Road and Rail Funding (was Re: Bugger all express services on Hillside Trains)

[amorton@mullian.ee.mu.oz.au (Anthony Morton)]

Maurie Daly <mauried@commslab.gov.au> wrote:

>I fully agree with your sentiments.
>The estimate of $12 B I got a few years ago from the Rail2000 Web site and it 
>is a bit over inflated.
>The current estimate for the Current financial year based on the Federal 
>Budget estimates is $9745 million net , after taking into account all fuel 
>rebates.
>Its hard to find exactly what the feds are spending on roads as the budget 
>for the Dept of Transport & Regional development is not sufficiantly detailed 
>but the estimates of total administered grants from this Dept is $2462 M.
>Ie if all the DOT grants were spent on roads this would be the figure.

If this is the case then the states must be supporting their road budgets
from other sources (payroll tax, gambling revenue etc.).  I recall when the
Commonwealth Grants Commission announced the grant figures for this coming
financial year Premier Jeff raised a fuss about there not being enough money
for roads.  So I'd lay bets on a fair slice of state road expenditure being
funded from 'non-user' sources.

The real question is: does the amount the states and local councils draw on
from their consolidated revenue (excluding fuel tax and grants) exceed the
amount the Feds pocket from fuel tax?  I'm not sure anyone knows the answer
to this question, but the picture's certainly a lot more complicated than
what you get purely from the Federal figures.

>As this figure includes all Transport modes administered by this agency
>ie Road,Rail,Maritime and aviation then the road figure is much less than this.

You'll find that the roads always take the lion's share (at least 90%) of
transport funding.  Barring the white-elephant gauge (re)standardisation
between Melbourne and Adelaide, no government at any level has spent much
at all on rail infrastructure.  Public transport operations are funded by
loans, not by grants, which is why governments are stingy about providing
public transport but shower money on roads.

>Note that the $9745 million does not include state fuel excise which is also
>collected by the Feds,but doesnt show up in the budget estimates.

As you've noted, state fuel excise is only a very small proportion of the
federal excise.

>In the case of State Road spending I cant comment but I am wondering exactly 
>what the Victorian State Govt is spending such a large amount of money on,
>excluding major road developments like the Citylink project which is a Toll 
>Road.

This year the money is to be spent on a whole swag of projects including the
Eastern Freeway extension to Ringwood and the Hallam Bypass.  This is an
election year in Victoria and new roads are regarded as vote-winners in a way
that rail projects are not.  (Never mind what the community thinks.)  But if
you look at this year's figures, the road budget is only around 5% more than
it was last year.  These large amounts of money are spent on a routine basis.

>$1.6 B is enough to build around 500 to 1000Kms of brand new 4 lane highway 
>every year, given that a new 2 lane road costs around $1 million per km and a 4
>lane freeway around 4 M per km.

These estimates strike me as a bit on the low side.  The proposed Scoresby
Freeway, which would run over some 30km between Ringwood and Frankston, is
estimated by Vicroads and its consultants to cost $900 million.  I don't have
costings for other freeway projects with me at present, but they all run to
some $10-$30 millon per kilometre.  (I'm not sure how many lanes they intend
to build though.)

But a large part of the road budget involves resurfacing and widening existing
roads.  There's an enormous amount of this kind of work done every year, and
it costs real money.  A lot of people seem to think that once a road is built
it's there forever and no more has to be spent on it.

>Are you sure also that this $1.6B doesnt also  include the Feds component 
>since the National Roads Program is counted as a Payment to the States.

This is an expenditure figure not a revenue figure.  I dare say the Victorian
component of the National Highway funds would show up on the revenue side of
the balance sheet.  But as I understand it, the largest share of National
Highway funding goes to states like Queensland and WA with the largest land
area.

>Its fairly obvious from the table that the hardest hit users of the fuel 
>excise is cars & trucks.

As I say, that's because roads cost a lot of money to maintain.

>The aviation industry gets away with just about no tax at all.

Interesting.  Maybe that's because aviation places little demand on publicly
funded infrastructure.

>Since the States all charge their own fuel excise of around 3C per litre and 
>the Feds charge 37C per litre ,its fair to estimate that the states raise in 
>total around 8% of what the feds do, ie about $780 M per year which one hopes 
>they spend on roads as well.                                                   

The thing you discover from looking at budget papers is that no particular
piece of revenue is earmarked for spending in particular areas.  All revenue
goes into a big pot from which money is drawn and spent.  In effect you can
regard all the state fuel excise money as being spent on roads, as it
constitutes only a small proportion of the roads budget.  As for the bulk of
road spending, it seems to come from a combination of Commonwealth grants and
other state sources.

What I'd like to see is a big balance sheet showing on one side all revenue
collected from motorists at all levels (federal, state and local) and on the
other side all motoring-related expenditure at all levels.  Then we could do
the same for rail transport.  Only then can this question of who gets what
be decided.

Cheers,
Tony M.