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DEVELOPING A RATIONAL TRANSPORT MARKET

THE PRIORITIES OF NATIONAL REGULATORS AND REDUCING CONGESTION

CALCULATING THE GREENHOUSE FOOTPRINT OF ROADS

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MOU FOCUSES ON INTELLIGENT TRANSPORT SYSTEMS

PERSONAL SAFETY AWARENESS The new frontier for transport

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FEATURES Photo courtesy of Transurban

Developing a rational transport market Australia needs a more honest debate about how it can close the gaps in its transport infrastructure and underpin national productivity, including a real discussion about developing a rational transport market, argues Infrastructure Partnerships Australia’s Chief Executive, Brendan Lyon. There is a strong consensus between Australia’s policymakers, the business community and the public about the need for more (and better) infrastructure. The public debate is increasingly focussed on two broad themes; Australia’s declining productivity and growing ‘cost of living’ pressures that are impacting households and businesses. The focus on these themes is fundamental to Australia’s global competitiveness; however these themes are really a discussion of the symptoms, rather than the lack of infrastructure investment and inefficient utilisation of existing infrastructure that is causing these impacts. In short, the broad consensus about the need for infrastructure solutions has yet to mature into an honest public debate about the difficult reforms that are available to solve these challenges. In the roads sector, the need for meaningful and sustained investment and better regulation is fast becoming acute. Already, road network congestion costs the national

economy more than $10 billion per annum. Figure one, below, shows the cost per kilometre of congestion in Australia’s capital cities. Without substantial investment and reform, recurrent avoidable congestion costs are expected to exceed $20 billion by the end of this decade. (See Figure 1) The case for reform toward an efficient transport market is unequivocal, particularly when current impacts are considered in the context of rapidly growing demand drivers. Figure 2, below, shows IPA’s modelling of national population growth to 2050. Our research finds that Australia’s population will reach 37.8 million people over the coming four decades. More people will naturally place much greater demands on Australia’s transport networks. After all, more people will mean more freight, more journey-to-work demands and a greater call on Australia’s road and rail networks. (See Figure 2) IPA’s research finds that the national freight task will double by the end of the present

decade; and will triple to more than 1,540 billion tonne kilometres by 2050. Figure 3, below, shows the forecast growth across both bulk and non-bulk freight. (See Figure 3) The growth in the broader freight task will also place a much greater call on Australia’s road network. Figure 4, below, shows that the tripling in the freight task will have a corollary tripling in demand on the nation’s roads. The Federal Government anticipates that the tripling of the freight task will be accompanied by an even greater growth in the passenger task, with an expected four-fold increase in demand for passenger transport over the same period. (See Figure 4) The substantial growth in the nation’s passenger and freight transport task will demand significant and sustained investment in new network capacity. Figure 5 (page 4) below shows IPA’s estimates of transport infrastructure investment requirements to 2050. Our research finds that Australia will need to fund at least a quadrupling of current

Figure 1: Average unit cost of congestion for Australian metropolitan centres, current and projected Figure 2: Figure Australia’s population growth, 1850 – 2051 Figure 2 Figure 1

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Unit Costs (c/km)

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Source: Bureau of Infrastructure, Transport & Regional Economic, Working Paper 71, 2007

2005

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Year ended June

Source: Urban Transport Challenge: Driving reform on Sydney’s roads, Infrastructure Partnerships Australia, 2009

Forecasts (IBISWorld)

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Figure 3: Australia’s domestic freight task, bulk and non-bulk,1961–2050 Bulk

Non-Bulk

Billion Tonne – Kilometres

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Source: Meeting the 2050 Freight Challenge, Infrastructure Partnerships Australia, 2008

Figure 4: Growth in Australian road freight, 1960-2051 650 600 550 500

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Source: Urban transport challenge: Driving reform on Sydney’s roads, Infrastructure Partnerships Australia, 2009

Figure 5: Transport infrastructure investment, 1985-2050 70 60 50 40 30 20 10

Source: Meeting the 2050 Freight Challenge, Infrastructure Partnerships Australia, 2008

The first and most important step is in beginning a reasoned and mature public debate about the relative merits of a national road pricing scheme – and its potential to change the way Australia funds and manages its transport infrastructure.

