Chapter 3
The need for an integrated approach to future transport needs
3.1
This chapter considers the need to move towards an integrated approach
to transport, transport funding and urban development.
From a 'private car versus public transport' debate to an integrated
approach
3.2
Evidence to the committee highlighted the importance of integration at a
number of different levels. These include an integrated approach to congestion
utilising all transport modes, transport planning within infrastructure
development (which takes into consideration factors including employment hubs
and land use), and an integrated and mutually supportive approach to transport pricing
mechanisms.
3.3
In its Urban Transport Strategy, Infrastructure Australia acknowledged
that debates in Australia about urban transport have focused on either roads or
public transport.[1]
It recognised that urban transport has not been viewed as an integrated system
dealing with both people and freight flows. Similarly, the Committee for Perth
noted that planning for urban transport in Australia had mainly focused on
either roads (especially car use) or public transport with both functions often
undertaken in isolation of each other. It argued that urban transport has not
been viewed as an integrated system dealing with people, cars and freight flows
(by road, rail, sea and air) while:
Little consideration has also been given to the impact of
transportation on economic productivity, including its impact on the location,
form and function of the city's employment and activity centres and on its
urban form.[2]
3.4
Infrastructure Australia acknowledged that any discussion of urban
transport needs to consider roads and public transport together given that
'greater use of one may result in less use of the other, and funds allocated to
one are not able to be allocated to the other'.[3]
3.5
Mr Cole Hendrigan of the Curtin University Sustainability Policy
Institute, made the point that integration of road and rail was fundamental if
only to maximise investments already made in both modes of transport.[4]
3.6
Professor Currie noted that integration across road and rail was
important for reasons including the fact that car access to public transport systems
is a significant but often undervalued commuter requirement. He explained that as
public transport systems don't cover most of Australia's cities, with
approximately half of the city of Sydney without public transport, about 40 per
cent of rail users access railway networks by car. At the same time, most
public transport available in Australia's cities is road-based as approximately
70 per cent of public transport services comprise buses rather than trains and
trams. For these reasons, prioritising on-road transport requires consideration
of the trade-off between road space and road time.[5]
Professor Currie argued that there were three primary problems in relation to
public transport in Australia:
The first is the congestion we have in our railways in
central areas...The second is that our trams in Melbourne, or streetcars, are
stuck in traffic. The third is that the bus coverage of our outer suburbs is
very poor.[6]
3.7
ARA also submitted that Australian cities have traditionally invested in
roads to combat congestion despite the fact that investing in additional roads
to accommodate more cars is not a long-term solution.[7]
The department also recognised the need for an integrated approach to address
congestion, which, is otherwise set to increase. The department acknowledged
that both urban road and rail systems are an essential part of both urban passenger
and freight networks and do not operation in isolation of each other.[8]
3.8
ARA drew on a railway study in Sydney which found that if rail absorbed
30 per cent of the forecast increase in urban travel then congestion, carbon
emissions and safety costs could be reduced by approximately $1 billion a year
by 2025.[9]
It also noted that concentrating investment in one mode of transport would
create an 'unbalanced, inefficient transport system that is unable to meet the
growing needs of the population' whereas:
An integrated transport system with service connectivity
between transport modes is critical. It allows more people to use public
transport as they can move from more origins to more destinations which in turn
increases the productivity of the city and therefore the nation.[10]
3.9
The Transport Reform Network (TRN) also acknowledged that many transport
projects are planned in isolation of a broader transport vision and system.[11]
The introduction of a new mode or extension of an existing mode will be directed
at solving a particular problem rather than contributing to an integrated
solution. The Committee for Melbourne gave an example whereby one piece of road
is fixed only to create a bottleneck further down the same road.[12]
What is missing is planning at a system level across all geographical
jurisdictions.[13]
As TRN argued, the issue was not one of rail versus roads, or cars versus buses,
