Ap-50-97 Road in The Community Part 2 Towards Better Practice PDF

I
I
t
______I
0 `'/ A R 1)
F
13 r_ I F r' E\
iZ A C r I
ROADS
IN THE
COMMUNITY
PART I i
TOWARDS
BETTER PRACTICE
EDITED BY DOUG KNEEBONE
AUSTROADS
First published 1997
(D Austroads Incorporated 1997

This work is copyright. Apart from any use as permitted under the Copyri$htAct 1968, no part may be repro-
duced by any process without prior written permission from Austroads. Requests and inquiries concerning
reproduction and rights should be addressed to the Executive Director, Austroads, PO Box K659, Haymarket
NSW 2000.
AP-50/97
ISBN 0 85588 487 8
Front cover photograph by Ian Wallis (Design Side)

Backcover photograph courtesy of NT Tourist Commission
Edited by Debbie Duncan
Published by Austroads Incorporated
DISCLAIMER
Roads in the Community (Australia at the Crossroads - A Summary Report, Part I Are they Doing Their Job? and Part II
Towards Better Practice) are compiled from independent consultant reports.
They should not be construed as representing any government policy, advocating particular positions, nor
reflecting the views of Austroads or its member organisations.
CONTENTS
1. ROADS IN THE NATIONAL ECONOMY 9
2. ROADS IN THE RURAL CONTEXT 159
3. ROADS IN THE URBAN CONTEXT 229
4. THE IMPACT EMERGING TECHNOLOGY 351

PREFACE
Towards Better Practice
Roads in the Community - Towards Better Practice is the second of a two-part independent review of how well
the Australian road system and Australia's road agencies are serving the community.
Austroadsl commissioned these reports in 1995 in the hope that they will raise the level of understanding of
road-related issues within road authorities and the community, assist road authorities to better understand the
needs of users, help set future Austroads work programs and assist road authorities in their move towards
best practice in all their activities. Austroads members at the Federal, State and local level will be seriously
considering the matters raised when they develop their activities over the coming years.
Roads in the Community comprises a series of consultant reports on how well our roads are serving the nation's
needs and putting forward ideas for improvements. With such a wide ranging subject --- on which there are
many and diverse opinions - it is not possible to reflect all viewpoints or to address all issues. The primary
emphasis in compiling the reports was to draw together the thinking of some leading Australians working in
this field, but who are currently outside the formal structure of public sector agencies - thus providing an
independence of thought and observations.
Roads in the Community does not advocate particular positions, not does it reflect the views of Austroads mem-
ber authorities or governments. It is up to the reader to make his or her own mind on the matters raised.
Roads in the Community Part I - Are They Doing TheirJob? provides an inventory of the current state and per-
formance of the nation's road system within the wider transport, land use and community setting. This is
predominantly a factual review of performance and trends, with some commentary on the possible implica-
tions of key trends.
Roads in the Community Part II - Towards Better Practice consists of a series of invited papers which
provide the authors' views on how well roads are meeting community needs, together with commentaries on
where Australia may be able to move to better practices in the planning and delivery of road-based transport
services so that the nation has world class road transport services.
A distillation of the main observations and discussion from the two parts is available in the complementary
document Australia at the Crossroads: Roads in the Community - A Summary. This document highlights the fact
that in a number of areas there are a range of views within the professional community and the wider com-
munity.
I hope that the contributions achieved their purpose of raising understanding and stimulating debate so that
stakeholders and road authorities can together decide on the most appropriate way to develop and manage
the road system to ensure that it continues to play its role in supporting the achievement of community-
determined economic, social and environmental needs.
Doug Kneebone
Editor
1. Austroads is the national association of road transport and traffic authorities in Australia and New
Zealand. Its membership comprises the six Australian State and two Territory road authorities, the Commonwealth Department
of Transport and Regional Development, the Australian Local Government Association and Transit New Zealand.
ARE THEY DOING THEIR JOB? 5

CONTRIBUTORS
A number of prominent consultants were invited to provide their personal perspectives. They were selected
because of their professional standing in their fields and in the belief that they would be both objective and
questioning in their approach. Contributors to the project were:
Dr Peter Brain National Institute of Economic

and Industry Research
Mr John Cox Transport Consultant
Dr Glen D'Este Transport Systems Centre

University of South Australia
Mr Ian Gordon Transport Consultant
Professor David Hensher Institute of Transport Studies

University of Sydney
Mr Doug Kneebone Transport Consultant
Dr Glenn Otto School of Economics

University of New South Wales
Mr Tim Raimond Institute of Transport Studies

University of Sydney
Ms Carolyn Stone PPM Consultants
Professor Mike Taylor Transport Systems Centre

University of South Australia
Dr Graham Voss School of Economics

University of New South Wales
Emeritus Professor Hans Westerman Westerman Consultants
Mr Damian Yeo Kinhill Economics
To assist these authors, a panel of independent eminent referees was also appointed to provide comment and
advice. These were:
Professor Evan Walker University of Melbourne
Professor Ted Kolsen University of Queensland
Professor John Taplin University of Western Australia
Mr Denis Robertson Road Transport Forum
Mr Robert Lim Business Council of Australia
Mr Lauchlan McIntosh Australian Automobile Association
The report was project managed by Mr David Berry, Victorian Department of Infrastructure with the assis-
tance, of Mr Alan Collins and Mr Geoff Anson, both of VicRoads.
6 ROADS IN THE COMMUNITY

ABBREVIATIONS
AAA Australian Automobile Association

ABARE Australian Bureau of Agricultural and Resource Economics
ADDT Average annual daily traffic
ABS Australian Bureau of Statistics
ACF Australian Conservation Foundation
ACOSS Australian Council of Social Security
ACTU Australian Council of Trade Unions
ALTP Australian Land Transport Program
ANTTS Automobile Network Travel Time System
APT Action for Public Trust
ATAC Australian Transport Advisory Council
ATC Automatic Traffic Control
AURDR Australian Urban and Regional Development Review
AVC Automatic Vehicle Control
BCA Business Council of Australia
BCRs Benefit Cost Ratios
BIE Bureau of Industry Economics
BOOT Build, Own, Operate and Transfer
BOT Build, Operate and Transfer
BTCE Bureau of Transport and Communications Economics
CAFE Corporate Average Fuel Economy
CBA Cost-Benefit Analysis
CBC Commonwealth Bureau of Roads
CEDA Committee of the Economic Development of Australia
COAG Council of Australian Governments
CSOs Community Service Obligation
CWW Compressed Work Week
DIS Driver Information System
EDI Electronic Data Interchange
ETA Environment Impact Assessment
EIS Environment Impact Statement
EPAC Economic Planning Advisory Commission
EPM Environment and Pollution Monitoring
ESD Ecologically Sustainable Development
EST Vehicle Engine and Suspension Technologies
ETC Electronic Toll Collection
FIR Federal Interstate Registration Scheme
FMS Freight Management Systems
FORS Federal Office of Road Safety
GBE Government Business Enterprises
GPS Global Positioning System
GVM Gross Vehicle Mass
ARE THEY DOING THEIR JOB? 7

HARP Health and Air Research Program
HDI Human Development Index
HITEC Highway Innovation Technology Evaluation Centre (US)
HOV High Occupancy Vehicle Lane
IC Industry Commission
IDCs Interdepartmental Committees
IM Incident Management
ISC Inter-State Commission
ISO International Standards Organisation
ITS Intelligent Transport Systems
IVHS Intelligent Vehicle and Highway Systems
JIT Just-inTime
LATM Local Area Traffic Management
MCRT Ministerial Council of Road Transport
NAASRA former National Association of Australian State Road Authorities
NIEIR National Institute for Economic and Industry Research
NRC National Rail Corporation
NRTAC National Road Trauma Advisory Council
NRTC National Road Transport Commission
NTPT National Transport Planning Taskforce
OAG Over Arching Group
PAYGO Pay as you Go
PFI Private Finance Initiative
PTE Public Trading Enterprises
PTI Public Transport Information
RACV Royal Automobile Club of Victoria
RBA Reserve Bank of Australia
RIS Regulatory Impact Statements
RLTS Regional Land Transport Strategies
ROG Route Guidance
ROT Refurbish, Operate and Transfer
RSE Road Safety Environment
RTA Roads and Traffic Authority
SA Salvation Army
SCATS Sydney Coordinated Adaptive Traffic System
SES Security and Emergency Services
SMA Snowy Mountains Authority
TAROR The Australian Roads Outlook Report (NAASRA 1987)
TCM Transport Control Measures
TEL Telecommunication Applications
TFP Total Factor Productivity
TNZ Transit New Zealand
VMT Vehicle Miles Travelled
WASS West Australian State Ships

1.1
ROADS
IN THE
NATIONAL
ECONOMY
MR DAMIAN YEO
(KINHILL ECONOMICS)
OUTLINE
1. ECONOMIC OBJECTIVES OF THE ROAD SYSTEM 13
1.1 Introduction 13
1.2 Economic efficiency 13
1.3 Relationship between economic objectives for the

road system 14
1.4 What are the constraints on efficiency? 16
1.5 Conclusion objectives and constraints 18
2. MEASURING PERFORMANCE 19
2.1 Introduction 19
2.2 How is efficiency normally measured? 19
2.3 Constraints on measuring efficiency in roads 19
2.4 Why is pricing so important? 19
2.5 Doing without price information 20
2.6 How do benefits compare with other performance

measures? 20
3. INSTITUTIONS AND THEIR EFFECTS ON EFFICIENCY 22

3.1 Introduction 22
3.2 Ownership structures and organisational objectives 22
3.3 Funding 24
3.4 Pricing 25
3.5 Regulation 28
3.6 National versus state or regional road system objectives 30
3.7 National competition policy 31
3.8 Conclusions 31
4. THE URBAN CONTEXT 23

4.1 Introduction 32
4.2 The economic efficiency issues 32
4.3 Congestion 32
4.4 Environmental effects and economic costs 37
4.5 Summary 38
5. THE RURAL CONTEXT 40

5.1 Relevant characteristics of the rural road network 40
5.2 What are the influencing issues in rural roads? 40
5.3 Are rural roads doing their job? 44
5.4 Where to from here? 45
5.5 Conclusion 47
TOWARDS BETTER PRACTICE I1

6. MULTI-MODAL ISSUES 48
6.1 Defining multi-modal 48
6.2 Economic issues in multi-modal transport 48
6.3 Relevance to the road system 48
6.4 Current practices relating to intermodal efficiency 48
6.5 Response to current practices 50
6.6 The special case of urban transport 50
6.7 Conclusions 50
7. PRACTICE ELSEWHERE 51
7.1 Practice elsewhere 51
7.2 cost-benefit analysis practice 51
7.3 Road pricing 51
7.4 Institutional structures and objectives 52

7.5 Conclusion 54
8. PROPOSALS TOWARDS BETTER PRACTICE 55

8.1 Summary 55
8.2 Specific issues for better practice 57
REFERENCES 61
END NOTES 65

1. ECONOMIC OBJECTIVES OF THE
ROAD SYSTEM
1.1 Introduction
Governments require their road authorities to pursue a range of economic and non-economic objectives. For
economists, efficiency is the most important economic objective. This chapter argues that efficiency can also
embrace consideration of the other economic objectives of growth and regional development. Economists
accept however that the community also pursues non-economic objectives, the achievement of which may
constrain the realisation of economic outcomes.
1.2 Economic efficiency

One way to approach the meaning of economic efficiency is to consider road use as a product like any other
available in the market. How would the economic success of the product be judged? Firstly by the fact that
consumers made a choice to buy (referred to the product by economists as allocative efficiency). Just as
important for economics is that the product be purchased at a price which covers the producer's costs and allows
her to make a profit. The producer's costs must be as low as possible commensurate with the quality of the
product, and her profits no greater than could be earned by any other efficient producer of the same product
(referred to as productive or technical efficiency).
This bargain between the consumer and the producer will be consistent with the maximisation of the
economic welfare of each. The community's economic welfare will be maximised as well if, at the same time,
the producer and consumer each pays for all the environmental costs which their production and consumption
activities impose on others, and if they comply with all the relevant laws of the land.
If all of these conditions hold, the economist would judge the production and consumption of this product to
be efficient.
On the face of it, it would seem reasonable that the road system be judged by the same rules. Commercial users
of the road system are certainly judged by the profit rule, as are suppliers of air and sea services, and to a
lesser extent, suppliers of rail services. As in the market economy in general, these suppliers must provide a
product for which there is demonstrable demand at an efficient price (see Docwra 1993).
The satisfaction of the consumer's wants and the earning of a satisfactory profit for the producer are the
measures of efficiency in this very simple example. Not only are they simple in concept but they have
underpinned the relevant economic theory for a century.
1.2.1 Should we build more or less roads?

Roads in the National Economy argues that the efficient level of total investment cannot be determined because
roads are not priced at the time and point of use. Prices provide the information about value of service to the
consumer which can then be related to the costs of maintaining and enhancing capacity. Roads in the National
Economy takes the position therefore that without price information it is not possible to determine whether
more or less road investment is warranted on economic grounds.
In their 1993 report for the Australian Automobile Association, The Allen Consulting Group sought to estimate
the potential gains to the economy from a $1 billion increase in road investment. The Allen Group report found
the gains to be significant, but they cautioned that their results were "not sufficient to estimate an optimal level
of investment in land transport infrastructure". Their analysis emphasised the desirability however that budget
allocations to the road sector at least be spent on the types of roads yielding the highest economic return. The
Business Council of Australia in its report Refocusing Road Reform Cox and Meyrick 1994 argued that the quality
of the Australian road system is well below that of international practice, and a potential hindrance to Australia's
international competitiveness. The National Transport Planning Taskforce (1994) endorsed the need for
efficient allocation of investment budgets between modes and between discrete projects, but it did not believe
TOWARDS BETTER PRACTICE 13

there was "sufficient evidence to support a case for a substantial increase in the current overall level of
transport infrastructure spending.
While the findings of these reports differ in emphasis and in context, each appears to be in agreement on the
need for improvements in pricing and investment evaluation and for institutional reform. Each of these
improvements has a role to play in ensuring that the transport system itself finds the efficient level of
investment spending.
1.3 Relationship between economic objectives for the road system

1.3.1 Current policy directions
Three objectives - efficiency, growth and regional development - appear frequently in public statements of
road authority policy.
The linkages between the objectives are not always clearly stated or understood in policy documents. Examples
of the types of policy statements which guide road system investment and management are set out in Box 1.
Economists would likely adopt a simpler approach to specifying road system goals, that::
"Roads should be provided which people want to use at prices which offer a satisfactory return
on road authority capital."
What are the essential differences between the policy statements and the economist's objectives for the road
Box I : Objectives of the road system

The Commonwealth
"projects and programs that reduce transport costs for industry, speed the flow of goods and produce to ports
and demonstrate a capacity to lift national income through shorter travelling times and greater efficiency
gains." (DoTAC 1993)
Queensland
`"To improve economic trade and regional development and the quality of life for Queenslanders through the
planning and management of a system of roads of national and State significance; and the exercise of
influence over the total road network in a manner which contributes to overall transport efficiency, whilst
ensuring the appropriate balance with social justice, safety and environmental sustainability." (QT 1994)
Austroads
"The road system is an integral part of Australia's transport system, and as such plays a significant part in
achieving effective land use and regional development and contributing to the overall performance of the
economy and the social functioning of the community. The community requires that, along with other
elements of the nation's infrastructure, the road system be provided and operated in a manner compatible with
achieving the nation's economic, social and environmental goals.
In contributing to these goals, the principal role of the road system is:
"To facilitate interaction between people and the exchange of goods and services by providing effective,
equitable, land-based accessibility to a wide range of places, and by enabling safe, reliable mobility of people
and transport of goods and services with the efficiency required to compete in the global economy."
(Austroads 1994).

NAI'IONAI.. ECONOMY
system? The policy statements are quite similar in their pursuit of economic and non-economic goals although
the distinction is not always clear as to which of these policy issues represents objectives and which represents
constraints on the objectives. Economists would maintain that each objective is desirable provided someone is
prepared to pay for its achievement: that the benefits of achieving them are at least equal to the costs. This is
the first difference between the views of the road policy maker and the standpoint of the economist.
The second difference is in the question of whose mobility the road system should foster. The policy statements
place an emphasis on the mobility of the commercial sector in producing and distributing goods and services.
In contrast, economic welfare or standard of living are measured in terms of consumption. That is, the
purpose of production is ultimately to consume. Because transport is a derived demand' there is no economic
basis for according priority to private or commercial users of the road system. The only information needed in
formulating efficient strategies for satisfying the needs of each group is the willingness of each group to pay for
their use of the road system. Any policy which diverts resources from private consumption simply to reduce
the costs of production will reduce the community's economic welfare if the reduction in production costs is
less than the value of those resources.
Efficiency
This efficiency-oriented view is not necessarily at odds with the concerns of the policy statements. A road
system which provides services in response to customer demand will still "facilitate interaction between people
and the exchange of goods and services" (Austroads 1994, in Box 1), but at a level and quality of service
consistent with the community's preferences for the use of resources. Certainly, current mechanisms for
funding roads weaken the link between the customer's preferences and the road authority's perception and
understanding of those preferences (as discussed in Chapters 2 and 3). But the principle nevertheless holds. In
economic terms, customer preferences should determine the quality, quantity and geographic distribution of
road service. Much could be gained for efficiency by clearer, more customer-oriented statements of road
system objectives.
Regional economic development

Regional development is one of those objectives of policy which will not always be efficient. A road authority
seeking to maximise the community's economic well being would only invest in a regional development if the
expected benefits exceeded the costs by a sufficient margin. This approach is consistent with efficiency orient-
ed regional development initiatives, not only in transport, but across a range of portfolio areas. The alternative
equity oriented approach is outcome focused, on reduction of unemployment, increases in income or re
ductions in prices in regional areas (see BIE 1994).
Commonwealth policy implicitly favours the efficiency approach (see The Kelty Taskforce 1993; BIE 1994; and
McKinsey and Company 1994). The Bureau of Industry Economics argues that the emphasis on resource
efficiency in Australian economic policy is one reason why the Australian economy is not plagued with the
disparities in regional economic performance which are evident in other industrialised nations. The more freely
resources are able to move between regions in pursuit of developmental opportunities, the more even is the
pattern of national economic development, and the higher the national income. Infrastructure investment will
not always be the necessary stimulus to economic development as McKinsey and Company argued in their major
report to the Commonwealth on regional economic development.
McKinsey and Company also found that the adequacy of regional infrastructure is not a significant impediment
to private investment in regional areas. In their survey of regional attitudes to regional development, only 3%
of private sector respondents said they would be deterred from investing more in their region by the adequacy
of its infrastructure.

The road authorities should pursue regional development objectives where road investment would be an
efficient means of reducing regional uncompetitiveness- that is where the benefits of doing so exceed the
costs by a satisfactory margin. But given the plethora of potential causes of poor regional economic
performance2, road authority initiatives need to be framed in a community wide-whole of government approach
to regional economic development.
Economic growth
A very extensive debate in recent years - here and overseas - has developed around the contribution of infra-
structure to economic growth. The issue is one of whether infrastructure responds to demands generated by
the private sector, or actually itself generates demand for private investment'. The debate has been inconclusive
for a number of reasons related to the relevant theory. Even the proponents of the proposition that infra-
structure contributes to economic growth accept that infrastructure investment must be efficient if it is to
maximise its contribution to economic growth. The thrust of microeconomic reform is to maximise national
income by using resources where they earn the highest return, and to have in place policies that allow resources
to move freely to where the highest return will be earned. This thrust has been emphasised in the
Commonwealth government's two major statements on national economic policy, One Nation and Working
Nation (see Keating 1992; Keating 1994). The US Congressional Office put a similar view in its assessment of
the infrastructure-economic growth debate. Road agencies, the Office argued, could yield higher gains to
economic well-being not by building more roads, but by more effectively utilising and pricing existing road
assets.
1.3.2 Summary -- economic objectives

The thrust of national economic policy for infrastructure - the microeconomic reform agenda - is for the
efficient provision and operation of infrastructure services. This means providing services which people want
at prices which provide a satisfactory return on investment. Other economic objectives - of growth and
regional development - are pursued through efficiency, or are subject to the requirement for efficiency.
1.4 What are the constraints on efficiency?

1.4.1 Ecologically sustainable development and environmental objectives
The National Strategy for Ecologically Sustainable Development defined ESD as:
"Development that improves the total quality of life both now and in the future in a way that
maintains the ecological processes on which life depends." (Commonwealth of Australia 1992).
Understanding ESD and its implications is one of the most controversial issues in
economics today. Neither
the environmental implications of economic activity, nor the economic implications of environmental
management are as yet fully grasped.
Yet understanding of the ESD agenda is further challenged by the breadth of its vision. ESD is most readily
perceived in terms of a concern for the relationship of economic activity to the biophysical environment. But
it also embraces two further concerns that are key elements to the policy challenges it poses. The first is an
acceptance that the achievement of ESD should not be at the expense of equity between people now living.
The second - intergenerational equity - demands that the welfare of the current generation should not be
achieved at the expense of the welfare of subsequent generations.
Austroads' discussion paper on ESD (1994b) emphasises the cultural shift and the long term perspective that a
commitment to ESD will imply, but recommends nevertheless that ESD should be the prime goal of the
Austroads member authorities. The paper signals that notwithstanding the apparent simplicity of the notion of
sustainable development, the reality of its implementation in the roads sector will be complex.

