35 minute read
Progressing road user charging | panel discussion
Progressing road user charging – panel discussion
Progressing road user charging
Chair: Panellists:
Brendan Lyon, Chief Executive Officer, Infrastructure Partnerships Australia • Scott Charlton, Chief Executive Officer, Transurban • Philip Davies, Chief Executive Officer, Infrastructure Australia • Brian Negus, General Manager Public Policy, RACV • Peter Regan, Deputy Secretary and CFO, Transport for NSW
Key points:
• Changing road pricing models will be practically and politically complex. • The support of motoring clubs and other user groups makes the discussion possible. • A well-resourced and well-led national study is needed to increase community understanding of the problem, and to develop and refine alternative models.
L–R: Peter Regan, Philip Davies, Brian Negus and Scott Charlton
Progressing road user charging – panel discussion
Brisbane
Brendan Lyon (BL): Could each of you reflect on what Scott Charlton has shown [in the earlier presentation, see page 38] on first findings from Transurban’s Road Usage Study? Perhaps give us a bit of a sense of what your view is, either as the operator, or as the user groups.
Brian Negus (BN): Certainly, a lot of what Scott said is what the RACV, the AAA and many of the other motoring organisations across Australia have been saying for some time. The current taxation system is complex; it’s broken. People don’t understand what they’re actually paying now, although interestingly, some of the users of Scott’s trial know about the situation.
The current system doesn’t reflect the way people use their vehicles; when, where and for how long. Revenue streams are reducing, and as Scott said, and as all of the graphs we’ve seen from government departments show, fuel efficiency will increase that decline as we go forward. Users of fuel-efficient vehicles are paying less fuel tax for pretty obvious reasons.
Importantly, there is no direct link between the revenue raised from road use and the investment into transport, so we’re seeing a huge transport backlog. The system isn’t coping, and the revenue is decreasing. Certainly, there is no hypothecation, even of the current taxes, to try to fix that problem. The AAA did some research just a year ago and found that 85 per cent of respondents said the majority or all of fuel excise should fund road and public transport projects. That indication comes from properly structured research across about 2,500 people.
From a principled point of view, we really want to see a new system based on mass, distance, time and location. Mass and distance are about kilometres. Trucks are currently charged on a system based on ‘pay as you go’, which is not really working. It’s not equitable, whereas time-based and location-based charging are about congestion. We think that’s an important inclusion, because if you’re going to get demand management and make mode choice decisions, then you need congestion as part of the game plan.
Importantly, you need hypothecation of the revenue that comes from those new charges, and
Progressing road user charging – panel discussion
underlining all of that is the removal of fuel excise. You also need to remove most of the fixed federal and state taxes. There is a plethora of them, and that’s why people don’t understand what they’re actually paying now.
We are in favour of a separate, independent inquiry into this issue, and Infrastructure Partnerships Australia (IPA) is on the same page, given that we’ve worked with them for some years on this. The inquiry could be done by the Productivity Commission or Infrastructure Australia so that it’s independent. It also has to engage the community in plotting the pathway forward.
We’ve held that view for many years. The ACCC, the consumer advocate organisation, Infrastructure Australia, and now Infrastructure Victoria and Infrastructure New South Wales have been in the same boat; so we’re seeing a collection of groups coming forward with that same proposition.
Importantly, we’ve seen the Federal Minister for Urban Infrastructure, the Hon Paul Fletcher, on the front foot, having discussions in New South Wales and in Victoria about these issues. That’s good news. BL: That is an incredibly strong call for reform from the user group. It really does show that there are legs on this kind of discussion. Peter, would you like to give us a reflection on this issue from a transport agency point of view?
Peter Regan (PR): There is a very significant challenge, and it’s not just in a New South Wales Government context. This is a challenge for governments around Australia to meet the long-term funding means for transport generally. That’s not just public transport, but all forms of transport. When we look into the future, we see an increasing burden falling on the general taxpayer, rather than specific transport-based funding. In the absence of specific funding, the public is still looking for services; it’s still looking for road capabilities and public transport capabilities, so if there isn’t another source of funding, that just falls to the general taxpayer.