but rather how to finance, fund and deliver transport solutions that benefit
all users.[14]
Integrated transport and urban productivity
3.10
The integration of transport planning as part of city infrastructure
development was a key theme of the inquiry. The committee received considerable
evidence which highlighted the impact of urban transport on city productivity
and national competitiveness.[15]
3.11
Defining competitiveness as a 'set of institutions, policies, and
factors that determine the level of productivity of a country' the World
Economic Forum (WEF) identified extensive and efficient infrastructure as the
second of twelve pillars of economic competitiveness.[16]
WEF noted that:
Well-developed infrastructure reduces the effect of distance
between regions, integrating the national market and connecting it at low cost
to markets in other countries and regions. In addition, the quality and
extensiveness of infrastructure networks significantly impact economic growth
and affect income inequalities and poverty in a variety of ways. A
well-developed transport and communications infrastructure network is a
prerequisite for the access of less-developed communities to core economic
activities and services.[17]
3.12
In 2010–11, Australia was ranked by WEF on its global competitiveness
scale in sixteenth position. WEF noted that if Australia is to progress
further, the country would need to increase the sophistication of its
businesses and strengthen its innovation capacity.[18]
In terms of infrastructure, Australia was ranked twenty-second in the world
which, according to the Committee for Perth, is proof that investing in
infrastructure is vital to Australia's international competitiveness.[19]
3.13
According to the Committee for Perth, the measures of competitiveness
are generally based on pragmatic indicators including public transport
infrastructure and internal connectivity.[20]
It noted that the competitive success of cities or city-regions depends on
their economic diversity, skills and human capital, quality of life, environment,
innovation and connectivity.[21]
3.14
If public transport is to deliver connectivity and productivity enhancements,
an understanding of the location of growth areas and employment hubs is
fundamental. This way, future investment can be targeted to deliver better
outcomes for the national economy.[22]
As the physical limits of major urban environments become more evident, and
widening roads and increasing the number of public transport services is no
longer effective in combating congestion, major cities will require wholesale
reform and planning in order to transform how people move, work and live.[23]
3.15
Evidence to the committee highlighted that Australia's CBDs will be
unable to absorb expected population and jobs growth, thereby requiring
secondary and tertiary hubs to take up much of the demand. Ms Emma de Jager,
Executive Officer of the Planning Institute of Australia argued that this would
require initiatives to improve the interconnectivity of major regional centres
outside of the CBD. However, one of the major challenges to creating
multiple-centre cities is that of the current radial mass transit network.
Transport corridors are generally centred on the CBD and radiate outwards to
the suburbs, thereby requiring commuters to travel via the CBD to access other
parts of a city. This in turn causes long delays and added congestion.[24]
In the case of Perth, which has a radial rail and radial road system, there is
little in the way of orbital link-up.[25]
The establishment of a more interconnected and multi-centred urban environment
would therefore require a rethink of the traditional CBD-centric networks and
establishment of secondary and tertiary population hubs.[26]
3.16
The integration of residential and employment hubs resulting from
connected hub-and-spoke public transport networks would increase the ability of
those in the outer suburbs to access jobs and create wealth. The transformation
of cities in this way would ensure that Australians are not excluded from some
job markets on the basis of where they live. The Planning Institute of
Australia explained that:
There are several studies which document that public
transport investment will be needed along major corridors to cater for the high
density, mixed-use developments and capacity expansion that will be required in
several CBD oriented public transport services to cater for patronage growth.
Failure to provide such capacity carries risks of CBD job loss, with the
associated losses of agglomeration economics for which CBDs are important from
an economic perspective.[27]
3.17
The need to maximise benefits to dense city populations by ensuring that
new residential and commercial zones are developed around major transport hubs
and nodes was a central theme of the inquiry.[28]
3.18
The point was made that those who live on the outskirts and on the
fringes may pay less for their housing in contrast to those in inner city
areas, but will have to spend considerably more money and time on transport.