NA'T'IONAL ECC)NC) '
ESD is concerned with improving human welfare while reducing the human and environmental costs of achiev-
ing those improvements. It is not so much therefore a constraint on efficiency, because much of what it
embraces is consistent with the maxims of economic efficiency. It would be more correct perhaps to say that
the ESD policy agenda is a complicating factor in achieving economic efficiency.
The theoretical mechanisms for optimising economic and environmental outcomes, for example through
pricing or the use of cost-benefit analysis are not new. The economically optimal level of environmental
quality is that for which people are prepared to pay. Partly those mechanisms are operational now. A biophys-
ical environment of desired quality is becoming increasingly scarce, and in response, its price is rising.
ESD implies a limitation of this potential to trade off human activity and environmental quality according to
the preferences of individuals. Notions of economically optimal levels of environmental quality - as those for
which people would be prepared to pay - are being challenged. It could be argued in fact that the relationship
has been reversed in two ways. Firstly, economic instruments are being proposed or implemented - such as the
tax on leaded fuel - to achieve environmental objectives. Secondly, environmental management policies ate
having to be structured to control their negative economic consequences.
The pure efficiency response to environmental management which relies solely on individuals' valuations of the
environment is probably not consistent with ESD. But the setting of constraints within which efficiency should
be achieved, or to which efficiency should be subject, is not new. It is a concept familiar in safety regulation, in
the operation of the legal system and in health and education.
1.4.2 Safety
Safety presents problems for economics not unlike those of ESD and for somewhat similar reasons. Road
safety is an area of human activity in which markets will not be totally successful in allocating resources. People
undervalue risks to themselves and to others, and some of the risk cannot be completely controlled - for exam-
ple, by driving a safe vehicle, observing the road rules, wearing a seat belt. Rather than relying on individuals'
valuations of their own safety in determining the efficient level of safety provision, the community through the
road authorities assigns values to the avoidance of damage to life, limb and property. These values are usually
based on the earnings capacity of the average employed person. Costs are assigned to safety initiatives and
compared with the savings in personal and property costs (referred to as the benefits) likely to accrue from each
initiative. Initiatives with benefits exceeding their costs are worth implementing on economic efficiency
grounds.
Given the status the community accords to the protection of life, this approach will (justifiably) continue to be
used. Safety is nonetheless only one objective for the community. Efficient solutions to the safety problem will
not always be road infrastructure based. Other measures - such as lower speed limits, better policing,
improved driver training, safer vehicles, or reduced road use - should also be considered where appropriate.
They may achieve the same objective at lower cost.
1.4.3 Equity
Equity (or social justice) is usually identified as a road system objective, but unlike efficiency, it is not amenable
to straightforward definition. The Commonwealth's social justice strategy:
"calls for a society with an equitable distribution of economic resources; equality of civic legal and
industrial rights; fair and equal access to essential services such as housing health and education;
and opportunity for everyone in terms of personal development and participation in community
life and decision making." (AURDR 1995)

There is no necessary conflict in economics between equity and efficiency. In fact, everything which economists
are able to say about efficiency is prefaced by an acceptance of the given distribution of income in the
community. Income distribution, as a measure of equity is determined outside the efficiency framework.
The challenge for policy is in achieving outcomes which are both efficient and equitable. Governments can
strive for this equality either through the taxation and income support systems, or by direct intervention in the
delivery of government services.
More fundamentally however, the inadequacies of current road charging and funding mechanisms, and
inconsistencies with the funding of other forms of mobility, will hamper the achievement of equitable out-
comes. As long as road users and users of other modes are unable to use market power to force the provision
of the desired transport system - whether roads, public transport or measures such as high occupancy vehicle
lanes - the potential for inequity will be greater than it need otherwise be. The inequities will be in several
directions: between urban and rural users; between those who have access to cars and those who do not; and
between public transport users who pay directly for their service and road users who do not.
In these senses, inefficient and inequitable policies may be two sides to the one coin. Any policy which wastes
resources denies those resources to the achievement of other policy objectives.
1.5 Conclusion - objectives and constraints

The road authorities make their contribution to the national economy by efficiently using resources in the pro-
vision and operation of the road system. They can best do this by providing roads which people want to use,
at prices which enable the community to earn a satisfactory economic return on the use of those assets. This
objective recognises that, while accessibility is a desirable objective, its achievement will always be constrained
by the resources available to service it.
Efficiency must always be pursued subject to constraints which include the environment, safety and equity.
Each of these objectives can be addressed within the efficiency framework either directly - by confronting
people with the costs of road travel - or indirectly, by choosing the most cost effective means of overcoming
the constraint.

2. MEASURING PERFORMANCE
2.1 Introduction
Once the objective of economic efficiency is specified,the road authorities must be able to put the objective
into practice in their capital works and maintenance programs. They need a measure or measures therefore of
how well their policies contribute to economic efficiency.
2.2 How Is Efficiency normally measured?

In the private sector, profit or the rate of return on investment is in broad terms the measure of efficiency of
resource use. The earning of profit indicates that the consumers of a good or service are willing to pay prices
that exceed the costs of resources used in production. Private entrepreneurs will invest more in products which
earn higher profits than are normal in the market, and will reduce their investment in products which earn below
average returns. In this way, the private producing sector responds to the demands for goods and services
expressed by consumers in the market place (see Kolsen and Docwra (1987)).
Environmental costs, where appropriate, can be included in production costs through the process of internali-
sation referred to in the previous chapter. Where this is done, and where consumers are under no coercion to
consume any particular good or service, risk- adjusted profit or rate of return on investment indicates the
efficiency with which resources are being used in each sector of the economy.
Other factors may also need to be taken into account in making these efficiency comparisons between sectors.
Some sectors may be dominated by a small number of producers. This tendency towards monopoly means that,
all things being equal, this sector will earn artificially higher profits than sectors which are more competitive.
Also, differences in the degree or cost of government regulation may cause some distortion in inter-sector com-
parisons of investment return. Nevertheless, in broad terms, profit is a reasonably robust signal of the
efficiency with which each sector is using resources.
2.3 Constraints on measuring efficiency in roads

The simple efficiency model cannot be applied to the road system because with few exceptions, roads are not
directly priced in the market. Road revenue, either in total, or for individual sections of road, cannot be
estimated, and as a consequence, the profitability of the road system cannot be gauged.
It could be argued that fuel taxes and vehicle registration charges represent the revenue of the road system. But
it is easy to see why this is not the case. Registration charges firstly bear no relationship to the distance to be
travelled by each vehicle or the type of roads to be used. Fuel taxes relate only indirectly to distance travelled,
do not reflect the costs of use of highly congested roads, and do not vary directly with the type of road used.
Nor do these total tax collections determine the amount and quality of service provided by road authorities (see
Stanley 1993).
Regardless of whether payments by road users and vehicle owners represent taxes or charges in a theoretical
sense, the amounts collected do not represent revenue in the sense that would apply to the private sector. The
level of payment by users is set regardless of cost, it does not directly influence the service provided, and users
have no choice in paying more for a better service, or less for a lower quality of service. Therefore, the prices
users would be prepared to pay for the use of particular roads cannot be determined.
2.4 Why is pricing so important?

The most obvious reason is that the ability to directly levy charges would provide a constant, fairly predictable
source of revenue. Provided the prices charged cover the road authority's costs, the maintenance of the road

system could proceed independently of the political determination of spending priorities. Secondly, the
relationship between revenues and costs for each road provides the road authority with a measurable,
unambiguous guide to investment priorities. Profitable roads would be improved or expanded, and unprofitable
roads reduced in quality (or the price increased). Only those investments for which users were prepared to pay
would be made. Finally, road authorities could determine the efficient level of total road expenditure in the same
way that profit in the private sector signals the need for investment in product improvement, or the redirection
of expenditure away from "declining" products.
Users would also be able to make efficient expenditure choices. They would have information available to com-
pare the costs of road and other transport services, and to compare the cost of mobility with that of other,
4
substitute activities .
2.5 Doing without price information

For the present, direct pricing of roads is the exception rather than the norm. The road authorities therefore
rely on other means of guiding efficient maintenance and capital works programs.
The most typically used technique is cost-benefit analysis or CBA. As its name suggests, cost-benefit analysis
compares the costs and benefits of proposed courses of action. In the road sector, CBA has traditionally been
confined to construction projects, but is more and more being used to analyse maintenance programs as well.
Costs are usually fairly easily estimated because in general they are derived directly from the planning and design
processes. No such certainty applies to benefits. Because roads are not directly priced, economists have no
reliable measure of the value people place on the use of different types of roads, at different times of day, and
in different places. Instead they rely on estimates of the prices people would pay for changes in the quality of
road service. These estimates are based in turn on estimates of the value of time users which road users spend
travelling, and the costs they incur in operating their vehicles.
The ratio of benefits to costs (called the benefit cost ratio) or the difference between them (the net present
value) are then measures of the relative efficiency of individual road projects, whether investment or
maintenance. The road authority which aims to achieve the highest contribution to economic welfare from the
available road program budget would in broad terms implement those projects having the highest benefit cost
ratios or net present values.
Recalling the discussion in the previous chapter, regional development and ESD considerations can be
incorporated in the cost-benefit analysis framework, however imperfectly, as can road safety. Equity is not as
readily dealt with, but the CBA approach can be used to compare equity initiatives or at least identify the costs
of those initiatives in terms of benefits foregone elsewhere.
2.6 How do benefits compare with other performance measures?

2.6.1 Profit
Benefits in cost-benefit analysis cannot be compared with the revenues earned by a private firm or by a
government trading enterprise. The reasons for this are related to the economic theory behind the
measurement of benefits. In simple terms, firms operating in reasonably competitive markets will not be able
to earn in revenues all the value which customers place on their goods and services. Competition between firms
will ensure that prices are driven down, so that any benefit in excess of the price actually paid, will accrue to
consumers rather than to firms. All things being equal, benefit cost ratios will overstate the profits which a
private firm would have earned in producing the same service. For this reason, benefit cost ratios cannot be
compared with profits.'

NATIONAL ECONOMY
While some road projects, particularly in highly congested urban areas exhibit very high rates of return, this
"shadow" or proxy profitability cannot be compared with returns earned in the private sector.
2.6.2 Other performance measures

Austroads (1994) derived a set of physical and economic performance measures for the road system. The
physical measures include travel times, congestion indicators and noise and emissions measures. These physical
measures should not be the sole guide to performance. Initiatives to improve system performance as measured
by these physical measures are economically desirable only if the benefits of improvement exceed the costs.
2.6.3 Where to from here?

signals about user preferences enabling the
Ideally, comprehensive and direct road pricing would provide clearer
road authorities to be more confident about the efficient use of resources.
Until then, cost-benefit analysis will remain the best tool for guiding the road authorities towards efficiency. But
as hinted earlier, CBA is not perfect. It cannot be used to determine the efficient budget for the road authori-
ties. As well though, it cannot perform two very important efficiency roles of the price system: firstly,
management or òptimisation' of congestion; and secondly, guiding transport demand to the most efficient
mode.
As later chapters discuss, each of these roles is important for the efficiency of the transport system. Without
road pricing, the transport sector can only achieve Glower order' responses to these challenges. Two things
need to be done: firstly, the road authorities must accept that solutions are not always road based or even always
transport based; and second that alternatives be searched for and evaluated.

3. INSTITUTIONS AND THEIR
EFFECTS ON EFFICIENCY
3.1 Introduction
This chapter addresses the influences on efficiency of.
ownership structures and organisational objectives
funding
pricing
regulation
national versus state or regional road system objectives
national competition policy.
3.2 Ownership structures and organisational objectives

With few exceptions, Australia's road system is publicly funded and operated, with involvement of each of the
three levels of government) )Commonwealth, State and local. While State and local governments build and
operate roads, each of the three levels of government, and particularly the Commonwealth, provides road
funding. The Commonwealth alone has no responsibilities as a direct road provider (Painter and Dempsey
1992), but its contributions have averaged approximately 30% of total road expenditure by State and local
governments (Docwra 1993).
Both Painter and Dempsey and Docwra emphasise the importance for the road authorities of political rather
than economic objectives. Docwra describes the road authorities as "creatures of government" that are
required from time to time "to puruse policy objectives dictated by government".
Painter and Dempsey extend this concern to the inter-governmental arena, arguing that the three levels of
government compete for the power to control the road policy agenda. Road policy becomes "an electoral
weapon".
It could be argued that roads by their very nature lend themselves to a strong degree of public sector (if not
necessarily political) control. Roads are characterised by a degree of what economists can "natural monopoly".
That is, the network characteristics of roads, and the existence of economies in scale in moving from low
capacity to high capacity roads, mean that it is more efficient to have only one, rather than a multiplicity of
suppliers. Roads in certain locations or at certain times of day may also exhibit "public goods" characteristics.
A certain minimum level of service is deemed desirable by the community, and in some circumstances it is
inefficient to use pricing mechanisms to control or ration the use of that minimum available capacity.
The natural monopoly character of roads in itself should not stand in the way of the road authorities in pur-
suing economic rather than political objectives. The problem of natural monopoly is rather one of control, of
ensuring that the pursuit of profit by a monopoly does not lead to excessively high prices and poor service. The
National Transport Planning Taskforce in its report (1994) placed considerable emphasis on competition
between modes and operators in forcing efficient provision of transport services. But competition will be less
effective if modes and operators do not pursue, or are prevented from pursuing a common objective of
profitable service.
Road freight operators, and increasingly rail authorities have commercial objectives. Road authorities on the
other hand, are motivated by a range of economic and non-economic objectives (see Chapter 1). As long as
the road authorities are only partially motivated by commercial objectives, any co-ordination effort directed at
more efficient transport will be of reduced effectiveness.

N A.'T' I O N A1.. ECONOMY
The National Transport Planning Taskforce recommended a number of initiatives for achieving efficiency in
the transport system. These included the general adoption of user pays pricing and consistent approaches to
the economic evaluation of proposed investments' (NTPT 1994). But these initiatives will be ineffective if the
suppliers of road access services, the road authorities, have the flexibility to base their decision making, as they
choose, on non-economic objectives. Porter (1992) argues that public authorities can withstand the negative
consequences of inefficient decisions because of their access to government funds and because they are not
accountable to shareholders as are private firms.
Newman (1995) recently questioned why the road authorities were almost unique in escaping the pressures of
commercialisation and of the national competition policy agenda. His comment reflects the concern being
expressed here as to whether a commitment to efficiency, on its own, will be sufficient to achieve efficiency, if
that achievement cannot be measured, and if road authorities are not accountable for their successes and their
failures.
The reasons for this lie in the importance of commercial objectives for the achievement of efficiency. As
Chapter 1 argued, efficiency in the economy is signalled when firms achieve satisfactory returns on their assets.
Prices are set so as to recover costs, and investments are made which at those prices will earn a return at least
sufficient to cover interest on borrowed capital. Therefore, prices have a role in communicating information
between firms and consumers. But they are also important in directing investment efficiently to where it will
earn the highest return. If all firms are profit motivated, the market provides a decentralised mechanism for
the efficient use of resources.
The road sector on the other hand exhibits the paradoxical outcome that the users of the road system pursue
either profit or individual welfare maximising objectives, but the suppliers of the road space have the flexibili-
ty to choose from a range of objectives, of which economic efficiency is but one.
The World Bank is increasingly taking the view in respect of the management of infrastructure services
generally that commercialisation or corporatisation, combined with the use of efficient pricing strategies, are
essential prerequisites to the efficient use of infrastructure resources and efficient delivery of services (see
Kessides, cited in Cox and Meyrick 1994; also see Heggie 1995).
The essence of the World Bank view as put by Kessides and Heggie is a confidence in the ability of markets to
deliver economically more satisfactory infrastructure services than can the political process, with its focus on
disparate sets of electoral objectives, and its lack of incentives for performance and criteria for measuring
performance. At base, the Bank sees "political failure" as containing greater potential for economic damage
than "economic" failure. Lewis (1993) in the American context actually questioned whether governments would
achieve the economic objectives they claim to hold for infrastructure unless they also put in place the
mechanisms to ensure infrastructure authorities pursue those objectives.
There is some evidence in Australia of efficiency (productivity) gains in the public trading enterprises (PTE)
sector as a consequence of a range of microeconomic reform measures. Forsyth (1992) characterised the
sector as a "partial success story of Microeconomic Reform so far". The gross rate of return on capital in the
electricity, gas and water sector rose over the period 1984-84-1989-90 from 4% to 5.5%, and in the
communications sector from 8.1% to 14.3W. Forsyth attributes these improvements to a number of factors
including injection of competition (as in telecommunications), but also to external pressures of more intensive
monitoring of PTE performance, private sector objection to excessively high prices and the influence on PTE
behaviour of the threat that their structures and operations will be reformed. Some improvement in produc-
tivity has emanated from periodic efficiency drives. Overall, Forsyth believes that government has been too

reliant on ad hoc measures (such as efficiency drives) and not reliant enough on long-term structural reform
(such as increased competition) and the rigorous setting and monitoring of financial performance targets.
Nonetheless the implication from Forsyth's analysis is one of market, efficiency driven reforms being early steps
to better economic performance by the PTE sector.
3.3 Funding
The issues of funding and pricing are obviously at the heart of any attempt to forge a economically efficient
supply of roads. It could be argued in fact that in Australia, the funding system not only distorts this supplier-
customer relationship but as well stands in the way of the implementation of efficient pricing systems.
Each of the three levels of government are involved in some way in the planning, funding and delivery of roads,
but only the States have constitutional powers over roads. Local authorities derive their roles as road suppliers
via State legislation, while the Commonwealth's role is limited to that of funding agency.
The outcome of this division of responsibilities is significant. While in 1989-90, for example, "the
Commonwealth spent $1.4 billion on roads and raised over $5 billion from road users via the petroleum prod-
ucts excise alone (in current prices), State and Territory governments spent $2.2 billion on roads in 1989-90 and
raised $2.8 billion from road users (m current prices)" (Stanley 1993). Approximately 60% of road-related
revenues in that year were raised directly by other than the road authorities.
Walsh (1992) notes that this characteristic of "fiscal imbalance" is common throughout the Australian federal
system, and it is one which induces inefficiency and uncertainty in the delivery of government services. Its
specific effect in the roads sector is to sever the link between the raising of revenue and its expenditure. Because
the road authorities lack full control over the raising of their revenues, there is little chance that incentives for
good economic performance can be built into their institutional structures. Sources of funding are not obvi-
ous to voters or road users, leading to a lack of any objective judgement of how well road authorities use their
assets. Because the allocation of funds from the Commonwealth is subject to inter-governmental deliberation,
there is little certainty over long-term funding programs (and the construction of the road system is in electoral
cycle terms a relatively long-term activity). Stanley (1993) takes a similar view but argues as well that increased
accountability of the road authorities should accompany a closer linkage of revenues and expenditures.
In a broader sense, according to Walsh, it is the narrow State tax bases which constrain the States in adopting
efficient pricing for their infrastructure services. Infrastructure charges are viewed as proxy taxes-by govern-
ments and electors-and therefore subject to influences other than those of efficiency (Walsh 1992).
The importance of funding and of pricing for an efficient road system is as outlined in the previous chapter.
Prices provide the link between what the consumer wants to buy and the producer wants to sell. Severance of
that link leaves the road system without any objective measure of how much in economic terms it should be
spending on the road system, what the balance between capital and recurrent expenditures should be and where
system improvements should be made (see also Williams 1994).
A transition to a limited fee for service road system is underway, with the development of tollways and the
introduction of nationally standardised charges for heavy vehicles. These initiatives will no doubt provide a
platform for further reforms in the future. But the scope for reform could be limited by two factors: an unwill-
ingness on the part of the road authorities or their State governments to be bound to simple, sensible economic
objectives; and constitutional limitations on efficient pricing.

NNJ IONA.I_ ECONOMY
The first of these constraints has been addressed in the previous sub-section. With respect to the second there
is a potential constitutional threat that road use charges could be regarded as excise dudes rather than as fees
for service (or charges in other words), as, under section 90 of the Constitution, the Commonwealth is
provided exclusive power to impose excise duties. This threat will persist until mutually exclusive definitions of
charges and excise duties are fully established.
Saunders (1993) recently outlined the principles under which constitutionally acceptable road use charges could
be set. Among her principles she recommended that:
"The charge should not seek to encourage the use of one form of transport over another or
impose any other form of indirect social or economic regulation."
A very significant role of pricing is to send signals to users about the most efficient service (for example road
vs rail or bus) and the most efficient provider. If Saunders' principle were interpreted to embrace transport
generally, it could preclude the introduction of efficient road pricing. Were this to be the case, corporatisation
or privatisation of road systems might be the only satisfactory means of establishing road pricing systems. That
is, the gordian knot of road funding, efficient road pricing and road system efficiency might only be loosened
by separating the road authorities from direct public control.
3.4 Pricing
This section examines the role of road pricing and selected
issues relating to its implementation. With
significant advances in electronic road pricing technology, the technical feasibility of direct and comprehensive
road pricing would appear to be within reach. Nevertheless, the potential stumbling blocks to progress should
not be overlooked. The appropriate technology must be selected, trialled and perfected. At the same time, and
perhaps more importantly, the scope for practicable pricing applications must be defined, and concerns for the
privacy, equity and funding effects identified and redressed as pre-conditions of political acceptablity.
Taxes versus charges

Central to the road pricing debate is the difference for economists between taxes and charges. Road users could
argue that they are already charged for their use of roads through fuel taxes and registration fees.
In broad terms, taxes are raised in respect of the general services of government. They are not tied to any
specific service, and those paying the tax do not have the choice to pay more or less tax in according to the
quality of service desired or supplied. Charges by comparison contain the element of choice. People can choose
to consume the service for which a charge is levied, or choose another service having a different relationship
between the quality of the service and the level of the charge (see Musgrave and Musgrave, (1989)). It is because
of this characteristic of choice that prices have such an important signalling role in economics, between the
preferences of the consumer and the costs and profit of the producer.
Obviously there are instances in which the payment by the consumer exhibits characteristics of both a charge
and a tax. But, in general, because they are levied irrespective of the costs and qualities of specific services, taxes
do not have the power to influence the efficient allocation of resources between the competing demands of
consumers.
The adequacy of present revenue raising arrangements is therefore a matter not only of how much revenue is
raised, but of how the revenue is raised, and how the mechanism for raising it influences the decisions of road
users and road suppliers.