There is clear agreement on the challenge across the board. Road pricing itself is not a new concept in that we’ve had at least 40 years of roadways being tolled across Sydney, Melbourne and Brisbane. But that has not been around congestion pricing as a way of paying for the construction of infrastructure. To date, that has been what tolling has been for: to fund the construction of new roads and motorways, in particular.
BL: But we do already price the road systems through taxes and charges; it’s just less visible.
PR: That’s right. I’ll make that point – there is some acceptance of user pays, but it is only on one type of road. I would agree that there isn’t a good understanding of the rest of the funding model, and how much money you are paying to use roads.
When you look further forward, you can see that where specific road pricing has already been in place – the toll road sector in particular – it has been evolving. In Sydney, we are moving towards distance-based tolling, which has a further element of user-pays charges embedded into them. But it’s still a very small subset of the market.
If you had asked me, from a transport agency perspective, what needs to be done going forward, there will need to be changes to the funding model. Whatever that model is, road pricing will play a role in that in some form. It is going to need to be flexible enough to allow both new projects to be developed and, very importantly, existing roads to be maintained, and for capacity improvements to be made on arterial roads. Investment cannot just focus on a high-end motorway product.
Secondly, there will need to be very strong buyin from stakeholders, and from the community in particular. We’re at the starting debate in this kind of survey, and this kind of discussion is what we need. Because this is a complex problem, it will take a while for people to understand and to accept change, so it will take time to implement.
I’ll finish by saying that, ideally, the system should be transparent to the extent that it can be, and it should deliver in a way that people can understand. Then it will allow us to plan with more certainty as to how the future transport system works. The road system is integral to that.
Above L–R: Philip Davies, Brian Negus and Scott Charlton
Progressing road user charging – panel discussion
BL: Phil, you’ve published on road pricing in The Australian Financial Review. Is this an inevitable change, or is it something in which Infrastructure Australia has a role to really steer this through?
Philip Davies (PD): What’s inevitable is that we need a new way of paying for roads.
BL: But is it just funding we need to fix?
PD: No. I think that’s a complexity of the challenge here. We’ve got a growing population, which will lead to increased congestion. If we don’t take action, this could cost us as much as $53 billion by 2031. It’s about making better use of what we’ve already got. Simply put, what we’ve got is unfair, unsustainable and inefficient. The principal challenge of considering different ways of funding roads is to actually dial in with the community. That’s where Transurban should be congratulated on taking a good first step with its road-usage study.
The bill for every vehicle on the road today is around $1,300 per annum, and that roughly breaks down to 46 per cent for fuel excise, 22 per cent across vehicle registration and licensing fees, and 10 per cent stamp duty. Most people won’t know that this figure is then topped up another 22 per cent through tax. That’s a starting point for the conversation. The community needs to be engaged in the fact that we have a problem to solve here, but the problem is a good problem to have. The problem is a result of population growth and a growing economy, but one of the consequences is congestion.
We need a more efficient way of managing our own network. Pricing, in a sense, is one of the ways of dealing with that through sending the right signals to users. That’s why we’ve highlighted this as part of the 15-year infrastructure plan. The way that Infrastructure Australia suggests we move this forward is through an independent inquiry, which we will be very well placed to lead. It needs to be arm’s length from the government. It needs to be an independent body that leads it. It needs to be well considered, and really go at a pace where we can take people on the journey.
We need a flexible, pragmatic approach and to actually explain the problem before we start talking about what the solutions are. Brian outlined the common view of what the solution is, but there are other complexities, as Scott said earlier, such as people living in the regions, and so on. It’s a complex topic. Let’s take the first step and engage the community.
BL: Scott, you clearly see this as a very important option in terms of fixing some of our transport challenges. Is it inevitable that we head down the path of road user pricing? Or does it need to be led?
SC: It has to be led. The disruption of technology can really be the help or the push – the shove – that we didn’t have before. I hear the complex issues, and there is the issue of congestion pricing; but if you can use technology in the new generation of cars coming in, a very simple fairness test will show that electric cars pay one-third of all funds that a normal car pays. You just say to the community, ‘That’s unfair; we’re going to charge them’, and they’re going to charge these people the most. All the people that adopt the new technology will understand the issue better because they’re early adopters for everything.
