RACV Public Policy Department

14 July 2017

Committee Secretary Senate Economics Legislation Committee PO Box 6100 Parliament House Canberra ACT 2600

RACV is pleased to provide the attached submission regarding the operations of existing and proposed toll roads in Australia. There is huge transport infrastructure deficit both in Victoria and across Australia. With Melbourne’s population projected to reach 8 billion by 2050, transport demand will increase massively.

RACV supports the use of all methods of funding for transport infrastructure, including user pays tolling. It is clearly preferable that Government infrastructure financing is used for the construction of projects, including the use of public sector debt, however the huge demands for transport projects is such that all avenues must be utilised. This should also include value capture, differential rates and developer levies. The construction of privately financed projects that are funded via availability payments or user tolling can ensure that Victorians get the benefit of the projects more quickly than waiting for their eventual construction by Government.

It is important that user pays tolling is transparent, equitable and independently assessed to ensure that the community is getting a clear benefit for the tolls they are paying.

However, the Federal and State Governments need to be planning for the introduction of road pricing for the whole road network, not just selected privately financed and constructed toll roads within the broader network. Future toll road agreements need to contain provisions that will allow network pricing to be introduced.

The attached submission addresses some issues regarding the operations of existing and proposed toll roads in Victoria. Please contact me if you require further information.

Yours sincerely

BRIAN NEGUS GENERAL MANAGER PUBLIC POLICY

Att: RACV Submission for Operations of existing and proposed toll roads in Australia

RACV Public Policy Department

Royal Automobile Club of Victoria (RACV) Ltd ABN 44 004 060 833 550 Princes Highway, Noble Park North Victoria 3001 Australia Telephone 03 9790 2863 Facsimile 03 9790 2629 racv.com.au RACV Submission for Operations of existing and proposed toll roads in Australia

RACV SUBMISSION FOR OPERATION OF EXISTING AND PROPOSED TOLL ROADS IN AUSTRALIA

Efficient, safe and affordable transport continues to be a key concern for our 2.1 million members and the broader community, and an ongoing challenge for our State as it continues to grow. There is already a huge transport infrastructure deficit both in Victoria and across Australia. With Melbourne’s population projected to reach 8 billion by 2050, transport demand will increase massively.

With the rapid expansion of Melbourne’s outer-metropolitan communities and regional cities, and the expected strong demand for access to employment in central and inner-suburbs, there is a strong demand for travel on existing and proposed roads and public transport. No one mode has, or can have, sufficient capacity for the scale of urban development planned for outer-Melbourne, as well as to and from the broader region.

The use of user pays systems should not be restricted to roads, but also it can be used for the construction and operation of public transport infrastructure like train lines, tram lines and busways.

Victoria has examples of the private sector building and operating road infrastructure. They are the CityLink and EastLink tollways, and Peninsula Link (shadow-tolled). The West Gate Tunnel project being delivered by Transurban as a market lead PPP and a proposed busway from Melbourne to Doncaster East by Transdev are examples.

Road Pricing and Transport Infrastructure Funding In 2013, RACV and Infrastructure Partnerships Australia prepared ‘Road pricing and transport infrastructure funding: reform pathways for Australia’i. The report highlights the significant funding issues the Federal and State Governments are facing and how road pricing is essential to manage demand.

There is a massive transport infrastructure backlog and also future needs in Victoria and across Australia. Governments are facing significant challenges to fund this demand. At a Federal level we have an unfair and dysfunctional system of vehicle taxes that bear no relation to how, where and when we travel, and there are a raft of fixed State and Federal taxes added to this unfair system. With vehicles becoming more fuel efficient, vehicle manufacturers developing better electric vehicles, and the sharing economy for private vehicles growing, government revenue from fuel excise, car registration and car purchases is already declining and this rate will increase. A more equitable and sustainable system of pricing road use is needed, in place of the current unfair system. The new system should relate directly to the weight of the vehicle, the location, time and distance travelled. This would mean as part of the change people in outer and regional areas could pay less as they are travelling in uncongested conditions, and people with more transport choices in inner areas could consider cheaper alternatives, rather than pay more to drive in congested conditions. Improved public transport is an essential part of this proposed change. The revenue from this fairer system must be totally dedicated to deliver the road and public transport improvements we need.

It is vital that agreements for future toll road projects allow for a national transition to road user charging, and that the interests of toll road operators do not impede this national priority.

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RACV Submission for Operations of existing and proposed toll roads in Australia

RACV and other organisations, including Federal and State Government departments, participated in a project reference group for a Transurban trialii of different pricing methods to explore the potential behavioural effects of road user charging. The study did not consider a transition path to pricing the use of Australian roads.

RACV supports calls for a national inquiry into the introduction of road user charging. The inquiry should consider how such a system can be introduced in a way that incorporates the existing toll roads and any future projects.