The role of road pricing
The most important objective of pricing is to improve the allocative efficiency of scarce economic resources
used in providing road services. The main road services include provision of vehicle access road space for
transiting vehicles and loading capacity (adequate pavement strength) for heavy passenger and freight vehicles.
As noted by Kolsen (1968), optimum efficiency is achieved when there is an "allocation of resources which pro-
duces a total bundle of transport and non-transport goods and services and leisure which consumers prefer to
any other bundle produced within a given economic and social environment". This "ideal" cannot be achieved
in practice because of numerous institutional and technical constraints. However, direct pricing, if correctly
managed, should move the economy closer to its achievement.
As a general principle, direct pricing should be applied to those who benefit from the services which suppliers
provide, as long as specific beneficiaries or groups of beneficiaries can be identified. Roads are also construct-
ed and improved to serve wider community objectives such as defence and specific community service obliga-
tions. For efficiency, achievement of these objectives should be funded directly from general taxation via con-
solidated revenue.
Cost recovery is also an important outcome of various direct and indirect pricing systems. However, achieve-
ment of full cost recovery will not, of itself, lead to a more efficient use of resources, unless the pricing system
reflects the community's willingness to pay for road services. Frequently, where cost recovery is given higher
priority, administrators favour the use of indirect pricing mechanisms such as fuel taxes, which are easier to
implement, but do not accurately target the costs of the specific services being delivered. These pricing instru-
ments can cause allocative inefficiencies.
The role of markets

As noted, application of pricing systems which target the use of specific services and beneficiaries, and reflect
willingness to pay should improve allocative efficiency and, in most cases, allow the system to be self-funding.
If the road system were being managed by profit driven corporations (public or private), investment would be
determined by assessments of future returns on road assets. Interaction of demand and supply for specific ser-
vices would create market prices which would ultimately determine if road capacity should be expanded or con-
tracted. Within a corporate profit driven environment, the provision of road services would be guided by the
same principles as prevail in the private sector. Unfortunately, the singular most important constraint to the
introduction of pricing is the absence of pervasive markets for road services.
Simulating markets through shadow pricing

Without markets for road services, it is necessary to derive and administer economically efficient "shadow
prices". These prices should be reflective of the prevailing market conditions in the wider economy.
The short run marginal external costs, being the costs imposed by road users and other beneficiaries on the road
system, provide an initial basis for price estimation. These costs include the non-private costs (imposed on the
road system and third parties) caused by road damage, traffic accidents, congestion, and environmental damage.
As the system approaches full capacity, these costs will rise and ultimately reflect marginal user benefits at full
capacity (refer to Webb 1975).
Efficacy of congestion pricing

There is a growing consensus that congestion pricing will be an efficient means of rationing scarce road space,
provided the costs of administering the pricing system are relatively low, and efficient use is made of the rev-
enues obtained from road pricing. A key issue of congestion pricing is the redistributive effect. Hau (1992a)
notes that the major beneficiary of road pricing is the government. Road users who place a high value on their
time would benefit. Users who could be disadvantaged would be those who are tolled but have a low value of

NANONAl- ECONOMY
time, those who are diverted to other roads, and those users of other roads who would then face an increase in
congestion. According to Hau: "Unless the public in general, or road users in particular, can partake in the tax
proceeds either in the provision of public goods and/or reduction in tax revenues, they will definitely be worse
off from this imposition of an òptimal' congestion toll." It would only be in cases where there is hyper
congestion, that congestion pricing would enable a greater traffic flow, and make everybody better off.
The importance of the use of government revenue and the interaction of congestion pricing with public
transport was examined by Abraham and Maroney (1994). From modelling of traffic behaviour in London, they
concluded that pricing strategies which diverted revenues to either subsidising public transport fares or improv-
ing public transport services were superior to sole use of congestion pricing.
The efficacy of congestion pricing is, however, disputed. Evans (1992) for example, made similar findings as
Hau (1992a). However, he doubted that congestion pricing would be implemented efficiently by governments.
He also noted that in many cases the net benefits would be relatively small in comparison to the negative
redistribution effects. With these misgivings, he concluded that non-price rationing mechanisms such as the use
of priority bus lanes in cities would be superior to congestion pricing. Fitzroy and Smith (1993) are also strong-
ly opposed to congestion pricing. They observed that because traffic is mixed, pricing is relatively ineffective
as a means of preventing low-capacity, low-efficiency cars from obstructing high-capacity, high-efficiency
vehicles such as trams and buses. Their study of Zurich found that the use of unobstructed, exclusive lanes for
buses, together with other improvements to public transport services had successfully rationed road space.
The discussion of congestion pricing highlights the need to regulate road pricing agencies to ensure that
allocative objectives are addressed. Also, the use of government revenues from congestion pricing will have a
strong bearing on the overall benefits for road users and the wider community. It is evident that various non-
price mechanisms can be effectively implemented, such as priority bus lanes. However, in many cities, the
options for non-price rationing are becoming more limited. Also, there would be scope for joint use of price
and non-price mechanisms. Over time it is expected that planners will become more favourably disposed to
congestion pricing as other options become more difficult to implement.
Practical problems and institutional constraints

In practice, there are problems in estimating resource costs, simulating a cost efficient pricing system, and
assigning costs to specific beneficiaries according to time and location. Major difficulties have been experienced
in developing systems for efficient recovery of road damage costs caused by heavy vehicles, and environ-
mental damage. Use of indirect pricing methods, such as fuel taxes, vehicle registration fees and licensing have
been favoured as a consequence. Development of advanced electronic monitoring systems, such as the smart
card system which is being trialled in Europe, will, however, moderate these problems in future years, provided
such systems can be implemented in a cost effective way.
Political and social opposition to road pricing is also of particular importance. As Mearns (1994) noted in a
brief survey of public acceptability of road pricing in the United Kingdom, the public is predominantly
opposed to road pricing. However, there has been a sliding-scale in opposition with greater willingness being
shown for pricing of inter-urban roads and new motorways. Also, opposition differs according to how
revenues from pricing are proposed to be used. In Australia, it will remain difficult to implement a compre-
hensive pricing system while road taxes are used for general revenue purposes.
The future of road pricing

It would appear that there is a role for road pricing, provided the allocative efficiency objective is given first
priority, and the implementing agencies make efficient use of the revenues from road pricing. There are major
problems associated with setting prices, as markets for road services generally do not exist. These problems

could be partially overcome by progressively privatising or corporatising road networks. Without markets, there
will remain significant problems in deriving and administering shadow prices for road services. Rationing of
loading capacity for heavy vehicles is an important case in point. Real time costing could be implemented, but
to date it has been found that it is more effective, from a cost recovery viewpoint, to use indirect charging based
on instruments, including fuel taxes, registration charges and licence fees. However, the cost recovery objective
should not stand in the way of progressive implementation of direct pricing methods, made possible by tech-
nological advances in electronic pricing.
There are important theoretical issues relating to road pricing, but practical and efficient solutions appear to be
available. Also, pricing should not preclude some joint application of pricing and non-pricing mechanisms. The
challenge is to breakdown the strong institutional and political opposition.
3.5 Regulation
Here the distinction is drawn between two forms of regulation-
1 Economic regulation, by which governments restrict the number of operators in an industry (taxis being a
good example) or set maximum rates to which industry must adhere; and
2 Product regulation, by which governments mandate certain types or standards of behaviour in order to
achieve safety or environmental objectives. Legislation mandating the installation of emissions control
devices and seat belts in cars are respective examples of environmental and safety regulation.
There are relatively few examples of economic regulation in transport and the practice is generally not essential
to socially desirable standards of road transport service. Those that remain will eventually be proscribed or at
least limited in their scope by the National Competition Policy (see section 3.7 below). This form of regulation
is not discussed here. Environmental and safety regulation responds to widespread community concerns about
quality of life issues and permeates the transport system to a significant degree. The discussion below relates
this category of product regulation to the economic objectives for the road system.
The rationale for regulation

Any form of regulationentails a balance between reducing costs in production and consumption activity on the
one hand, and maintaining the community's non-economic values on the other. As Doyle has noted, the com-
munity faces a choice between:
"On the one extreme a nation with an unacceptable low standard of living left behind by the rest
of the world and on the other where a single minded focus on growth may lead to an environ-
mental wasteland where quality of life would be unacceptably low. The real choice is to seek a
balance." (Doyle 1994)
Is regulation necessarily a hindrance to the achievement of national economic objectives? The answer is in sev-
eral parts.
Firstly, our measures of national income, prepared by the Australian Bureau of Statistics cannot fully encom-
pass all those goods, services and outcomes of economic activity which people value. This is because the sta-
tistical measure of national income only embraces things bought and sold in the market at the time the trans-
actions take place. Changes in national income therefore do not fully reflect changes in economic welfare. One
American study found that the statistical measures of economic output overstated growth in economic welfare
by a factor of two, when measured national output was adjusted for changes environmental effects, undervalu-
ation of government services and the effects of growth on the availability of unpaid labour in the household

NATIONAL. ECONOMY
(Nordhaus and Tobin cited in Tietenberg (1992) That study illustrates the difficulty of treating all the effects of
economic activity in a neat comparison of benefits and costs. Many effects are not amenable to valuation, or
the data on which valuation would be based is not readily obtained.
A more important consideration is whether some decisions should be made on the basis of benefits and costs.
The valuation of some effects of economic activity runs the risk of offending strongly held moral views (see
Kelman 1980). The political judgement must nevertheless be made as to how much of the national income
should be spent to save one life: in other words, how far should regulation go.
One American study in the late 1970s estimated that regulation was costing the United States economy $100
billion annually in 1979 values (cited in Krugman 1994). As the provisos above have illustrated, these types of
estimates encounter the danger of excluding the benefits of regulation - not all of which are measurable, such
as safety or environmental amenity -- or of viewing untrammelled growth as having broad community support.
The efficiency of the road transport industry is nonetheless important for the national economy. The Centre
for International Economics in its research for the NTPT estimated that a 10% improvement in the industry's
productivity would increase the national economic welfare (as measured by consumption) by $2.1 billion per
annum (CIE 1995).
The following discussion addresses some relevant issues in the regulatory reform agenda of the National Road
Transport Commission (NRTC) and in the process discusses some of the policy challenges for economics in
the area of road safety.
The National Road Transport Commission Agenda

Achieving uniformity of regulation
The National Transport Planning Taskforce (expressed the view that regulation should aim for "cost effective
transport" and "should be minimal and relate to environmental and safety concerns" (NTPT 1994). According
to one submission made to the Taskforce:
"A problem with road transport regulations has been that historically they have been based on
arbitrary lines drawn at State and Territory boundaries rather than on operating conditions."
NRTC was established in 1992 following the decision of the 1991 Special Premiers' Conference to "improve
road safety and transport efficiency by adopting nationally uniform or consistent transport legislation" (NRTC
1992). Its brief covers three areas of which only technical standards for heavy vehicles and their operation is
considered here. The others are national charges for heavy vehicles and registration of heavy vehicles and
licensing of drivers.
The Commission's task in the regulation of commercial vehicle standards has two elements: determining the
standards which are appropriate and justified by their benefits relative to their costs; and obtaining uniformity
in the legislation of the standards across each of the Commonwealth, State and Territory jurisdictions. Each
illustrates the complexities in a Federal system of achieving the laudable objectives of efficient and effective
regulation.
The principle of uniformity of regulation, subject to the criteria of efficiency and road safety overlays NRTC's
deliberations. The objective of uniformity is to ensure that road transport operators face the same regulations
everywhere in Australia, and are saved the expense of complying with different rules in each State and Territory.
The formation of the NRTC by inter-governmental agreement was motivated by a desire to substantially
improve the mechanisms for national regulation of transport '° (see Moore and Stairs (1994) and Pollard (1993)
for discussion of the legal and political challenges).

Proposing and evaluating regulatory standards
Pollard (1993) notes that at the beginning of the 1990s there were "over 100 pieces of legislation in force in
Australia on the subject of road transport". Yet at the same time, the Bureau of Industry Economics found in
a survey of road freight operators as part of its international benchmarking study that only 20% of operators
interviewed identified vehicle related regulations as a significant adverse influence on their business. A large pro-
portion of that 20% represented concerns in respect of non-uniform regulations between States and Territories.
By comparison 35% were concerned with the level of taxes and charges and 37% with restrictions on pick-
up/receival hours. (BIE 1992).
The benefits of uniformity of regulation are nonetheless appealing, even if impossible to measure. The role of
the NRTC in this respect "is to ensure that operators oblivious to the State in which they are operating" (Aplin
1992). The implications of uniformity for efficiency are obvious. Vehicles and drivers are subject to the same
rules wherever they operate, allowing flexibility in the use of resources, eliminating unnecessary costs in finding
out what another State's regulations are and in complying with them as well as with home State regulations, in
reducing the costs of vehicle modifications, and allowing greater certainty of operation.
The related challenge for NRTC is to identify the economically optimal vehicle standard to be applied uniformly.
Here it must firstly identify the likely effects of a change in regulation, and then value those effects in terms of
costs and benefits. In its regulatory impact statement on regulations pertaining to heavy vehicle standards, the
Commission recommended against the installation of vehicle monitoring devices because the costs - $70 mil-
lion per year - could not be justified by the benefits in terms of reduced road accidents. It also recommended
increases in the maximum lengths of trucks and some buses because this would result in annual benefits to the
industry of at least $70 million per annum, but at low cost in terms of road damage and accidents (NRTC 1993).
3.6 National Versus State or Regional Road System Objectives

The first recommendation of the National Transport Planning Taskforce was for the establishment of a
National Transport Infrastructure Network:
The Taskforce expressed a concern with "the current division of responsibilities for transport expenditure in
Australia (which) inhibits consideration of investments on a nationally consistent basis""(NTPT 1994). It did
not elaborate though on why a national strategy was of necessity: or put another way, why the actions of indi-
vidual operators, service providers and governments would not of themselves lead to a nationally satisfactory
transport system. Nor did the Taskforce define the characteristics of investments of `national economic sig-
nificance". On the other hand the history of Australia's railway break of gauge problem provides some clue as
to the type of decision which might warrant a national approach.
O'Connor (undated) cogently demonstrates the increasing national integration of Australia's transport and com-
munications networks over the last 40 years. His criterion for integration is "when all (parts of the national
urban system) are linked so that movement can take place across the whole nation, rather than just within
regions".
Australia in the past has had mechanisms to co-ordinate national interests in transport. But for West and Tapp
(1993), the mechanism for doing so - the inter-governmental Australian Transport Advisory Council (ATAC),
which operated for a half century - was unsuccessful because "there was no requirement for the parties to be
bound to collective decisions" (West and Tapp 1993). The agenda of the Australian Transport Council which
replaced ATAC under the "new federalism"initiatives of the Council of Australian Governments is aimed
towards achieving national transport system outcomes.
In seeking to determine why and when a national transport approach is needed, three questions could be posed:

NATIONAL ECON01MY
1 What issues are peculiarly national?
2 What national issues are peculiar to transport?
3 What are the appropriate roles for governments and for service providers?
One means of thinking about these issues is to assume that all transport services were privately provided. How
would the private sector deal with developmental opportunities and would "national' opportunities be
approached any differently to local ones? Local opportunities for service development would be pursued by the
private sector provided a profit was in prospect, all relevant planning approvals could be obtained and finance
was available. "National" projects - such as a Hume Highway - would proceed by mutual recognition and
negotiation between road providers along the route or the prospective route. Provided the project was likely to
be feasible financially and there were no planning objections, it would proceed. Being profit motivated, it would
be in the interest of the road providers to avoid the poor co-ordination that characterised Australia's railway
break of gauge fiasco.
The achievement of this decentralised co-ordination would entail a national strategy embracing not so much
where and which roads to build, but rather the mechanisms to ensure that the road authorities have it in their
best interests on a day-to-day basis to build the right roads in the right places. The potential for national
economic welfare gain in the required comprehensive structural overhaul of this road sector is likely to be
greater than in the pursuit of investment projects of supposedly national significance. The achievement of
these long-term structural reforms would seem to be an appropriate role for the Australian Transport Council.
3.7 National Competition Policy

In April 1995, the Council of Australian Governments (COAG) reached agreement on a package of measures
to enhance competition throughout the public and private sectors of the economy (COAG 1995). The purpose
of the reforms is to enhance the efficiency of resource use and offer greater protection to consumers. A
number of elements of the reforms are significant for road pricing and any associated move towards commer-
cialisation of road authorities. The key principles are that:
Monopoly government business enterprises should be subject to prices oversight by independent bodies.
Government business enterprises should compete with other businesses on an equal footing in terms of
taxes, charges, access to finance and environmental and planning regulation.
Monopoly government business enterprises should not retain regulatory powers.
Plans for implementation of these reforms are being developed by each of the jurisdictions, and for the present
the effects on the road authorities cannot be foreshadowed with certainty. Nevertheless, the reforms offer some
reassurance that mechanisms could be put in place to control the activities of monopoly commercialised road
authorities.
3.8 Conclusions
This chapter has discussed the influence on road system performance of the institutional issues of structure
(objectives, incentives and control), funding and pricing. It argues that reform in these areas is fundamental to
the realisation of the economic potential of the road system, and measures to do so are on the agenda elsewhere
in the world. Where regulation is for the purposes of achieving objectives related to road safety and environ-
ment, it would be very difficult to draw any conclusions on economic grounds about the efficient level of
regulation. These sorts of decisions will be likely to remain strongly within the political arena, drawing on
estimates of the likely economic and non-economic effects.

The discussion questioned the need for measures to identify projects of national significance. It argues instead
that fundamental reforms to road authority structure, and to funding and pricing are likely to have far greater
national significance. It is too early to forecast the ramifications of the national competition policy, but the
recent COAG agreement provides regulatory mechanisms which could complement road pricing and commer-
cialisation of the road authorities.

4. THE URBAN CONTEXT
4.1 Introduction
Recent reports by the Commonwealth's Australian Urban and Regional Development Review (AURDR 1995(a);
AURDR undated) have highlighted the significance for the national economy of efficient and livable cities. At
the same time, Spiller Gibbons Swan (undated) and EPAC (1995) have addressed concerns that relative declines
in infrastructure investment may be constraining the efficiency of our cities and of the nation as a whole. EPAC
cautioned that historical comparisons of infrastructure will not necessarily provide sound policy guidance, while
Gramlich (1994) in the United States has emphasised that the shortage or otherwise of infrastructure is not nec-
essarily the issue. It is more important that policy focus on mechanisms for achieving the efficient level of infra-
structure.
It is in this sense that pricing is important in the urban context, as a mechanism for signalling efficient infra-
structure requirements and one which is responsive to population, land use and the spatial distribution of eco-
nomic activity. As Jacobs notes in her book on the economic development of cities (1984), cities are capable
of continual adaptation to changing circumstances, and this is a potential which policy should not inhibit (see
the Economist (1994) for an interesting example).
The rest of the discussion in this chapter proceeds from the view that efficiency has a dynamic role in urban
planning, but that it is not and never can be the only influence. Instead, the role for policy is to build mecha-
nisms which allow efficiency considerations to guide decision makers, to provide information about economic
consequences and to allow a continual balancing of economic and other objectives.
4.2 The Economic Efficiency Issues

This chapter considers two dimensions of the relationship between roads and the national economy in the urban
context namely:
congestion;
environment.
Congestion has been a major recent focus in the literature on the economic performance of roads. Its links to
the national economy are fairly apparent. Congestion reduces the productivity of people and vehicles, and its
relief can call on substantial resources which could profitably be invested elsewhere. The relationship of roads
and the environment to the national economy might appear a little less obvious. This should not be so. Any
policy which has significant implications for resource use (such as environmental policy) or causes significant
change in the consumption of resources is potentially of relevance to the national economy. The national econ-
omy is after all only the aggregation of all that occurs at the levels of individual enterprises, cities, regions and
States.
4.3 Congestion
Cities represent agglomerations of economic activity fundamentally dependent on mobility. Any impedance of
movement creates costs for the economy in two ways. Firstly, it reduces productive efficiency. The productivity
of workers is reduced by traffic delay. Secondly, manufacturers' and sellers' inventories must include a safety
margin to allow for uncertainty in delivery time. As well, goods in transit incur holding costs. The greater the
delay in selling final goods after their production, the longer the producer must wait to be paid. Producers incur
interest costs in this waiting period on the resources invested in producing final goods.
Cox and Meyrick (1994) reported estimates of the cost of congestion in Australian cities of approximately $5
billion per annum. Congestion is a function of the demand for a facility exceeding its supply. In the case of

roads, at certain times of day, more people wish to travel than there is road space to accommodate them. As
more vehicles enter the traffic stream, the speed of each vehicle decreases, and the time taken to make any
particular trip increases. Roads are not unique though in experiencing congestion. But the normal response by
a seller of a service to congestion --- to an excess of demand over supply - is to raise the price. Airlines charge
more for seats on Easter Thursday than in the week before or after Easter. Tourist resorts lift their prices
considerably over Christmas, and picture theatres reduce the availability of cheap seats on Friday and Saturday
nights. In each of these cases, the service provided cannot be stored. Water authorities release more stored
water from their dams during hot, dry periods. Retailers can store umbrellas in anticipation of rain, but where
storage of the product is not feasible, periods of peak demand are characterised generally by higher prices.
As Thomson (1974) demonstrates, congestion is for economists a matter of relativity. Not all congestion is bad.
What matters are the willingness of people to pay to avoid it and the economic adequacy or optimality of the
existing infrastructure. If the capacity of the available infrastructure is less than that for which users would be
willing to pay, the resulting level of congestion will be inefficient. On the other hand, some level of congestion
may nevertheless be economically efficient, depending on the willingness of people to pay to avoid it, and the
costs of providing additional capacity. (The Industry Commission (1993) took a similar view).
It is one of the unique characteristics of roads that periods of peak demand do not lead to increases in price,
because with few exceptions, there is no price system. What is called "Downs Law" - "that on urban
commuter expressways, peak-hour traffic congestion rises to meet maximum capacity" (cited in Small, Winston
and Evans 1989) - arises at least in part because road users have no incentive to avoid travelling during peri-
ods of high demand. Or as Garreau puts it 'We think that roads are free, and we use them with abandon".
(Garreau 1991). This concern occurs throughout the literature, that the problem of peak hour road congestion
will not be solved by the provision of additional road space alone.
The role of pricing under these circumstances is to ration the available road capacity to those who value it the
most. When users who do not value their travel time highly in peak periods cause delay to those who do, the
result is a loss of economic welfare to the latter group. The cost of delays to this latter group will be greater
than the welfare loss other motorists would experience if road pricing deterred them from travel in peak
periods.
In some cases, the welfare losses to motorists experiencing delay will be reflected in a loss of productivity.
Examples are the business traveller or the freight carrying vehicle delayed in traffic.
How can road authorities control congestion?

The control of congestion is not an end in itself. For the economist, there is no intrinsic disadvantage in
congestion, so long as it is the result of a free choice by the those congested, based on the levying of efficient
prices.12 But where efficient prices cannot be levied for whatever reason, and users' decisions about congestion
are constrained by a lack of options, governments throughout the world are investigating measures to control
not only congestion but the total volume of private vehicle travel in major cities. At the political level,
environmental and social amenity concerns are probably stronger influences in this respect than economic
efficiency in itself. The management of congestion has nonetheless important economic ramifications.
The evidence as to the success of alternative measures to control congestion is not compelling. Hensher (cited
in Industry Commission (1993) found that a 10% decrease in rail fates would reduce car use by only 1%. The
Australian Urban and Regional Development Review strategy paper on public transport policy directions
(AURDR 1995b) reported that:

NATIONAL ECONOMY
Physical measures to restrict traffic (such as traffic free areas) are finding increasing application around the
world.
The success of car pooling and high occupancy vehicle lanes has been very mixed.
The Dutch policy to encourage cycling and walking has been showing encouraging signs of success, but this
has been associated with an extensive package of other measures to encourage alternatives to private motor
vehicle use.
Parking restrictions consistently perform as the most effective constraint on motor vehicle use, but the effect
may be simply to disperse traffic to where the restrictions do not apply. (AURDR 1995b).
A further potential response is of course to build roads in outer areas where there are fewer environmental con-
straints, and land is cheaper. The outward spread of our cities in both residential and workplace locations
(Garreau's so-called Edge City), and the constancy of work trip durations over time suggest that this is occur-
ring (see Roads in the Urban Context). While there may be significant cost advantages for road authorities in
building roads in outer areas, the negative consequences will not usually be accounted for in their cost-benefit
analyses. Possible negative effects include under-utilisation of infrastructure" (water, sewerage, schools, hospi-
tals) in inner areas and the reduced viability of urban rail and tram services which rely for their success on trip
density rather than dispersion. Also, building roads in outer areas may only serve to relocate congestion.
The benefits of improving roads

Improvements in the capacity and quality of urban roads have consistently ranked as the most desirable of all
possible roads investments. Improvements to urban roads in Australia exhibit benefit cost ratios of between five
and seven10, compared with ratios of around two for rural roads (The Allen Consulting Group 1993).
Intuitively, these results would seem to contradict the notion that building more roads is a potentially futile
response to congestion. The cost-benefit analysis results in fact seem to point to the almost overwhelming eco-
nomic desirability of responding to urban congestion with more and better roads.
The cause of the paradox lies in the method of calculation of the benefit cost ratios. The larger proportion of
the benefits of urban roads is comprised of savings in travel time. Increased road capacity allows vehicles to
travel more quickly, thereby reducing trip time. These time savings are multiplied by estimated values of travel
time, expressed in terms of dollars per minute and multiplied by both the number of minutes saved per vehi-
cle and the number of vehicles using or expected to use the road. These values are based on proportions of
average wages that people would spend to save time. The method of calculation is such that on roads carrying
large volumes of traffic, small time savings for each of a large number of vehicles will lead to very large values
of travel time savings overall.
The behaviour of road users, in being prepared to queue and wait, suggests two possibilities: firstly that
motorists do not value their time highly; or, that some users do not have any alternative. But provided users are
not required to actually pay for the time savings they accrue, road improvements will essentially be viewed by
them as free goods. More motorists will benefit from the improvement than would be the case if roads were
priced, and the road improvement had to paid for directly by users. There is a further weakness in the applica-
tion of the standard cost-benefit analysis methodology which can result in a tendency towards road space solu-
tions. The estimation of travel time benefits is made as if there were no limit on the share of their incomes
that users would be prepared to pay for road improvements.
There is quite likely an overstatement of the benefits of urban road improvement because in the language of
economics, the estimation of travel time benefits is unconstrained by income. To the extent that this is so, and
to the extent that high benefit cost ratios influence the allocation of road funds, the consequence of these weak-

nesses in analysis will be overspending on urban roads, or at least on those urban roads which exhibit heavy con-
gestion and high traffic volumes.15
The road authorities - or, more properly the governments which oversee them --- are able to tolerate this over-
statement of benefits for two reasons which relate to the discussion on institutional structure in Chapter 3.
Firstly, the actual achievement of efficient use of resources by the road authorities cannot be measured as can
the profit of a public corporation or a government trading enterprise. The potential performance can be
measured under the limiting assumptions above about user budgets for road travel. But the actual economic
performance cannot in any confident way be measured. Secondly, the road authorities do not suffer for poor
performance or receive rewards for good performance (if performance could be measured) because the raising
of their revenues is separate from the budgets they are allocated. These structural weaknesses then reinforce
the inefficiencies caused by the lack of efficient pricing; and the failure to implement efficient pricing in turn
perpetuates the structural weaknesses.
The cost of doing nothing about congestion

The Bureau of Transport and Communications Economics in a recent paper (BTCE 1995) on the urban
congestion problem has clarified the concept of congestion costs by introducing the concept of the "cost of
doing nothing about congestion." The typical methodology for calculating congestion costs yields a gross
measure of congestion cost. The Bureau's "cost of doing nothing" represents a net cost.
The difference arises in the manner in which congestion is defined. The typical measure takes the difference
between actual travel time and travel time in an uncongested or `free speed' situation. It multiplies this time
difference (expressed in minutes) by the assumed value of travel time to arrive at a cost of congestion. The
Bureau's approach compares the gains and losses to which, with the application of an efficient congestion toll,
would accrue to different groups of road users and to road authorities. The result of the netting out of costs
and benefits represents the economic cost of congestion (BTCE 1995).
Even taking a typical average travel time value of $15 per vehicle hour (p 25), the Bureau's economic cost
estimate is approximately one third of the typically estimated measure of congestion." Taking Melbourne as the
example analysed, the typically estimated congestion cost for the morning peak hour is approximately $1.3
billion per year. The economic cost of that congestion - that is, the cost of doing nothing - is only $430
million.
The two estimates have quite different meanings. The net measure derived by the Bureau is an estimate of how
much the economy is losing in economic welfare at prevailing levels of congestion. The gross measure is of
how much users would benefit by a "free" increase in road capacity; that is an increase in capacity for which they
did not have to pay directly. This difference between how much users benefit if they do not have to pay for
reduced congestion and how much they benefit if they do is the essence of the problem for cost-benefit
analysis in evaluating road space solutions.
If the BTCE's preliminary economic cost estimate for congestion were to be extended across Australia, the total
costs would appear less than previous estimates, but nonetheless significant, of several billion dollars per year.
An accurate measurement of the costs will never be obtainable in the absence of road pricing. Current
methods for assessing the benefits of road improvements probably encourage an over-reaction to the problem
of congestion. Whether those methods can be refined to yield more useful information is open to question,
but it is clear that in the absence of road pricing, no definitive determination of the economically efficient
volume of road space can be made.

