Pre‐Budget Submission 2009‐10 Contents 1 Budget context.....................................................................................................1 1.1 Oil vulnerability ..........................................................................................1 1.2 Climate change ............................................................................................2 1.3 A Green New Deal......................................................................................2 2 Savings Initiatives ...............................................................................................4 2.1 Fringe Benefits Tax......................................................................................4 3 Expenditure/Asset Initiatives............................................................................5 3.1 AusLink ........................................................................................................5 3.1.1 Guiding principles ..............................................................................5 3.1.2 Melbourne Urban Corridor ...............................................................6 3.1.3 Melbourne‐Adelaide Corridor ........................................................10 3.1.4 Melbourne‐Brisbane Corridor.........................................................12 3.1.5 Melbourne‐Geelong Corridor .........................................................13 3.1.6 Melbourne‐Mildura Corridor..........................................................14 3.1.7 Melbourne‐Sale Corridor.................................................................16 3.1.8 Sydney‐Melbourne Corridor...........................................................16 3.2 Major Cities/Building Australia..............................................................19 4 References...........................................................................................................20 © Public Transport Users Association 2009 247 Flinders Lane MELBOURNE VIC 3000 www.ptua.org.au ABN 83 801 487 611 1 Budget context The 2009‐10 Budget is being prepared in a highly challenging environment. The global financial crisis is creating fiscal risks for government and a cloudy economic outlook for Australian families and businesses. What the global financial crisis has not done, however, is lessen the need for urgent and decisive action to cut carbon emissions and reduce oil vulnerability. 1.1 Oil vulnerability Although crashing demand has dependence on uncertain reduced oil prices to well below international supplies, national the record set in July 2008, the energy security and our trade International Energy Agency balance will suffer unless we warns that the global financial reduce oil consumption. Families crisis could stifle petroleum and businesses will also suffer if exploration and development just they remain dependent on as depletion of existing fields private road transport and thus accelerates, leading to sharp price vulnerable to higher oil prices. It spikes in coming years (IEA is now a national imperative to 2008). reduce reliance on motor vehicles by investing in fast, frequent and Furthermore, much of the hoped‐ well‐integrated public transport for increase in production is and rail freight networks and by expected to come from OPEC making our cities and towns nations which are themselves more conducive to walking and seeing rapidly increasing cycling. populations and domestic oil consumption. It now seems likely that exports from oil Figure 1.1: Energy consumption exporting nations will begin to 3.5 decline sooner than the peak in 3 global oil production which 2.5 2 many analysts expect to arrive 1.5 within a decade (ASPO 2008, 1 0.5 pp.2‐5). MJ passenger per km 0 Car Bus Light Electric With Australia’s self‐sufficiency rail/tram train in oil production also in terminal Source: Newman 2000 decline and our growing 1 1.2 Climate change The transport sector – the transport energy use, fuel dominant user of oil in Australia substitution away from fossil – is also a large and growing fuels to renewable energy. source of carbon emissions. The best solutions to reduce our The Federal Government should vulnerability to peak oil are also play a central role in this task by the best solutions for reducing expanding and upgrading rail transport emissions – that is, networks and ensuring world’s shifting journeys to public best practice transport planning transport, rail freight, cycling and and management. walking and, for residual Figure 1.2: Transport energy consumption and electricity production and consumption in Australia (2006‐07) 1,500 Solar & 1,000 wind Hydro 500 Thermal Energy (Petajoules) Energy 0 Transport energy Electricity Electricity production consumption consumption Note: Thermal electricity production includes coal, petroleum, gas and biomass. Source: ABARE 2008 2 1.3 A Green New Deal In the midst of the most severe Recommendation: Make economic upheaval in many investment in public transport, years, economists and rail freight, cycling and walking a organisations right up to the central part of any efforts to United Nations have proposed a stimulate economic activity. “Green New Deal” to re‐energise the global economy on a sustainable footing. Investment in sustainable transport can be a central plank of the Australian Government’s response to current economic uncertainty. A federal commitment to high‐ quality rail networks can contribute to employment during the construction phase and boost national productivity in the longer term by helping to minimise transport congestion, improving access to employment and eduction and by making supply chains more efficient. In doing so, investment in sustainable transport would not only address the immediate economic challenges facing Australia, but also address the looming threats of peak oil and climate change and deliver lower‐cost mitigation options to Australian families and businesses. We outline a range of priority investments in the following sections. 3 2 Savings Initiatives 2.1 Fringe Benefits Tax Research undertaken by RMIT Figure 2.1: Statutory method tax and La Trobe Universities has expenditure shown that the statutory method 2,500 for valuing car benefits 2,000 encourages employees to undertake additional driving to 1,500 reach thresholds for more 1,000 generous tax treatment (Kraal, 500 Yapa & Harvey 2008). While ever more favourable tax Taxation expenditure million) ($ 0 2007-08 2008-09 2009-10 2010-11 treatment is offered to employees who drive further each year, this effect can be expected regardless of where thresholds are set. The direct cost to government of the statutory method concession is approaching $2 billion per annum, which does not count the costs of additional carbon emissions, congestion and business motor vehicle expenses resulting from the statutory incentive in favour of excessive driving. This tax expenditure should be Recommendation: Revise the eliminated in favour of a statutory method for valuing methodology that encourages motor vehicle fringe benefits to minimisation of vehicle use and reduce the level of taxation that frees up resources for expenditure and to provide an investment in public transport incentive to minimise motor alternatives. vehicle use. 4 3 Expenditure/Asset Initiatives 3.1 AusLink 3.1.1 Guiding principles 3.1.1.1 Oil vulnerability The bipartisan report from the Recommendation: Revise Senate Inquiry into Australia’s AusLink corridor strategies to Future Oil Supply recommended prioritise measures that reduce that “corridor strategy planning demand for private motorised take into account the goal of transport and encourage reducing oil dependence” and modeshift to walking, cycling, that “existing AusLink corridor public transport and rail freight. strategies should be reviewed accordingly”. These recommendations were premised on concerns expressed by the 3.1.1.2 Management reform in International Energy Agency in the transport sector the World Energy Outlook 2006, yet the more recent World Energy Infrastructure Australia’s Outlook 2008 has further December 2008 Report to the intensified warnings about the Council of Australian Governments cost and security of transport noted that many submissions energy supplies in coming years. requesting funding for projects This highlights the pressing need had serious deficiencies such as to revise AusLink corridor failure to relate proposals to strategies to actively prioritise broader planning, weak or absent improvements to public economic analysis and limited transport, active transport and option identification rail freight, and to manage (Infrastructure Australia 2008, demand for road transport rather p.77). These shortcomings are than pursuing outdated “predict not surprising given the funding and provide” approaches based patterns and biases in transport on increased supply. funding identified by the Australasian Centre for the Governance and Management of Urban Transport (Russell 2008). 5 The Garnaut Climate Change Recommendation: Develop a set Review also noted that current of Best Practice Management arrangements can “creat[e] Guidelines, applicable to both incentives for state and territory road agencies and public governments to give priority to transport governance bodies, road (where they can achieve with Commonwealth funding to matched funding) over rail the states conditional on its projects (which they must fully implementation (following the fund)” (Garnaut 2008, p.457). example of National Competition Policy), and explicitly include These