Professor Adams drew on research conducted by Griffith University which found
that increasing numbers of people, many of whom are not in poorly paid
employment, are time poor given the time it takes them to travel to work or to
make household purchases.[29]
3.19
However, evidence provided by Infrastructure Australia indicated that
there is a direct link between low-income households and the need to travel
greater distances in order to get to places of employment, services and
activities.[30]
As many parts of Australia's cities provide poor transport access to employment,
travel times continue to expand. In some parts of Sydney, a journey of 45
minutes by car or 60 minutes on public transport will provide a commuter access
to only 10–20 per cent of all jobs available in the metropolitan area.[31]
3.20
Part of the problem is that outside of metropolitan areas, transport
options are increasingly limited.[32]
In Melbourne, rail reaches an estimated 30 per cent of the population and trams
reach 25 per cent. Therefore, for 70 per cent of the population, buses are the
only option. However, buses are as infrequent as 40 minutes apart during peak
periods and 50 minutes at other times. Therefore, 95 per cent of the transport
task from outer metropolis growth areas reliant on buses is undertaken by
people driving cars.[33]
3.21
Professor Adams noted that as Australian cities will have to almost double
their urban accommodation capacity over the next 40 years in parallel with
population growth, new ways must be found to address the challenges of urban
transport.[34]
He emphasised that the future sustainability of cities is of critical importance
given that over 50 per cent of the world's population live in cities. Up to 75
per cent of greenhouse gasses emanate from those cities while the GDP of most
economies is driven by urban areas. Despite the need to ensure the
sustainability of Australia's cities, he argued that the matter has been
relegated to a state and local government discussion. Even then, cities are
considered within the context of issues such as health, education, transport or
land use rather than holistically.[35]
3.22
According to the Moving People 2030 Taskforce, without significant
reform, the compounded cost of every extra person on Australia's often
at-capacity transport networks will impact on the employment opportunities,
productivity and social well-being of the next generation.[36]
Melbourne's train system is as a case in point. By 2016–17, some of the train lines
will be at maximum capacity in peak hour. By 2021, the entire train system will
be at maximum capacity.[37]
3.23
Professor Currie from Monash University informed the committee that despite
substantial growth in public transport services in Australia, mass transit in
its cities had been significantly underfunded and required considerable
investment. He emphasised the need for efficient transport modes such as
railways, noting that the capacity of the proposed Melbourne Metro Rail would
be equivalent to about five West Gate freeways full of traffic.[38]
He argued that while the standard federal approach had been to leave public
transport to state governments, public transport initiatives are projects of national
significance which require federal involvement.[39]
In the US, for example, federal funding for urban public transport systems is
derived from a modest tax on fuel. Professor Currie noted that until
cost-effective investment into current public transport systems takes place,
Australia will continue to experience low public transport usage in the outer
suburbs coupled with car domination and the consequent problems created for the
inner suburbs.[40]
Pricing mechanisms
3.24
One of the primary challenges in relation to financing public transport
into the future is that of pricing mechanisms. The department noted that ticket
revenue in Australia's public transport system has always fallen short of the
cost of providing the service. Consumers don't pay any of the involved capital
costs with the balance funded by state and Commonwealth tax payers.[41]
The true cost of service delivery is approximately four times the price that
consumers currently pay in fares. Furthermore:
...fare recovery in Australian urban mass transit systems is
already well below international benchmarks and continues to decline. A
preliminary analysis by BITRE estimates that Sydney’s mass transit system
recovers 24 per cent of its operating costs through the fare box while
Melbourne recovers at 31 per cent, while Perth recovers 38 per cent. For
Canberra’s bus only system, users pay only 17 per cent of operating costs.[42]
3.25
According to TNR, the price that consumers pay for transport
infrastructure and services has evolved 'haphazardly' and remains a legacy of
the complicated layering of government responsibilities. With revenues,
expenditures and pricing remaining a shared responsibility across various
agencies at national, state and local government levels, there is little
consistency and transparency in transport pricing in Australia today.[43]
At the same time, there is competitive tension between the different modes of
transport which is driven by a view that investment in one mode takes place at
the expense of another. However, a holistic approach to transport pricing, with
pricing signals that encourage greater use of public transport, can benefit all