NKUIONAL ECONOMY
Without road pricing, even the application of robust cost-benefit analysis techniques - which measure in
effect the `free' congestion benefit - is likely to result in overstatement of the benefits of urban road
improvement. What cost-benefit analysis provides is a second order means of allocating road funds in the
face of the external, political constraint on efficient road pricing. But policy should not accept any notion
that cost-benefit analysis of increased road capacity is the best or the only economic response to the problem
of congestion.
Implications for the productive efficiency of cities?

Reducing road costs for business increases their productivity. The Allen Consulting Group 1993) estimate that
the business community incurs costs of $43 billion annually in using the road network", of which $24 billion is
incurred in the capital cities. This estimate embraces the costs of operating freight vehicles and business cars,
including the time costs of the drivers and passengers". Implementation of "just in time" manufacturing with
its implications for the need to tightly manage all elements of the logistics function has heightened concern that
the road system be able to facilitate or accommodate increasingly efficient logistics management systems (see
Apogee Research 1990).
As The Allen Consulting Group (1993) has estimated, the potential for achieving reductions in the costs of
business use of the road system is very significant. Some proportion of that potential - in terms of savings in
vehicle operating and time costs - is estimated in cost-benefit analyses of road improvement projects. While
there are doubts about the accuracy of those estimates, the potential for business productivity savings is at least
being addressed.
It is one thing to carry out a cost-benefit analysis and on the basis of its results of benefits to private and busi-
ness users, implement an increase in road capacity. It is another to ensure that business users actually accrue the
benefits estimated for them. Because benefits to business users are more likely to be "real" - in the sense of
there being a higher probability that business users would actually pay for them - there is some basis for giv-
ing priority to the business sector in being able to take advantage of road improvements. Without road pricing,
only physical demand management measures could be taken to ensure that the business sector does actually
accrue the estimated benefits. Given the preponderance of private travel on the road system, benefits to busi-
ness users are likely to be eroded in the absence of pricing or other demand management measures.
In this sense, the use of cost-benefit analysis in guiding the allocation of road funds, while desirable, cannot
necessarily guarantee delivery of benefits to the business using sector in the absence of efficient road pricing.
There is a tendency in some of the literature to see logistical efficiencies as desirable regardless of the cost to
the road system of supporting them. In economic terms, they are desirable if the benefits of greater produc-
tive efficiency exceed the total of the costs which producers, road freight operators and the road authorities
incur in achieving them. Unfortunately, the science of measuring benefits to business users is somewhat inad-
equate, and there is certainly a need for better information. Finding the economically efficient balance between
the benefits and costs of logistical improvements is presently fraught with difficulty.
It is not possible to gauge the extent to which the logistics management and road freight sectors (increasingly
becoming the one industry) will benefit from road pricing. They are likely to benefit though in a greater relia-
bility of delivery times given the power of pricing to influence road demand. With this improved reliability, the
business sector would therefore stand to gain more from any given set of road improvements.

Implications for policy
Policy should not aim to control congestion as an end in itself, at least on economic efficiency grounds.
Congestion which is inefficient in the terms defined earlier hinders the efficient functioning of urban areas, and
while the costs are very significant they are perhaps not as great as some people may think. Cost-benefit analy-
sis possibly encourages a "build more roads" response to congestion", when in fact supply responses are not
always the most efficient. Instead more road capacity appears to result in even more cars. There is some likeli-
hood that the community is presently paying too much to relieve congestion through capital works. Any ineffi-
cient allocation of road investment crowds out more productive uses which can benefit the economy.
Alternative system management measures - such as car pooling and high occupancy vehicle lanes - have not
had compelling success in controlling congestion. There is now an increasing interest almost worldwide in the
use of road pricing as the only economically effective means of controlling congestion, or of finding the
economically efficient level of congestion.
The business community probably has the keenest interest of all users in the efficiency of the road system. Yet
current road system management probably serves them most poorly, in that their benefits from road improve-
ment may be quickly eroded by the overwhelming influence of private users on traffic flows. This could have
serious implications for policies to improve business efficiency with better roads. Road pricing is probably the
only means to ensure that business users benefit from efficiency initiatives in the road system.
This chapter has not addressed the implementation challenges of road pricing. These include the encourage-
ment of sensible community debate, and the issues of privacy, equity, and price setting controls on monopoly
behaviour on the part of the road authorities. These challenges can only be hypothesised because
comprehensive and direct road pricing has not yet been implemented anywhere in the world. Nevertheless, the
challenges are acknowledged.
4.4 Environmental effects and economic costs

Management of the negative environmental effects of transport could be expected to give rise to two types of
concern. The first is that measures to reduce negative environmental effects will reduce the level of economic
activity as measured by the gross domestic product (GDP). No Australian estimates have been identified, but
a study in the United Kingdom (CEBR 1994) estimated the effects of reducing road building as a response,
concluding that a 50% in road building expenditure in the United Kingdom would reduce total national
employment by 125 000.
An American study (Nordhaus cited in Alden (1995) estimated that the United States economy would incur a
cost of between $US16 billion and $US30 billion to reduce greenhouse gases by between 20 and 25%. Australia's
internationally agreed target is a reduction to 1988 levels of greenhouse gas emissions by 2005. The interesting
conclusion from the Nordhaus study is that the costs of greenhouse reductions are expected to rise at an
increasing rate, so that a 25% reduction would cost nearly twice a 20% reduction. One estimate of the costs of
greenhouse reduction on a world scale was put at $US18 trillion of the period 1990 to 2030 (cited in Grey 1994).
This is equal to approximately 45 times total Australian output.
Concerns about the costs of environmental mitigation in terms of lost output and jobs are obviously legitimate.
But policy is challenged by the long term nature of the problem and the related implications for the distribu-
tion of costs and benefits. The present generation is expected to pay the costs of mitigation to ensure the
survival of future generations. Arguments that environmental mitigation will hinder economic growth might

NATIONAL ECONOMY
well inform, but be unlikely to direct the appropriate policy response. In other words, the road authorities must
take as given the expected increase in road using costs needed to achieve greenhouse reduction. The
appropriate economic policy response is to find the least cost means of doing so. Continuing with greenhouse
as an example, AURDR (1995a) endorses the integrated approach to controlling road use, including road
pricing, integrated land use and transport planning and more flexible funding of public transport. The report
argues though that these measures will not be enough, and that stronger, direct measures to control the
efficiency of the Australian road vehicle fleet will be needed. Achievement of Australia's greenhouse targets
could, the report implies, entail a 100% increase in fuel excises. Direct regulation to increase vehicle fuel
efficiency would on equity grounds be more desirable.'
Other environmental effects do not have the vexing long term dimension of greenhouse, but their costs
nonetheless present challenges for policy. A report on the health related costs of vehicle emissions prepared
for the National Road Transport Commission (Segal 1995) estimated a range of between $10 and $ 20 million
per year, with a "reasonable point estimate" of $50 million per annum. Noise costs of $640 million per annum
were reported by Sinclair Knight (1994) in their report to Austroads on the costs of personal travel".
The need for change

The road authorities are considerably constrained in their responses to the environmental consequences of road
use. But at the same time, the community in general and the scientific community are signalling the desirabili-
ty of change. The fact that change will be costly is not totally at issue. What is at issue is finding means to min-
imise that cost.
There is widespread agreement on the need for comprehensive road pricing to signal directly and bluntly to road
users the costs they impose. The directness of the road pricing instrument would greatly aid the road authori-
ties in the task of meeting their environmental responsibilities.
Road pricing in a broader sense offers the potential to encourage motorists into other alternatives, or at least to
inform them of the relative costs and benefits of alternatives to road use. Whether road pricing would rein-
force the effects on road use of other measures such as parking restrictions and land management and the nat-
ural "rationing" influence of congestion is subject to debate.
What road pricing can do is make the decision process more rational. Without road pricing, and because of the
dominance of travel time benefits in cost-benefit analysis72, urban road improvements will always tend to yield
better benefit cost ratios than public transport, cycling or pedestrianisation initiatives. In this sense, road pric-
ing is fundamental to the achievement of a properly informed perception of the benefits and costs of travel
alternatives, and of alternatives to travel. There is already some evidence that people are seeking alternatives to
travel, even without the assistance of road pricing. Hensher (1995) quotes Golob as estimating that telecom-
muting in California might be reducing vehicle kilometres of travel by as much as 10%. Total American
telecommuting has been estimated to amount to 7.6 million people".
4.5 Summary
Cities are of crucial importance to the economy and roads perform the key economic function of linking pro-
ducers and consumers, and workers and employers. There is no doubt that roads are important.
The need for more roads everywhere does not follow from this conclusion. As with all resource allocation deci-
sions, the economic problem is one of which roads, of what quality, where and at what prices. Current institu-

tional arrangements - in particular the absence of direct and comprehensive road pricing - do not allow these
resource allocation questions to be answered. cost-benefit analysis goes part of the way in providing guidance,
but it cannot simulate the information about road user preferences which could be gained from road pricing.
The road authorities are therefore limited in their capacity to manage or respond to the two perhaps most press-
ing issues for roads in urban areas - congestion and environmental disamenity.
Inefficient levels of congestion acts as a drag on the productivity of cities, thereby reducing national economic
well being. Economic welfare is reduced not only in the cities but for the nation as a whole because cities
account for such a large proportion of Australian economic activity. Efficient road pricing offers a sensible
solution integrated with appropriate land use, public transport and other initiatives.
The appropriate response to the problem of environmental disamenity is somewhat but not entirely different.
Measures to reduce the disamenity effects of transport could very well reduce our national productivity.
Governments have decided that these actions must be taken if the welfare of future generations is not to be
adversely affected. The only feasible response for the transport sector in general is to find the cheapest means
of reducing negative environmental effects.

5. THE RURAL CONTEXT
5.I Relevant characteristics of the rural road network

The rural network is enormous in its extent, covering nearly 700,000 kilometres of road of which 537,000 kilo-
metres or 79% are local. Only 14% of the network comprises National Highways or arterial or main state roads.
This network serves most of the continental land mass, but its market comprises just 2.5 million people (see
Roads in the Rural Context).
Volumes on the National Highway system of 2,800 vehicles per day are less than 20% of those on urban arte-
rials, while rural arterials carry average volumes only 6% of those of the urban arterials. At the local road level,
average volumes on the rural system are only 3% of those on the urban system.
These relative intensities of road use between the urban and rural systems are reflected in average benefit cost
ratios for urban and rural projects. According to The Allen Consulting Group (1993), average benefit cost ratios
for urban capital works of between four and seven are two to three times greater than for rural works (average
around two). The conclusion generally taken from these sorts of comparisons is that Australia spends too much
on rural relative to urban roads, and that our national economic performance is constrained accordingly.
5.2 What are the influencing issues in rural roads?

The prevalence of low traffic volumes across an enormous network is the most obvious physical issue. Wide
diversity in the vehicle mix - of cars, coaches, trucks and road trains - is a further complication. Both char-
acteristics bear on the determination of efficient road standards and on the selection of appropriate construc-
tion and practices.
Low traffic volumes and associated road quality standards are not necessarily economic concerns in themselves,
so long as they reflect user preferences as indicated by willingness to pay. In this respect, fuel taxes (and state
fuel franchise fees) are a blunt instrument. Individual rural users pay the same amount per kilometre for poor
toads as do urban users for good ones14. Users are unable to demonstrate which roads they highly value, and
those for which they prefer to accept low standards.
Low volume roads enter as a problem, not of theory but of policy, where the community has developed an
expectation of minimum levels of service. Some roads may carry volumes for which no road could be eco-
nomically justified. Calls for better roads in areas where volumes are low are sometimes couched in terms of
regional development, social equity (equality of access) or industry efficiency advantages, The 1991 report of
the Western Australian Taskforce on Road Funding Needs in that State provides a comprehensive statement of
the arguments (WA Taskforce 1991). The economic and political challenge is to satisfy the desire of minimum
access for all, while ensuring investment of sufficient funds where roads can assist in the generation of eco-
nomic benefit.
The institutional structure poses challenges or constraints addressed more broadly in Chapter 4. Funding and
pricing arrangements obstruct the customer-supplier relationship. In this way they hinder the processes where-
by road authorities can respond to willingness to pay signals through higher or lower levels of capital and main-
tenance works.
Cox and Meyrick (1994) in their examination of rural road policy proposed the need for significant change: in
a redistribution of investment away from rural areas; and a marked reduction in fuel excise in rural areas to
reflect the relatively lower externality costs of rural road use. With respect to the former, they estimated tenta-
tively a 2.5% increase in GDP by allocating road investment according to benefit cost ratios from cost-benefit
analysis.

5.2.1 Community expectations
Regional development
Regional development is often advanced as a justification for maintaining or increasing infrastructure spending
in rural (or more generally, non-urban) areas. Infrastructure spending, so the argument goes, has the potential
to create employment and activity directly, to create more attractive environments for business and to enhance
competitiveness by reducing transport costs.
Studies quoted in reviews of the international literature by Meister and Weber (1992) support the view expressed
in Chapter 1 that regional development is economically desirable where the benefits exceed the costs. McKinsey
and Co (1994, also cited in Chapter 1) argue that the adequacy of transport infrastructure is not a pressing
concern for businesses in regional areas. Also, road user and community surveys conducted by Vicroads and
cited in Roads in the Rural Context indicate an equity concern (in terms of accessibility and safety) in respect
of the rural network, rather than a regional development concern.
Accessibility and the costs of transport

A survey of road system perceptions taken in Victoria might not be representative of responses in areas where
the road system is less well developed.
A recent Western Australian survey found somewhat conflicting results. The business community favoured
more road expenditure at the expense of expenditure on power, environmental protection, police and
education. But of the rural community more generally, between 20 and 30% of respondents believed that roads
warranted greater expenditure (the comparable estimate for Perth respondents being 16%). At the same time,
the highway system was judged positively by 81% of rural respondents, sealed minor roads by 54%, and town
streets by 75%. Only unsealed minor roads were perceived negatively, by 69% of respondents. Supporting these
latter results, rural survey respondents were more likely to reply that the road system condition sometimes
affected access to services and recreation, but the percentages of respondents affected (18 to 31%) were not
markedly greater than for Perth respondents (13 to 20%) (WA Taskforce 1991).
In both the Vicroads survey cited earlier, and the WA Taskforce surveys, safety was the prime road related issue
for rural residents followed closely by comfort and accessibility. Accessibility ranked closely second among
Victorian respondents, and in WA, comfort and vehicle maintenance costs were the most important issues for
rural people after safety.
This Australian evidence, although from diverse and perhaps inconsistent sources, suggests a stronger concern
or interest in the efficiency of the road system (safety, vehicle costs, comfort) and in equality of access than in
regional development.
Policies to improve access between rural and urban areas might in fact have the unintended effect of diverting
activity from rural areas (see de Silva et al (1993); and O'Connor undated)). De Silva et al argue instead that
rural road development should aim to contain economic activity within rural areas "by increasing the capacity
of rural and remote people to live and work in their environment".
The fact that economic activity in rural areas is centralising and in some cases declining points to an efficiency
interaction in decision making by individuals and businesses. Activity shifts in response to external market
forces, or to opportunities offered by better infrastructure. The alternative model would maintain that rural
communities are worth sustaining in their own right and regardless of the inevitability of external forces.
The policy model ultimately adopted by governments for the rural road network is likely to reflect a
combination of economic, social and political concerns. It is appropriate for policy, as in the urban context, to
determine the importance of efficiency relative to other community objectives as a public decision criterion.

NA! TONAL I CON(:)MY
But two very broad propositions and conclusions can be posed at this stage: firstly, regional development is pos-
itive for the national economy if the benefits exceed the costs, and if the benefits do not simply represent a pol-
icy induced transfer of activity from other regions; and secondly, that for rural users, issues of efficiency and
equity in road service provision are probably more important than those of regional development.
5.2.2 Efficiency in investment and maintenance

The lack of comprehensive road pricing inhibits judgements about the efficiency of the rural network as much
as it does about the urban network. The obvious importance of the rural network can be argued based on its
preponderance in rural passenger transport, and its significance for non-urban freight. What cannot be said in
economic terms is that we have the right roads, built to the right standards in the right places.
The relevance of benefit cost ratios (BCRs)

Cost-benefit analysis is the only economic tool which can guide efficient investment and maintenance decisions
in the absence of direct road pricing information. Benefit cost ratios for investment on rural roads, as already
noted, tend to be significantly lower than for urban roads. Even National Highway investments yield prospec-
tive benefit cost ratios less than half those on major urban roads.
By implication, rural road investment should be reduced and in urban areas increased until benefit cost ratios
across the total national network are equalised. Were the congestion cost estimates for Australian studies cited
in the previous chapter to be accepted, the economically justifiable shift in expenditures might well be very sig-
nificant.
Experience suggests the need for caution in drawing these sorts of conclusions given the present state of devel-
opment of the cost-benefit analysis technique, and the quality of the data used.
For rural roads, the use of standardised values for travel time, very similar to those for urban areas, possibly
understate willingness to pay for road use where transport alternatives are limited. Current cost-benefit analy-
sis practice does not handle well the estimation of benefits from reduced product spoilage or livestock damage
which road improvement might permit, or the reduction in damage due to dust from unsealed roads. In gen-
eral, cost-benefit analysis practice is more confident in its treatment of the value of driver and passenger time,
than in the valuation of effects of road condition on freight and livestock. Similarly, the treatment of benefits
to flood improvement could warrant more attention'.
Urban cost-benefit analyses rest very heavily for their conclusions on the assumed value of travel time and a
general tendency to understate environmental costs. The treatment of freight commodity related benefits in the
rural context is probably as rudimentary.
On balance, the likelihood of overestimation of benefits is greater in the urban network due to the strong influ-
ence of congestion benefits in overall benefit cost ratio results. But without road pricing, it will always be dif-
ficult to gauge users' relative valuations of different parts of the network.
In urban and rural areas, a lack of information about consumer behaviour (including commercial user behav-
iour) and understanding of willingness to pay for roads is a major constraint on effective cost-benefit analysis
practice.
Improvement is warranted in rural and in urban cost-benefit analysis practice. Only then can the relative effi-
ciency of investment in different parts of the network be judged with reasonable confidence. It is the relativi-
ty between rural and urban cost-benefit analysis results rather than their absolute magnitudes which is sending
the signal for a significant shift in investment towards urban areas.

Institutional structure and funding
Funding arrangements for the rural sector have the same effect as for the road sector as a whole, in severing
the link between the supplier and the consumer. These complex arrangements include the Commonwealth's
direct funding of National Highways according to its own priorities, untied Commonwealth funding of local
roads, and State funding of arterial roads and those essentially local roads deemed by legislation to be State
responsibilities.
These arrangements lessen the probability that the eventual level and distribution of rural road funding will be
efficient at the national level. Firstly, the partitioning of budgets between different road types (National
Highways versus local roads for example) or between jurisdictions (States and Territories versus local
authorities) acts as an impediment to the distribution of funds according to demonstrated economic need
taking account of the total network. Secondly, the road agencies - including the Commonwealth as steward
of the National Highway system, and local authorities in respect of non-state roads - are not bound to achieve
efficiency as a performance condition.
The potential for inefficiency arises because the volume of funds allocated nationally to each jurisdiction or
road type is not determined by reference to relative benefit cost ratios.
The separation of revenue raising powers between each of the levels of government reinforces or at least
contributes to the reliance on partitioning as a funding delivery mechanism. So long as road agency budgets
are determined "top down" without demonstrated economic need, cost-benefit analysis can only ever be a
"least worst" tool for guiding investment allocations between projects.
There are a number of examples of the sorts of resource misallocations which could result. The
Commonwealth Auditor-General's recent review of the National Highway program found that if the cut-off
(or acceptable) benefit cost ratio for NHS investments were raised from one to two, "expenditure on the
National Highway would fall by 48% for projects expected to be undertaken between 1989 and 2000"
(ANAO). At current levels of expenditure, the effect would be to reduce annual National Highway invest-
ment by approximately $400 million.
The Bureau of Transport and Communications Economics demonstrated in its review of the National
Highway System for the National Transport Planning Taskforce the degree to which economically justified
investments would be spatially concentrated on the network. In total it recommended an economically justi-
fied National Highway program over the next twenty years of $11.3 billion. Approximately $9 billion or 81%
was recommended to be spent on the corridors between Melbourne and Cairns. Expenditure on only two cor-
ridors - both between Sydney and Brisbane - would account for 56% of total recommended expenditure.
Together these two corridors represent only 8% of the total system length estimated by the Bureau (BTCE
1995a).
The Bureau's estimates suggest the potential for funding mechanisms which are institutionally determined to
restrict national economic gains from efficient investment.
The problem of community service obligations (CSOs)

Efficiency loses its primacy as a system management criterion in those rural and remote areas where
accessibility to markets and to essential services is poor and roads are the only feasible transport option.
De Silva et al (1993) caution that:
"As (cost-benefit analysis) approaches result in only an aggregate measure of benefit across a
certain community they fail to provide information that is required for equitable distribution of

NATIONAL ECONOMY
benefits from road investments thus resulting in communities and industries reliant on roads
suffering from lost opportunities."
They propose a process of moderating urban and rural benefit cost ratios so that extreme values, high or low,
are minimised in their effects on the formulation of investment programs. The argument is partly one of
whether cost-benefit analysis adequately measures benefits to road programs in rural areas. But, as raised by De
Silva et al, and WA Taskforce (1991), the issue is one of "a government requirement to provide products or ser-
vices to community groups at a price less than the cost of supplying them." (Bureau of Transport Economics,
cited in Harvey, 1992).
For the WA Taskforce on Road Funding Needs (1991), rural roads are a merit good on equity grounds, how-
ever:
"Me use of the merit good argument requires some measure of accessibility to allow the signifi-
cance of the (rural accessibility) problem to be addressed. Those communities not enjoying the
minimum standard of accessibility should have priority in fund allocations for rural roads which
should not be subject to benefit cost analysis until the minimum standard is achieved."
How should community service obligations be addressed?

