By publicly highlighting where The benefits of IPR scrutiny of Benefit 2: Increased road managers may be able to reduce expenditure may be limited because efficiency from costs or improve the efficiency of the following existing processes better governance their investments, the IPR has the already provide a level of scrutiny: through potential to place a level of public existing internal government pricing scrutiny on expenditure proposals budget processes; and independent (and past expenditure) that does not Infrastructure Australia price and/or currently exist. evaluation processes for economic Scrutiny will be assisted by expenditure submissions; and regulation comparative benchmarking of BITRE benchmarking on road expenditure across states and construction costs and key cost territories, will be supported by drivers (BITRE 2018). new data and analytical systems. Some governments have existing Existing scrutiny of maintenance freight industry consultation expenditure is constrained by a lack forums, which partly provide of robust benchmarking information. existing formal user input A more formal industry consultation mechanisms. process has the potential to alter investment priorities and service levels. A customer service charter may result Benefit 3: Better The customer service charter applies quality roads, in some roads receiving a higher level only to key freight routes, although leading to lower of service than they would have those routes make up a significant vehicle operating otherwise receive. proportion of arterial roads. costs Without reforms to road funding, committed service levels may be set conservatively. Benefit 4: More A road user charge (RUC) that is set It is unclear whether there are any at a higher to reflect more limitations. efficient pricing, leading to lower efficient pricing will not exceed the vehicle operating current fuel excise level. costs Scenario 2 provides a more definitive result, in that the benefits are likely to be greater than costs under both reform options. This is because if Reform options A and B are rejected there is likely to be a delay in moving towards end-state reform, and it does not need to be a very long delay for the benefits to be greater than the costs. A delay of only 2 months is likely to be more than sufficient to justify moving ahead with either reform option. However, it is important to note that Scenario 2 assumes further reform towards the end-state reform.
Benefit 2: Increased efficiency from better governance through pricing and independent price and/or economic regulation By publicly highlighting 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, 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 the following existing processes already provide a level of scrutiny: existing internal government budget processes; Infrastructure Australia evaluation processes for expenditure submissions; and BITRE benchmarking 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 have otherwise receive. The customer service charter applies only to key freight routes, although those routes make up a significant proportion of arterial roads. Without reforms to road funding, committed service levels may be set conservatively. Benefit 4: More efficient pricing, leading to lower vehicle operating costs A road user charge (RUC) that is set at a higher to reflect more efficient pricing will not exceed the current fuel excise level. It is unclear whether there are any limitations. Scenario 2 provides a more definitive result, in that the benefits are likely to be greater than costs under both reform options. This is because if Reform options A and B are rejected there is likely to be a delay in moving towards end-state reform, and it does not need to be a very long delay for the benefits to be greater than the costs. A delay of only 2 months is likely to be more than sufficient to justify moving ahead with either reform option. However, it is important to note that Scenario 2 assumes further reform towards the end-state reform.
consultation_ris_-_hvrr_phase_2_-_independent_price_regulation_of_heavy_vehicle_charges.docx