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investment levels to more than $64 billion per annum by 2050, if we are to maintain current levels of capacity and productivity across the transport network. (See Figure 5.) As with any capacity constraint, there are two fundamental responses; adding capacity and/or managing demand. Historically, Australia’s response has been limited to the supply side of the transport equation, with new road capacity added to deal with increased demand. But the sheer scale of the challenge and the inability to efficiently add supply to high demand areas, such as Australia’s capital cities and major freight corridors, will logically drive reform toward a rational market for transport. In 2010, Infrastructure Partnerships Australia issued a major discussion paper examining the role that rational road pricing could play in addressing our transport infrastructure challenges. Our paper put forward a model that would remove the array of often inconsistent, inefficient and invisible road user charges, such as vehicle registration, licensing and the fuel surcharge; replacing them with a tiered charging scheme based on the time, location and distance travelled by a vehicle. Our modelling found that the abolition of all existing road user imposts in favour of a transparent road pricing scheme – including a modest increase in the average cost per kilometre – could liberate up to $10.8 billion each year for investment in transport infrastructure. In a structural sense, this kind of model is far from revolutionary. Australia has already largely reformed its other network infrastructure markets such as water, electricity and gas to reflect actual cost of use. But we also recognise that this kind of change would make the cost of use of the road network visible to motorists and represents a substantial change to the status quo. Australians pay an estimated $22.8 billion each year in road-related fees and charges. Under a rational model, prices could be set at a level that achieves revenue neutrality once existing road taxes and charges are removed; or at a level which increases revenue to allow expanded investment in the maintenance and construction of projects that promote a sustainable transport system, including road, rail and public transport. By providing better price signals that reflect users own impacts on the network, a rational pricing model presents a substantial opportunity to address the demand side of the transport equation and create the framework of an efficient broader transport market. The first and most important step is in beginning a reasoned and mature public debate about the relative merits of a national road pricing scheme – and its potential to change the way Australia funds and manages its transport infrastructure. Australia’s policymakers will have to engage in a much better informed and honest public debate about the options and tradeoffs; there is no pot of gold at the end of the budget rainbow. New investment is critical but it is only half the solution. Rational road pricing will provide new capacity to fund projects, but also drive better utilisation of existing road assets. Infrastructure Australia articulated the challenge facing policymakers in its most recent report to COAG: “As a country…we are reluctant to increase government debt… baulk at raising taxes…are uncomfortable with the user pays concept and against selling assets and using the proceeds to fund other infrastructure….yet we are concerned about congestion, water, electricity and telecommunications. “There is a profound disconnect here.” Creation of an efficient transport market, including a rational road pricing scheme is a real option to make meaningful inroads into Australia’s transport challenges. We need to see Australia’s governments, business leaders and the community engage with the concept so that we can begin a real debate about Australia’s transport future.