The problem of CSOs encapsulates the classic dilemma posed in seeking to balance efficiency and equity. These
two goals of policy, as mentioned earlier, are not necessarily in conflict. Efficiency may serve as an overriding
goal if the community is accepting of the current income distribution, and of the mechanisms for compensat-
ing those adversely affected by changes in resource allocation. It is doubtful however whether the community
does have such a clearly defined view of equity or efficiency. While efficiency can be technically defined, there
are few operational definitions of equity'. Harvey (1992) takes the seemingly pragmatic view that when con-
sidering CSOs in a cost-benefit framework, "t is necessary to assume that the CSOs are solely for non-economic
reasons".
Cost-benefit analysis, or a road revenue-road tax approach can then be taken to identifying the cost of the com-
munity service obligations on particular roads. In broad terms, the CSO is the difference between the net costs
of the current service standard and those of the service standard determined to be economically efficient.
For policy purposes, the key requirement is that the community define its minimum acceptable standards.
Having identified the costs, it is for the community to judge the trade offs between the equity gains in meeting
CSOs and the benefits foregone from economically more advantageous investments elsewhere.
The trade off can only ever be a political decision, informed by the efficiency and equity implications. The
determination of appropriate road service standards in areas where equity issues are pressing, can never be by
the efficiency criterion alone.
The problem is not unique to roads or even to transport. But Harvey's suggested procedure of systematically
analysing the rural network and identifying CSOs would at the same time allow a rationalisation of standards to
reflect the effects of long-term change in the demographics of rural areas. Some roads might warrant down-
grading, and others servicing growing regional centres might be economically upgraded.
5.3 Are Rural Roads Doing Their Job?

In economic terms, the question remains open. Without the ability to determine rates of return on the use of
road capital, economists cannot judge whether the rural road system is efficient. In broad terms, the national
economy will be advantaged only if rural road investment can at least match the returns on other investments
in the economy (adjusted for risk). Any other position serves to constrain national economic welfare.

Economic development is a dynamic process. Part of the job of the rural road system ----- as for other factors
of production in the economy - is to evolve in response to the economy's dynamism. Both Roads in the Rural
Context and Roads - Are They Doing Their job-demonstrate the paucity of information available to judge
performance in this respect. Information is lacking describing trends in service quality, and in the distribution
of expenditure spatially and by road type.
In very broad terms there is some evidence that the road system is adjusting over the long term to changes in
the economic and demographic characteristics of the rural road network. Evidence of declining budgets for
local roads suggests an indirect reaction to declining demand. The results of surveys reported earlier, from
Western Australia and Victoria, point more to specific concerns about network condition - particularly about
safety --- than to a perception of the network being generally inadequate.
For the economist, judgements of this type can only ever provide conjectural information so long as they remain
unsupported by demonstrations of the market's willingness to pay for roads of differing standards and in
different locations.
5.4 Where To From Here?

The community imposes a significant burden on the road authorities, who are after all service providers, to
respond to a wide-ranging rural policy brief.
Hitherto, roads in rural areas, like railways in earlier times have been perceived by the community as perfor-
ming developmental, efficiency and equity (access) roles: developmental, in facilitating new economic activity;
efficiency, in providing low cost transport of adequate quality for people and goods; and access, in linking rural
people with essential services, community and recreational activities.
At the same time, the policy focus in terms of funding appears to have shifted increasingly to urban areas. The
problems of congestion and growth in the manufacturing and service sectors, allied with the desire to make our
cities more efficient and environmentally sustainable have been factors influencing the shift of policy focus.
Perhaps as a consequence, the information bases about rural roads and the rural road market are poorly
developed. Yet the rural network provides links into our still important agricultural sector, and increasingly
important tourism industry, and embraces the major inter-regional and inter-capital links.
5.4.1 Road authority objectives

The specification of a simple, readily comprehended economic objective would aid in focusing policy on the
appropriate roles and contribution of the rural road sector. Chapter 1 proposed framing the role as follows, that:
"Roads should be provided which people want to use at prices which offer a reasonable return on
road authority capital."
Pending developments in road pricing, the objective might be modified to embrace the provision of service at
standards for which the benefits exceed the costs. Benefits and costs would be established using cost-benefit
analysis.
The adoption of this simple objective would enable the road authorities to state their position as service
providers. Subject to budget constraints, service can be maintained or improved where the benefits exceed the
costs. "Developmental" improvements could be considered if justifiable on the same basis.

NAI-IONAI_ ECONOMY
Regional development
This approach recognises that there is no dichotomy between efficiency and development. The latter is
desirable if the benefits it brings exceed the costs incurred in its facilitation..
Where governments choose to pursue developmental objectives through the road system without necessary
regard for efficiency, other portfolios should have responsibility for project identification, development and
funding. Publication of the results of cost-benefit analyses of these initiatives would enable developmental sub-
sidies to be readily identified'.
Community service obligations

A similar approach would be desirable with respect to CSOs. Current mechanisms whereby road authorities
must act efficiently and equitably confuse outcomes with processes. The desired outcome is equity. Road ser-
vice might be one means to achieving equity for rural people.
The determination of equitable standards by agencies other than the road authorities would assist efficiency in
a number of ways: firstly, a cross-portfolio approach to identifying, costing and funding equity interventions
would facilitate considerations of alternatives to road access where these were appropriate; secondly, the costs
of CSOs could be identified and separately funded, allowing the road authorities to focus more clearly on eco-
nomic efficiency; thirdly, rural people would have better information on which to express their preferences for
equity delivery mechanisms.
5.4.2 Consistent economic evaluation

Without road pricing, good cost-benefit analysis practice is essential to the specification of efficient mainte-
nance and investment programs. Current calls for a substantial shift towards urban road investment, while pos-
sibly justified in large part, rest on a substantial faith in current cost-benefit analysis practice.
In the prevailing funding and pricing environment, the role of cost-benefit analysis is to guide the efficient allo-
cation of predetermined road budgets.
The capability of cost-benefit analysis to adequately reflect relativities in the efficiency of urban and rural invest-
ments is therefore crucial. Much currently rests on the adequacy of our understanding of user time benefits in
the urban and rural environments. How we currently interpret urban user willingness to pay for road improve-
ments strongly influences perceptions of the relative merit of urban versus rural road improvements.
5.4.3 Funding and pricing

Earlier chapters have outlined the implications for efficiency of current funding arrangements which sever the
link between road system revenue and expenditure.
cost-benefit analysis is the only means at present for efficiently allocating these predetermined road budgets.
As an alternative approach, Kolsen and Docwra (1987) suggest the use of fuel excises as revenue surrogates
which could be compared with expenditure requirements. This implies a form of hypothecation to those roads
from which revenues were raised, a set of rules for relating revenues to justified road infrastructure investments,
and predetermined financial performance rules for comparing revenues and costs. These rules must take
account, as Kolsen and Docwra observe, of past decisions which have led to higher or lower than efficient qual-
ity standards. This approach brings the supplier and the user closer together, and provides a discipline on the
road authorities to maximise the efficiency of their maintenance and capital works. Public disclosure of the
methods for assigning revenues to road sections, and of regular traffic count information would provide a use-
ful discipline on road authority asset management policy".

The theoretical basis of this approach is that fuel excises (and State fuel franchise fees) provide probably the
only available measure at present of willingness to pay for road use.
It is important to note (as do Kolsen and Docwra) that hypothecation in this sense is not an end in itself.
Hypothecation is only part of the process of bringing road authority decision making closer to that which
pertains in the economy more broadly.
Where benefit cost ratios are low for road investments - on parts of National Highway and lower volume State
arterials - comparisons of revenues and expenditures could lead to lower standards than at present. Direct and
transparent CSO subsidies to those sections of road might well be appropriate. Funding these additional costs
as subsidies would allow users and other interest groups to more effectively influence the direction of road
system investment.
In the longer term, electronic pricing of the more heavily trafficked rural roads would ease the tasks described
above. It is likely however that for much of the network, fuel tax hypothecation might be the only practicable
alternative for pricing roads according to volume of use.
5.4.4 Institutional structure

A system of hypothecation, integrated with institutional reform would overcome a salient weakness of
cost-benefit analysis as an efficiency tool. Unlike profit motivated organisations which prosper or fail according
to a relatively simple performance criterion, authorities which rely on cost-benefit analysis as an efficiency tool
are neither bound to abide by the results, nor judged according to their efficiency performance".
A policy of hypothecation could be accompanied by institutional changes aimed at bringing the road
authorities closer to their customers. This might be achieved by separating the strategic planning and funding
of rural roads from that of urban roads, and appointing regional advisory bodies to assist in the determination
of investment priorities.
5.5 Conclusion
As in the urban networks, the problem of identifying the economic contribution of rural roads is bound up with
the lack of price signals to provide measures of the value of road service. Even with comprehensive road
pricing, the rural network presents significant challenges.
These include sparse population and low traffic volumes, and the resulting problem of community service
obligations. Perceptions of what the rural network should be achieving take many forms, serving only to
complicate the task of providing efficient service.
It would be desirable to simplify the role of the road authorities to that of efficient service provision, with other
objectives (such as equity and regional development) being the responsibility of the appropriate agencies.
Reforms in funding and institutional structure should be considered which will facilitate the efficient, service
delivery role. Given the physical character of much of the network, its low volumes and isolation, some form
of hypothecation of existing revenue sources might be the only practicable pricing solution for the foreseeable
future.

6. MULTI-MOD ISSUES
6.1 Defining Multi-Modal

Multi-modal interrelationships in transport take two forms, both of which are relevant to the goal of econom-
ic efficiency. The first and most obvious is that of inter-modal handling of passengers or freight. The second
of these interrelationships is that of competition between modes. Efficiency in the use of transport resources
requires the selection of the mode which satisfies customers' needs at the lowest possible cost.
Whole-of-transport system approaches to policy are increasingly important for a number of reasons:
the micreconomic reform agenda, with its concern for efficiency in production and investment;
the national competition policy, which calls for "level playing fields" between competitors; and
the development of "just in time" manufacturing, which relies on so called "seamless" links between trans-
port modes to achieve the required levels of transport system performance in terms of reliability, speed and
cost.
6.2 Economic Issues in Multi-Modal Transport

The efficiency rule in the multi-modal context is essentially that the best mode should be used for the job (see
Kolsen (1968)). Compliance with this rule requires that customers be free to choose the best mode for their
needs, that the prices they are charged reflect the costs of service, and that transport operators are denied the
latitude to exert monopoly power which distorts price-cost relationships.
The National Transport Planning Taskforce referred throughout its report to practices or policies which distort
cost relationships between modes. These include inconsistent tax treatment, inconsistencies in organisational
objectives, differences in work practices, and barriers in some modes to efficient pricing and investment poli-
cies. In its discussion of multi-modal transport issues, the Taskforce noted that "Previous reforms to the trans-
port industry have focused almost exclusively on individual modes, and their interrelationships have been large-
ly ignored" (NTPT 1994). The Taskforce clearly favoured a situation in which the distribution of the transport
task between modes emerges, not from forced integration by governments, but through the self-interested inter-
actions of the transport suppliers themselves.
6.3 Relevance To The Road System

In considering multi-modal policy from the perspective of the road system, it is useful to identify the system's
two prime constituents: firstly, the road authorities which provide and maintain the infrastructure; and second-
ly, the operators of private and commercial (including public transport) vehicles who use that infrastructure.
Unlike rail operators who exercise control simultaneously over vehicles and track, road use is the outcome of
separate decisions taken by the owners of the track on the one hand, and the owners of the vehicles on the
other. As Kolsen maintains, road pricing is the appropriate means for bringing the track owner-vehicle rela-
tionship in road transport into equivalence with that in rail (Kolsen 1968).
From the point of view of what the road system can do to enhance multi-modal efficiency, improvements in
pricing and the consequential or related changes in investment practices and institutional objectives are proba-
bly prominent.

6.4 Current Practices RelatingTo Inter-Model Efficiency
The discussion here is concerned with the capacity of the road authorities and road policy generally to influ-
ence multi-modal efficiency. Other considerations, such as inconsistencies in tax treatment between modes, or
the regulation of the rail and coastal shipping sectors are outside the scope of that brief, important though they
may be.
6.4.1 Investment evaluation and policy

The most influential contribution of the road authorities is probably through their investment and rehabil-
itation programs. These programs are made up of projects designed to preserve or enhance discrete sections
of road or groups of sections forming links and corridors.
Yet, these investment programs are formulated generally without the price information which is so important
in guiding investment decisions throughout the economy according to the broad principles set out in Chapter
2. The road authorities rely heavily instead on cost-benefit analysis (CBA) as the analytical tool for determining
the viability of investment projects in the absence of price information. As previous chapters have argued, CBA
has its weaknesses. Its pre-project assessments are not subject to objective testing in the market either before
or after the event, and its performance measures cannot exercise the same discipline on organisational
behaviour as does profit.
In this inter-modal context can be added another weakness inherent in the application of CBA. The results of
a CBA of a road investment are generally not comparable with those for modes which directly price their
services (see Harrison and Mackie (1973)). Because of this non-comparability, efficient allocations of national
infrastructure investment between modes cannot emerge "bottom up": that is, through a pooling of all
potential investments across the modes, and selection of those offering the highest rates of return. CBA does
not offer therefore a rigorous mechanism for decentralised achievement -- without direct government inter-
vention - of multi-modal efficiency.
It might be argued that the proposed national system of heavy vehicle charges offers some respite to the
pricing problem in roads, and hence to that of achieving efficiency in investment (see NRTC (1995)). On the
other hand, the charges are to be confined to the heavy vehicle sector, and, being fixed charges, cannot be
related to the volume or composition of use of discrete road sections or corridors. Pricing information at this
micro level of individual road sections or corridors is essential to the task of efficient multi-modal allocation of
investment resources. And to be effective in controlling investment decisions, the pricing system must cover all
vehicles in the traffic stream..
6.4.2 Institutional objectives

Allied to the weaknesses of pricing and investment practice, the institutional framework of the road authorities
militates against a decentralised system for achieving multi-modal efficiency. Heavy vehicle users have an
inherent incentive to operate efficiently. Any other form of operation compromises their commercial survival.
Reasonably efficient pricing systems for their services and for the services of competing and complementary
modes will guide customers to the most efficient service, taking account of price and quality differences.
The same pressures do not bear on the road authorities in deciding where and how to invest. They are not
bound to take cognisance of CBA results whether or not they reflect the consequences of modal competition,
and they are not judged, either before or after, on the economic performance of their investments. The road
authorities lack the incentive then to validate their traffic and benefit forecasts in the light of prospective actions
or reactions of competing modes, and to adjust their investment strategies accordingly. They may desirably test
their forecasts for the competitive response of other modes, but their institutional structure and objectives do
not require them to do so, nor necessarily to act accordingly.

NATIONAL ECONOMY
Institutional structure can influence patterns of multi-modal transport supply in other ways as well. An
example is the upgrading of a corridor to an intrastate port or railhead when the channelling of traffic to anoth-
er State may be more beneficial for users and hence for the economy. Without a commercial objective, there is
no incentive for patterns of investment to reflect economic and market, rather than political, imperatives.
6.5 Response To Current Practices

It follows that the arguments elsewhere in this report for changes in the related areas of pricing, investment and
institutional structure have particular application to the road system's interactions with other modes. Some of
these changes may be relatively long term in nature. But until they are effected, the NTPT's preference for
decentralised multi-modal efficiency can probably not be realised.
Applied Economics (1995) in its report to the National Transport Planning Taskforce on investment evaluation
methodologies recommended that those major projects having multi-modal implications should be subject to
consistent cost-benefit analysis so that the most efficient mode for the task could be chosen. External, public
examination of these evaluations under certain circumstances was also recommended.
Notwithstanding the concerns of Harrison and Mackie (1973) about the non-comparability of CBA results
between "priced" and non-priced sectors, the Applied Economics approach, combined with centralised cross-
authority evaluation of major transport initiatives, might be the best that can be done towards multi-modal effi-
ciency until longer term institutional and pricing policy change is implemented. One alternative proposed by
Harrison and Mackie as appropriate in some circumstances, would see prospective revenues in financial evalua-
tions for rail projects for example, being "topped up" to reflect non-priced benefits, as a means of achieving
comparability with CBAs for road projects. The non-priced benefits could then be actualised by means of a
subsidy to the rail operator.
6.6 The Special Case of Urban Transport

None of the theoretical precepts for efficiency are as readily applied in the urban setting, where the interactions
between transport, land use and planning systems are inherently complex (as Roads in the Urban Context
demonstrates). The immediately preceding discussion is probably most apt in respect of intrastate and inter-
state corridors, but even in urban areas the framework issues of pricing, investment and institutional structure
are relevant to the problem of using the best mode for the transport task at hand.
Improvements in these areas would certainly contribute to the NTPT's ideal of decentralised multi-modal effi-
ciency. Until then (and perhaps even with fundamental change) initiatives such as the Commonwealth's Better
Cities Program may be required to stimulate or act as a catalyst towards whole-of-transport system approaches
to achievement of urban policy objectives. In this context, the Australian Urban and Regional Development
Review report on public transport (AURDR 1995b) emphasised the joint role of all levels of government in
supporting enhanced, outcomes directed funding for transport, integrated planning, pricing and pricing systems
and improvements in data collection.

6.7 Conclusions
Economic efficiency across the transport system is more likely to be achieved if the road sector operates accord-
ing to those pricing, investment and institutional rules which pervade much of the transport sector, and partic-
ularly the commercial road using sector. The NTPT's ideal of decentralised multi-modal interactions, largely free
of government intervention, must be conditional on reform in these areas. cost-benefit analysis processes,
applied consistently across modes, can go only part way to remedying the weaknesses of pricing, investment and
institutional structure in the road sector. Until more fundamental reform is achieved, consistency in CBA prac-
tice particularly between road and rail, allied with cross-authority planning processes may be the desirable avenue
towards multi-modal efficiency. In addition, in some instances, direct subsidisation of commercialised rail ser-
vices may be an efficient policy intervention pending change in the economic management of the road system.
The urban sector presents particular complexities, but even here, reform in the areas mentioned above would
certainly be important in achieving broader policy goals for our urban areas.

7. PRACTICE ELSEWHERE
7.1 Practice Elsewhere

Australians frequently look to practice overseas to justify what we see as our strengths or find confirmation of
what some see as our weaknesses. Desirable economic practice in the management of the road system is one
area however in which overseas practice provides little guidance. We face the same challenges in the roads
sector as do other developed nations, and the same uncertainties in reacting to them. Some overseas experience
is informative for Australia, but in other areas, our practice is equal to any other. Therefore, the discussion in
this chapter is, of necessity, brief, and concentrates on those issues which serve as sub-themes of the report as
a whole. They are cost-benefit analysis practice, road pricing and institutional structure.
7.2 Cost-benefit Analysis Practice

A reading of the literature would suggest that Australian cost-benefit analysis practice is the equal of world
practice. The Bureau of Transport and Communications Economics and its predecessors have long experience
in the application of CBA to transport investments generally, and this experience is available in the private
consultancy and academic sectors and within the road authorities themselves. Austroads is soon to issue a
national CBA manual to complement the practice manuals of the Commonwealth and State treasury organisa-
tions, and those of some of the road authorities. Practice can always be improved though, as Chaper 8
proposes.
The road authority team preparing the Austroads CBA Manual has examined New Zealand practice, where CBA
is rigorously applied in the assessment of national and local road projects. Australian analysts face the seeming-
ly almost universal problem of having their findings accorded suitable weight in the decision-making process.
The Applied Economics report (1995) prepared for the National Transport Planning Taskforce contains
recommendations, including greater public exposure of CBA results, aimed at increasing the influence of
economic efficiency in the decision-making process.
7.3 Road Pricing

There are very few instances in the world where direct, comprehensive pricing of roads is in place. Australia
conforms in a negative sense therefore to the world practice benchmark. Roy (1994) in his recent survey of
European transport investment policy noted that apart from France with its tolled motorways, few European
Union countries (including the United Kingdom) have more than "limited experience" with road pricing.
Area wide road pricing has been applied in Singapore, and to a lesser extent on ring roads in Norway, but the
technique remains untried generally throughout the United States, Europe and the United Kingdom (see Cox
and Meyrick 1994). The Singapore scheme, in operation since 1975, has resulted in a 22% increase in travel
speeds during peak periods, and a reduction in the traffic growth rate. "Escape" behaviour onto untolled routes
was observed initially but controlled by signalling and other measures on circumferential routes around the
tolled area (Button 1993). Button quotes analogous experience of the Bergen cordon pricing approach in
Norway, which unlike Singapore, operates in peak and off-peak periods. Introduced in 1986, the Bergen
pricing scheme has reduced traffic volumes in the urban area by 6 to 7%.
While "the theoretical case for road pricing is irrefutable" (Evans 1992), the universal concerns are of practica-
bility, equity and political acceptability. Mearns (1994) reported similar concerns in the United Kingdom, but
noted that greater market familiarity with smart card technology could be a factor in undermining opposition
to urban road pricing.

A major government study of road pricing options for London initiated in 1991 concluded that road pricing
would be complicated and difficult, but would have significant positive effects on revenue and traffic speeds.
Nevertheless, in releasing the London study, the government referred to technological limitations and "complex
administrative and enforcement issues" as grounds for rejection of the pricing option (Traffic Engineering and
Control 1995).
7.4 Institutional Structures and Objectives

There is perhaps more to be gained from international experience in examination of approaches to institution-
al structure. This report has placed considerable emphasis on the interaction between institutional structure and
the achievement of economic efficiency, and on its important reinforcing links with pricing and investment.
Here, two somewhat contrasting approaches are examined, in the United States and New Zealand.
7.4.1 US experience - the ISTEA Act

The United States Federal government's Intermodal Surface Transport Efficiency Act 1991 has attracted con-
siderable attention in Australia on account of its emphasis on multiple objective outcomes, and multi-modal
approaches to the achievement of national transport objectives.
A key feature of ISTEA is its capacity to fund a wide variety of initiatives, including roads, public transport, car
pooling, and research and development, by transferring Federal funds previously allocated to the highway sys-
tem. Amendments to the Clean Air Act introduced in 1990 provide an incentive to State and local jurisdictions
to take advantage of the flexibility in ISTEA to initiate alternatives to reliance on the highway system. The Clean
Air Act amendments mandate ambient air quality standards in urban areas. ISTEA in addition ties its assistance
to State and local governments to the establishment of planning processes for metropolitan and urban areas.
These processes must be consistent with the objectives of the ISTEA Act, and provide for the involvement of
the community in the formulation of plans. According to AURDR (1995b), the Act has been successful in gen-
erating "planning partnerships" between levels of government, in placing transport planning in the broader con-
text of national planning, and stimulating interest in intermodal transport solutions and in the potential of intel-
ligent transport systems (ITS).
The influence of ISTEA can be seen also in the continued development of the National Highway system (see
USDoT 1993). Future planning is to be directed to management of the already existing network, based on per-
formance standards developed according to environmental, safety and economic, rather than engineering crite-
ria. Links in the network with other modes are also identified. These include ports, airports, long distance pas-
senger rail (Amtrak) and urban transit interfaces, and truck-rail interfaces. The proposal for the system prepared
by USDoT required that state and local officials to participate in the process of identifying intermodal connec-
tions with the National Highway System.
The Australian Urban and Regional Development Review (1995b) in its research report on public transport
futures, identified three features of ISTEA relevant to Australia:
It reflects governmental concern with increasing reliance of the transport system on the private motor
vehicle.
It represents "an example of a federal government in a federal system taking the initiative within a federal
system in relation to what are seen as national priorities for action."
It combines the powers of environmental and transport legislation in the wider context of integrated trans-
port planning.

