News

Road Pricing on Reform Agenda

16.10.2009

Australian Automobile Association (AAA) is very pleased that road pricing has been placed on the tax reform agenda by the Secretary of the Treasury, Dr Ken Henry.

In a speech to CEDA, Dr Henry identified a number of lessons for tax reform, the first of which is that the case that is put for tax reform must be compelling.

In seeking a case in the Australian economy, he identified one possibility – road pricing reform and he stated that "there would be few areas in economics where such a clear and rational set of policy directions have so consistently lagged in practice." AAA agrees with this view.

"For many years now – in fact it is eight years since AAA made a submission to the Fuel Taxation Committee (Trebeck) Inquiry – the organisation that represents over 6 million members has attempted to put reform of fuel tax and road pricing on the public policy agenda", said Mr John Metcalfe, Director of Research & Policy with AAA.

"Dr Henry quite rightly raised the issue of the community's distributional concerns", added Mr Metcalfe, and in this context noted that Dr Henry had quoted the AAA's support for road pricing in its submission to the Henry Tax Review, as long as road users are 'compensated' by the abolition of fuel excise.

But compensation needs to be broader than this", said Mr Metcalfe, "with revenue from any road charge being dedicated to road infrastructure and public transport investment and towards addressing environmental externalities such as air and noise pollution and congestion.

"If congestion charging is introduced as part of a reform package, motorists need to be given options for modal choice or travel times that ensure that they are properly compensated", said Mr Metcalfe, "and while we are in favour of a properly structured road user charge, we reject a congestion charge being imposed on top of the current 38 cpl fuel excise as has been proposed by some parties," he added.

AAA also agrees with Dr Henry that road pricing will be difficult. "The way it is practically implemented needs careful evaluation and the community needs to be brought along", said Mr Metcalfe, "but overseas examples show that it is possible and it is pleasing that the issue is now on the reform agenda."

 

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