such modes because they stimulate the system as a whole to operate more
efficiency. According to TRN:
The challenge, therefore, isn't just about the physical
integration of public and private transport modes and infrastructure; it's
demonstrating to the community the system-wide benefits of an integrated,
transparent and mutually supportive approach to pricing.[44]
3.26
The point was made that an integrated public transport system could play
a key role in alleviating transport disadvantage and car dependence, thereby
addressing a significant barrier to workforce participation and access to
training and services.[45]
An integrated approach that considered land use planning (including parking),
employment and active travel (including walking and cycling) as well as road
and rail is essential for productivity gains, income generation and quality of
life in Australia's major cities.[46]
Maximising existing public transport resources
3.27
Another matter raised during the inquiry was the need to maximise
existing public transport resources. Professor Adams noted that if public
transport is to be a viable option in addressing congestion in Melbourne, a
range of changes were required, including the need to improve rail system signalling
to the metro link as well as effective and harmonised timetabling.[47]
Yet, such improvements cannot take place in isolation. For example, to provide
maximum efficiency in the context of Melbourne's public transport system,
improved signalling needs to take place at the same time as grade separations
and initiatives to address congestion on the CBD train loop.[48]
3.28
Ms Roffey of the Committee for Melbourne also emphasised the need to
consider what existing infrastructure can be used more efficiently. Of the
transport situation in Melbourne, she noted that:
There are places where rail and tram just do not work. It is
too expensive to put in a couple of kilometres of rail, but a bus that does a
small loop is very effective. Unfortunately, we have buses that go all the way
from Dandenong to the north of the city and that route just takes too long. But
if you have small looping buses that link public transport conductivity nodes,
I think we would have a much better system operating. At the moment, the buses,
the trams and the trains operate independently of each other.[49]
3.29
Harmonisation of existing public transport services was recognised as a
key practical step towards an integrated transport system. A number of
submitters argued in favour of a hub-and-spoke model which would permit greater
complementarity between services and thereby enable commuters to catch a bus to
get to a train to the city as opposed to driving a car.[50]
As a case in point, Western Australia has a fully integrated public transport
system which allows for centralised planning in relation to timetabling. The
integration of the bus and train timetable enables complementarity of service.
This system is further supported by a common ticketing system whereby
passengers can catch a bus, train or ferry and transfer between them on the one
ticket.[51]
3.30
However, complementarity is a particular challenge in Melbourne where
respective timetables may not match or complement each other partly because each
of the transport services are contracted to separate entities.[52]
The lack of coordination between these services demonstrates the extent to
which the effective operation of each service depends on the other. In the case
of Melbourne, the tram network cannot work without an efficiently operated road
network, and without a good road network, an efficient public transport network
is not possible.[53]
3.31
A major challenge in coordinating transport timetables is the impact of
congestion. According to Mr Dennis Cliche, Chair of TRN, during peak periods,
trams run late 25 per cent of the time as a consequence of road congestion.[54]
Furthermore, complementarity is also made extremely difficult if not impossible
when different services operate at different frequencies. For example, where
trains run every 20 minutes and buses every 30 minutes.[55]
3.32
Yet, practical steps can have a significant impact. A study commissioned
by the Greater Shepparton City Council found that by increasing the frequency
of passenger travel to Melbourne and improving timetabling, the uptake of
passenger rail services by both business and leisure commuters increased. Other
benefits from these practical changes included improved accessibility to public
transport for the disabled and elderly, reduced vehicle congestion and
emissions on the roads, increased population growth and with it increased
investment in Greater Shepparton.[56]
3.33
Another mechanism which seeks to address peak-hour traffic is that of
providing free or reduced price tickets during pre-peak periods. In one such
initiative, the Victorian government made train rides into the Melbourne CBD
free to commuters before 7 am. According to Professor Adams:
Two thousand six hundred people took advantage of that. That
was the equivalent of buying five new trains, which would have cost $100
million. If you then take off the subsidy, which was $15 million, you still
have $85 million in front.[57]
3.34
Evidence suggested that demand elasticity for off-peak travel is
typically up to two times higher than for peak periods. Therefore, peak-hour
commuters are more likely to absorb fare increases than off-peak commuters.