The National Transport Planning Taskforce in assessing ISTEA commented favourably on its funding
flexibility and network wide focus. The Taskforce believed however that ISTEA had not lived up to
expectation in practice:
"Criticism includes that there has been little change from past practice with funding going to the
states rather than to local or metropolitan bodies...While there are broad national directions
expressed in the legislation project selection for funding still primarily rests with individual state
agencies. As a result individual investment decisions are not necessarily on a multimodal
strategic basis." (NTPT 1994).
Gramlich (1994) raises a similar concern, not specifically with respect to ISTEA, but about the matching grant
arrangements between Federal and other levels of government, enshrined in United States policy practice. The
Federal government typically meets 80% of approved project cost. For Gramlich, funding arrangements which
discriminate against maintenance in favour of capital expenditure, and encourage States to postpone worthwhile
projects in anticipation of Federal funds are inherently inefficient. If infrastructure investment is good for the
economy, Gramlich argues that before those benefits can be realised, the efficiency of the funding mechanisms
themselves must be improved: States should be required to compete for grants (rather than these being
allocated according to historical shares) and user charges should be employed more aggressively.
7.4.2 New Zealand - corporatisation

The overarching national focus of ISTEA is a characteristic of the New Zealand experience as well. The
objectives of the road system are set nationally, but at the same time the means to their achievement are
exerted via a "bottom up" focus on individual projects. As far as the goal of economic efficiency is concerned,
the salient features of the New Zealand model are threefold:
the adoption of a corporatised approach to the planning, management and operation of the national road
system.
the adoption of a simple corporate objective, directed to the maximisation of economic efficiency while
providing a safe network."
universal contracting out of professional services, construction and maintenance activities for the State
highway system.
Established in 1989, Transit New Zealand (TNZ) has full responsibility for State highways including planning,
construction and maintenance. Its State highway functions are fully funded from the National Land Transport
Fund, from which TNZ also funds subsidies to local authority roads and public transport services, safety
projects and administration. The National Land Transport Fund is in turn credited with charges levied on
commercial vehicles, vehicle registrations, and that proportion of fuel excise collections which is considered by
the government to be a charge for road use rather than a tax. The balance of fuel tax collections is allocated to
consolidated revenue (Travers Morgan 1995).
As in Australia, the composition of the road and other programs managed by TNZ is subject to approval by
government. The annual program, referred to as the "statement of intent" is essentially TNZ's contract with
the government. The statement of intent "includes the basis on which TNZ will evaluate projects, determine
the budget of outputs and approve competitive pricing procedures. It also contains TNZ's assessment of land
transport needs and issues during the next five years." Within this statement of intent process, it is the tight
specification of the corporate objective which appears to limit the scope for the pursuit of objectives other than
economic efficiency and safety (Travers Morgan 1995).

The link in the model between the corporate objective for TNZ and the approval of a program which meets
the corporate objective is a rigorous system of cost-benefit analysis of all projects proposed for funding through
TNZ. The cost-benefit analysis procedures are set out in a project evaluation manual which is universally
applied, and all candidate projects must achieve a relatively high BCR before being accepted. Candidate pro-
jects include those proposed for State road system and for subsidy by TNZ to local authorities. Recently, the
BCR cut-off has been set as high as five. Candidate projects include those identified by TNZ for the State high-
ways, and by local authorities in respect of TNZ subsidy of works on local authority roads (Travers Morgan
1995). The use of CBA as a moderating tool across road classes provides some assurance that efficiency will be
maximised S2 Subjecting all projects to be fully or partly funded by TNZ to a common form of assessment con-
tributes to ensuring efficiency across jurisdictional boundaries as well.
Wilkinson (1995) in a recent review of the TNZ experience saw the setting of "a single overriding objective"
for State-owned enterprises as providing significant efficiency gains, although "privatisation is likely to be nec-
essary to lock in such gains".
A strong link between a simply stated corporate objective and the rigorous application of a standardised cost-
benefit analysis procedure go as far as possible to ensuring allocative efficiency: that only those projects are
funded for which users would be willing to pay.
The New Zealand model has been aggressive also in achieving the other component of economic efficiency,
namely technical efficiency in the use of resources. Technical efficiency necessitates that the objectives being
pursued are achieved as inexpensively as possible allowing for the desired quality of outcome. TNZ's enabling
legislation requires that its activities of design, construction and maintenance be fully "contestable": that is, to
be contracted out in the open market. Comprehensive contracting out of professional and engineering services
in pursuit of this objective has realised savings of 8% per annum on State highway works projects (Bates and
van Barneveld undated).
7.5 Conclusion
International practice does not provide significant guidance to Australia in the economic management of the
road system. In technical areas such as pavement management, Australia is able to tap into world expertise, and
does so. But in determining how roads should be funded and priced, and road authorities organised to achieve
economic efficiency, there are no obvious beacons of international practice. The US ISTEA model warrants
further study to identify how its top down national objectives are translated into effective decision making at
state and local level.
What stands out in the New Zealand model however is its simple objective and corporate institutional structure.
New Zealand's rigorous approval to carrying out cost-benefit analysis and taking notice of the results in the for-
mulation of expenditure programs is arguably one which is ahead of Australian experience. Its linking of insi-
tutional and economic mechanisms addresses the concerns raised by Gramlich, the NTPT, and by Lewis in an
earlier chapter, that the approach embodied in the ISTEA model has not resolved the institutional problem at
the micro level. This report has argued elsewhere in favour of commercialisation for the Australian road author-
ities, supported by a simple corporate objective of efficient service. A study of the Transit New Zealand model
would be worthwhile to identify those aspects of its experience which are appropriate for Australian circum-
stances.

NATIONAL ECONOMY
8. PROPOSALS TOWARDS BETTER

PRACTICE
8.1 Summary
The theme of this report has been the contribution which roads can make to the national economy. The road
system has the greatest positive effect on national economic well-being when two preconditions are met:
An efficient volume of resources is allocated to road transport.
Those resources are employed in such a way as to produce the highest level of benefit given market
preferences, the state of technology and those social, safety and environmental constraints imposed by the
community.
There are various models available which can determine the effects on the national economy of road system
policies and investment programs, but the operational means to achieving those whole of economy outcomes
lie in efficient allocation and use of resources.
The discussion has concentrated on the role of the road authorities partly at least because that is one important
focus of the Roads in the Community initiative. It has done so also because initiatives to enhance efficiency in
the roads sector lie primarily on the supply side rather than the demand side. The road transport industry (the
"demand" side) is already acclaimed for its efficiency. The industry is highly competitive and responsive to
market demand and technological potential. The private user segment is hindered in using the road system
efficiently by the absence of appropriate price signals. By virtue of history and the technical characteristics of
the road system, the road authorities on the other hand (the Osupply' side) are not subject to the same
competitive forces as their customers. Nor do they (or are they necessarily accorded the scope to) engage in
that single-minded pursuit of economic efficiency which characterises their commercial customers.
The road authorities exert their greatest influence on efficiency through their road maintenance, planning and
construction, and traffic management activities. Here, they are constrained at present in the contribution they
can make to economic efficiency by the policy objectives they pursue, the absence of any comprehensive
system of direct road pricing and the disciplines and incentives that guide their use of resources.
Each of these factors is strongly linked, but pricing is arguably the core. Until recent years, direct pricing of
roads at the point and the time of use has been technologically impracticable. Developments in intelligent
transport systems (ITS) have changed that so that direct pricing of all roads at the point, and the time of use is
within the realms of practical possibility. The report has emphasised the economic importance of road pricing.
It is the means which links users' preferences for the services of roads, to the costs of meeting those
preferences.
Pricing therefore is of fundamental importance in matching supply and demand, in ensuring that road
authorities provide roads which users want, at prices users are prepared to pay. The information which prices
can provide is fundamental to the task of making efficient investments in maintenance, rehabilitation and new
construction decisions and in traffic management decisions. For pricing to be fully effective as an efficiency
mechanism, it must be accompanied by a discipline on suppliers. In the market economy, from which the
economist's efficiency paradigm derives, suppliers benefit if they make profitable pricing and investment
decisions, and they suffer if their decisions are faulty.
The economic desirability of road pricing cannot be considered in isolation therefore from the discipline of
profit and loss which ensure that prices will be correctly set and resources for maintenance construction and
management used efficiently. Australian decision makers are not alone in their aversion to, or at least
uncertainty about comprehensive and direct road pricing. But debate rarely focuses on the institutional mech-
anisms needed to accompany it.

The road authorities in Australia pursue efficiency as but one of a suite of objectives. This thinking derives
perhaps from a belief that roads are "public" goods (which is a characteristic they exhibit only under certain
closely defined conditions), and also from a certain confusion between objectives and constraints. In the mar-
ket economy, profit for suppliers is the objective. The proper use of the environment, and management of
health and safety risk and compliance with corporate and consumer protection law are constraints. Equity or
social justice and regional development are responsibilities of government, rather than of individual suppliers
of goods and services.
In the road authority context, each of these desirable outcomes is seen as an objective for the road system. The
conceptual separation between objectives and constraints which characterises the marketeconomy does not pre-
vail. This report argues in effect that the road authorities should be structured as market agents, pursuing sim-
ple market and commercial (or rate of return) objectives. Other desirable outcomes of policy - such as envi-
ronmental management and health and safety - should be addressed by the relevant arms of policy influenc-
ing road management from the outside. This influence could be exerted by various forms of regulation as in
the rest of the market economy, or by direct, transparent subsidy where the objectives of government would
entail financial losses for the road authorities. This does not imply that for the economist these other objectives
of government policy are unimportant. Rather, the model proposed here recognises that efficiency and other
policy objectives can be achieved in a number of ways. If governments place strong weight on efficiency, the
current departmental model which treats roads as public or merit goods is not necessarily appropriate.
The report recognises the complexity of the policy and institutional environment in which the road authorities
operate. The problem in the roads sector of finding the right balance between efficiency and other policy objec-
tives is certainly not unique. The road sector is characterised by institutional arrangements which stand strong-
ly in the way of better practice. The separation of revenue and spending decisions, and the distribution of road
management and policy responsibilities between the three levels of government are emphasised in the report.
These arrangements very much constrain the initiatives the road authorities can take to enhance the efficiency
of the system. In particular, the use at the federal level of fuel taxation as a revenue raising measure is one of
the principal hindrances to efficient pricing practice.
Other external influences on the road authorities and their customers - such as safety regulation and the man-
agement of the environment - can be dealt with by the two groups in the same way as in other sectors of the
economy. Welfare maximising decisions by consumers, and profit maximising decisions by suppliers factor in
the effects of these external influences on prices and costs.
The desirability of reform in pricing, and in making the road authorities commercially oriented are perhaps the
major themes of this report. At present and given the constraints on efficient pricing, cost-benefit analysis pro-
vides the road authorities with the best possible guide to efficient resource use in maintenance, construction and
management. But the technique has its weaknesses, and as well it is not as strong as profit in its influence on
efficient behaviour. The difficulty faced by the road authorities lies in balancing the recommendations of CBA
with their other objectives. This is a difficulty which will prevail until road authorities reach a clearer definition
as to what are their objectives and what are their constraints.
Improvements of this nature would together provide in the long term a greater certainty of an efficient multi-
modal transport system. Road authorities would be more likely to be responsive to modal competition and coor-
dination if the effects of doing so were reflected in their commercial performance. In this sense, pricing and
commercial discipline are decentralised measures for ensuring that the most efficient mode is used for any par-
ticular transport task, and modal coordination is achieved where necessary by the push and pull of the market
system.

NATIONAL ECONOMY
The report is less than sanguine that international practice can serve as a guide to achieving a more efficient road
system. There is scant international experience with comprehensive road pricing. In terms of institutional
arrangements, some relevant experience was drawn from the United States and New Zealand, but in neither case
are the outcomes entirely apposite for Australia. Nevertheless further study of the United States ISTEA and
Transit New Zealand models would be worthwhile. In the application of cost-benefit analysis however,
Australian practice is probably the equal of any. Limitations in applying the techniques are not unique to
Australia, and accordingly recommendations for research are proposed below.
8.2 Specific Issues for Better Practice

1 The road system makes its greatest contribution to the national economy by using resources
efficiently.
Economic efficiency means providing roads which people want to use, at prices they are willing to pay and
which allow an adequate return on the capital invested in the road system. Therefore, there are two parts to
economic efficiency. The first is satisfying people's wants, achieved through a customer focus in the provision
of service. The second is using resources where people value them the most. The return on capital is a
measure that resources are being used where they are most highly valued. This is an underlying presupposition
of the report.
2 The road system pursues objectives other than economic efficiency.

Road authorities pursue a range of non-economic objectives. These include ecologically sustainable develop-
ment (ESD), safety, equity (or socially just outcomes) and regional development. Sometimes these objectives
can be pursued within an economic efficiency framework. For example, car users can be required to pay for the
negative effects of their road use on the environment. In other instances, governments may give priority to non-
economic objectives in road authority decision making. They may for example, seek to sustain quality of
services in remote regions irrespective of the efficiency consequences. In these cases, a more confined
definition of efficiency may be appropriate, in which the equity objective is pursued at the lowest possible cost.
But as a general principle, simpler customer-focused objectives would enhance the achievement of economi-
cally efficient outcomes.
3 The efficiency performance of the road system cannot be measured because road use is not
directly priced.
People pay to use roads now, via fuel taxes and registration charges. These are revenue raising rather than
pricing measures. Efficient prices reflect the costs of the service provided and are levied at the time and point
of use. Prices paid provide economists with a measure of the value consumers place on goods and services. If
these goods and services satisfy people's wants and provide an adequate return on the supplier's capital, the
industries providing them can be judged to be efficient.
Without direct pricing of roads at the time and point of use, economists cannot determine whether the road
system is operating efficiently. Very few roads are presently directly priced in Australia.
Market research into user responses to road pricing should objectively identify users' concerns, and options for
pricing structures, and pose the possibility that comprehensive direct road pricing could eventually supplant
Commonwealth and State fuel taxes.
4 Cost-benefit analysis is a second order means of measuring and achieving road system efficiency.
Cost-benefit analysis is used by economists to provide surrogate measures of the values which users place on
the road system. These measures are surrogates because the values cannot be directly observed from the prices
people pay to use roads of different standards in different places and at different times of day. Cost-benefit

analysis provides a measure of the rate of return on road investment, but this measure is not directly
comparable with profit in the private and government trading enterprise sectors of the economy. Hence it
cannot be used to determine the efficiency of the road system relative to that of other sectors of the economy.
At best, cost-benefit analysis assists road authorities in achieving the maximum efficiency from the resources
made available to them by governments. Cost benefit analysis cannot be used to determine whether those
resource budgets are themselves set at economically efficient levels.
Nevertheless, the technique is likely to be the best tool for some time to come.
5 Profit is a better measure of performance (and a stronger organisational discipline) than surro-
gate performance measures from cost-benefit analysis.
Profit in the private and government trading enterprises sectors provides a continuous measure of organisa-
tional performance. It is readily calculated, reported and understood. Measures of performance derived from
cost-benefit analysis - such as the benefit cost ratio - do not have the same advantages. They are not as
effective therefore as disciplines on the road authorities in the use of their resources.
Any research into pricing systems should be accompanied by consideration of the institutional structures and
objectives for the road authorities which would be needed to make pricing an effective strategy.
6 Pricing and funding systems, and the institutional structure of road authorities impede efficiency
in the road system.
Road authorities do not raise all their own revenues. Nor are their maintenance and capital expenditures
determined by the revenues raised from road users. These arrangements hinder attempts by the road
authorities to relate the value people place on roads to the standards and costs of road service which will be
consistent with those values. The departmental structure of the road authorities, and the revenue raising
systems currently in place, mean that profit cannot be used as a discipline on road authority behaviour and as a
measures of road authority performance.
A program of road pricing research should consider the constitutional and budgetary implications of
alternative pricing regimes, the impediments to efficiency, and means to overcoming them.
7 A commercial, customer oriented approach would improve road system efficiency.

A commercial focus for the road authorities, with the associated changes in revenue raising and organisational
structures would enhance the efficiency of the road system. It would provide a closer link between people's
wants, road authority revenues and costs, and the use of investment funds.
8 Road pricing is technically possible and desirable for economic efficiency.

Road pricing appears to be technically possible via systems of electronic recording, vehicle identification and
billing. It would in theory go a considerable way to ensuring that our road systems were efficient. Road pricing
does not only cover pricing of heavily congested roads. It embraces the pricing of all roads to ensure that users
pay the costs which their road use imposes on the community. A policy of pricing only congested roads might
serve only to relocate congestion to other parts of the road network where direct prices are not imposed.
Any road pricing research should focus on the total road network. It should provide an inventory of the
technology, and address alternative implementation strategies and technologies for different levels of the road
hierarchy.

NiU"IONAL ECONOMY
9 But there is a range of economic, organisational, privacy and equity issues to be addressed
before road pricing could be practicable.
There will be challenges in determining the efficient prices, and in ensuring that road authorities do not take
advantage of their monopoly power. There are also concerns about equity and the privacy of road user
information which must be addressed. There is certainly some evidence that the initial effects of road pricing
will be to benefit those in the community who are better off. The longer term effects may be more equitable,
as people only pay for the roads they use, and inefficiencies in the supply and maintenance of roads are reduced.
A more efficient economy is better able to provide the necessary range of transport and other services to the
less well off in the community.
10 The acceptability of road pricing could be endangered by fuel taxation.

The introduction of road pricing would need to be accompanied by measures to reduce the rate of fuel taxa-
tion. Direct pricing would almost certainly be unacceptable to road users if fuel taxes were to remain at current
levels. Community surveys of the road pricing issue should attempt to gauge the sensitivity of people's re
sponses to perceptions about current systems of Commonwealth and State fuel taxation.
11 The congestion and environmental effects of road use may impede the economic capacity of our
cities.
The majority of Australians live in cities. Our cities are important contributors to the economy, but because of
their complexity, economic efficiency they can never be the sole basis for their planning and management.
Nevertheless, road congestion has been estimated to impose very high costs on our cities, of the order of
several billions of dollars annually. These estimates are subject to some controversy. Congestion nonetheless
acts as a drag on the productivity of our cities, and reduces our economic well-being, not only in cities but in
the nation as a whole. Road pricing offers a sensible solution as part of a package of land use, alternative trans-
port and other initiatives. The use of cost benefit analysis would appear to encourage too strong a reliance on
road supply solutions to congestion, because road users are not required to pay directly for the estimated
benefits of congestion relief. Further research is needed into the amounts people would be willing to pay to
avoid congestion.
12 Pricing will not be the only solution to the negative environmental effects of road use.
Measures to reduce the disamenity effects of road transport could well reduce our national productivity, but
governments have decided that these actions must be taken if the welfare of future generations is not to be
significantly eroded. The only feasible response for the transport sector in general is to find the cheapest means
of reducing negative environmental effects. As with congestion these measures could include pricing and land
use measures, and measures to enhance the availability of alternative forms of transport.
13 The efficiency of the rural network could be enhanced by organisational reform, simpler objec-
tives and a stronger customer orientation.
Reforms to road authority structure and operation which brought them closer to actual user wants, and which
related rural road costs to current revenues would enhance efficiency, even in the absence of road pricing. In
fact, anything other than very simplistic road pricing systems would probably not be feasible in much of the
rural network. Separation of road authority responsibilities for urban and rural roads, and according more
responsibility and revenue to local government in respect of rural sub-arterial roads could be a means to achiev-
ing this closer customer focus. Governments could also provide clear direction to road authorities as to
socially desirable minimum standards of service for the rural network and fund those standards accordingly.
Higher quality roads could otherwise be provided where the revenues exceed the costs by an appropriate
amount.
TOWARDS BETTER PRACTICF, 61

14 Achieving efficiency across the transport system as a whole will require aconsistency of policy
approaches to all modes. Road freight users are commercially motivated but road space suppliers
are not.
An efficient transport system requires that users - private and commercial - be able to select the mode which
offers the best combination of price and quality. This will occur provided all suppliers compete on the same
basis. The road freight and airline industries are profit motivated, and increasingly the road passenger and rail
freight industries are being subject to the same pressures. Yet the road authorities continue to pursue a
diversity of objectives, and to be subject to revenue raising mechanism which do not allow commercial orienta-
tion in service provision. The paradox arises that road freight users are commercially oriented but suppliers of
the road space are not. An efficient "seamless" transport system for Australia would seem to require that the
suppliers of road space - the road authorities - be subject to the same incentives and disciplines as other
suppliers of transport services. This will require reform in pricing, organisational structure and investment and
maintenance policies.
15 The challenges of managing road systems efficiently are not unique to Australia.
Road systems worldwide tend to be managed as departments, rather than as corporations of government. This
is partly due to the almost total absence of direct road pricing, and a widespread perception that roads are "
public" goods. United States legislation has attempted to shift Federal funding from a "roads" outcome focus
to a transport outcome focus, by allocating highway revenues to other types of transport on a needs basis. New
Zealand has adopted a corporatised approach to its national road system, though without the total flexibility for
revenue raising offered by direct road pricing. Underlying international approaches to road system management
is the objection to, or uncertainty about the efficacy of direct road pricing.
16 Australian cost-benefit analysis practice is the equal of that anywhere else.

Until more progress is made in the area of road pricing and associated organisational change, cost-benefit
analysis will remain the economist's key tool for assessing the efficiency of the road system. Australian practice
in cost-benefit analysis would appear to be at world standards, and our understanding of the technique the equal
of that anywhere else.
17 But improvements in the cost-benefit analysis methodology are worth considering.

The valuation of road user benefits has been subject to recurring professional controversy. CBA practice
appears to place an over-reliance on travel time and vehicle operating cost savings as surrogates for the values
people place on better roads. The use of market research should be considered, to elicit more direct valuations
of different types of road improvements, for different types of users, across a range of hypothetical improve-
ments types. This research could usefully explore the differences between the perceptions and valuations of
private and commercial users, and between those of urban road users and rural road users. The valuation of
road improvements should be explored within the context of the budget constraint on travel expenditure. In
other words, it should consider what values people place on road improvements given that their capacity to pay
is not unlimited. The results of this research should, over time, inform the standard benefit values used in
cost-benefit analysis models and programs.

