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Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Media Release of 23/02/2006

NO.007

PRODUCTIVITY COMMISSION TO REVIEW ECONOMIC COSTS OF FREIGHT INFRASTRUCTURE AND EFFICIENT APPROACHES TO TRANSPORT PRICING

The Treasurer today announced that the Productivity Commission will undertake a public inquiry to review economic costs of freight infrastructure and efficient approaches to transport pricing.

The Treasurer noted that the review will determine the full financial and economic costs of providing road and rail infrastructure and identify the optimal methods and timeframes for introducing efficient road and rail freight infrastructure pricing. This will inform the Government and help to implement efficient pricing of road and rail freight infrastructure through consistent and competitively neutral pricing regimes.

The Productivity Commission will shortly release an issues paper and invite expressions of interest from anyone wanting to participate in the review. Anyone with interest in the inquiry is encouraged to make a submission to the Commission.

The Terms of Reference for the inquiry are attached. Further information about the inquiry is available from the Productivity Commission at www.pc.gov.au or by phone 02 6240 3239.

MELBOURNE
23 February 2006

Contact: David Alexander
02 6277 7340

Terms of Reference

REVIEW OF ECONOMIC COSTS OF FREIGHT INFRASTRUCTURE AND EFFICIENT APPROACHES TO TRANSPORT PRICING

Productivity Commission Act 1998

I, PETER COSTELLO, Treasurer, pursuant to Parts 2 and 3 of the Productivity Commission Act 1998, hereby refer the economic costs of freight infrastructure and efficient approaches to transport pricing to the Commission for inquiry and report by December 2006. The Commission is to hold hearings for the purpose of the inquiry.

Background

The purpose of the review is to assist COAG to implement efficient pricing of road and rail freight infrastructure through consistent and competitively neutral pricing regimes, in a manner that optimises efficiency and productivity in the freight transport task and maximises net benefits to the community.

Scope of the inquiry

The review will estimate the full financial costs of providing and maintaining freight transport infrastructure on major road and rail networks. It should be based on the principle that prices charged should reflect all costs in each mode and that there are benefits in a national pricing regime. In estimating these financial costs, the review will take account of the extensive research and studies on this issue, including by the National Transport Commission and the Bureau of Transport and Regional Economics.

The review also will assess the full economic and social costs of providing and maintaining road and rail freight infrastructure, if it judges this to be feasible. Such costs would include environmental and safety impacts of different transport modes. The review would assess existing studies of these economic and social costs and comment on the strengths and weaknesses of methodologies used. The review should also assess what information or future research could improve the quality of the estimates.

The review will investigate options for transport pricing reform, including moving to mass, distance and location charging of freight transport. In considering distance based charging regimes the review will:

  1. consider principles and practical options for the structure of the different pricing regimes;
  2. estimate the impact of charging regime options, including on transport operators and users and specific locations;
  3. consider options for implementing any new pricing regime, including the practical costs and benefits of alternative technology options; and
  4. provide advice on options for the design of and timeframes for implementing mass distance location based charging regimes, taking into account adjustment issues. The review will not address fiscal implications which will be assessed by governments following the review’s completion.

The review will also identify any other competition, regulatory and access constraints on the economically efficient pricing and operation of road and rail freight transport and related infrastructure networks and assets, including access to and competition between inter-modal facilities, and make recommendations on the options for removing these impediments and increasing efficiency.

In undertaking the review, the Commission is to consult widely with stakeholders on its contents and recommendations and to produce a draft report. The final report is to be presented to COAG by December 2006.

PETER COSTELLO