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Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
Sarah Close, PwC Transport - Future strategy for road supply and charging
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Sarah Close, PwC Transport - Future strategy for road supply and charging

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Sarah Close, PwC Transport delivered the presentation at the 2013 Mining NSW Conference. …

Sarah Close, PwC Transport delivered the presentation at the 2013 Mining NSW Conference.

The 2013 Mining NSW Conference looked at mine exploration and development opportunities in Central NSW and the Northern Tablelands with a spotlight on capital raising outlook and overseas investment.

For more information about the event, please visit: http://www.informa.com.au/miningnsw13

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  • 1. PwC Transport National Transport Regulations Reform 2013 Case study: Strategy for roadCase study: Strategy for road supply and charging in Australia June 2013 June 2013
  • 2. Agenda Page 1 Purpose of the strategy 1 2 Current situation 3 3 Key findings 93 Key findings 9
  • 3. Purpose of the strategy Section 1 PwC June 2013 1 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 4. Industry sought an independent review Section 1 – Purpose of the strategy • Identified disconnect between road charges and road investment PC • Identified disconnect between road charges and road investment • Propelled issue onto national agenda CRRP • Found that more direct heavy vehicle charging could yield benefits • But only realised if integrated with funding and expenditure reforms HVCI • Currently preparing a RIS of supply and charging reform models • More long term, theoretical focus to date: mass distance location charging 2006 2010-2012 2013→ PwC June 2013 • Focus to date has been on charging more than supply/investment • ATA sought an independent review to guide the trucking industry • Practical approach that considered timeframes for change. 2 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 5. Current situation Section 2 PwC June 2013 3 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 6. Australia’s heavy vehicle sector Section 2 – Current situation Growth in Australia’s road freight task (1980-2030, billion tkm) PwC June 2013 4 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia • Critical to the production and distribution of a diverse range of commodities • 70% of domestic freight is transported by road (t) • Road freight task expected to double by 2030 and triple by 2050 (ntk).
  • 7. Road freight vs. regulation of other sectors Section 2 – Current situation Natural monopolies (electricity, water) Key differences for road freight • Have been tightly regulated for the last 20 years • Independent assessment of efficient costs • Use-based charges • Achievement of standards • Overseen by national regulators • Non-excludable • Non-rivalrous • Social / community • No examples of full regulation internationally • New Zealand has come the closest. PwC June 2013 5 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 8. Road supply: complex distribution of funding Section 2 – Current situation Commonwealth Nation Building (NB) Program: • Road investment ($1,956 m) • Black spot ($60m) • Heavyvehicle safety& productivity($20 m) • Roads to Recovery(18 m) Road-related expenditure $17.9billion (administration, enforcement, arterial and local roads) State Payment forwork on arterials NB:Roads to Recovery ($332 m) SA Local Roads ($16 m) Regional and Local NB Off-network projects ($225 m) • Roads to Recovery(18 m) Building Australia Fund ($312m) NB Plan for the Future ($27 m) FIRS ($69 m) ($11,887 m) Road-related revenue $18.8 billion • Fuel excise ($11,247m) • Federal Interstate RegistrationFees (FIRS) ($69 m) • Vehicle registrationfees($5,294 m) • Stamp dutyon registration fees ($2,167 m) PwC June 2013 6 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia Local on arterials ($705 m)f Identified Local Roads Grants (paid through the States) ($641 m) Regional and Local Community Infrastructure Program ($189m) ($6,469 m)
  • 9. Heavy vehicle charging Section 2 – Current situation PwC June 2013 • 60% of charges are allocated by the Commonwealth (fuel excise) • Remaining 40% is paid directly to states (high annual registration) • Some distortions due to increasing interstate freight. 7 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 10. Problems with the current situation Section 2 – Current situation Road supply issues: Case for more demand-led investment • Lack of national cohesion in road supply decisions • Lack of accountability and transparency • Does not meet diverse needs of road users • Poor incentives for heavy vehicle access • Disjointed access for heavy vehicles • Uncertainty about how to treat CSOs Road charging issues: Balancing charging reform with reality • Road user charges do not reflect costs of use • Cross-subsidisation within vehicle classes and across time • Over-recovery and distortions • Limited behavioural response to charging • Practical constraints on charging revenues PwC June 2013 8 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia • Uncertainty about how to treat CSOs • Lack of demand data to inform investments • Practical constraints on charging revenues
  • 11. Key findings Section 3 PwC June 2013 9 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 12. Recommended road supply and charging model Section 3 – Key findings Short term (0-3 years) Medium term (3-6 years) Long term (7+ years) 1. Three-tier road freight network + service standards and access levels 2. Reporting, benchmarking and review of road costs 3. Transparent formula for allocating funding to road suppliers 4. Improve cost reflectivity 1. Reporting, benchmarking and review of efficient road costs – tied to funding 2. Further improve cost reflectivity of road charges – majority fuel-based charge 1. Potentially establish national road fund to assess demand data and submissions for Tier 1 and 2 investment plans 2. Continue with a fuel + registration charge until strong business case for variable charging emerges: • Can and will detailed data obtained through variable charging be used to improve investment decision-making? PwC June 2013 10 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia 4. Improve cost reflectivity through adjustments to PAYGO investment decision-making? • Is added cost, time and complexity warranted?
  • 13. Key findings/learnings Section 3 – Key findings 1. Understand why roads is one of the last monopolies to undergo micro 1. Understand why roads is one of the last monopolies to undergo micro economic reform: diversity of users as well as road network infrastructure 2. There is a case for more demand-led investment in roads used by heavy vehicles: critical to meet future freight growth through productivity, however linkages with light vehicle investment to be resolved 3. Better alignment of charging is promising if detailed data can be used to improve investment decision-making and other benefits justify cost, time and complexity. PwC June 2013 11 National Transport Regulations Reform 2013 • Case study: Strategy for road supply and charging in Australia
  • 14. Thank you Further questions, please contact:Further questions, please contact: sarah.close@au.pwc.com The strategy prepared for ATA is available at: http://www.truck.net.au/industry-resources/future- strategy-road-supply-and-charging-australia This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PwC Australia, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2013 PwC Australia All rights reserved. In this document, “PwC” refers to PwC Australia which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

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