Toll Structure As congestion increases on the road network, pricing is a tool that can be used by Governments to influence behaviour by providing an incentive to motorists to change their travel patterns. For example, inter-peak (day) and off-peak (night) tolls can be used to encourage motorists to shift their travel from peak periods to off-peak. In Victoria, only Eastlink offers a weekend and public holiday discount.

RACV supports future toll roads having a mandatory peak, interpeak and off-peak toll structure to provide an incentive to motorists to not travel in peak periods if they have a choice of travel times.

Victoria’s toll structure, for CityLink and EastLink, has an outdated vehicle classification system. Toll charges are linked to four vehicle classes:  Motorcycle  Heavy commercial vehicle  Light commercial vehicle  Car. The ‘light commercial vehicle’ is defined as ‘Any two axle rigid vehicle with a cab chassis construction, with a gross vehicle mass that is greater than 1.5 tonnes but less than 4.5 tonnes.’iii At the time of the creation of CityLink, cab chassis vehicles were general commercial vehicles. However, many cab-chassis vehicles are now everyday family and recreational vehicles with no commercial purpose and no worse impact on the wear and tear of road pavements than larger cars and four wheel drives some of which even share the same architecture. Example cab-chassis vehicles include Ford Falcon utilities, the Ford Ranger and Toyota Hilux all of which have SUV or car derivatives that pay only the car toll (Ford Falcon, Ford Everest and Toyota Fortuna respectively). Additionally there are many similar sized or larger vehicles that are not of cab- chassis construction and therefore also only pay the car toll. Examples include the common Ford Territory, Jeep Wrangler, Mazda CX9 and Range Rover.

RACV believes Victoria’s system has to be updated to a fairer system. New South Wales has a system based upon the height of a vehicle (higher tolls for vehicles over 2.8m height - iv). Queensland’s vehicle classification system is similar to Victoria’s, but with the important distinction that the light commercial vehicle toll only applies to vehicles registered as a commercial vehiclev. Victoria does not distinguish vehicle registration as commercial or non-commercial.

The Victorian toll road companies only introduced light commercial vehicle charging of many cab- chassis vehicles, including common Holden and Ford utilities, in 2014/15 despite having it in their concession deeds since their roads commenced operation. RACV’s members were rightly upset that the increased toll was implemented, increasing the operating costs if their vehicle. It is not obvious to many people about whether the vehicle they are purchasing is of cab-chassis construction or not, and therefore the toll they will need to pay to use their vehicle on Victoria’s toll roads.

RACV has contacted VicRoads, CityLink and EastLink about this issue. VicRoads advised that changes to the vehicle classification system will require the agreement of the operators and substantial compensation to be paid, and therefore did not intend to negotiate any changes.

RACV will not support a similar vehicle classification system being imposed on any future toll roads in Victoria.

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RACV Submission for Operations of existing and proposed toll roads in Australia

Network Management RACV believes that the privately managed road network is in a better condition than the publicly funded network and this is a significant operational benefit of toll roads in Victoria. The standard of the roads, quality of incident response, condition of the road surfaces, and amenity of the road corridor is of a significantly higher-standard than adjoining public roads.

Technology change Vehicles A challenge faced by toll road operators is how they will accommodate vehicles with an increasing level of autonomy. RACV is working with the Victorian Government, CityLink and EastLink to trial a range of currently available vehicles with differing degrees of automation on Victoria’s toll roads to identify any infrastructure issues. It is known that current in-vehicle technologies in some models of vehicle have issues detecting messages on electronic speed signs (including speed limits) and with line marking.

The effect that fully autonomous vehicles will have on future traffic flows is an issue that will have an impact on projected traffic volumes and revenue for future toll roads. Duncan Elliot, the Chief Executive Officer of the North East Link Authority, identified this as a factor to be considered when planning the North East Link, in a community presentation in May 2017.

Tolling technology Current tolling technology is based upon in-vehicle units (tags) and short range radio communications. RACV expects that advances in technology will see these systems replaced with GPS based systems, perhaps based upon mobile phone technology. Systems used for road user pricing will need to be compatible with those used for tolling technology. New systems should be cheaper for toll road operators to operate, requiring no roadside infrastructure or the issuing and periodic replacement of in-vehicle units.

End. i http://www.aaa.asn.au/storage/1-road-pricing-and-transport-infrastructure-funding-reform-pathways-for-australia.pdf, accessed 10 July 2017 ii https://changedconditionsahead.com/the-study/, accessed 10 July 2017 iii https://www.citylink.com.au/help/using-toll-roads/using-toll-roads-in-australia/what-is-my-vehicle-class, accessed 10 July 2017 iv http://www.rms.nsw.gov.au/sydney-motorways/frequently-asked-questions.html, accessed 10 July 2017 v https://www.govia.com.au/web/ssp/toll-costs-by-tolling-point, accessed 10 July 2017

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