In using technology, the problem is sometimes that you set out to design the perfect system. We just need to start getting some of the population used to a system, and then they can evolve to the perfect system.
BL: Is this one of the things that is the best study process, if we can call it that? It’s not going to be a leather-bound process if you’re trying to engage in the community; it’s going to be much more about getting out there and starting to trial bits and pieces.
Do you want to tell us a little bit about how you would approach it, Brian? What you think would be useful in terms of engaging your seven million members around the country that drive?
BN: Certainly, we would rather a properly structured inquiry or study. It really is about engagement. What Transurban’s done, and what Scott has described to us, for example, gives a good methodology in terms of engaging people. Trials are a great way to do that. In terms of engaging in this work, as Phil has already said, having them understand what they’re paying now, what the complexity is in the current motoring taxes and then what happens to the revenue, needs really strong engagement.
BL: People pay about 11 cents per kilometre now, is that right?
BN: Yes, that’s right. And they probably don’t understand that right now. That engagement needs to be done properly. It needs to be done with online survey material. The motoring clubs across Australia can help to get that engagement going. We certainly know a lot about online surveys. That sort of online survey material, properly structured research, but also engagement across various parts of the country – both urban and rural areas, because they are always going to be different.
Progressing road user charging – panel discussion
There’s been talk about the issue of community service obligations applying to rural roads, because otherwise they’ll miss out due to low traffic volumes. That needs to be on the table, as well, especially in rural communities. Those complexities need to be handled in a really very structured way to make sure that people understand it and feel engaged, and are able to contribute to the discussion.
PD: Just to add to what Brian said, the other component of a trial, or an inquiry study, would be looking at what the strategic priority of different types of roads in regional areas is, and roads in our cities. Importantly, what service levels do we need to deliver on those roads? That needs to be an important part of the conversation. That brings back the levels to which you maintain roads, as well as operate them. This is a good opportunity to step back from how we’ve done well to get to this point, and say, actually, there’s a real opportunity here to do a much better job of planning our transport networks to meet demands of a growing population.
BL: Transurban’s video shows the concept of ‘give people the information and they will understand the problem’. What’s the thing that we need to really start breaking through on regarding the need for reform?
PR: I agree that better community understanding is important, but to ultimately change a system that involves tax at different levels of the government, it needs the involvement of different levels of government.
There has been good progress in the national heavy-vehicle sector, and there has been a lot of work done that looks at different options there, particularly around how interstate traffic can potentially contribute in a fairer way. It has to be something that involves different jurisdictions. Probably because of that and because of the significance of the fuel excise, the conversation needs to be led by the Federal Government. From a New South Wales context, we’d very much welcome working with the other jurisdictions and the Federal Government to try and take forward different funding models.
BL: We’d almost be beyond any individual state.
PR: This issue is, and it ultimately needs, broad buy-in. At the moment, it would be difficult to see how you could run two models simultaneously. There is going to be some work to do, but that kind of thing has been achieved before. Doing more work on our end to get the facts out is important. Having buy-in broadly across jurisdictions is important. We then need to look not just at what the funding model is, but also at how those funds are deployed. How does it come in, how does it get allocated, how is it managed, and what’s the efficient and effective way to make sure that, ultimately, the funding is getting to the end purpose, which is providing road construction and maintenance, and contributing to transport generally?
SC: The biggest ‘changing thing’ for our participants was getting a monthly statement. ‘I had no idea I was driving that much. I had no idea why that happened a million times. Why did I do that? I don’t know why I went to the store three times when I could have just gone once.’
Then they see the amount that they drive and they see how much it’s costing them under the new system, and how much it’s costing them under the old system. Well, that’s not fair. The monthly statement was just an unbelievably powerful tool getting imbedded in their psyche. The participants started using terms like ‘marginal propensity to drive’ after they looked at their statement for a few months.
BL: Brian, how often does this come up in the free form section in your surveys?
