The Fuel-Based-Charging Option will stay alive

And now it’s time for a prediction.

At the end of this year, Governments are due to receive a ‘feasibility study’ that’s being produced as a key report from the ‘COAG Road Reform Plan’ (CRRP).

I’ve bet the President $50 that this report will not rule out ‘fuel based charging’ as an option for any future CRRP reforms.

That’s not because the bureaucrats have suddenly fallen in love with fuel based charging – for a range of reasons, the majority of them still are very sceptical about that approach.

Together with a range of industry colleagues, we’ve been pressing the argument that the CRRP project has, to date, failed to prove two out of the three things that it needs to be able to show.

We’ve argued that, as a simple matter of logic, CRRP needs to jump over three hurdles, before governments can even think about adopting a profoundly new and different charging system:

CRRP: two out of three hurdles simply aren’t proven

What CRRP has to prove: Where they’ve got to:
1.           They have to prove that its technologically and economically ‘feasible and beneficial’ to move to a new system. The economic analysis fails to show that there is a worthwhile economic benefit solely and directly from a new charging system.

It turns out the economic benefits only really add up to something worth having if you can actually deliver: better roads, better maintenance and better access as a result of whatever reforms you pursue.

There isn’t a cashable economic benefit in pursuing technology for technology’s sake.

Will our members be surprised to hear that? Not at all. Were government officials surprised? Some were, yes.

2.           They have to prove that it’s necessary to move to a new system in order to produce the three things everyone wants: better roads; more efficient maintenance of the roads; and better access to the roads for industry. Being blunt: this item is a clear fail. Officials have argued that they need ‘revenue certainty’ and ‘better traffic information’ in order to give us better roads.

That’s all very well, but why does it take a new charging system to achieve that?

Why can’t it be achieved using less radical methods? This question hasn’t been credibly answered.

3.       They have to prove that moving to a new charging system is sufficient to produce those three things we all want. On this one, officials haven’t even tried.

Privately, they acknowledge that road agencies would need to undertake major changes – especially cultural changes – to learn to treat industry as ‘customers’.

But just look at how long Telstra’s been working to become a ‘customer-focused business’. Telstra used to be a huge government-owned engineering business (just like most road agencies still are) and they are still talking about needing to become ‘customer-focused’.

Road agencies will need to do much better than simply say ‘trust us, we know we need to change … and it doesn’t matter that we don’t know how or what changes to make’.

CRRP is meant to be about making the road agencies start to operate more like businesses, and making them move towards treating the industry more like customers. It’s meant to be about delivering better roads, better maintenance, and better access.

It’s meant to be about getting away from industry being charged to ‘recover the cost’ of building the roads and instead moving to a world where industry pays for ‘a service’ – perhaps, say, the ability to drive from point A to point B; and maybe even the quality of your ‘on-road experience’.

The bureaucrats have actually failed to prove (1) that a complex charging system is necessary, or (2) that a fuel-based-charging model isn’t sufficient, in order to deliver those changes, or most of those changes.

And that’s why they will unable to lodge a report that kills off fuel as an option.

… CRRP must move to examine ‘supply side’ measures

What we’d like to see in the CRRP report is a recommendation to ‘park’ the destructive debate about you-beaut new charging techniques.

Governments should now spend some serious time and energy looking at what changes need to happen inside road agencies in order for Australia to get better roads, better maintenance, and better access to the roads.

Few State Governments, and almost no local governments, can produce a comprehensive condition report upon their road assets, let alone an integrated road asset management plan.

Just fixing that ‘measurement and data’ problem will take serious effort and commitment.

It’s a problem that’s been very effectively identified in “Going Nowhere,” the first publication from the group of agriculture-focused Councils and Shires who make up the Australian Rural Roads Group.

That report calls for mandatory public reporting of road asset condition to be introduced in Australia.

That’s the kind of foundation that CRRP needs to build. Yet, so far, CRRP simply hasn’t addressed the huge gaps in information held within government, and the huge gulf between what most governments keep secret and what they reveal to their ‘customers’.

Put simply, if governments can’t find a way to share asset condition information, they’ll never get anyone believing their claims about the challenges which the road system may be facing.

More importantly, if governments can’t lay down a clear economic framework for how roads and road agencies will be managed in the future, they won’t have the slightest hope of persuading anyone that ‘economic reform’ isn’t a code that means ‘we’ve come up with a new way of ripping you off’.

… Watch out: here come the Treasuries

While some of us in industry are quite pleased to have fought this round of the CRRP process to a nil-all draw (and that is how some people in government are viewing it), none of the industry groups who’ve taken an interest in this topic should relax.

The next move is already very clear to us – the CRRP agenda is going to be reinforced by involving senior officers from the Federal and State Treasuries.

The next round is going to be very interesting, and industry is going to need to be ready to play in the A-Grade!

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