JOHN AUSTEN. Roads – another year of congestion-causing deficits

We are spending enormous sums on roads and increasing our national debt. Communities are being seriously disrupted and the congestion is increasing. When will we put a stop to this nonsense?  

Previous articles in this blog, for example ‘Michael Keating, Luke Fraser. Infrastructure: Improvement or impoverishment?‘ and ‘John Austen and Luke Fraser. Urbane transport policy, Part 1‘, ‘Part 2‘, and ‘Part 3‘, identified the fact of a large reported road fiscal deficit. Australian road spending has exceeded road revenues by billions of dollars for years. Dr Michael Keating and roads expert Mr Luke Fraser are almost the only voices drawing attention to this. The ‘roads industry’ won’t admit it.

The result, contrary to views propounded by lobby groups or implied in presentations of official statistics, was reaffirmed by data released just before Christmas 2016.[i] We are being seriously misled in the presentation of the public data. Does Prime Minister and Cabinet and Treasury realise what is happening.

The roads deficit in 2014-15 was $3.2billion with spending exceeding revenue by 13%.

The cumulative road deficit in the 5 years to 2014-15 was $21.8billion with excess spending of 17%.

For reasons explained previously:

  1. these figures understate the level of road subsidies and the true road deficit
  2. there should be a large roads fiscal surplus.

With our roads mania we face a serious road problem; undercharging and overspending. Most likely spending is also misdirected; monumental engineering on some roads like Westconnex in Sydney whilst others are falling apart.

One consequence of such enormous subsidisation of road use is congestion and loss of amenity in our cities. Only sensible pricing offers any hope of sustainable resolution of these concerns.

Australia also faces a problem of denial and misrepresentation of road facts, a factual deficit, which together with stupid policy proposals such as pricing for every user of every road, has erected a formidable barrier to reform.

The federal Minister for Urban Infrastructure presaged a review into road pricing to be led by an ‘eminent’ Australian. We can only hope the eminent person and the review secretariat (officials from states, the Department of Infrastructure and Regional Development and Infrastructure Australia) reduce this factual deficit and come up with ideas much better than those flagged by the bureaucracy and infrastructure club in recent years.[ii]

We are spending enormous sums on roads and increasing our national debt. Communities are being seriously disrupted and the congestion is increasing. When will we put a stop to this nonsense?

John Austen is a happily retired former official. He was Director of Economic Policy for Infrastructure Australia from its inception in 2008 until his retirement in 2014.  Further background is at :  thejadebeagle.com. 

[i] For the purpose of analysis, general taxes such as the goods and services tax, customs duties, and fringe benefits tax should not be included in road related revenues. Data is sourced from https://bitre.gov.au/publications/2016/files/BITRE_yearbook_2016_statistics_full_report.pdf

[ii] For light vehicles http://minister.infrastructure.gov.au/pf/speeches/2016/pfs013_2016.aspx

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One Response to JOHN AUSTEN. Roads – another year of congestion-causing deficits

  1. Philip Laird says:

    I have to agree. The operation of road vehicles imposes appreciable external costs on the community. In a paper Moving People: Solutions for a Livable Australia Bus Industry Confederation (2012) estimates of “road deficits” of about $20 billion pa in 2001 and $27 billion pa in 2010 were cited and these exclude the costs of road congestion. Clearly, some effort should be made to direct more of these costs onto road users as opposed to the wider community.
    The cost of road congestion in Australia’s capital cities was estimated by the Bureau of Infrastructure Transport and Regional Economics to be $9.4 billion in 2005 and to rise to $20.4b by 2020. T
    The evidence from overseas is that road congestion cannot be eased simply by building more roads. Moreover, some road investment has been called into question, as indeed it was by the people of Victoria in November 2014 when voting for a new State Government that cancelled the proposed East West tollway for Melbourne.
    It is suggested that some current high outlays in roads by government at over $23 billion per year could well be reviewed. This expenditure was described by consultants to Infrastructure Australia in a 2014 report Spend more, waste more as a “road spend [that] can only be described as hideously inefficient.”
    Thus, projects such as Sydney’s WestConnex that has now blown out to about $17 billion and duplication by 2020 of the Pacific Highway (that was taken to task by Infrastructure NSW in its 2012 report ) could well be reviewed.
    The 2016 Federal budget drew a reaction from NAB Group Chief Economist Alan Oster of “infrastructure spending that is still road heavy. ”
    Meantime, there is no shortage of more basic road projects, and rail projects (in major cities, and in regional Australia) that need funding
    It is trusted that the 2017 federal budget in regards to investment in rail and road will be more balanced than the 2015 and 2016 ones.

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