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The priorities of national regulators and reducing congestion Federal Transport Minister, Anthony Albanese, has used speeches to key industry associations to reinforce the government’s commitment to creating national regulators for the road, rail and maritime sectors, and its focus on reducing congestion. Mr Albanese told the Australian Logistics Council Forum on March 29 that it was hard to overstate the importance of the decision to create single national regulators for the road, rail and maritime sectors from 1 January 2013. He said it would cut the number of transport regulators across Australia from 23 to three. “It is indeed the most important microeconomic reform to the transport sector since Federation; one that has been considered but never secured by generations of transport ministers. “It will mean an end to the various and inconsistent state-by-state regulatory arrangements which have frustrated operators, stifled efficiency and acted as a handbrake on productivity. This change alone will boost national income by $30 billion over the next 20 years.” Mr Albanese told the forum that reforming regulation was part of the answer, but it needed to be backed by smart planning. He said that was where the National Ports Strategy and the National Land Freight Strategy came into play. “Both strategies are important steps towards a seamless national land freight system. The ultimate goal is one national integrated system that identifies existing and future roads, rail lines, intermodal terminals, ports and airports, all linking together, seamlessly. “As a government and an industry, we’ve got to get this right,” Mr Albanese said. He said since the launch of the draft National Freight Strategy last year, the government had received 75 submissions which it was working through. Mr Albanese said a successful land strategy was nothing without seamless integration at the nation’s ports — facilities that connected Australia with the world. “Almost all our exports and imports flow through our sea ports. Our National Ports Strategy addresses the need for much better long term planning while acknowledging the strategic connections between ports, transport corridors and shipping channels. The strategy will be considered by COAG shortly.” Mr Albanese said logistic solutions were like a Swiss clock, all parts must work perfectly and in unison. “It’s a great metaphor for the work of the Australian Logistics Council — a national, cross-modal body, bringing together different parties to focus on improving the entire system. Government policy is the same — each of our reforms must link in with our investments to produce better outcomes.” 6

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Image courtesy of abc.net.au

On March 14, Mr Albanese addressed the Bus Industry Confederation Annual Dinner and told them congestion was one of the greatest handbrakes to Australia’s national productivity. “That means reducing the hours Australians spend behind the wheel of a car goes to the core our decision-making. It points more than ever to the need for high-quality public transport that is so reliable, so frequent and so affordable that it becomes a far better choice than reversing the car from the garage.” Mr Albanese said this saturation and even downward trend in travel was not happening just in Australia. He said a report by the Bureau of Infrastructure, Transport and Regional Economics Traﬃc Growth: Modelling a Global Phenomenon, analysed 25 countries and revealed declines in kilometres travelled per person in many of them including France, the United States, New Zealand and Italy. “Buses are uniquely suited to help ease congestion. You are the work horses of the public transport network. Figures, also from BITRE, show that people are taking to buses like never before. “In 2010, Australians travelled more than six billion kilometres in buses and the trend is increasing. Your own report Moving People — Across Australia highlights that the coach sector contributes more than $5 billion to the Australian economy and supports almost 16 million nights of tourism. “In the last five years, Australia has produced $3 billion worth of buses,” Mr Albanese said. The minister said one of the interesting things the confederation had highlighted in its report was that buses provided an alternative to car travel, and also took up less space on the road. “This is best highlighted by the often quoted fact that a single bus lane on the Sydney Harbour Bridge carries more people than all the other lanes combined. One bus can remove on average 50 cars from our roads.” Mr Albanese said the government had committed to at least one major public transport project in every mainland state — in Queensland there were two. “Such improvements free up our roads from congestion making people’s daily lives easier, and giving them more time with their family, friends and at their workplace.” Mr Albanese said keeping Australia’s communities connected across vast distances in the face of climate change and population pressures was not easy. He said through the Bus Industry Confederation the industry sector had a strong and articulate voice representing its interests. “They are also the interests of the Australian people who need and deserve a first class network connecting us within cities, between cities and all the towns along the way.”