BN: Quite a lot, actually. People actually don’t discuss the fact that the current motoring taxation systems are broken, because they talk mostly about congestion on the roads, but also about public transport, more and more. They are already saying to us, ‘There has to be a better way to fix this’.
Safety and congestion are the top issues. Congestion is always number one, on both the roads and public transport. On the back of what Scott mentioned about communicating the amount of motoring tax we pay to the community, an idea that the AAA put out on our collective behalf a while ago is ‘let’s actually show on all our petrol bills the amount of excise and GST we pay on the fuel we buy now’. That’s one of the ways that people would understand it. ‘I didn’t realise that tax, in those two forms, is what I’m paying now.’ That’s a good way to start the process.
PD: I think greater transparency around what we’re currently paying [is needed]. Actually, I think extending what we need to pay to maintain what we’ve already got [is needed]. The tendency is always to build new roads; actually, now it’s probably not much of the road infrastructure we need, it’s more about how we use it effectively and efficiently.
BL: Thinking about taking this forward from a national government perspective. There were a lot of
Progressing road user charging – panel discussion
L–R: Peter Regan, Philip Davies, Brian Negus, Scott Charlton and Brendan Lyon
pullouts in Transurban’s videos around the things that switched the community on, and switched them off. To all of you, what do you think the main consideration is going to need to be around progressing the process, and there’s nothing to implement if you don’t know what road pricing looks like? We just know some broad theories. We know some user acceptance surveys that are underway around behaviour. What are the traits that we need to really nail, in terms of getting this conversation going in a way where it’s going to move forward?
BN: I think the principles that we’ve talked about among the clubs around Australia would set the scene. There was strong support for independent inquiry of the sort we’ve all talked about. My favourite would probably be Infrastructure Australia.
Fairness needs to be number one in this system, in terms of a principle, to make sure that people aren’t discriminated against [because] of the vehicle that they drive. The fairness issue also relates to the issue around hypothecation. We’re not getting enough back, so we want more of the taxes we’re paying now coming back into funding road and public transport projects.
Transparency was the second major principle that we have been discussing for some time now. A sustainable system needs to make sure that we’ve got enough increase in revenue to address the issues that we’ve talked about, and efficiency in terms of the way it’s applied.
It’s a game changer. Ten years ago, we started this journey. The technology was basically unknown and there were huge privacy issues, and there was just no sort of game plan. It was about self-reporting of kilometres, whereas now the technology is proven and people don’t have the privacy concerns I thought they might have.
BL: Peter, you mentioned the allocation of revenue. That’s going to be one of the really sticky issues around this. Do you want to share some thoughts on those intergovernmental network complexities that sit around there?
PR: The key is that people will be more accepting of change if they are seeing that there is progress to provide them alternatives where possible.
BL: Alternatives will be important.
PR: Alternatives are important, and you can’t put too fine a point on that. Where possible, having a public transport option or other alternatives is a key thing for people to feel like they have a choice, especially if they don’t feel impressed in the first place that they’re already having to pay a considerable amount.
That does tend to have the same issue of intergovernmental responsibilities, because where you’ve got one government raising the money, and you’ve got another responsible for delivering the service, you have to have a way to equitably allocate funding. For the states – or whether it be local governments who are responsible for delivering the works – to have a sense of sufficient confidence into the future regarding funding streams, that will be forthcoming.
Whether it is direct hypothecation, or whether it is some form of allocation based on formulas or needs, or independent assessment, there has to be a degree of transparency in how it’s allocated, and a degree of certainty that it won’t be heavily politicised.
That then allows state governments more planning around alternatives, be it public transport or roads, with some degree of certainty. These projects often take more than a term of government. You need longterm thinking. You need 20-year or 30-year thinking to implement the kind of network that people are looking for. So, it’s a combination of those factors.
PD: Building on what Peter and Brian have said on transparency around how the money is spent, we’ve got to win the trust of the community in terms of how to collect this money, and this is how it’s going to be spent on infrastructure.
Progressing road user charging – panel discussion
SC: People are happy that the money goes to all forms of transport. They’re happy that it goes to maintenance, but they just want to see where the money goes.
