Anderson stressed that this new vision for land transport would not lead to a reduction in Federal transport spending. He promised that it would not affect any current projects, or any projects that have a firm commitment, especially
- $180 million over 4 years Black Spot Program
- $1,200 million Roads to Recovery Program over 4 years
12. Excludes urban passenger transport systems
- These are a State responsibility and States / Territories have increased ability to fund them through their GST revenue.
Key issues for the community in AUSLINK
Road access pricing
While the new National Transport Commission will continue to focus on regulation, Minister Anderson has suggested that the key issue of access pricing as a factor in transport infrastructure investment decisions be a matter for the new National Transport Advisory Council. His repeated assertion that there will be no reduction in federal funds to roads, and that there will be a doubling of road freight volumes over the next 18 years, indicates that the under-pricing of heavy road vehicle access charges will continue. This will continue to inhibit any concept of road use demand management, and induce ever more demands for highway and tollway construction. Unless the NTC addresses this issue as a high priority, AUSLINK will be of little real impact, whatever the rhetoric.
The NTC must make reform of road access charges a major focus of its regulatory reform agenda.
Urban Public Transport
No other OECD country takes the Australian government view that urban public transport is not a national responsibility. The current Federal policy arose from the "small government" mentality of the Keating government, which has been taken to new heights by the Howard government. It relies on our 19th century federal constitution, which gives federal power only to interstate transport issues, and even that is in conjunction with the States. At the end of the 19th century, there was barely any State commitment to urban public transport, with most tram systems run by private enterprise. The Federal government has long since abandoned the idea that rail freight is a 'state issue', and it is high time it renewed the short-lived federal commitment to urban public transport that existed between 1974 and 1994.
According to the Bureau of Transport Economics, urban transport congestion cost $12.8 billion in 1995, and BTE estimated that this would rise to $29.7 billion by 2015. To this cost must be added the impact of air and noise pollution, and road trauma, on our health and safety and social life.
Urban transport is the principal contributor to pollution in our major cities, and transport is a major user of energy resources. According to data from the United Nations Framework Convention on Climate Change, Australia has the highest per capita greenhouse gas emissions in the world, and urban transport is a major contributor.
Australia's major cities now have clear "transport rich" and "transport poor" regions, because of the creation of new suburbs without strong public transport infrastructure. This is a key feature of Australia's own social justice challenge.
There can be no doubt that these economic, environmental and social impacts of urban transport are a national challenge, which must be part of a sustainable national transport system. Therefore, urban public transport must be incorporated into AUSLINK.
The Minister's assertion that the GST provides enough revenue to the States and Territories to manage the urban public transport challenge is not supported by any data, and appears to be little more than a political throw-away line.
Role of National Transport Commission
The Minister so far has not spelt out the role of the National Transport Commission from January 1, 2004, beyond having a focus on road, rail and intermodal issues. The NTC should have an expanded role, including:
1. Defining a National Rail Network, including in Tasmania, and Tracks of National Importance, to complement the National Highway System and Roads of National Importance, thus determining a National Integrated Land Transport Network.
2. Competitive Neutrality issues between road and rail in terms of access pricing and taxation. The harmonising of road user charges was a major role of the NRTC.
3. Development of a consistent investment methodology across modes, including environmental, regional, safety and financial criteria.
4. Development of consistent performance benchmarks across road and rail modes, eg 30 tonne axle loads at an average speed of 100 kilometres per hour for mainline rail, with similar transit times for rail and road.
5. Creation of modal share objectives in urban transport for Australia's major cities, for inclusion in the proposed five-year rolling investment plan and the 20-year strategic outlook.
6. Development of the National Transport Investment Plan, with a rolling five year plan within a 20-year strategic outlook, to incorporate State / Territory plans such as Melbourne's 2030 Plan, WA's sustainability Strategy and Freight Network Review, and NSW's Action for Transport 2010, and Queensland's Rail Network Strategy.
7. Development of a strategy for reduction of Greenhouse Gas Emissions and reduction in air pollution from transport systems.