However, according to the Moving Australia 2030 Taskforce, for pricing to be an
effective mechanism to balance demand, off-peak tickets have to be at least 20
per cent cheaper than the peak alternative.[58]
3.35
TRN's Mr Cliche made the point that these initiatives use pricing and
transparency of pricing as a signal to drive behaviour. Such initiatives lead
to better utilisation of all transport modes and greater efficiency of
services. To this end, what is important is to make the costs of the various
modes more transparent and known to commuters in order that they make informed
decisions about transport modes and potentially modify their commuting
behaviour accordingly.[59]
Agglomeration economics
3.36
One means of maximising existing infrastructure resources which received
attention during the inquiry was that of agglomeration economics (AE). AE
describes the benefits that arise from special concentrations of economic
activity.[60]
A 2013 report on the contribution of public transport to economic productivity
made the following observations:
PT [Public transport] can both encourage and enable increased
employment in central city locations, by reducing commuting costs in congested
transport networks and freeing up space that would otherwise be required for
car parking. Through these two channels PT is able to make a somewhat unique
contribution to economic productivity in denser urban environments.[61]
3.37
The committee heard evidence that by obtaining maximum use of existing
infrastructure and related resources rather than constructing new
infrastructure, savings can be achieved and public transport made more
accessible. Professor Adams argued that if accommodation of up to eight storeys
is constructed along railway lines in central Melbourne, 860,000 people can be
accommodated within walking distance of railway stations.[62]
Furthermore, the savings that result from constructing housing units within
existing infrastructure rather than on the fringes (where infrastructure needs
to be built), is estimated at $300 million per 1000 dwellings. In Melbourne,
for every million people added to the city and accommodated within its existing
infrastructure, the savings are estimated at $110 billion.[63]
Additional savings flow from this maximisation of available resources in areas
such as property rates as the tax load is spread across a broader base as the
population grows.[64]
Public transport funding
3.38
Regional transit networks have traditionally been funded by government
from consolidated government taxation revenue and market rate loans.[65]
Evidence put to the committee suggested that Australian governments can no
longer afford to continue relying on an allocation from general government
funds for public transport improvements and infrastructure investments.[66]
Infrastructure Australia also noted that there was a risk that Commonwealth
infrastructure funding was seen as a 'gift' to assist in the delivery of a
project or support a state rather than an exchange to improve national
outcomes.[67]
3.39
For these reasons, it was emphasised that alternative funding sources
for public transport must be found alongside private sector contributions to
financing transport infrastructure.[68]
Whether Australians travel by public transport or not, the entire community
still benefits from its existence and use by others. As the previous chapter
has demonstrated, effective public transport has a direct impact on national
productivity, global competitiveness and quality of life.
3.40
It was suggested to the committee that public transport has often 'taken
a back seat' to roads because it can be difficult to establish how public
transport will pay its way, particularly in the short term.[69]
The greatest challenge is that of the ongoing operational costs of public
transport.[70]
The Committee for Melbourne argued that the construction of roads is
comparatively easier than the establishment of public transport systems because
a toll can be imposed on road use which is attractive to private investors who
can potentially enjoy a return on their investment.[71]
3.41
Nevertheless, Curtin University's Professor Newman made the point that
public transport was no different to freeways to the extent that neither modes pay
for themselves unless proper charges are imposed. He highlighted that the
public transport systems of Japan and Hong Kong not only pay for themselves but
actually make a profit, derived from the payment of fares and application of
the value capture method on properties constructed along rail lines.[72]
3.42
The City of Yarra held the view that there was a huge 'catch-up' required
in public transport and rail freight infrastructure across Australia because taxation
treatment and investment has traditionally been heavily biased to favour motor
vehicles at the expense of alternatives. It argued that this approach has left
Australian cities, and the nation as a whole, economically and social
disadvantaged.[73]
It held the view that as the trucking industry has received the benefit of road
infrastructure funding, taxation and other advantages, rail freight has
suffered. The City of Yarra suggested that when external costs are included,
road freight has expanded through the use of hidden public subsidies which have
led to a major decline in competitiveness and the use of rail freight while:
It is estimated that the additional cost to the community of
funding road transport over public transport, is at least $30 billion annually
per annum.[74]
3.43
RTBU argued that while public transport infrastructure received heavy
investment during the post-war years, investment began to decline in the 1980s
as public transport infrastructure spending came to be viewed as a cost rather
than investment.[75]
According to RTBU, in the immediate post-war decade, the total transport
investment was 70 per cent of all non-primary investment. By the 1980s, this
figure had fallen to 30 per cent and is now less than 10 per cent.[76]
Implications of state government
funding of public transport
3.44
The Committee for Perth held that any decision not to provide national
funding to public transport is not only seriously remiss but will have long
term negative consequences on the economic productivity, competiveness and