People will believe it if it’s a New Zealand–type system, in which they see where the money goes and how it gets allocated. The other issue is about alternatives and choice. People would also like to see a choice in things like flexible work hours or different operating hours for services. People would say, ‘Look, I understand in the broad scheme of things that there can’t be a tram that goes to everyone’s front door. If you allow me to be flexible at work, then I can work around a system’.
But coming back to what you think we need to take it forward – what we need is leadership in state government or Federal Government, and some level of bipartisan support to take it forward.
We are in an unusual position where we have the operators, the bureaucracy, the users and the builders... every one of them here is in massive agreement that we have to do it. When we educate and talk to the community, they accept it, as well. We just now need government leadership somewhere to take that forward.
BL: Phil, in the Infrastructure Australia Plan, you put a very ambitious timeline on the reform of the road market. You put zero to five years to reprice the heavy-vehicle fleet, and you put five to 10 years to do a similar across the entire fleet. Give us a sense about how that’s going to roll out, and how important the heavy-vehicle study is going to be in terms of road user pricing trials.
PD: In terms of heavy vehicles, that’s already well advanced, and we just need to complete the rollout. It’s a natural, relatively easy step in terms of user pays. The discussion we’ve been having here has been more around light vehicles, and that’s a much harder, broader discussion. We’ve touched on the complexity of that. Whether it’s 10 years or 15 years, I’m not sure, but we’ve got to start the journey. What we’ve got is broken, and it isn’t going to support what we need in the future. Let’s at least start the journey, and think through what the appropriate time frame is.
SC: Use the technology and run the systems in parallel. I think that sometimes as economists or engineers, we try to create perfect systems and they become complex.
You have to get the people to adopt it. There is a change coming; use the change to change the base system, and then you can adjust the system over time, and bring it in parallel. Say on 1 July 2025, everyone’s going to go from petrol tax to a user-pays system. I can imagine that day; that’s not a very pretty day. But as each new car gets imported – which is a brandnew car that has a level of electricity or efficiency – it starts moving to a system.
BL: I want each of you on the panel to imagine just for a minute that the Federal Minister for Infrastructure and Transport is sitting in the front row. If you were giving this theoretical minister, who’s sitting in the front row and is about to speak, some advice about steps forward around requirements and so forth, what would it be?
PR: What’s just been discussed is probably a good snapshot of the issues. We have relatively converging views about the need to do something. This change is complicated and it won’t happen overnight, but we do need to be moving towards more sustainable funding models. Certainly, I think there would be a lot of engagement from other levels of government to talk this through and try to find ways of doing that.
Funding is the challenge that all governments face, and when you project that challenge forward, there is a big gap opening up, and it is a problem for people today that needs to be dealt with.
It’s understanding the problem and getting a debate going more broadly, and not jumping to a single answer, that is really important. The focus on broader road-usage analysis before having a discussion around congestion is a good start.
PD: So, in terms of the problems that we’re trying to solve, what we’ve got is unsustainable. In terms
Progressing road user charging – panel discussion
of funding, that’s probably the burning platform right now that we need to address. But then, as we’ve said, what we’ve got is inefficient. So, there’s a hierarchy in terms of the problems that we’re trying to solve. That is a fairly complex narrative to put together for the community. There is something to be said for just focusing on one of those to start off with ... we have a funding problem here that we need to address, so let’s come up with a strategy to address that once we’ve communicated what the problem is.
Then we can get more sophisticated in terms of the inefficiency and the fact that it’s unfair, because we’re going to have to make sure that it’s fair. There’s a hierarchy to this conversation.
BN: Basically, people understand that the system, as it is now, is broken. But also, we need to convey to them the issues about congestion, and that we also have a backlog of projects and maintenance.
They’re the key issues, the congestion that we’re facing on roads and public transport, and the funding backlog, and the fact that the current system isn’t working in that sense.
BL: It’s all of the user groups you would have to study. I mean, having the motoring clubs on board is a big thing.
BN: Well, I think probably for the first time, Brendan, we’re seeing confluence in a lot of the players: the Productivity Commission, the ACCC, the Competition Policy Review, Infrastructure Australia, Infrastructure Victoria, and Federal Minister Paul Fletcher, who have been talking about the whole issue of road pricing and road user charging.
