24 November 2016
Subject: the Government's response to Infrastructure Australia's 15 year plan
Paul Fletcher: Okay well this morning the Turnbull Government has released its response to the Infrastructure Australia 15 year plan. Infrastructure Australia of course, is the Government's provider of independent policy advice in relation to infrastructure and it also maintains the Infrastructure Priority List which is a list of projects which have been assessed as having suitable business cases. Of the 15 projects on the High Priority List at the moment, 14 of them have been the subject of committed Commonwealth funding.
This morning we released the Commonwealth's response to the 15 year plan which contains some 78 recommendations across a wide range of infrastructure areas, transport infrastructure which falls within Minister Chester's portfolio and mine and then of course also water, energy, telecommunications and so on. The Government is accepting 69 of those recommendations which demonstrates that the Infrastructure Australia 15 year plan is very much shaping our policy directions when it comes to infrastructure.
In terms of the key elements of the response that we announced today, we said that we want to work with the state governments to agree urban rail plans for our five largest cities and their surrounding regions. We said that we want to accelerate existing work in relation to reform of the heavy vehicle user charging system. We've said that we want to appoint an eminent Australian to lead a study into the benefits and impacts if we were to move to road user charging. Now if we want to go in that direction, that would be a 10 to 15 year journey and that would only happen if governments, both state and Commonwealth, were persuaded the benefits exceeded the costs but what we are announcing is that we will be appointing an eminent Australian to lead the study, we'll have more to say in due course about who that would be, the terms of reference and so on with that study expected to commence in 2017. We've also said that we want to develop a plan in relation to the better use, collection and dissemination of data in relation to the transport and infrastructure sector and we'll be working with organisations like Data61, of course, the Commonwealth's specialised ICT agency falling within the CSIRO and we've also announced a freight and supply chain strategy. Minister Chester is leading this work and so I'll ask Darren to speak about that.
Darren Chester: Thank you, Paul, today's government response to the Infrastructure Plan is an important part of the journey in terms of seeing our foundation for our next stage of infrastructure investment. Right now we have a $50 billion infrastructure investment program rolling out right across Australia, not just in our cities, not just in our regional highways but also in those small country and rural areas and we recognise when you invest into infrastructure you can change people's lives, you can save people's lives. It changes lives by reducing congestion, improving productivity and also saves lives obviously in relation to reducing road trauma which is an issue of national significance.
The Freight and Supply Chain Strategy which we announced today is an important part of that process of seeing the foundations for future investment. The Australian community expects us to deliver value for money for every one of their taxpayer dollars and we need to make sure we're making those investments in an informed way. We need to be a smart investor as a Commonwealth and working with our state and local government counterparts and the business sector to make sure we're driving maximum value of Australian taxpayers' dollars. The freight task across Australia is expected to grow by 50 per cent until 2030. That means we need to get it right. We need to plan for that growth; we need to make sure we're getting goods to market in the most cost effective way and manner possible.
Importantly we've announced over the last couple of years three important free trade agreements and we need to make sure that regional Australia can capitalise on the benefits of those free trade agreements and the way we do that is providing cost effective freight management getting those products to market as quickly as possible, capitalising on the benefits that are there to be had through the free trade agreements.
Question: What are your personal views on the road user charge model? Do you think that that idea has merit?
Paul Fletcher: Well what we've agreed to today is a recommendation from Infrastructure Australia that we have a public examination of it and so that's why we've said we plan to appoint an eminent Australian to lead a study into the benefits and impacts of a more direct road user charging system. So the first thing to do will be to look in detail at how the system presently works, what people are paying today and then look at whether there are alternatives and whether they would deliver better roads, a fairer system, people able to move more freely on our roads. These are all things that governments would need to be satisfied of if we were to go down that track. As I've said, as the Prime Minister has said, if we were to do that, it would be a 10 to 15 year journey and because the way we fund our roads today is a combination of state and Commonwealth funding, it's a decision that both state and Commonwealth governments would need to agree. So I think what we can say at this stage is it's important to have a look at these issues, there's a lot of questions we don't know the answer to and that's why it's important we have a comprehensive examination but what I can say with great clarity is that unless this very thorough piece of work demonstrates that there would be significant benefits which would outweigh the costs, unless it meets tests of fairness, of better roads, of people having to move more freely on our roads, then it's not a direction we would pursue.
Question: And how long do you anticipate it will take until you can reach that conclusion on whether the benefits outweigh the costs?
Paul Fletcher: Look I think this is going to be a pretty thorough and comprehensive piece of work. We'll be having more to say about the work program as well as of course who's going to lead it, in coming months but we do want to have a careful look at this, reflecting the fact it's a recommendation not only of Infrastructure Australia but a whole series of reviews such as the Henry Review into tax in 2010, the Harper Review into competition in 2015, the Productivity Commission Inquiry into Public Infrastructure recommended having a look at this and bodies like the AAA, the Australian Automobile Association which is the peak body for the motoring clubs has called for an examination of this, as has for example, the Australian Trucking Association but what everybody is saying is let's have a look at it, let's understand the impacts of the present system, that's what we're doing, there's a lot of work that needs to be done to understand how the present system works and if there is an alternative which would deliver better roads, a fairer system, people able to move around more freely on our roads, there's a lot of work to do here. Those are all things we need to be satisfied of, and you'd need both Commonwealth and the state governments. So as I've consistently said, if we were to go down this path, it's a 10 to 15 year [indistinct].