liveability of Australia's cities.[77]
Similarly, the Committee for Melbourne held the view that:
The nation's competitiveness and attractiveness is dependent
on the quality of this infrastructure and as national priorities compete, the
role of the Commonwealth to provide efficient provision of infrastructure
increases.[78]
3.45
Professor Adams took the view that Australia's cities will undergo
social and financial breakdown if federal funding is not invested into public
transport. He explained:
If we decide that public transport is not worth investing in,
very quickly our cities become less livable. We sit on that livability index – I
do not want to flirt with Melbourne's livability – right on the cusp of losing
that. If we start to get greater congestion and greater social disharmony, all
of that will see us slide back on those scales. [79]
3.46
The City of Yarra also challenged the argument that public transport should
be exclusively a state matter and raised concern that such an approach has left
investment in public transport neglected, especially when the Commonwealth has
provided substantial funding for road networks in urban and regional areas. It
was submitted that Australia is the only developed country in the world whose
national government does not substantially fund urban public transport systems,
and that this approach was to the disadvantage of public transport investment.[80]
3.47
UnitingCare Australia argued that federal funding for roads and not
public transport provided a 'perverse incentive' to state governments to favour
road projects over public transport infrastructure.[81]
UnitingCare Australia suggested that the East West Link project was a case in
point. Similarly, the Committee for Melbourne argued that if directed just to
roads, federal funding will 'skew' state priorities to major motorway projects
whether they are the most important or not.[82]
It raised concern that the federal government's position on public transport
may lead to an inconsistent approach to the evaluation, planning and funding of
transport types, particularly urban public transport. As an alternative, it
argued that Commonwealth funding should be based on the contribution of
transport projects to the national economy and enhancement of national
productivity.[83]
3.48
A further point was made that, in terms of capacity spending, the
federal government receives 80 per cent of national tax revenue in comparison
to 16 per cent which goes to the states and territories and the 3.5 per cent to
local government. The City of Yarra made the point that if state governments
only receive 16 per cent of national tax revenue, they cannot be expected to
fully fund rail.[84]
3.49
According to the City of Yarra, while state planning processes
repeatedly discuss the need to integrate transport projects with development
plans, the 'scale of investment now required prevents meaningful delivery of
these plans without federal Government contribution to public transport funding'.[85]
It challenged the argument that public transport is too costly when compared to
road transport infrastructure on the basis that it fails to properly cost
externalities, opportunity costs and market distortion in favour of motor
vehicles.[86]
Furthermore, noting the need for a framework for cities to evolve, the City of
Yarra made the point that in the 1930s, Melbourne's rail spine was double its
current size and has contracted, particularly in regional areas, ever since.
The rail network was established when Melbourne had a population of 300,000
whereas now Victoria is home to five million people.[87]
Road user charges including congestion charges
3.50
Road user charges were recognised by some submitters as an important
mechanism to address congestion and fund public transport investment. STCWA
argued that state governments should plan location- and time-specific road user
charges for all major cities as a means of congestion management.[88]
3.51
However, CSSA cautioned that any increased user charges for public
transport would affect the disadvantaged and those on lower incomes who have
limited capacity to pay for additional fees.[89]
The City of Yarra also expressed concern that where road user charges are
applied in the absence of any feasible public transport alternative, such
charges 'operate as an unfair taxation mechanism' to those who already suffer
the high economic costs of transport disadvantage.[90]
3.52
However, ARA suggested that road user charges could be applied to fund
public transport initiatives:
As demonstrated in Perth, a charge for road users (in this
case through a parking levy) which can be used to fund public transport
initiatives can be successfully. The broader issue of applying a charge to road
users which could partly be used to fund public transport and manage congestion
in city centres is something the Committee may wish to consider.[91]
3.53
The point was made by STCWA that while road user charges are a matter
for state governments, the federal government could play an important role by
developing guidelines for consistent nationwide application.[92]
3.54
Some witnesses argued in favour of the introduction of congestions
charge such as that applied in the London CBD. The committee heard evidence from
Mr Philip Davies, former director of Transport for London who presided over the
introduction of London's congestion charge. Mr Davies explained that when the
congestion charge was introduced, traffic was almost gridlocked in central
London with authorities facing growing pressure from businesses in the CBD to address
the problem. The congestion charge was hypothecated to support the funding of
300 new buses and paid for the upgrade of the bus network. As a consequence of
the charge's introduction, London's bus network was expanded to meet growing
demand. The combined effect of such initiatives resulted in a 30 per cent
reduction in congestion.[93]
3.55
The London congestion charge currently generates almost £200 million a year of
additional revenue for the city. Mr Davies noted that while congestion levels
are now comparative to the pre-charge era, through investment in buses and
other initiatives, the network is able to respond.[94]
3.56
Congestion charging practices are also applied in Singapore and Norway.