That confluence hasn’t been seen in the past. Our suggestion, and that of the AAA, is to put the fuel excise and the GST on the petrol bill so that people actually understand what they’re paying now, and can actually relate that to the fact that there’s a gap in the funding for projects.
But then the bottom line is that the Federal Government, in combination with the states, needs to actually launch an independent inquiry. We would be happy if Infrastructure Australia were to do it, but strong community engagement is required. While we all really get what we’re talking about, until the community is informed, the average player will not really understand the situation. Community engagement is vital.
SC: If the minister was here, the first thing I’d say would be ‘Thank you for your contribution on NorthConnex’. The second thing I would say is, ‘Minister, with the data that we’ve received, there is a very clear and simple message on the funding side, and on the fairness side. I think that there is a message that resonates with the community. You’ve got the support of seven million people in the AAA. We can do what we can with three million of our customers. We hope that you are as brave as you can be with an inquiry, another pilot study, or offering an incentive for one of the states to trial something to advance the agenda’.
Once we have a very succinct and open conversation with the community, it’s incredible. Actually, a lot of those people have become advocates now for reform. They ask, ‘okay, what do we do next?’, and we’re like, ‘Well, that’s over – you can’t get any more money from us, but the study is over’. But they become advocates and are really interested in where this leads, so hopefully it will lead to something.
Progressing road user charging – panel discussion
Brendan Lyon is the Chief Executive of Infrastructure Partnerships Australia (IPA), the peak infrastructure policy partnership between Australia’s Commonwealth and state governments, and the business sector.
Joining IPA on its formation a decade ago, Lyon initially led the policy and research team, before being appointed CEO in early 2008.
Through strong, evidence-based public policy, good research and strong relationships across the business, media and government sectors, IPA has developed into a respected and trusted voice on economic and social infrastructure policy.
In his role, Mr Lyon also serves on a range of boards, committees and inquiries, and is currently serving on the Board of Transport for NSW and on the New South Wales Government’s Expert Advisory Panel on social housing reform. Mr Lyon has previously served on major national reviews, including COAG’s Infrastructure Finance Working Group and the Commonwealth Government’s study into highspeed rail.
Mr Lyon is a member of the Australian Institute of Company Directors and holds a Masters of Business Administration with Distinction. In 2013, he was appointed an Honorary Associate Professor at Sydney Business School.
With a strong interest in infrastructure and in economic policy, Mr Lyon has authored and contributed to a large number of research and policy papers considering different aspects of infrastructure market regulation.
Scott Charlton joined Transurban Group as Chief Executive Officer in 2012. Mr Charlton has more than 25 years’ experience in developing, funding, constructing and operating infrastructure assets, working with some of the sector’s leading corporations, including Lendlease, where he was Chief Operating Officer for global operations (2010 to 2012).
Prior to this, he was Chief Financial Officer at Leighton Holdings and a Managing Director of Deutsche Bank. Mr Charlton is an engineer by training. He is Deputy Chairman of Infrastructure Partnerships Australia, a board member of Roads Australia, and a member of Monash Industry Council of Advisers, and the Business Council of Australia.
Above L–R: Peter Regan, Philip Davies, Brian Negus, Scott Charlton and Brendan Lyon
Progressing road user charging – panel discussion
Philip Davies is the Chief Executive Officer of Infrastructure Australia, with a mandate to provide independent expert advice to all levels of government on infrastructure policy and planning. Infrastructure Australia publicly advocates for reforms on key issues, including means of funding, financing, delivering and operating infrastructure, and how to better plan and utilise infrastructure networks.
Infrastructure Australia released the Australian Infrastructure Audit in May 2015, which is a comprehensive independent review of Australia’s infrastructure and our future needs across transport, water, energy and telecommunications.
Infrastructure Australia has recently finalised a 15-year Australian Infrastructure Plan – a strategic framework for addressing Australia’s future infrastructure needs.
Mr Davies is an experienced infrastructure executive who has spent more than 25 years shaping policy, delivering nationally significant infrastructure projects, and leading reform within the infrastructure sector.
