AUSTRALIAN GOVERNMENTS ARE WORKING TOGETHER TO PROVIDE A SUSTAINABLE ROAD NETWORK FOR FREIGHT NOW AND IN THE FUTURE

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1 HEAVY VEHICLE CHARGING AND INVESTMENT REFORM AUSTRALIAN GOVERNMENTS ARE WORKING TOGETHER TO PROVIDE A SUSTAINABLE ROAD NETWORK FOR FREIGHT NOW AND IN THE FUTURE roadreform.gov.au

2 Productivity and the road freight transport sector Road freight transport is a vital part of Australia s economy, delivering to all parts of the nation: moving goods to markets, raw materials to processing sites, exports to rail and wharves, and removing waste from our communities. In the past 40 years, the road freight task has grown six-fold, from around 27 billion tonne kilometres in 1971 to over 180 billion tonne kilometres. The road network has expanded to cater for the increasing freight task, with vehicles also becoming bigger and more productive. During this time, productivity growth doubled. By 2030, the freight task is projected to double again, but productivity growth will slow significantly in the absence of further reform. Targeted investment in infrastructure is vital to combat the challenges the road freight transport sector is facing now and in the future. To meet the growing freight task, governments are developing new reform options that are designed to direct funding to where there is the greatest potential to improve productivity. Governments are now considering road agency institutional structures, funding arrangements and charge setting functions to support heavy vehicle productivity growth. Like previous utility reforms, this potentially game changing microeconomic reform is the opportunity to lay the groundwork for road provision to be responsive to the needs of business and the community. Proposed reforms aim to improve productivity growth in the road freight transport sector (tonnes) 10 Articulated trucks 5 Rigid trucks Actual Predicted Forecast (with no reform) HVCI objective Actual and projected average loads, , ten per cent Gross Mass Limits scenario * Bureau of Infrastructure, Transport and Regional Economics 2011, Truck productivity: sources, trends and future prospects, Report 123, Canberra, ACT. (Excluding HVCI objective)

3 A road network that responds to market demand The proposed reforms seek to create a transport sector that is cost effective, reliable and internationally competitive. Reforms to promote a productive road transport sector and efficient road network should ensure: Heavy vehicle road use charges reflect the cost of road use and infrastructure required to improve access for high productivity vehicles to meet the future freight task Revenue collected by governments in heavy vehicle charges flows back into improving road services and growing the road network More coordination between the three levels of government in the planning, investment and funding for the provision of heavy vehicle road services The road to reform Productivity Commisssion inquiry The Productivity Commission conducts an inquiry into road and rail freight infrastructure pricing. The inquiry identifies disconnects in the system relating to heavy vehicle road pricing, funding and expenditure Council of Australian Governments (COAG) establishes the COAG Road Reform Plan COAG tasks the Australian Transport Council, now the Standing Council on Transport Infrastructure, to review heavy vehicle pricing and funding of roads to support freight COAG Road Reform Plan Phase 1 Report Feasibility Study results A Phase 1 Report into key road reform elements, including road use and costs determines there is enough evidence to proceed to a feasibility study. COAG has noted the findings of the feasibility study which suggests that a combined funding, institutional and heavy vehicle charging reform would provide positive net benefits in the order of $5 to $7 billion NPV over 30 years

4 Linking the flow of heavy vehicle charges to road spending Charging linked to road funding Customer Improved supply chain management Road user Road provider Road investment for access The benefits: Customer and community Road services that offer value for money and maintain high standards of road safety A road network responsive to customers and community needs Economic growth and prosperity Road user Greater access for heavy vehicles to some roads which are currently closed to high productivity vehicles Fairer charges that reflect the cost of road use and minimise cross-subsidies between vehicles Reduced operating costs through more efficient fleet purchasing decisions and route choice Road provider Road usage information for more effective road maintenance programs Strong incentives to provide road infrastructure that is sustainable and cost effective Lower road costs due to funding certainty and the ability to make long term spending decisions Heavy Vehicle Charging and Investment Reform: Framework development The design of a new framework: an integrated package of charging, funding and expenditure reforms where benefits outweigh costs. Regulatory Impact Statement (RIS) Regulatory Impact Statement to be released for public comment. Australian governments consider agreements to implement reforms. Implementation Any decision by COAG to proceed to implementation will follow consideration of a RIS in WE ARE HERE

5 The new phase for road reform The Heavy Vehicle Charging and Investment Reform (HVCI) is continuing the work of the COAG Road Reform Plan Feasibility Study, which found that associated government road funding and investment changes were needed to make the reform successful. The project will develop an integrated charging, funding and investment framework and identify what processes are needed to successfully implement reforms. The framework will consider how the following functions will be delivered in a new regime: Investment and planning: enabling road providers to respond to the needs of the market and make targeted investments in the road for now and in the future Access: providing heavy vehicles sufficient access to the road network to support the growing freight task and encourage productivity growth Charging and regulation: implementing a charging framework that reflects the costs of road use, is directly linked to road funding and facilitates greater access Implementation: transitioning to a new regime This work will form part of a Regulatory Impact Statement (RIS) to be released for public comment in A project team has been established in Melbourne to develop the framework for a potential new regime. The project is governed by the HVCI Reform Board comprised of senior representatives from various government departments that are responsible for road infrastructure provision throughout Australia.

6 Get involved Moving to a new charging and investment regime will require a shared commitment to reform. The reform options must address the practical and commercial realities that affect all stakeholders. The heavy vehicle industry, business community and governments are encouraged to get involved to help the project to develop a plan for reform that considers the needs of the road freight transport sector now and in the future. HEAVY VEHICLE CHARGING AND INVESTMENT REFORM In the coming months, as the project progresses, the HVCI project team will consult with industry representatives through: Meetings of a newly established Transport Consultative Forum, involving transport associations, logistics managers, local government and business representatives Focus group sessions Roundtable discussions Periodic meetings and workshops with transport associations, governments and other peak bodies If you would like to be involved please hvci@transport.vic.gov.au or the project office on: to register your interest. FOR MORE INFORMATION PLEASE CONTACT: Heavy Vehicle Charging and Investment Reform T (03) E hvci@transport.vic.gov.au W roadreform.gov.au A Level 6/121 Exhibition Street, Melbourne VIC 3000