Home' Future Building Australian Infrastructure Review : Volume 3 Number 2 Contents 16 futurebuilding Volume 3 Number 2
Sir Rod Eddington AO
For most road users, access
to the road network appears
'free' at the point of use because
the current opaque charging
structure does not provide
motorists with visibility of the
charges they pay
paid per megawatt hour in Victoria increased by just
seven per cent in real terms from 1996--2010.
Over the same period, prices in New South Wales
and Queensland increased by 45 per cent and 46 per
cent respectively. The defence rests its case.
But, of course, reform is not easy, as the divisive
policy debates that have dogged energy reform in
New South Wales demonstrate; but it's important
to get the right reforms in place, because the
consumers bene t.
Full electricity reform also represents the best
opportunity to break the back of Australia's broader
infrastructure funding shortfall.
In New South Wales, the sale of network assets
would improve the state's bottom line by between
$40 billion and $50 billion.
This would represent a generational boost to
the state's budget capacity, and equip New South
Wales to make transformational investments in new
economic and social infrastructure. The same could
be said in other parts of the country.
Turning to transport, change is not easy.
Transport shortfalls across freight and passenger
networks are imposing substantial productivity
constraints on our nation.
By some estimates, congestion on the road
network nationally is stripping more than $12 billion
from the economy this year alone. In Melbourne,
road congestion will probably shred something like
$4 billion from the state's economy this year.
For most road users, access to the road network
appears 'free' at the point of use because the current
opaque charging structure does not provide motorists
with visibility of the charges they pay. And the current
approach does not and cannot adequately re ect the
time and location of road use.
In the freight sector particularly, the pricing
disparities between road and rail have distorted
Only ve per cent of total road cost to freight
users stems from road access charging, while for rail
freight, track charges account for between 30 and 40
per cent of rail freight costs.
The historic response to mounting demand has
been to add more capacity to the transport network,
and this will clearly remain an ongoing requirement.
But there are limits to supply-only responses, and
Australia's major cities are facing a situation in which
they can no longer only seek to build their way out
Policymakers must begin to face up to the
challenges and opportunities that are posed by
road network congestion, including through the
exploration of rational market signals for access to
our road networks.
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