REFERENCES
Abraham, Henry and Oven Maroney [1994] "Road pricing and public transport provision in London" in Traffic
Engineering and Control, December.
Alden, Dave [1995] "Can Economics Help Take the Heat Out of Global Warming" in The Australian Economic Review
lit quarter.
Aplin, Neil [1992] Road Transport Reforms - Can They Be Achieved? Road Transport Reforms in Industry Briefing
Breakfast Land Transport Reforms- Can They BeAchieved?, The Chartered Institute of Transport in Australia, Victorian
Section, 12 August.
Apogee Research [1990] Transportation: Key to a Better Future - The Relationship of Transportation Investments to Economic
Growth prepared for a Special Committee of the American Association of State Highway and Transportation
Officials, December.
Applied Economics [1995] Evaluation and Decision Making for Transport Infrastructure Investment, Report for the National
Transport Planning Taskforce, Australian Government Publishing Service, January.
Australian Transport News (1995] "Higher Fuel Taxes: Can They Be justified", 30 June 1995.
Australian Urban and Regional Development Review [AURDR 1995] Places for everyone: Social equity in Australian cities
and regions, Research Report #1, Department of Housing, Urban and Regional Development, July.
Australian Urban and Regional Development Review [AURDR 1995a] Green Cities Strategy Paper #3, May.
Australian Urban and Regional Development Review [1995b] Timetablixg for Tomorrow: An agenda for public transport in
Australia, Strategy Paper #2, February.
Australian Urban and Regional Development Review [1993] Transport and urban development, Workshop Papers #2,
December.
Australian Urban and Regional Development Review [AURDR undated] Australian cities and regions: a national approach,
Information Paper #1.
Austroads [1994b] Ecologically Sustainable Development and Implications for Member Authorities Austroads Discussion Paper.
Austroads [1994] The Australian Road System: Role, Outcomes and Performance Measures.
Bates, DJ and JH van Barnveld [undated]. Institutional Impacts on Pavement Management - A New Zealand Viewpoint.
Beckerman, Wilfred [1994] "Sustainable Development. Is it a Useful Concept" in Environmental Values 3.
Bureau of Industry Economics (BIE 1992) International Performance Indicators - Road Freight Research Report 46,
Australian Government Publishing Service.
Bureau of Industry Economics (BIE 1994) Regional development: patterns and policy implications Research Report 56,
Bureau of Transport and Communications Economics (BTCE 1995a) Adequacy of transport infrastructure prepared for
the National Transport Planning Taskforce, Volume 1, Commissioned Work, January.
Bureau of Transport and Communications Economics [BTCE 1995] Urban congestion: modelling traffic patterns, delays and
optimal tolls, Working Paper 15, May.
Button, Kenneth J (1993) Transport Economics, 2nd ed, Aldershot, Edward Elgar Publishing Limited.
Carroll, Peter (1995) "Mutual Recognition: Origins and Implications" in Australian Journal of PublicAdministration 54,1,
March.
Centre for Economics and Business Research Ltd (CEBR 1994) Roads and Jobs: The Economic Impact of Different Levels of
Expenditure on the Roads Program - .summary" prepared for the British Road Federation, June.

Centre for International Economics (CIE 1995) The role of transport in the economy prepared for the National Transport
Planning Taskforce, January.
Commonwealth of Australia [1992] National Strategy for Ecologically Sustainable Development, Australian Government
Publishing Service, December.
Congressional Budget Office [CBO 1991] How Federal Spending for Infrastructure and Other Public Investments Affects the
Economy, Washington DC, Congress of the United States, July.
Council of Australian Governments [COAG 1995] National Competition Policy Package.
Cox, John B and Stephen J Meyrick [1994] Refocusing Road Reform Prepared for the Business Council of Australia.
Cox, John B [1992] The Economics of Roads: Macro, Micro and All That Address to the REAAA Meeting, Brisbane, 14
July
de Silva, Hema; Terry Bailey and Bob Peters [de Silva et al 1993] "An Emprical Approach to Improve Social Equity
When Providing Roads" in Proceedings; 18th Australian Transport Research Forum.
Department of Transport and Communications [DoTAC 1993] Australian Land Transport Development Program: Review of
Operations 1989-91 Australian Government Publishing Service.
Docwra, GE [1993] Roads Policy and Fiscal Federalism Occasional Paper No 106, prepared for the Bureau of Transport
and Communications Economics, Australian Government Publishing Service.
Doyle, Neil [1994] `Trade Offs in Transport Reform - Balancing the Economic, Social and Environmental Issues
with a Focus on Roads" Proceedings, Australian Transport Research Forum, Gold Coast.
EPAC Private Sector Task Force [EPAC 1995] Interim Report prepared for Economic Planning Advisory Commission,
Evans, Andrew A [1992] "Road Congestion Pricing: When Is It a Good Policy?" in Journal of Transport Economics and
Policy, September.
Fitzroy, Felix and Ian Smith [1993] "Priority over Pricing. Lessons from Zurich on the Redundancy of Road Pricing"
in Journal of Transport Economics and Polity, 27,2, May.
Forsyth, Peter [1992] Public Enterprises: A Success Story of Miceveconomic Reform? Centre for Economic Policy Research,
The Australian National University, Discussion Paper No 278, November.
Garreau, Joel [1991] Edge City: Life on the New Frontier New York, Anchor Books/Doubleday..
Gramlich, Edward M [1994] "Infrastructure Investment. A Review Essay" in Journal of Economic Literature, XXXII,
September.
Grey, Francis [1994] "Tough Choices, Simple Analysis?: The Role of Cost-Benefit Analysis in the Greenhouse",
Debate Paper prepared for the Workshop on the Role of Economic Analysis in Assessing Greenhouse Impacts and Responses,
Department of the Environment, Sport and Territories, 25 October.
Harrison AJ and PJ Mackie [1973] The Comparability of Cost-Benefit and Financial Rates of Return, Institute of Transport
Studies, University of Leeds, HMSO.
Harvey, Mark [1992] "The Cost of Community Service Obligations in Roads" in Proceedings, 17th Australian Transport
Research Forum, Canberra.
Hau, Timothy D [1992a] Economic Fundamentals of Road Pricing: A Diagrammatic Analysis, Working Papers WPS 1070,
The World Bank, December.
Hau, Timothy D [1992] Congestion Charging Mechanisms for Roads: An Evaluation of Current Practice, Working Papers WPS
1071, The World Bank, December.
I-ieggie, Ian G [1995] Managing and Financing of Roads: An Agenda for Reform Washington DC, World Bank Technical
Paper Number 275, Africa Technical Series, The International Bank for Reconstruction and Development/The
World Bank.

NATIONAL ECONOMY
Hensher, David A [1995] "Opportunities to Reduce Greenhouse Gas Emissions in the Urban Passenger Transport
Sector" in Economic Pafiers, 14,2, June.
Industry Commission [1993] Urban Transport, Volume 1, Report [draft version for comment].
Jacobs, Jane (1985] Cities and the Wealth of Nations: Principles of Economic Life New York, Vintage Books/Random House.
Keating, The Hon Paul J [1992] One Nation. Australian Government Publishing Service, 26 February.
Keating, The Hon Paul J [1994] Working Nation: Policies and Programs, Australian Government Publishing Service, 4 May.
Kelman, Steven [1980] "Occupational Safety and Health Administration" in James Q Wilson, The Politics of Regulation,
New York, Basic Books Inc.
Kinhill Economics and Access Economics [1995] The Economics of Investment in Road Infrastructure, prepared for
Austroads, Project RSM 3 C 20 [forthcoming].
Kinhill Economics in association with GE Docwra and HM Kolsen [Kinhill Economics 1994] Economics of Investment
in Transport Infrastructure Report for the National Transport Planning Taskforce, Australian Government Publishing
Service, January.
Kolsen HM and Docwra GE [19871 "Cost Recovery in Theory and Practice" Proceedings; 12th Australian Transport
Research Forum, Brisbane.
Kolsen HM [1968] The Economics and Control of Road Rail Competition Sydney, Sydney University Press.
Krugman, Paul [1994] Peddling Prosperity New York and London, WW Norton & Company.
Lewis, David [1993] Ensuring Productive Investment in Transportation Infrastructure Los Angeles, Reason Foundation, Policy
Paper Nol 59, June.
McKinsey and Company [1994] Lead Local Compete GlobakUnlocking the Growth Potential of Australia:r Regions, Final
Report for the Office of Regional Development, Department of Housing and Regional Development, July.
Mearns, J [1994] "Is road pricing acceptable to the public? in Proceedings of the Institution of Civil Engineers 103,
December.
Meister, AD and JA Weber [1992] Non-Traditional Benefits of Reading in the Wellington Region Department of Agricultural
Economics and Business, Palmerston North, July.
Moore, Barry and Margaret Starrs [1994] "Road Transport in a Federal System" Proceedings, Australian Transport
Research Forum, Gold Coast.
Musgrave, Richard. A; and Peggy B Musgrave [1989] Public Finance in Theory and Practice, 5th ed, New York, McGraw-
Hill Inc.
National Road Transport Commission [NRTC 1992] Issues and Objectives Paper.
National Road Transport Commission [NRTC 1993] Regulatory Impact Statement: Road Transport Reform [Heavy Vehicle
Standards) Regulations, July (Revised November).
National Road Transport Commission [NRTC 1995] Heavy Vehicle Charges: The Second Generation, February.
National Transport Planning Taskforce (1994] Building for the Job: A Strategy forAustralia:r Transport Network, Australian
Government Publishing Service, November.
Newman, Peter [1995] "Must all roads lead to ruin?" in The Australian, 2 August.
O'Connor, Kevin [undated] "Telecommunications and Transport Infrastructure and Urban Development Trends in
Australia 1960D1990" in Built Environment 18,3.
Painter, Martin and Kathy Dempsey [1992] "Road Grants, Intergovernmental Competition and the Benefits of
Duplication" in Australian Journal of Public Administration 51,1,March.
Pollard, Martin A [1993] "Road Transport Reform - The Legislative Challenge" in Proceedings of the Chartered Institute
of Transport in Australia National Conference Perth, 13D 16 September.

Porter, Michael G [1992] "The Case for Private Provision of Infrastructure in Australia?" in Bureau of Industry
Economics Occasional Paper 7: Private Provision of Economic Infrastructure, Conference Papers and Proceedings from
the BIE Infrastructure Forum, Canberra, 1D2 June.
Queensland Transport [QT 1994] The Road Network Strategy, November.
Roy, Rang [1994] Investment in Transport Infrastructure: The Recovery in Europe European Centre for Infrastructure Studies,
November.
Saunders, Cheryl "The Distinction Between Taxes and Charges for Road Use" in National Road Transport
Commission Taxes or Charges, Working Paper No 7, April.
Segal, Leonie [1995] Review of Health Costs of Motor Vehicle Emissions prepared for National Road Transport
Commission by L Segal Economic Consultants, Technical Working Paper 15, March.
Sinclair Knight [1994] Cost of Personal Travel prepared for Austroads.
Small, Kenneth A; Clifford Winston and Carol A Evans [1959]. Road Work: A New Highway Pricing and Investment Policy
Washington DC, The Brookings Institution.
Spiller Gibbons Swan [undated] "Infrastructure, the economy and urban form" in Investing in Infrastructure in Australian
Urban and Regional Development Review, Background Paper #1.
Stanley, John [1993] "Funding the roads infrastructure" in Road and Transport Research 2,1, March.
Taskforce on Regional Development [The Kelty Taskforce 1993] Developing Australia: A Regional Perspective a report to
the Federal Government.
Taskforee on Road Funding [WA Taskforee 1991] Report on Road Funding Needs in Western Australia: An Enquiry into the
Funding Needs of Western Australia's Road Network over the ten year period from 1989-90 to 1998-99, Perth, Main Roads
Department, May.
The Allen Consulting Group [1993] Land Transport Infrastructure: Maximising the Contribution to Economic Growth, prepared
for the Australian Automobile Association, November.
The Auditor-General [ANAO 1993] Efficiency Audit: The National Highway Lifeline of the Nation, Transport and
Communications Portfolio Audit Report No 15 1993-94, Canberra, Australian Government Publishing Service.
The Economist [1994] "Gift of the Provos", 26 November.
Thomson JM [1974] Modern Transport Economics, Harmondsworth, Penguin Education.

Tietenberg, Tom [1992] Environmental and Natural Resource Economics, 3rd ed, New York, Harper Collins Publishers.
Traffic Engineering and Control [1995] "Congestion charging `not an option for the future"', September.
Travers Morgan NZ and Maclnnes Group New Zealand [Travers Morgan 1995] Transit New Zealand's cost-benefitAnalysis
Manual. An Independent Review, Final Report Prepared for the Treasury and Ministry of Transport
United States Department of Transport [USDoT 1993] Report to Congress on the Proposed National Highway System Required
by Section 1006a of the Intermodal Surface Transportation Eideny Act of 1991, Public Law 102-240, December.
Walsh, Cliff [1992] Infrastructure Funding and Federal-State Financial Relations Federalism Research Centre Discussion
Papers, No 21, June.
Webb, Michael G [1976] Pricing Policies for Public Enterprises Macmillan Studies in Economics, London and Basingstoke,
The Macmillan Press.
West, Jonathan and Barry Tapp [1993] "What Chance Transport Policy Reforms?" in Proceedings of the Chartered Institute
of Transport in Australia National Conference, Perth, 13D16 September.
Wilkinson, Bryce [1995] "Options for Road Reform in New Zealand" in Agenda 2,2.
Williams, Alan W [1994] "Should the User Pay? - I essons from Anglo-Australian History" in Transportation [forth-
coming].

END NOTES
1 Transport is desired not for its own sake but as an input to production and consumption decisions.
2 Causes of poor regional performance can include for example declining resource base, inadequate workforce skills, poor
infrastructure, distance from labour markets, rigidities in land use planning processes, the effects of economic restructur-
ing or the effects of external factors such as drought or low prices for exports.
3 For an outline of the debate, see The Allen Consulting Group (1993); Kinhill Economics (1994); and Kinhill Economics
and Access Economics (1995).
4 Teleworking rather than commuting, or using a home swimming pool rather than driving to the beach, are examples of sub-
stitute activities.
5. See Kolsen and Docwra (1987) and Kinhill Economics and Access Economics (1995) for more discussion.
6 As outlined in Kinhill Economics and Access Economics (1995), the very significant implication flows from this that, in
the absence of comprehensive, direct road pricing, the efficient total road budget cannot be determined, even by the use of
cost-benefit analysis. Road authorities are then constrained to maximising economic welfare within their politically deter-
mined capital and maintenance budgets. (See also Cox and Meyrick, 1994.)
7. In its submission to the National Transport Planning Taskforce, the Australian Automobile Association noted that: "One
of the fundamental problems with the current decision making process is that it is not at all clear how investment decisions
are made".
8 Allowing for reductions in output prices over the period.
9 A number of important theoretical issues such as economies of scale and deficit financing, indivisibility and shifting peaks
are beyond the scope of this report
10 And as Carroll (1995) has noted, it was one part of a broader set of inter-governmental initiatives to achieve "mutual recog-
nition" of regulation of the supply of goods and services between the States and Territories.
11 Also see Applied Economics' report (1995) to the Taskforce on consistency in project evaluation practices (1995).
12 Including environmental costs, as is discussed later.
13 Whether urban sprawl increases the per unit cost of infrastructure services is subject to considerable controversy.
14 The more the benefit cost ratio exceeds one, the greater is the economic efficiency of the road improvement.
15 See Button (1993); and Kinhill Economics and Access Economics (1995).
16 BTCE cautions that this is only a preliminary estimate.
17 For related discussion, see The Allen Consulting Group (1993)
18 They represent "gross costs" in the earlier context of the "costs of doing nothing about congestion".
19 This has implications for rural roads, examined in the following chapter.
20 AURDR (1995a, p 96), "Australia's voluntary approach to setting fuel consumption standards has simply not delivered and
remains a significant reason why our greenhouse gas emissions are high in per capita terms."
21 The same report attempted also to present comparative estimates of the environmental costs of public transport services.
22 And particularly because the estimate of those travel time benefits typically assumes no budget constraint on the part of the
road user.
23 Note that Hensher's paper addresses the debate as to whether telecommuting reduces all vehicle travel, or whether a relat-
ed effect is a countervailing increase in non-work travel.
24 Ignoring questions of economies of scale in road provision, and relative rates of fuel consumption according to different
levels of congestion and road surface quality.
25 Harvey (undated) provides a useful discussion of rural road benefit estimation in a different context
26 A merit good is one desirable of itself without recourse to considerations of economic cost and benefit.
27 AURDR (1995) in its recent report on equity in cities and regions did not attempt a definition of equity, but noted the poten-
tial tension between equity and efficiency, and provided the following justification for an equity focus in policy: "The first
is the general proposition in moral philosophy that societies and governments have a responsibility to their citizens to strive
for equality of opportunity and a fair distribution of the fruits of the society's endeavour. The second is the argument that
economic development will be less efficient in a situation of social inequity. Development will proceed more efficiently in
a society which is cohesive."
28 The National Transport Planning Taskforce (1994) recommended publication of cost-benefit analysis results "for all major
transport decisions".

29 This discussions assumes the earlier recommendations in respect of community service obligations.
30 As Heggie (cited in Cox 1992, p13) notes: "Too many countries still treat roads as public goods, operate them as govern-
ment departments and finance them from government revenue. This is an anachronism...The lack of an explicit linkage
between revenue and expenditures is a major weakness. First it establishes the classic soft budget constraint which weak-
ens the incentive to keep costs under control... Second, lack of linkage means that expenditures are no longer controlled by
willingness to pay."
31 The Transit New Zealand Act 1989 requires it to "promote policies and allocate resources to achieve a safe and efficient
land transport system that maximises national economic and social benefits". (Wilkinson 1995, p 192).
32 Bearing in mind in this context the limitations of CBA referred to in earlier chapters.

i.n
ROADS
IN THE
NATIONAL
ECONOMY
DR PETER BRAIN
(NATIONAL INSTITUTE OF ECONOMIC AND INDUSTRY RESEARCH)

While the NIEIR endeavours to provide reliable forecasts and believes the material contained in this report to
be reliable and accurate, it will not be liable for any claim by any party acting on such information.

OUTLINE
EXECUTIVE SUMMARY 73
1. INTRODUCTION 76
2. CRITERIA FOR ROAD INVESTMENT: THE MACRO 77

PERSPECTIVE
2.1 The "double bell" phenomenon 77
2.2 The Allen Consulting Group Study 80
3. ROADS AND THE MACROECONOMY: 82

THE FUTURE MACRO ENVIRONMENT
3.1 Context 82
3.2 Roads and cities 83
3.3 Links between city development and macroeconomic performance 83
3.4 Roads and city development 86
3.5 Allowing for impacts in the NIEIR modelling framework 87
4. ROADS AND THE NATIONAL ECONOMY: MICRO ANALYSIS 88

4.1 The traditional approach 88
4.2 Capturing city structure and environmental effects 89
4.3 The relationship between direct travel time savings 89

and GDP and consumption
4.4 Direct travel time savings and differential macro (economy wide) 89
impacts
4.5 The expectation of differential travel time impacts: theoretical 90
aspects
4.6 Travel time savings and the macro economy: model-based 91

empirical estimates
4.7 The case studies 94
4.8 Different modes of model use 94
4.9 The results 96
5. ROAD EVALUATION STUDIES USING GENERAL 100

EQUILIBRIUM MODELS
APPENDIX 103

EXECUTIVE SUMMARY
There are three main issues examined in this paper. These are:
1 the extent to which road expenditure can be used as a general instrument for economic growth;
2 the factors which should be taken into account in assessing the direct benefits of a road project; and
3 the extent to which the economy-wide benefits should vary from the direct (or traditionally calculated)
benefits from a road project.
Roads as a general instrument for economic growth

For roads to be accepted as a general instrument for economic growth the following conditions must both
apply:
1 road investments will create positive externalities to such an extent that there is a high gain in economic
activity (as measured by the GDP or consumption expenditure gain) relative to the road investment outlay;
and
2 the potential for road investment driven externality generation is time invariant. That its, the same potential
exists irrespective of the economic environment.
By externality generation is meant that road investments unlock economic opportunities that would otherwise
not have been available, thereby increasing the rate of return on existing and potential investments.
The empirical evidence to support the use of road investments as an instrument of economic growth is the
strong correlation between national productivity growth and road infrastructure expansion between 1950 and
1990. Over the 1950 to 1970 period when road infrastructure expansion grew at a high rate national
productivity growth was high, with the 1970 to 1990 period being characterised by low road infrastructure
expansion and a sharp decline in national productivity growth compared to the previous two decades. The
evidence is the same for Australia and the United States.
If one accepts that the line of causality runs from road investment to growth, then the historical correlation
suggests that a $1 million increase in road investments will generate a $1 million permanent increase in GDP
during the operational phase.
The evidence is further reinforced, in the Australian case, by econometric model results which suggest that a $1
million permanent increase in road investments will result in a similar increase in GDP.
The paper points out that logically there is no reason to suggest that the externalities generated by road
investments should be independent of the economic environment. The conditions of the 1950 to 1970 decade
were created by:
under investment in road infrastructure between 1930 and 1950; and
over investment in producer capital stock in the 1940 decade to support the war effort and immediate post-
war reconstruction.
This led to substantial externalities being generated by road investments during this period.
By 1970 this "backlog" effect had come to an end. The post 1970 statistical correlations are explained by
increasing returns to road investments, given the economic environment, rather than a low level of road
investment limiting the opportunities for growth.
The Australian econometric evidence in fact supports this conclusion. The econometric evidence is based on
the direct benefit of projects under construction or being considered. That is, projects that would be

supported with Australia's current level of road expenditures. The economy-wide benefits are no more than
what would be expected given a plausible post 1970 demand for road infrastructure function.
The overall conclusion is that neither the historical conditions nor the econometric evidence can be used as
evidence to support a general expansion in road investment relative to the general level of economic activity.
The justification for road investments is, therefore, restricted to a case by case basis after:
all direct benefits have been assessed; and
the economy-wide impact of the direct benefits calculated.
The overall level of road investment in the economy should be determined in the light of-
the returns on all potential road projects; and
the returns on investments prevailing elsewhere in the economy.
The factors which should be taken into account in assessing the direct impacts
In the context of the globalisation process and the increasing competitive pressures which will be brought to
bear on the Australian economy, the study argues that the factors taken into account in calculating the direct
impacts should extend well beyond the traditional time savings focus.
Environmental considerations
It is highly likely that within the next decade Australia will agree to binding CO2 gas emission reduction targets.
The savings of a project in CO2 emissions (or the resource) should be factored into the direct impacts by cal-
culating the direct benefits of resource savings (or costs) that the project will generate in terms of reductions
(or enhancements) in general CO2 reduction programs to meet a preset target.
A similar treatment is appropriate for other environmental issues.
Economic competitiveness
A road project can impact on economic competitiveness in a more diverse way than what is simply represented
by travel time savings.
One essential strategy that Australian cities will have to follow in the future is the protection and growth of
existing industry clusters. The traditional mechanism of the flexible relocation of enterprises within city bound-
aries is becoming less and less operational. Declines in protection and increasing international competition will
increasingly result more and more in a forced relocation decision which will mean either:
cessation of operations;
sale to foreign buyers who substitute foreign production with the closing down of the domestic site; or
expansion overseas.
Further, with the decline in natural and imposed protection, the strength, diversity and quality of the local net-
work will increasingly determine the core competitiveness of individual enterprises in the network.
The impact of road projects on enhancing/threatening existing or potential local area industry clusters should
be an important focus in the calculation of the direct impacts.
The core input into the emerging production technologies is skilled labour. A region's competitiveness will
increasingly be influenced by its ability to attract and retain skilled labour. A region's ability to attract skilled
labour is a function of its livability characteristics. How a road affects the quality of the urban environment and
enhances its livability characteristics should be given a high weight in the evaluation process.