ARA explained that the Singapore congestion charge system, introduced in 1975,
is believed to generate $150 million annually with all revenue reinvested into
the city's transport system.[95]
3.57
Professor Currie argued that some Australian cities including Sydney,
Perth and Melbourne already apply similar charges to that of a congestion fee
by way of parking levies. In Perth, revenue derived from the parking levy is
directed to fund the public transport system. In Sydney, the parking levy is
hypothecated to fund investment in suburban railway stations. However, in
Melbourne, the $50 million derived from parking revenue is directed to general
revenue.[96]
3.58
Professor Adams noted that a congestion tax should be considered as a
mechanism to shift or spread the peak load over a greater part of the day.[97]
Such a mechanism would encourage a change in behaviour whereby commuters leave
for work earlier or later than the peak period. According to Professor Adams
taking a modest 10 per cent of commuters off the roads (which generally happens
during school holiday periods in capital cities) had a positive effect on the
roads during peak periods.[98]
3.59
The point was made, however, that greater flexibility in traveling times
also requires substantial changes to work patterns and movement away from the
standard working day.[99]
The Hon. Alannah MacTiernan, federal Member for Perth noted that peak periods
in Perth had been extended rather than flattened as a consequence of more
flexible workplaces and the development of the night-economy.[100]
Land value capture
3.60
As a method of deriving funding for public transport, land value capture
was the focus of considerable discussion throughout the inquiry. Founded on an
integrated approach to transport and urban infrastructure development, land
value capture arguably provides a mechanism to accumulate revenue by bringing
land value, transport and finance together. The concept of land capture is
based on the principle that if the land values around new rail lines are
included in any investment package, they can provide the basis for funding
urban rail. The mechanism is based on evidence that land within the vicinity of
urban rail is more valuable.[101]
3.61
Australia does not apply a value capture approach. However, value
capture is applied in a growing number of other jurisdictions including North
America, Hong Kong, the United Kingdom (UK) and Japan where strategic
land-based levies, similar to other utilities and infrastructure, are applied.[102]
It was applied in the US to build railway systems and in the UK to fund half of
the Crossrail system. Over the next 30 years, infrastructure funding in
Manchester will be funded through land value capture.[103]
3.62
Professor Newman described the land value capture method as a
beneficiary payment rather than a tax. Studies he conducted in Perth considered
factors including views, proximity transport, water and schools as determinants
of land value. His work demonstrated that land value along the southern railway
increased over a five year period by 42 per cent in an area within 1200 metres
of railway stations all the way down the line. The study demonstrated that 60
to 80 per cent of funding for the southern railway could have been derived from
land value capture.[104]
Professor Newman noted that in contrast, freeways did not have the same impact
on land values. He explained how the mechanism can be applied:
That value increase translates into a range of rates and
taxes, which are land based: the stamp duty, the land taxes, the federal taxes
relating to capital gains tax and even the GST on the sale of a property. These
are going to increase naturally, because the value is going up. If you do not
build the infrastructure, they do not go up by that special extra amount. So
all you need to do is hypothecate them, which is the word the treasuries do not
like. In fact, in this state, they like this concept, because it is a new
source of revenue that can enable this to work.