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Calculating the Greenhouse Footprint of Roads The rapidly increasing concern with climate change has led to a marked increase in the number of organisations seeking to understand their carbon footprint and the road construction industry is no different. Historically, road agencies have developed their own greenhouse tools to suit local conditions; however, these tools do not allow for the benchmarking of road projects across the jurisdictions due to variations in the scope and methodologies applied. Recognising the value of having a consistent approach across all jurisdictions, the Australian and New Zealand road agencies have jointly funded a project to develop a common approach to the assessment of greenhouse gas emissions associated with the design, construction and operation of a road project. The final product is the joint effort of six road agencies: • Road Maritime Services New South Wales; • New Zealand Transport Authority: • Department of Planning, Transport and Infrastructure South Australia; • Department of Infrastructure, Energy and Resources Tasmania; • Main Roads Western Australia; and • VicRoads (Victoria). It is anticipated the product will be utilised by all road agencies across Australia. The project has involved two stages: • The development of a workbook to document the emission factors utilised and the assumptions made to develop a standardised approach for a suite of standard pavement designs over the wholeof-life of a road project; and • The development of a user friendly calculator known as Carbon Gauge® to identify emissions associated with each stage in the life of a road considered to generate materially significant amounts of greenhouse gas emissions, namely construction, maintenance and operation (street lights and traffic lights). Simon Renton, Project Manager of the initiative, said the approach adopted by the Australian and New Zealand road agencies is unique. Mr Renton, Senior Engineer Environmental Sustainability with VicRoads, said that for the first time, proponents can assess the whole of life emissions associated with a particular road construction project. A review of overseas literature identified a variety of greenhouse calculators available in the market or as propriety products for internal use by specific organisations. However, these calculators were limited to the construction stage of a project. The UK Highway Agency had adopted an alternative approach based on materials and fuels used in construction and maintenance activities undertaken in any one year, but it did not enable whole-of-life emissions for a specific project. 8

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“With increasing demand in Australia and New Zealand for emissions over the whole-of-life of a project to be estimated for use in project approvals and/or Environmental Impact Statements, there was a clear need for a different approach,” Mr Renton said. “There was also an incentive to adopt a standard model to avoid duplication of effort from agencies, contractors and suppliers and to provide a more consistent platform for benchmarking. “The result is a consistent and transparent approach to estimating greenhouse gas emissions over the fifty-year life of any single road project.” The approach adopted also follows the philosophy of the National Greenhouse and Energy Reporting Act for determining materiality. The workbook identifies that the design phase of road construction is not material and is therefore excluded from the subsequent calculator. Mr Renton said while it was widely acknowledged that decisions made in the design process (i.e. the alignment, gradients and materials or equipment selected) can have a significant impact on the greenhouse gas emissions from the road during its life, the actual emissions associated with producing the design are not materially significant. Similarly, the emissions associated with decommissioning a road are not included, as roads are rarely decommissioned. “The workbook and the calculator do not address emissions from the use of vehicles on the road as other tools and processes exist to do this,” Mr Renton said. “However, this emission source is able to be considered and included as an input. Over the 50-year life of a road, vehicle emissions are estimated to be the largest source of emissions representing in excess of 90% of the total emission footprint.” The workbook is available through the agency websites. In addition, the Carbon Gauge® Calculator is being investigated for its suitability to become a web-based online tool, which will ensure its ongoing integrity and avoid obsolete versions being used by interested stakeholders. This will also enable capture of information for benchmarking purposes with the potential for setting targets for road construction projects into the future. For further information contact the road authority within each State or the New Zealand Transport Authority. The designated contacts are: Robert Mitchell NZTA, NZ Robert.Mitchell@nzta.govt.nz Anne Welsh DPTI, SA Anne.Welsh@sa.gov.au Con Lambous RMS, NSW Con.Lambous@rta.nsw.gov.au Louis Bettini Main Roads, WA Louis.Bettini@mainroads.wa.gov.au Dick Shaw DIER, Tas Dick.Shaw@dier.tas.gov.au Simon Renton VicRoads, Vic Simon.Renton@roads.vic.gov.au