Before joining Infrastructure Australia, Mr Davies led AECOM’s Infrastructure Advisory business in the Asia-Pacific, providing government and private sector clients with infrastructure advisory services.
He is a Chartered Engineer and a Fellow of Engineers Australia.
Brian Negus, General Manager Public Policy, RACV
Brian Negus is General Manager Public Policy for RACV, where he is accountable for market and technical research to formulate policies and initiatives addressing a broad range of safety, mobility and community needs across the transport sector. The Department advocates for, and is the public face of, these issues on behalf of RACV’s two million members.
Mr Negus was formerly the Deputy Director of Public Transport with the Victorian Department of Transport, Planning and Local Infrastructure for three years, and previously held the position of Metropolitan Regional Director with VicRoads, Victoria’s state road authority, for eight years. Prior to this, Mr Negus worked across many areas of the transport sector, including ITS implementation, transport project delivery and policy formulation.
Mr Negus is the President of Intelligent Transport Systems Australia and represents ITSA on the ITS World Congress Board.
Mr Regan is the Chief Financial Officer and Deputy Secretary, Finance and Investment at Transport for NSW. He is responsible for ensuring strong financial management across the cluster of New South Wales government agencies involved in the provision of road and public transport assets and services, as well as identifying and acting on commercial and financing opportunities to support the significant investment in transport infrastructure currently underway in New South Wales.
Mr Regan has more than 20 years of experience in infrastructure and project financing in both Australia and the United Kingdom, with a particular focus on the transport industry. He has a strong track record of delivering innovative outcomes through efficient use of public and private sector capital and expertise, and in the effective delivery of strategic priorities.
Prior to joining Transport for NSW, Mr Regan performed senior roles at NSW Treasury, Sydney Motorway Corporation, Transport for London and Deutsche Bank.
QUEENSLAND RAISES THE BAR ON INFRASTRUCTURE DEVELOPMENT
A new plan spells out how the state will work across government, and with the private sector and councils, to accelerate growth.
The Palaszczuk Government’s bold new approach to infrastructure planning is designed to drive innovation and collaboration in the sector, and to create better community outcomes.
The landmark State Infrastructure Plan (SIP), released in March 2016, is transforming how Queensland plans, prioritises and funds vital projects. It is also setting new benchmarks in how states can work with the private sector and local councils on infrastructure.
The SIP sets out Queensland’s infrastructure needs and links them to a clear vision to grow the state. In doing so, it creates more opportunities for the private sector to put forward project proposals and greater certainty about the state’s infrastructure priorities.
‘The new framework for planning and prioritisation of infrastructure projects provides a solid foundation for making informed investment decisions,’ says Jackie Trad, Queensland Deputy Premier and Minister for Infrastructure, Local Government and Planning, in the introduction to the SIP strategy document. ‘It will help identify the best, most cost-effective way to address the service needs and infrastructure challenges facing Queensland.
‘We have also established a $2-billion State Infrastructure Fund (SIF), which is already funding the delivery of new infrastructure projects across Queensland.’
Trad says that the private sector has an important role in helping the state meet its infrastructure needs. ‘Leveraging opportunities for the private sector to put forward value-for-money proposals that respond to Queensland’s infrastructure priorities, while protecting ownership of public assets, will play a critical role.
‘Queensland is open for business on infrastructure. We are encouraging private operators who have a good idea on infrastructure to talk to us, and together, [we will] find ways to get things done.’
Darren Crombie, Deputy DirectorGeneral, Infrastructure Policy and Planning at the Department of Infrastructure, Local Government and Planning (DILGP), says that the SIP has embraced a different approach to previous infrastructure plans. ‘In the past,
infrastructure plans have often contained aspirational and unfunded lists of projects, and the community and private sector have had to work with that. The SIP wants to change that and encourage a greater focus on defining problems and challenges, and allowing a more market-led approach to bringing forward solutions to address the state’s mid- to longerterm infrastructure challenges.’
The SIP has received an encouraging response, says Trad. ‘The SIP’s framework is about being open-minded and less prescriptive about infrastructure within the state’s current funding constraints.’