So what you do is you find out exactly where the values are
going to go up and you can do that scientifically. You then enable the extra
value flows that are going through all those taxes to be drawn into a fund.
That fund can be used to finance the railway. And it goes on, so it can finance
the operations. So, you can actually build, own and operate with a private
sector involvement – if you want to – or it could be done by the state raising
the finance from that. If you want to go down the track of separating it
completely – so that only the money is raised and then that is used and given
to a consortium that wants to build, own and operate and do land developments
around stations – the whole thing could be off the books and not affect credit
ratings at all.[105]
3.63
Professor Newman noted that value capture not only provided a means of
raising revenue but also contributed to productivity in general given that it
helps to prevent suburban sprawl.[106]
However, the key to attracting finance is by packaging land and railway
infrastructure development together. Without growth in both the demand for land
development and a railway, it is difficult to raise the finance.[107]
3.64
Councillor Bradley Pettitt, Mayor of the City of Freemantle recognised
the significance of value capture as a means of funding public transport.
However, he cautioned that such a mechanism would be challenging in Perth
because the relationship between density and land value is not straightforward for
reasons including building costs.[108]
3.65
ARA supported value capture, arguing that light rail has proven to be a
'powerful tool' for urban renewal and regeneration with studies demonstrating a
demand for commercial and residential property closer to train stations.[109]
It noted that the preference to live in close proximity to existing train
stations can be capitalised on through transport-oriented developments, while
system extensions and new stations can implement value capture mechanisms to
assist with funding.[110]
3.66
Professor Currie also argued in favour of a user-pays system or rather
the-one-who-benefits-pays system. He noted evidence indicating that in
Australia's cities, the public transport user was not always the person who
benefited the most, as all traffic users enjoy considerable benefit from public
transport. The greatest area for capturing the value of public transport is the
CBD. He explained:
We have some of the most expensive real estate in Australia
in the Sydney and Melbourne CBDs. The reason it is expensive is that the
commercial entities who pay for it make profits out of being there, because
being next to similar businesses is a very effective way of doing business –
you can really make money and be efficient. Those CBDs only exist because of
railways, yet those people who benefit do not pay any money towards the
railways. They do contribute very indirectly through taxes, but everybody pays
the same taxes. So I think there is a role for moving closer towards what I
call value capture – the people who are benefiting paying.[111]
3.67
TRN also argued the case for a user pays system as long as it was
hypothecated. That is, that the funds derived from an extra change to use the
particular transport mode are channelled exclusively into the funding of
transportation improvements.[112]
Committee view
3.68
The costs and impact of urban congestion on the economic productivity of
the nation, as well as the health and wellbeing of its citizens, require
immediate address. Without an integrated approach to urban development which
incorporates transportation planning, congestion is set to continue undermining
national productivity.
3.69
This report has detailed some of the many benefits of public transport which
extend far beyond the immediate issue of transporting people efficiently from
one place to another. As transport infrastructure projects can have a
significant economic, social and environmental impact on the national economy
and the quality of life of citizens, these factors must be considered as part
of any project cost-benefit analysis.
Recommendation 3
3.70
The committee recommends that, given the productivity cost of capital
city congestion, all levels of government interested in increasing national
productivity consider backing solutions to congestion, including public
transport.
Recommendation 4
3.71
The committee recommends that when addressing congestion and other
transport problems, a range of reasonable solutions be examined, including the
publication of cost-benefit analysis, before decisions on funding are made by
government.
Recommendation 5
3.72
The committee recommends that smaller cost projects, especially
so-called smart projects involving the more efficient use of existing
infrastructure, or the more effective integration of routes and modes, be
prioritised according to the positive benefits they produce.
Recommendation 6
3.73
The committee recommends that the Australian Government fund transport –
including road and rail projects – on a mode-neutral basis, based on assessed
merit.
Recommendation 7
3.74
The committee recommends that the Australian Government take a
leadership role on urban policy, working with the states and territories, given
the strong link between transport and urban planning.
Senator Glenn Sterle
Chair
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