Role of National Transport Advisory council
The RTBU proposes that the National Transport Advisory Council include trade union, regional, commuter and environmental organisation representatives, to ensure that a broadly-based line of advice to the Australian Transport Council, on access pricing, investment priorities, environmental and social objectives and strategic outlook.
National Legislative Framework
The AUSLINK proposal would be advanced through a new Federal / State / Territory Inter-Governmental Agreement to replace the 1991 IGA on roads. This new IGA would be developed after the Green Paper / White Paper process, which will include public consultation.
The RTBU suggests that the consultation process should be managed by the House of Representatives Standing Committee on Communications, Transport and Microeconomic Reform, which should make recommendations for a new Australian Land Transport Development Act, using the US Transport Equity Act as a model.
This would provide the Federal Government for a strong legislative basis for its cooperative arrangements with the States / Territories, and help to reduce the traditional constitutional obstacles to a concerted national approach to interstate transport and urban transport issues.
Public Private Partnerships
Public Private Partnerships (PPPs) are the latest fashion in privatisation to come from the UK. It is not called 'privatisation' because that doesn't market well with voters any more.
Under a PPP, government contracts a private consortium to provide infrastructure over a fixed number of years, and pays the private consortium a rent and maintenance fee for the life of the contract. This is a 'no risk' deal for the private business, on the one hand, and allows the government to claim it is not increasing public debt on the other.
However, the government pays a higher annual rent for the asset than it would if it financed the construction directly, in the traditional way. Government can borrow funds for 4%, while private consortia require a return of 11%-15% to both borrow funds and return a profit. The asset is transferred back to the government when it has reached the end of its life, and the risk is greatest.
Australia's most notorious examples of PPPs so far are the failed Sydney and Brisbane airport rail links, and the Sydney water treatment plants that failed in 1999.
When John Anderson promised to give PPPs and fully public projects equal consideration, he signalled a major shift in transport investment in Australia. It is quite likely that PPPs will reduce the scale of transport infrastructure that might be built, because of the larger long-term liability taken on by the public sector in PPPs. The Western Sydney Orbital, costing $1.25 billion, is a PPP.
Inducing Federal / State tension over roads
AUSLINK actually calls on State and Territory governments and the private sector to share the cost of the National Highway System, whereas today it is fully paid for by Federal funds. This is likely to cause a sharp increase in Federal / State conflict over transport investment, instead of the new cooperation projected in AUSLINK. Under AUSLINK, unless States / Territories take over some of the National Highway System and Roads of National Importance funding, the current Federal Government will not direct extra funds to rail or intermodal projects.
The current Federal Budget commitment to transport infrastructure is:
Roads - $1,736 million
Rail - $25 million
With Transport Minister Anderson promising no cuts to the Black Spot Program or the Roads to Recovery or to the Western Sydney Orbital, it looks like lower Federal spending on the National Highway System and Roads of National Importance, and untied local road grants, if more funds are to go to rail.
While Anderson claimed the Federal Government spends $1,800 million per year on transport infrastructure, the Budget paper indicates that only $980.75 million per year are spent on major road transport infrastructure. How much of this can be transferred to interstate rail projects, let alone urban rail projects?
A genuine Federal / State / Territory partnership on land transport will only be achieved with a clear federal funding commitment. This is how the National Highway System really works.
The references to the GST and State responsibilities in the AUSLINK briefings so far are a code for a major conflict, rather than a cooperative approach.
Similarly, the call for private sector investment in land transport projects is a recipe for small, company-specific projects, or for an investment vacuum - a queue of projects waiting for private sector commitment to trigger public investment.
The Federal Government needs to move further in the direction suggested by the AUSLINK proposal, and find ways to expand the overall infrastructure funds available.
Australia is at the very low end of developed countries for the share of taxation in Gross Domestic Production.