Question: So just in terms of the technology in this, for say, charging motorists per kilometre that they travel as opposed to per litre of fuel they use. What are some of the pros and cons of that? What can be some of the challenges in trying to get something like that over the line?
Paul Fletcher: Well again, I think we need to hold the study to have a look at those issues, and certainly amongst the questions are: what is the impact on the motorist? But these are all questions that we need to have a look at. The first thing we need to explain and work through in this study is what are the impacts of the present system? For example, people who are travelling long distances, people living in regional or remote Australia, or indeed people living in outer suburbs who may be commuting long distances. They're paying a lot today to use our roads. So one of the things this study will look at is what are people paying today and what do they get in exchange for that? So there's a lot of questions that need to be looked at, and really we need to get this study underway to have a look at the questions before we can give any definitive answers to the kinds of things you're asking.
Question: From a budget point of view, isn't that 10 to 15 year timeframe a little bit far out? I mean, as people are moving towards more energy-efficient cars and hybrid cars and eventually solar, the Government's going to lose out on more and more of our fuel excise. So 10 to 15 years, that's not going to be great for the Government's bottom line, is it?
Paul Fletcher: Look, certainly one of the factors here that is relevant is that a major source of funding for roads in Australia today is fuel excise revenue. As a nation we spend about $25 billion a year on building, maintaining and operating roads, and a major component of that comes from fuel excise. Vehicles are becoming more fuel efficient—that's a good thing. The share of electric vehicles in the fleet, on some estimates, is likely to rise to around 30 per cent in 20 years. And so one of the things we need to understand is: where does the source of funding for roads come from today? Fuel excise has an important part in that, and so this study certainly needs to have a look at that issue.
Question: Darren, what's your perspective there from your perspective in East Gippsland? How much of a challenge would it be to try and persuade people to replace the income from fuel excise with a road user or a per kilometre charge?
Darren Chester: Well the most important thing to reflect on at the moment is you're not trying to persuade people to change a rule; we're trying to explain the magnitude of the problem facing governments at all levels in terms of maintaining and then improving roads to the level that people expect. One of the challenges we had is explaining to people right now their roads aren't free. They may think they are, but their roads are really paid for, in a regional sense, the average is about $1700 per person to maintain the road network. In a metropolitan sense it's about $200.
So right now—regional people may not be aware of it—but they're already paying more for their roads than they realise. It means that local councils in those regional areas don't have the funding to build or provide some of the other services that people would like to see in those regional areas. So roads are already costing local communities and regional people a great deal more than perhaps they necessarily understand at the moment, so we need to have that conversation.
It's not about Paul and myself coming out and saying this is how things are going to be, it's a question of working out how we provide for the maintenance budget that's required, but also provide for those upgrades that people want. In the context of the conversation we're having there, we know that if you build safer roads you can save peoples' lives as well, and right now a disproportionate number of people in regional areas are dying on regional roads. So it's not a short conversation, there's going to be a long debate, I expect. State governments are very interested in the topic. We've had meetings with the Transport Industry Council already, where this has been an active area of discussion. So I'm afraid I can't give you a short answer to what is a very complex question.
Question: If you introduce a charter like that, you'd assume that fuel excise could drop to compensate, or rego could drop to compensate for those kinds of …
Darren Chester: Absolutely. If you're looking at a new form of raising revenue for maintaining, upgrading roads, there will be an expectation that existing forms of revenue would come off. So pressure would come off the motorists in that regard.
Question: When you say that you're having trouble convincing people that their roads aren't free, they aren't paying for them now, do you expect there to be some backlash against this from people going why are you asking me to pay for something that's been free, or that I think is free?
Darren Chester: Well I guess that is the challenge of the debate, is to explain to people that they are already paying a very significant amount of money, either through the fuel excise, through road registration, or through their council rates to maintain and upgrade the road network. So it is a cost already that regional people are probably disproportionately bearing through the nature of the small number of people in those communities. So that's the conversation we need to have.
It's not about scaring people in any way whatsoever. It's a question of if we want to have these better roads into the future, the challenge is how do we pay for them? And this is going to be a long process, it's going to be a very detailed and thorough process, it will require bipartisan support. Right now, several state Labor governments are looking at the same issue. They're encouraging us to do the work, so they're [indistinct] as well. The only way this reform will proceed over the next 10 or 15 years is if Members of Parliament on both sides of House work constructively through the challenge.
Unidentified Speaker: We're going to have to wrap guys. Last question.
Paul Fletcher: Yeah, can I just pick up on one point there? Darren's made a very important point here. The key aim of this exercise is to understand the facts and communicate the facts about how people pay for roads today. Australians pay a lot of money today to use our roads, through registration charges, through motor vehicle excise charges, fuel excise charges and so on. This is about having a careful look at that, communicating that, and then looking at whether there are alternatives that have the potential to deliver better roads, a fairer system, people able to move around more easily on the roads. But it's about having a look at it. It's a study, it'll be chaired by an eminent Australian. There's a lot of work to do to look at this. Any decision to be made here is going to take a considerable period of time. This is a 10 to 15 year journey if governments make a decision to proceed down it. If governments make a decision, the key point is that this study is an important part of understanding the issues.