Benefit 2: By publicly highlighting areas where The benefits of IPR scrutiny of Increased road managers may be able to reduce expenditure may be limited because efficiency from costs or improve the efficiency of existing processes already provide a better governance their investments, the IPR has the of scrutiny: through potential to place a level of public Internal government pricing scrutiny on expenditure proposals processes already examine the and independent (and past expenditure) that does not prudency and efficiency of and/or currently exist. expenditures, typically as part of economic Scrutiny will be assisted by budget approval processes. regulation comparative benchmarking of Infrastructure Australia currently expenditure across states and undertakes evaluations on all territories, which will be supported by infrastructure proposals for which new data and analytical systems. funding of more than Existing scrutiny of maintenance $100 million is sought from the expenditure is constrained by a lack Australian Government. of robust benchmarking information. has begun to publish A more formal industry consultation benchmark data on road process has the potential to alter construction costs and key cost investment priorities and service drivers (BITRE 2018). levels. Some governments have existing freight industry consultation forums, which partly provide existing formal user input mechanisms. Benefit 3: Better A customer service charter may result The customer service charter applies quality roads, in some roads receiving a higher level only to key freight routes and not to leading to lower of service than they would otherwise all roads. Key freight routes are vehicle operating receive. likely to make up a significant costs proportion of total kilometres of arterial roads managed by road managers. Without reforms to road funding involving revenues from road use returning to road managers, the charter may be set at a conservative level that does not result in material gains to road users. Benefit 4: More A road user charge (RUC) that is set It is unclear whether there are any efficient pricing, at a higher level to reflect more limitations. efficient pricing will not exceed the leading to lower vehicle operating current fuel excise level. costs Valuing the size of the contribution to revised benefits
Benefit 2: Increased efficiency from better governance through pricing and independent and/or economic regulation By publicly highlighting areas where road managers may be able to reduce costs or improve the efficiency of their investments, the IPR has the potential to place a level of public scrutiny on expenditure proposals (and past expenditure) that does not currently exist. Scrutiny will be assisted by comparative benchmarking of expenditure across states and territories, which will be supported by new data and analytical systems. Existing scrutiny of maintenance expenditure is constrained by a lack of robust benchmarking information. A more formal industry consultation process has the potential to alter investment priorities and service levels. The benefits of IPR scrutiny of expenditure may be limited because existing processes already provide a of scrutiny: Internal government processes already examine the prudency and efficiency of expenditures, typically as part of budget approval processes. Infrastructure Australia currently undertakes evaluations on all infrastructure proposals for which funding of more than $100 million is sought from the Australian Government. has begun to publish benchmark data on road construction costs and key cost drivers (BITRE 2018). Some governments have existing freight industry consultation forums, which partly provide existing formal user input mechanisms. Benefit 3: Better quality roads, leading to lower vehicle operating costs A customer service charter may result in some roads receiving a higher level of service than they would otherwise receive. The customer service charter applies only to key freight routes and not to all roads. Key freight routes are likely to make up a significant proportion of total kilometres of arterial roads managed by road managers. Without reforms to road funding involving revenues from road use returning to road managers, the charter may be set at a conservative level that does not result in material gains to road users. Benefit 4: More efficient pricing, leading to lower vehicle operating costs A road user charge (RUC) that is set at a higher level to reflect more efficient pricing will not exceed the current fuel excise level. It is unclear whether there are any limitations. Valuing the size of the contribution to revised benefits
consultation_ris_-_hvrr_phase_2_-_independent_price_regulation_of_heavy_vehicle_charges.docx