Significant infrastructure challenges and opportunities
Innovation is vital if Queensland is to deliver an infrastructure strategy and program that capitalises on its economic potential, supports growth and creates long-term prosperity for all Queenslanders.
Continued strong population growth is driving infrastructure demand. The state’s population is forecast to increase from 4.7 million to 7 million by 2036, and up to 10 million by 2061. With this comes greater demand for essential services such as transport, education, health, water and energy.
A dramatic change in Queensland’s social profile over the past decade is adding to the infrastructure challenge. An older population is increasing demand for health services; different household formations (such as more people living alone) are affecting housing demand; and more people are expected to live in South East Queensland and some coastal areas.
There is also greater demand for digital infrastructure and education services – vital assets if Queensland is to develop new industries, invigorate existing ones and continue to prosper in the global knowledge economy.
‘Having the right infrastructure at the right time is complex given Queensland’s expected population growth,’ says Trad. ‘Addressing congestion in South East Queensland is a significant challenge, as is ensuring communities throughout the state receive the necessary level of infrastructure investment to remain connected, productive and livable.
‘That’s why we have established Building Queensland as an independent infrastructure advisor to government, so we can have confidence that we are investing in the right projects, when they are needed,’ Trad says.
She also says that the rise of the digital economy is another challenge. ‘Planning a new hospital today, for example, means thinking about how technology will change the provision of healthcare services over a decade. We must also consider how technology can extend the life of existing
assets and reduce pressure to build new ones.’ Crombie adds: ‘At its core, the SIP is about getting the right infrastructure projects for people who need them now, getting infrastructure that gets our products to market, and doing it while thinking about the big picture and planning for it’.
Significant infrastructure opportunities
The SIP is built on three core components: directions, responses and programs. Part A of the SIP (strategy) sets out the state’s infrastructure challenges and objectives (directions) and its infrastructure planning and prioritisation (responses).
These are designed to guide infrastructure investment in Queensland, and to provide a cohesive model for planning and delivery within government agencies that integrates with land use and economic planning. The strategy will be updated every five years.
Part B (programs) outlines how infrastructure projects will be implemented, as well as each region’s opportunities and priorities. It identifies the Queensland Government’s policies and initiatives to support SIP implementation.
Projects fall into two categories. The first includes those in a 1–4 year program, which have firm funding commitments through the state budget. Those in the second category are future opportunities that cover the SIP’s indicative 15-year framework.
Although the program outlines what needs to be achieved, it is not prescriptive on delivery. Where possible, future infrastructure opportunities will be addressed in a way that encourages innovative, cost-effective solutions.
‘During industry consultation on the development of the SIP, private operators said they wanted at least three to four years of certainty in infrastructure projects to plan their resources,’ says Trad. ‘They also wanted a better indication of longer-term opportunities and greater scope to come back to government on how these might be funded and delivered.’
A newly created Infrastructure Portfolio Office is monitoring SIP implementation and providing a cross-government perspective on infrastructure expenditure, time frames and resourcing. And a high-level Infrastructure Cabinet Committee has been established to drive the state’s infrastructure program and ensure whole-of-government integration with infrastructure planning and delivery.
SIP off to a strong start
Trad says that the SIP is adding to Queensland’s infrastructure momentum. ‘DILGP is driving implementation of the SIP, and continues to have a very open dialogue with industry about what matters.’
The Queensland Government is close to finalising the South East Queensland Regional Plan, and in August, it announced the agreement of five councils to kickstart work on the first North Queensland Regional Plan, which aims to supercharge development in that region.
In June, a $1.5-billion boost for the SIF was announced in the state budget, bringing its value to $2 billion over five years. The additional contribution has allowed for an $850-million commitment to Cross River Rail, including $50 million to establish the new Cross River Rail Delivery Authority.
The SIF is funding a $300-million Priority Economic Works and Productivity Program, to help deliver targeted, productivity-lifting transport infrastructure across the state, as well as $180 million to bring forward social and economic projects in regional communities. The SIF is supporting the rollout of the SIP.
