about fairness between people who live close to the CBD, people in suburbs; we need to look at fairness between people in the cities, people in the bush, people who use public transport a lot, people who don't. One of the questions is would any of the money that's raised by this go to public transport? These are all questions of detail we need to work through.

Ben Fordham: Hypothetically speaking, what are some of the models, what are some of the ideas about how it could work? Because there'd be people listening at the moment- and by the way, if you've just tuned in, we're talking to the Minister Responsible for Major Projects, Paul Fletcher, in the Turnbull Government, and this is about this idea which is being considered at the moment, a pay per kilometre scheme, and in return for introducing such an idea rego fees, for example, and fuel excise could be scrapped. But how would it work? How do you record, how do you monitor how far people are travelling?

Paul Fletcher: And that's an excellent question, because 10 years ago if you'd suggested doing this it would have been completely impractical, you would probably have had to go to some checking station and have somebody look at your odometer, it just sounds like a nightmare. Of course technology has evolved a lot now.

Ben Fordham: True.

Paul Fletcher: And so technologically it's pretty straightforward to be able to monitor the distance that a vehicle goes. So for example in the US state of Oregon they've introduced a system to do this, it's a trial at the moment, or it's at early stages. They've got a number of different providers of technology, as a consumer you can choose which one you use. And for example in other countries what they do is they have some points where your car gets monitors as it goes past, not unlike the toll gantries that we have today and that we're familiar with.

Ben Fordham: I mean you mention tolls, there'll be a lot of people listening at the moment saying we're already paying to use the road through tolls as well, the more of those motorways you choose to use the more you end up paying in tolls.

Paul Fletcher: And you're right. One of the obvious questions here would be there are some expressways in Sydney and in other cities which are tolled, and so an obvious question would be well if we've got a system of road pricing, what happens to those? And you need to get that sorted out. You'd also need to make sure it was a uniform system nationally, because it would be incredibly inconvenient if you had one system in New South Wales and then you're over the border in Queensland, you've got another system.

Ben Fordham: It's not going to be an easy sell, is it?

Paul Fletcher: There's a lot of detail to work out, and that's why the Prime Minister and I have said if we were to go down this path it's a 10 to 15-year process; but certainly the question we're thinking about right now is should we take up Infrastructure Australia's recommendation of doing a more detailed study to look at what the system would be, how would people get charged, and of course who would be better off, who would be worse off, would it achieve the objective of reducing congestion, a fairer system, and one which gives us better roads.

Ben Fordham: Right I know that you guys spend a lot of money on market research, as every government does; I'm going to give you some free market research this afternoon on the open line about the pay per kilometre scheme. So I'll provide it to you free of charge. All you got to do is call 131873. Thank you so much for coming in the studio.

Paul Fletcher: Good on you Ben.

Ben Fordham: Paul Fletcher, the Federal Minister for Major Projects.