Australian Local Government Association

Productivity Commission to level the playing field for road and rail freight transport.

13 March 2006

Productivity Commission to level the playing field for road and rail freight transport.

The Productivity Commission has been instructed by the Australian Government to complete a review - of the costs faced by road and rail freight transport - by December 2006. This followed agreement between the Prime Minister and the Premiers and Chief Ministers at the recent Coalition of Australian Governments (COAG) meeting that governments required an objective analysis of road and rail costs so that they could implement policies to establish "competitive neutrality" betweent the two modes.

It is all part of the COAG program to remove inefficiencies and blockages from the Australian economy and to retain an edge in world markets. By ensuring that both road and rail freight transport meet the actual costs of their infrastructure and their operations, governments will drive investment in these modes to performing the freight tasks to which they are best suited.

At the moment there is a noisy and somewhat unproductive public exchange between the road and rail lobby, each claiming that the other does not pay its way. The productivity commission revies should establish an information base on which the community will be better able to make judgements on this matter.

The terms of reference to the review contain the following elements:

• the review is to determine the full finacial costs of providing road and rail infrastructure
• it is to identify efficient pricing approaches and recommend timeframes for implementation
• the review is to determine the settings for "competitive neutrality"
• the review is measure social coats including environmental and safety impacts
• the review will draw on the research of the Bureau of Transport and Regional Economics, and the National Transport Commission
• the Commission is to consult widely with stakeholders
• the Commission is to report by December 2006

In the COAG forum ALGA has been supportive of ramping up the transport agenda to support the competitiveness of Australain industries - the benefits to flow through to community level. And while it makes sense to support a position that says a freight transport task should be performed at least cost, a critical point for local government centres on that set of costs included in the equation.

Accordingly, in its initial discussions with the Commission Chariman, Gary Banks, and his staff, ALGA has stressed that local impacts such as noise, vibration, congestion, emissions and safety, which communities percieve as significant, should be part of that mix if "total" costs to be fully assessed. Local government can also be excused from having a "disinterested" view about the "right price" for heavy vehicles in the absence of local government access to revenue derived from the users of the lcoal road network, a huge asset or business for which it has custody.

ALGA will be making a submission to the review.

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