The road to a sustainable future

Henry Byrne

Group Executive, Victoria and Strategy

The collective response to COVID-19 has been allconsuming, with governments, organisations and individuals forced to adapt quickly to our now, not-so new reality.

As an owner and operator of toll roads in Melbourne, Sydney and Brisbane we’ve been monitoring the impacts of COVID-19 on transport and mobility trends since August 2020, and the challenges and opportunities that may emerge post-pandemic.

One of the challenges facing Australia before the pandemic was our reliance on an unfair and outdated road funding model, which is explored in our most recent industry report, Urban Mobility Trends: Road Funding Reform. Like many countries around the world, Australia’s road funding model is built on the collection of fuel excise – charged here at 43.3 cents per litre of petrol and diesel. Fuel excise - the single largest source of road-related revenue collected by the government - has been declining in real terms for decades due the increasing fuel efficiency of our national fleet. Motorists driving older, less economical vehicles are paying the most.

As the world moves to decarbonise its transport systems by encouraging the adoption of zero and low-emissions vehicles, the system will become more inequitable and result in a bigger funding gap between revenue collected and that needed to build and maintain infrastructure.

Despite low numbers of zero and low-emissions vehicles in Australia, a survey of 3,000 people across Victoria, New South Wales and Queensland commissioned by Transurban found that 42 per cent of respondents would like their next car to be an electric vehicle, with 84 per cent motivated by both the environmental benefits, and reduced operating costs.

It’s important to stress that electric vehicles are not the problem. They are vital to the decarbonisation of our transport networks, the urgency of which was driven home in the Intergovernmental Panel on Climate Change’s Sixth Assessment Report, which warned of increasing extreme weather. However, the more electric vehicles on our roads, the less fuel excise collected.

An alternative taxation model to Australia’s current system of fuel excise and other road-related charges such as licensing and registration, is a road-usage charge. It is a model that has long been advocated for by government and industry bodies including Infrastructure Partnerships Australia, Infrastructure Australia, Infrastructure Victoria, the Productivity Commission, the Harper Competition Review, the Henry Tax Review, as well as Transurban.

While a complex reform, our most recent research indicates that motorists would prefer it over the current road funding model, with half nominating it as their preferred option, compared to 32 per cent preferring the current model. Preference for the current model declined to 23 per cent when respondents were made aware that it would potentially result in less government funding for future roads and infrastructure projects.

The main reason respondents preferred a road-user charge model was because they considered it a fairer system. However, regardless of their preference, when it came to a road-user charge, around a third of respondents wanted to see concessions for people with low incomes, all revenue collected be spent on infrastructure, and for costs to vary to avoid penalising those in regional and remote locations. These would be important insights to consider in a reform process.

Overall, the survey found that 64 per cent of all respondents considered a road-user charge model a fair way to contribute towards road funding compared to 55 per cent who thought the current system would be fairer.

Reform has begun at the state level, with a distance-based road-user charge implemented for electric and plug-in hybrid vehicles in Victoria with similar changes announced, but not yet implemented, in South Australia and New South Wales. Overall, 68 per cent of respondents thought it was fair for electric vehicles to be charged per kilometre for using the road. The main barriers to purchasing an electric vehicle were the price and concern around availability of charging infrastructure.

While the adoption of zero and low-emissions vehicles is inevitable, more can be done to encourage faster adoption so we can all realise the environmental benefits sooner.

Transurban is helping play a part in encouraging adoption of electric vehicles by developing a range of initiatives to highlight their benefits to our 5.7 million Australian customers. This includes incentives such electric vehicle giveaways and customer experience programs. Additional findings in our research reinforced the need to transition to a more sustainable road funding system.

Over the 18 months that we have been tracking how COVID-19 might change people’s travel preferences over the long term, we have consistently seen a trend towards private vehicle use over public transport. Our most recent research showed an 11 percentage point increase in respondents’ expectations that they would travel by private vehicle every day in a post-COVID-19 world since we asked the same question in our August 2020 report. At the same time, people who once were daily users of public transport expect to use it less, with decreases seen most notably in Melbourne and Brisbane compared to when we asked the same question in our August 2020 report.

Obviously waves of COVID-19 restrictions have meant periods of little or no congestion, however when cities have reopened traffic has rebounded quickly. Increasing congestion was a concern to 93 per cent of respondents in Melbourne, Brisbane and Sydney, with 28 per cent rating the issue as very concerning.

A trend to more personal transport would place even greater strain on our stretched transport networks, with pre-pandemic congestion forecast to cost Australian cities billions.

To overcome the challenge of congestion we must look for ways to improve how we use the existing road network, as well as opportunities for targeted investment in new road and public transport infrastructure. But this all relies on Australia’s road funding model keeping up.

Transurban’s motorways provide motorists with a quicker and safer route around Melbourne, Sydney, and Brisbane, but they’re only as effective as the network – both roads and public transport – that surrounds them. A sustainable road funding model means a strong transport network and it is for this reason we are committed to research, education and advocacy on road funding reform.

For more information please contact

Charlotte Watson

Strategic Communications Manager, Transurban E: chwatson@transurban.com W: transurban.com/news/urban-mobility-trends-road-funding-reform