We should aim to shift the taxation rate from 27% of GDP - the second lowest of the OECD countries - to 34% over time, which is halfway between the US (the lowest) and the European rate. This would increase the public funds available for economic development, social expenditures on health, education and environmental protection by $50 billion per year. The end of indexation of fuel excise at the start of 2001 was a backward step, reducing revenue by $900 million over four years. This is already hurting the States and Territories, and undermines the AUSLINK project. The reinstatement of indexation of fuel excise must be a high priority.
Australia's General Government net debt levels are approaching 6% of GDP, compared to the OECD average of 40% (30% in the USA, 50% in the European Union and 20% in New Zealand). Australia does not have a public debt problem, and more funds can be borrowed by the Federal Government to finance land transport investments, particularly the huge backlog in rail investments.
The obsession of both the Labor and Coalition governments with budget surpluses and lower debt over the last 20 years has caused serious damage to the Australian economy. It will take a lot to change their thinking, but that will be necessary if AUSLINK is to bear any fruit.
Logistics or network - a paradigm shift underway?
Deputy Prime Minister John Anderson promised that high priority for spending would go to logistics investments and intermodal facilities.
On the one hand, this ignores the repeated results of research and inquiries in the 1990s which showed the need for a massive investment of $3,000 million over 10 years in the interstate rail network if it was to provide comparable axle loads, transit times and reliability to the national highway system. Mainline upgrades, not terminals, is the priority for rail.
On the other hand, Anderson's priority indicates relatively small investments, with the major beneficiaries being private sector transport companies needing to integrate with the rail network. Pacific National is now as the largest private rail freight operator in Australia. Its co-owners, Toll Holdings and Patrick Stevedoring, need to connect their road and port terminals to the rail system. The Federal Government appears to be promising them support in PPP-style investments.
While the transfer of freight from road to rail that this would facilitate is highly desirable, it will be limited by the lack of capacity in the east coast rail corridor, with its 19th century alignments, tunnel and bridge limitations, and the Sydney bottleneck. Anderson recognised this in his ARA speech, calling attention to a promised $870 million investment in the interstate rail network in NSW over five years, if the ARTC obtains a 60-year lease over the specified NSW track. Where will these $174 million per year in funds would come from for the Macarthur - Chullora Southern Access Corridor, the new train control for the Casino - Greenbank corridor, and improved alignments and gradients in the Sydney - Albury corridor. He suggested it would come from the Federal and State governments, ARTC and the private sector.
This illustrates the ongoing difference in Federal policy between road funding and rail funding. The National Highway System in NSW is funded by a direct Federal grant. Track in NSW still has to be funded by borrowings, and NSW has to bargain for it. NSW does not have to lease its highways to a Federal Corporation to obtain NHS funding.
The RTBU notes that there are a range of track ownership options in the interstate mainline, ranging from ARG operating as a wholesaler to ARTC in Western Australia, ARTC owning the track in South Australia, ARTC leasing the track in Victoria, and NSW owning the track in NSW which unlike the first three cases, includes a major coal freight system in the Hunter Valley. The RTBU opposes the proposed 60-year lease of the NSW track, and supports an alternative approach which would still allow ARTC to administer access arrangements, but insists that the $870 million investment program go ahead.
Rolling 5-year plan
Minister Anderson says that the rolling plan will be 5 years. This is a vital part of the claim that AUSLINK constitutes a genuine national plan, yet it is the least developed so far in the government's statement.
The National Highway System is continually upgraded because there is systematic long term planning by State and Territory road authorities, who are the bodies which expend the federal funds. A national land transport network will also require that State and Territory roads agencies become an integral part of the framework. Western Australia and Victoria have created single planning and infrastructure development agencies, and the other States and Territories will have to go down this track. This is highly unlikely to be achieved, especially if State governments suspect that AUSLINK is shifting a Federal funding burden onto them.
Coalition for a land transport network
The RTBU is consulting with the broad environment, welfare and public transport constituencies in Australia about the possibilities and shortcomings of the AUSLINK proposal, and endeavour to build a strong campaign for a genuine transfer of federal funds to rail and urban public transport as part of a consistent land transport investment program. The "Green Paper" process is the first phase of such a campaign.
RTBU National Office, November 4, 2002