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Roads covered by first rating scheme for sustainable infrastructure Australia’s first rating scheme for sustainable infrastructure projects can be applied to a broad range of infrastructure types including roads and bridges, ports, harbours and airports, energy infrastructure, water storage and supply, communication transmission and distribution. The Infrastructure Sustainability Rating scheme has been launched by the Australian Green Infrastructure Council and comprises a rating tool, assessment process and education and training programs. It measures the sustainability of infrastructure projects across the triple bottom line of economic, environmental and social criteria. AGIC’s Technical Director, Rick Walters, said during a speech to launch the scheme that the council’s engagement with the infrastructure sector had told it that sustainability was starting to be recognised, but people didn’t know exactly what it was. Mr Walters said the infrastructure industry wanted the scheme but struggled to describe it in frameworks, specifications and tenders. As a result, many infrastructure developers were “doing their own thing creating inefficiencies across the industry”. He said the sector often operated in silos and didn’t consider the full infrastructure lifecycle, from planning and design, through construction to operation and finally decommissioning or adaptation. Mr Walters said when AGIC was formed in 2008 such issues were becoming more and more evident and the business case was crystallising. He said it was time for the infrastructure industry to at least “do its bit” or “lead the way to help Australia become more sustainable.” AGIC commenced creating the scheme with a stakeholder workshop in 2008 where it developed the initial framework. During that year the council appointed a Project Manager, and with initial funding from the New South Wales Government developed the Climate Change Adaptation category in 2010. In September 2010 the council received more funding and started further tool development. It engaged category authors to develop the content of each of the categories and also engaged peer reviewers and a global review panel. By mid-2011, a draft tool was produced ready for initial piloting and two rounds of trials were undertaken between August and December last year. Altogether, 16 projects have been involved in pilot trials – representing a range of infrastructure types, locations, phases and sizes. The Infrastructure Sustainability Rating Scheme is a voluntary sustainability rating scheme incorporating a rating tool. There are 15 categories across 6 broad themes ranging from environmental issues such as energy and carbon, to social issues such as stakeholder participation, to management issues such as procurement and purchasing. There is a process for assessment, independent verification and certification. Mr Walters said while projects or assets could use the tool for self-assessment, they must seek a certified rating from AGIC to gain the right to publicly advertise their rating performance. Importantly, he said, the scheme covered the infrastructure lifecycle, from project to operating asset. 10

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Mr Walters said the council offered three rating types: • A Design rating awarded at the end of the design process which assessed the sustainability of the design and the planning for construction. This is an ‛interim’ rating and must be replaced by an As Built rating after construction. • An As Built rating which assessed the design, the measured sustainability performance during construction and what was built into the infrastructure asset. This rating may be awarded after practical completion of the project. • And an Operation rating based on the measured sustainability performance of the operating infrastructure asset. Both new projects and existing infrastructure assets are eligible to apply for an Operation rating. Mr Walters said the scheme used a system of three benchmark levels for each credit providing a “first step in the sustainability journey for some, while also rewarding those who lead the industry”. “IS is designed to be practical; it uses industry language, and it aligns to industry and government processes and requirements. Our Technical Manual provides guidance, and AGIC provides support throughout the assessment process,” he said. Mr Walters said the council believed the scheme provided a range of benefits, including a common national language for sustainability in infrastructure; support for tendering processes; risk and cost reduction; resource efficiency and waste reduction; innovation and continuous improvement; and reputation building. He said in the longer term, the council looked forward to sustainability being understood as more than just carbon, water and waste. Mr Walters said the council anticipated the long term view becoming the primary focus of decision making – using approaches like lifecycle analysis, whole of life costing and valuing externalities to make the future count. He said AGIC also looked forward to: • The whole industry increasingly working together – designers, constructors, operators, owners, supply chains, and customers – and the community as partners. • Infrastructure projects being welcomed by communities because of the benefits they bring and the open participation they welcome. This resulting in approvals being streamlined and a social licence to operate being granted. • Lower costs – in tendering, design, approvals, and lifecycle. • Better value – tenderers competing on an holistic sustainability basis, not just cost. • Better environmental protection – moving to enhance and restore GHG reduction efforts, saving water and other resources. • And greater social benefits – through stakeholder project input, enhancing livability, causing less disruption, and creating long term legacies.

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