THE NATIONAL ECONOMY
The variability of indirect benefits

The current conventional view is that there is very little flow-on from the direct benefits with the increase in
national GDP and/or consumption expenditure more or less the same as the direct benefits assessed by the tra-
ditional time savings focus.
The first point to make is that many of the functions which should be included in the direct benefit assessment
can only be quantified in an economy-wide context. However, if the analysis is restricted to the travel time sav-
ings component (as is common with general equilibrium or CGE models) then the finding that there is little
flowon from the direct effects is due to a view of the world which assumes that:
the economy is at a desired and/or achievable level of unemployment;
firms are operating at desired capacity utilisation levels;
any benefits that roads may generate to improve the balance of payments goes into real average income gains
(by an appreciation of the currency) rather than a general expansion in economic activity;
the rate of immigration is invariant to the economic environment;
enterprises allocate their investment portfolios to equalise the return on Australian investments with the
returns that can be achieved in any country; and
internal enterprise cash flow is relatively unimportant for local investment decisions.
The leading model of this type in Australia is the Productivity Commission/Monash Model.
The study further points out that if these economic fundamentals are accepted by the road authorities as valid
then they suggest that projects such as the Ring Road should not be built in any Australian city and would cast
doubt on most major road projects. Under these assumptions there is little benefit to the business sector for a
road project in terms of a fundamental improvement in competitiveness. The reason for this is that the
benefits are transferred to the household sector.
If, on the other hand, one accepts that:
the present level of unemployment is above achievable levels and can be reduced if the general economic
environment was favourable;
one negative aspect from the general economic environment preventing the reduction in unemployment
levels is the high current account deficit (which is the reason why there is currently large employment losses
being inflicted on the public sector);
the level of immigration intake increases as the rate of economic expansion increases;
internal enterprise cash flows are an important determinant to investment effort; and
expenditures on equipment, research and development and transport infrastructure are an important overall
determinant of enterprises competitiveness,
then the study shows that the ratio of GDP/consumption gain to direct benefits can vary between two and
eight. That is, a ratio well above the traditional one to one ratio. This conclusion suggests that road projects
can play an important role in determining whether or not Australia successfully accommodates the globalisation
process by generating a competitive level of economic performance.

1 e INTRODUCTION
Over the last two decades issues involving roads and the macro economy have developed in two streams. In the
first stream the aggregate empirical relationships between roads investment (or more accurately road capital
stock) and national/regional output (that is GDP) growth have been explored. The results generated have been
used to develop benchmarks of the optimal level of road expenditure or, at the very least, the direction that
road expenditures should take in relation to the level and growth of GDP. The first section of this paper
explores this stream of analysis and concludes that, while some of the findings may have relevance to micro
analysis (that is individual road project evaluation), by itself the stream is an empty vessel insofar as road invest-
ment decision making is concerned.
The second stream deals with the extent to which macro economic outcomes from individual road projects
should be taken into account in assessing the benefits and costs of individual projects. That is, it analyses
whether the traditional cost-benefit framework of evaluating road investments should be continued, or whether
a more economy-wide approach would be appropriate. A more economy-wide approach may incorporate into
the analysis alternative evaluation criteria (for example, GDP or other indicators such as consumption) and
extend the range of issues addressed. For example, issues such as the impact on the balance of payments and
city structures may be included. The strong conclusion is that the traditional framework should be replaced.

2. CRITERIA FOR ROAD INVESMENT:
THE MACRO PERSPECTIVE
2.1 The "double bell" phenomenon
The macro approach to road investment relies on the use of aggregate time series and the relationships between
such series to develop criteria for optimum resource allocation. This section investigates the usefulness of such
an approach.
The surge in growth brought about by Australia's post World War II immigration ended in the early 1970 decade.
This heralded the shift in focus of public policy from planning and implementing capacity expansion to
maximising the efficiency from existing installed capacity. Infrastructure investment as a% of GDP was
steadily wound back and resources held in public sector institutions for planning, design and implementation
coordination were diminished. The implications of this trend for road investment was a fall in Australian
government spending on roads from 2.7% of GDP in the early 1970 decade to 1.5% of GDP at the beginning
of the 1990 decade. Over the same period, road capital stock fell from 16% of GDP to 11%.
The last quarter century has not been a happy time for most high income economies. Long term rising
unemployment rates, cyclical instability of increasing volatility, and greater income inequality has intensified the
search for effective solutions. The academic/ consulting industry responded to meet market demand. One class
of such solutions adopts as its methodological centre piece the presumption that the solution lies in focusing
on one or a small number of factors. It then calculates the correlation of these factors with productivity growth
over the golden age of sustained growth, that is, over the 1950 and 1960 decades, and contrast this with
outcomes over the succeeding two decades. If double bell shaped curves are generated showing a strong
correlation between national/regional productivity growth and the targeted explanatory variable (as illustrated
in Figure 1) then the analyst has found the uncomplicated solution and has a powerful weapon to force public
policy to adjust in accordance with the implications of the "solution".
The "uncomplicated solution' wave started with monetary control rules, and proceeded to public sector deficit
targeting, finance and labour market deregulation, strategic industry policy and privatisation, To be fair, it should
be remembered that monetary control rules replaced a very simple idea that had prevailed since the War,
namely that government expenditure can be used to combat all economic evils.
By the end of the 1980 decade, United States research had begun to focus on public capital investment (of
which road investment is a large part) with the recognition that a duplicate bell-shaped curve prevailed when
the growth in national/regional productivity was contrasted with the growth in public capital stock. The
correlation between the two variables suggested that a 10% increase in United States public capital stock would
lead to a 4% increase in national output, with all other influences held constant. A similar outcome has been
found for Australia for the 25 years ending at the end of the 1980 decade (Figure 2). The average of findings
for the United States (and Sweden) suggest an increase in national/regional output of 2%, or an elasticity of 0.2,
with the empirical results also applying to the road component.

Figure l a indicative double bell shaped curves
4%
1950 1970 1990
mommomw Publiciroad stock growth ammomm National productivity growth
Figure 2 - Australian private TFP and government capital
0.10
Trend, Annual Growth
67 69 71 73 75 77 79 81 83 85 87 89
ms Private TFP mmmmmm Government capital

NATIONAL ECONOMY
These findings are of importance to public policy only if a level of causality is imposed. The level of causality
requires that investment in roads leads to an increase in GDP, by a combination of
increasing the rate of return on existing private sector investment, which in turn encourages further private
sector investment; and
unlocking private sector opportunities that were previously unexploitable because of the absence of suitable
infrastructure.
What is important here is the ratio of GDP increase to investment implied by the quantitative conclusions. A
simple illustration based on current Australian data suggests that, given the current ratio of net road capital
stock to relevant (road using) business sector, and given a public sector capital stock to GDP ratio of
approximately 20% and the 0.2 elasticity, then a $1 billion investment in roads would lead to a permanent $1.0
billion increase in national GDP or a ratio of GDP gain to investment of unity.
The public policy implications of this macro perspective are clear. A gradual build up in road investment to, say,
2% of GDP (from current levels) would eventually result in a sustained increment of more than $2 billion being
added to GDP each year. That is, it would add around 0.5% per annum to the GDP growth rate, increasing the
trend GDP growth rate from 3.0 to 3.5% per annum. That is, a relatively small reallocation of public expendi-
ture towards roads (a reallocation equal to 1.6% of total public expenditure) would thus make a
significant contribution to solving Australia's macroeconomic difficulties.
This macroeconomic conclusion in relation to the beneficial effects of additional road investment is in keeping
with the long list of single focus solutions of the last two decades for a return to sustained high level economic
growth. Like the previous offerings, the road solution outcomes would be significantly less than the predicted
outcomes of the policy proponents.
It is nonsense to infer from the macro historical outcomes that:
the decline in road investment since 1970 has contributed significantly to Australia's decline in productivity
performance; and/or
an increase in road expenditure would automatically result in an increase in economic performance.
It is nonsense not because of the argument presented in the literature, that the line of causation runs from
realised (private sector) economic activity to efficient road infrastructure expansion, but because road
infrastructure and economic activity are complements. Efficient road investments and economic activity
enhancement form a nexus of two way causality. Road investments undertaken in regions where the
preconditions for economic development have not been (and will not be) established will yield low returns to
the region and the nation. Equally, in regions where economic potential is high but is constrained by the absence
of adequate road infrastructure, the potential will remain wholly or partly unrealised.
In this context, the empirical findings reveal that, from the historical perspective, for a balanced evolution of
both private sector economic activity and road infrastructure, the road infrastructure expansion would have to
proceed at probably proportionally more than the rate of expansion in business economic activity.
This less rigid approach by itself does not prevent a macro-based conclusion being argued along the lines that
the Australian economy has under-invested in road infrastructure and that an acceleration in investment outlays
is likely to lead to a sustained increase in GDP, albeit of unquantifiable amount. This conclusion would rest on
the observation that between the late 1970 decade and the early 1990 decade the net road capital stock in
Australia increased by 7%, while road usage as measured by vehicle-kilometres increased by a third, with the
imbalance between the growth in supply and demand suggesting the generation of significant diseconomies.

Such a conclusion would be warranted only if the exact macro technical relationship between usage and
capacity was known. It is likely that the "0.7 elasticity rule" that applies almost universally in the relationship
between usage and capacity also applies in the case of road. This rule would allow the growth in the road stock
to accommodate one third of the usage growth. Over the 1980 decade the growth in capital productivity in
the capital intensive business sector has generally been in the range of between 1.5 and 2.5%. A productivity
growth rate of 1.5% per annum for roads (from better traffic management systems) would explain four fifths
of the balance. The residual would be explained easily by sub-optimal road utilisation rates at the end of the
1970 decade. This first cut development of a plausible macro technical relationship between road capacity and
usage suggests that there are no grounds from the macro economic perspective for concluding that the
Australian road investment expenditure since the late 1970 decade has been inadequate or as a consequence that
additional investment in roads over the late 1990 decade will lead to a significant sustained increase in GDP.
The problem with applying the macro perspective to road investment decision making is that an exact quantifi-
cation of the technical relationship between capacity and usage requires the aggregation of the results of the
net benefits for all potential individual road investment projects available at a particular point in time. In other
words, a valid macro perspective would only be attained after an exhaustive micro perspective.
But the macro results do have implications for micro analysis. The inference is that a road project should gen-
erate an annual GDP increase to cost (investment outlay) of at least unity if the project is to generate a per-
formance equal to the average historical benchmark. In fact, the recent macro evidence suggests that in more
recent times road investments have been generating an increase in GDP which is a multiple factor greater than
the initial investment.
The strong conclusion from the above analysis is that the double bell-shaped curve for road investment is spu-
rious, with no direct relevance for policy making. A common sense interpretation of why a double bell-shaped
curve results over the post World War II period runs as follows. The instability of the 1930 an 1940 decades
resulted in the under-provision of the road stock relative to utilisation. The period of the 1950 and 1960 decades
was one of "catch-up", which generated very large productivity gains in the general economy. These produc-
tivity gains are underestimated over the 1950 and 1960 decades because the growth in the road stock was sig-
nificantly greater than what would have been required if the 1940 and 1950 decades were more normal times.
The 1970 and 1980 decades were ones where the structural under-provision of road infrastructure had been
worked off and, as a result, given the continuing underlying relationship between road stock growth and nation-
al productivity growth, road stock growth requirements fell off sharply relative to the general level of growth.
The preconditions in economic fundamentals which allowed rapid equilibrium adjustment in the road stock over
the 1950 and 1960 decades are created by the unbalanced rapid expansion in the producer capital and stock over
the 1940 decade. This was driven by the requirements of the war effort and immediate postwar reconstruction.
2.2 The Allen Consulting Group Study

There is one more aspect which needs be considered before the macroeconomic perspective can be dismissed
as an inappropriate analytical framework for the determination of road investment optimal funding criteria.
The Allen study was undertaken for the Australian Automobile Association. The weight of its quantitative con-
clusions strongly suggest that the 1980 decade saw an under-performance in road investment in Australia and
that a reversal of this would result in significant economic benefit, especially if road funding was reallocated
towards urban freeways/arterial roads.

NATIONAL ECONOMY
The justification for this conclusion rested on two separate features. The first was the macro economic argu-
ment outlined and rejected above. The second was a model sensitivity analysis using the ORANI model. The
conclusion from the model study was that investment in the urban freeway/arterial network would yield a per-
manent GDP gain of between $0.7 to $0.8 billion (around $300 million for other forms of road investment)
per $1 billion investment, with the explicit reference that this finding is consistent with the estimates obtained
from the macro analysis.
The irony is that, instead of reinforcing the conclusions from the macro analysis, the model results suggest that
the current level of road funding may not be too far from optimal. This conclusion flows from the design of
the Allen study.
The study took a number of cost-benefit results for projects that were either under construction, committed or
being considered, with the total investment cost of the projects being $2 billion. The projects were
incorporated into the model structure largely on the basis of the impact on disaggregated industry costs. The
finding that these projects produce, on average, a GDP gain in accordance with historical outcomes, implies that
the current low level of investment expenditures is just managing to produce the economic increment of the
past.
If as seems likely, road investments have been generating high multiples of GDP gain relative to the initial
investment over the 1970 and 1980 decades, then to justify the current level of investment the model results
should have shown a GDP gain which is probably 2 to 3 times the initial level of investment. However, as will
be pointed out below, the reason for this lies in the nature of the model used rather than in the relatively poor
quality of the current available road projects.

3. ROADS AND THE
MACROECONOMY THE FUTURE
MACRO ENVIRONMENT
3.1 Context
Over the next five to ten years the pressures on public policy will intensify, with a widening gap developing
between the demands placed upon public policy for objective achievement relative to the resources available.
Specifically the focus of public policy will be on:
maximising industry competitiveness (lower taxes/high quality infrastructure support);
support of household disposable income to cushion pressure on living standards;
support of higher quality human capital creation (education/training) to give the domestic population a
better chance of competing in the global market;
incentive packages to attract direct investment for projects of regional (Asian) significance;
expansion of security and defence resources;
redistribution policies to give some support to the casualties of the convergence process so as to maintain a
degree of domestic social stability; and
resources to support a higher than currently expected population growth rate.
These pressures will require unrelenting application of strategies to maximise efficiency of resource use. It will
not be a time for funding of major road projects to be approved without-
0 a multi-objective evaluation framework being adopted;
all costs and benefits being taken into account;
all alternative (non-road) options having been considered; and
the opportunity cost of resource use having been quantified.
Within this trend of structural influences will be periods of significant cyclical variation. Over the next 18
months there should be a period of relative economic calm, with trend economic growth between 2.5 to 3.0%,
wage and inflation pressure moderating, the current account deficit stable at current levels, and interest rates sta-
ble or declining marginally. However, growth will accelerate sharply through 1998, so that the trend rate of
growth between 1998 and 2000 is expected to be around 4.0%. This growth will be driven by.
increasing real incomes from an appreciating currency and terms of trade;
rapid expansion in mining and natural resource based processing; and
strong pull forward effects of investment and tourist expenditure triggered by the Sydney Olympics.
Interest rate and inflation pressures will quickly resurface, with the result that pressures for increases in the pub-
lic sector savings ratio (that is, deficit reduction) will remain unrelenting for the next four years.
It is expected that, for many reasons, the period from 2001 to 2003 will be one of severe recession. It will not
be until then that opportunities for the use of road funding as a counter cyclical measure will again be available.
An overriding objective of policy will be to reduce the long-run current account deficit as a% of GDP from
the current range of 5 to 6% of GDP to around 3%. Australia has been able to run one of the highest current
account deficits as a% of GDP in the world for a decade or more and will probably be able to do so for the
next half decade at least. This has been made possible because Australia is seen as a country with low sovereign
risk in the world's fastest growing region. Inevitably, perceptions of the region will be readjusted downwards. If
Australia has not completed its structural adjustment in regard to the balance of payments by then, adjustment

NATIONAL ECONOMY
will be forced and vicious, not unlike that experienced by Mexico in 1995. The balance of payments constraint
to growth will be at the centre of long term policy determination for Australian authorities well into the next
century.
At the same time, there will be increasing pressure to justify the total resources devoted to road expenditure, not
simply for individual projects, within a given global funding allocation. Accordingly, the total road funding
allocation will become a function of the quality of road projects relative to other more general uses of funds.
For success, road expenditure proponents will increasingly have to argue that particular projects will generate
gains across a number of objectives. Moreover, to exploit funding opportunities as the economic cycle waxes
and wanes, the road construction program must be able to be fast-tracked in relation to implementation and
construction. This ability should become a strategic instrument of operation rather than a marginal tactical
exercise as at present.
3.2 Roads and cities

In an address to the OECD and Australian Government Conference on "Cities and the New Global Economy",
the former Prime Minister observed that there is an increasing realisation that the quality and management of
our cities and our networks are the key to our ability to generate wealth. Here, he was summarising the
emerging consensus on this issue. Australian cities are increasingly the engines for generating wealth and trade
in the global economy. But, in the process they continue to consume vast resources and take on forms of
development that are no longer sustainable. This poses a formidable question to policy makers, business and
Australian communities, concerning how we plan our cities to continue to attract investment and create wealth,
without generating adverse side-effects, or abdicating our social responsibility to deliver a high standard of
living without reducing the quality of life.
It is important to recognise the critical role of cities in influencing international competitiveness of nations,
particularly when competitiveness relies on the performance of knowledge-based and high-value-added
industries, rapid movement of capital, technology, information, people and freight, attracting investment,
efficient provision and pricing of infrastructure services, competent governance and skilled people
agglomerating in large cities. Livability, in terms of a healthy social, cultural and natural environment, is also
important in creating opportunities for innovation. In a rapidly globalising economy, it is recognised now more
than ever before that the structure, size, form, location, legacies of cities and strategies adopted for their
expansion and development will have significant impacts on national economic performance.
3.3 Links between city development and macro economic performance

The links between city development and national economic performance can be grouped into four factors
operating within cities, namely-
I infrastructure efficiency;
2 negative externalities (environmental degradation);
3 positive externalities (industry competitiveness); and
4 livability.

The fact that the overall net impact of cities on national economic performance is positive can be seen from
the fact that the most extensive survey of the role of cities (in industrialised countries) on their economic
performance has indicated that "the city's economy was 35% more productive than the rest of the national
economy" (The Economist, Special Urban Supplement, July 1995).
Roads influence all the above factors.
3.3.1 Infrastructure efficiency

Infrastructure efficiencyfalls into two categories:
1 capital; and
2 recurrent.
The structure of city development will influence the quantum of infrastructure resources required per capita,
in the following areas:
energy infrastructure;
transport infrastructure;
housing stock; and
community infrastructure (schools, hospitals, recreational facilities).
The recurrent costs of infrastructure operations will be influenced by:
the quantum of infrastructure capital (for a particular category) per capita; and
the distribution of infrastructure assets within a city's boundaries to ensure optimum utilisation rates.
The core mechanisms for capturing the impact of infrastructure efficiency gains in the NIEIR modelling struc-
ture is outlined in Figure 3. The (+) indicates positive feedback loops while the (-) indicates negative feedback
loops. The core model mechanism in Figure 3 is the same as the mechanism used by NIEIR during 1995 in a
number of Building Better Cities (BBC) project/progress evaluations.
Figure 3 Core model mechanism: the national and economic performance
Effi icncy pa )n iiifrasvucnjrc Fvrorisio i and "tei naitti
11 Yltf.
Tcquils
-''han e,lmdi Try R<turnil'mtra,'ru*.u

.._vmp ^:ivcn -oF .-racfng cam:":
®- - - ' ed-vMr-
aci c in iivc°cm rl Sn -tu
tjxr1. ny _qlI[ and ---------^----"ip. .
re scs ln:econc:nw;Icuvi[y and mplojmetat

NATIONAL ECONOMY
Essentially infrastructure efficiency gains produce direct macroeconomic outcomes, such as lower interest rates.
Eventually these lead to investment being (in part) reallocated towards the tradable sector which in turn expands
the productive and employment base in the economy. This process is sustained until equilibrium in the econo-
my is reestablished, equilibrium being defined as the point at which the current account deficit, interest rates
etc., are restored to levels that would have otherwise prevailed. This mechanism is represented by the negative
feedback loop in Figure 3.
3.3.2 Negative externalities

As they develop, cities create negative externalities which, sooner or later, force the adoption of measures to
ameliorate the consequences. These measures invariably require the diversion of capital resources from
productive uses and cost imposts on production, thereby reducing national economic performance.
The main negative externalities arise from:
noise generated from road, air, industrial and other land use activities;
air quality/pollutants generated by smoke/dust, sulphur oxides, nitrogen and carbon (and other greenhouse
gases), hydrocarbons, lead, and a variety of chemical compounds; and
waste disposal including industrial and household waste.
In general negative externality control or minimisation requires resource use for production reallocation or non-
optimal site selection; production capital deepening (economic control enhancement); enhanced collection,
distribution and storage assets for waste management; and transport infrastructure redesign and reallocation.
The core model mechanism for negative externalities is the same as for infrastructure efficiency enhancement,
with the additional element (other than for sign reversal of effects in Figure 3) that negative externalities will
directly impact on industry competitiveness. This is represented by the lines of dashes in Figure 3. This will
generally take the form of increased capital costs per unit of production.
3.3.3 Positive externalities

The importance of positive externalities arising from city developments is reflected in urban development
policies/strategies being adopted by fast growing East Asian economies. As a reference point, the design of
these policies/strategies assumes the city is a useful unit on which to focus for enhancing national
competitiveness in terms of maximising production, human capital organisation, knowledge distribution and
resource efficiency.
It is now widely recognised that cities are directly related to industry competitiveness for a number of reasons,
including:
economies of scale and scope;
proximity enhances competition and hence the benefits of competition;
labour productivity from wider enterprise selection pool for skills;
productivity enhancement from greater face to face interactions between suppliers and supplies and
customers;
lower stock holding requirements;
higher likelihood of funding appropriate research and development support; and
greater probability of ideas exchange.

The above positive benefits come not from cities themselves but from the fact that the greater the size of a city
the greater the likelihood that industry structures will be more complex and diverse. Moreover, relationships
between agents within a given industry and between industries will be both more numerous and closer. One
task of urban management is to allow those industry structures which best suit the competitive and
comparative advantages of cities to evolve with minimum obstacles and maximum incentives.
The core model mechanism for the elements of the impact of positive externalities of city development is the
same as for the negative externality impact.
3.3.4 Livability
It is now recognised by North American regional planners that skilled labour is the key input in the generation
and application of the technologies which will be the backbone of advanced economies in the 21st century
(information technologies, bio-technology etc.). The ability of a region to participate in these technologies will
depend on its ability to attract and retain the appropriate skilled labour. The ability to do this in turn depends
on the potential demand for labour and the livability characteristics of a region.
The main mechanisms by which city livability influences regional competitiveness are:
enhanced foreign capital inflow investment from site selection based on comparison of livability factors for
expatriate managers;
maximisation of labour market concentrations for particular skills and ease of hiring; and
enhanced labour market productivity for workers' contentment.
Indicators of livability conditions include climate, ratio of average house prices to mean income, average jour-
ney to work times, crime rates, cultural and recreational diversity, and ease of infra-city access.
The main model structure capturing the impact of livability factors on national economic performance Cut terms
of Figure 3) is represented by the dashed line to industry competitiveness. This dashed line represents the fact
that skilled labour is the key input in the generation and application of the technologies which will be the back-
bone of economic activity in the 21st century (information technologies, biotechnology etc.). The ability of a
region to participate in these technologies will depend on its quantity, quality, design, location and diversity of
physical infrastructure.
3.4 Roads and city development

Road projects can have major impacts, both positive and negative, on all channels by which cities influence
national competitiveness. New road projects can:
reduce CO2 emissions or increase them;
encourage urban consolidation or urban fragmentation;
increase general infrastructure efficiencies or reduce them; and
encourage industry cluster development or destroy them.
It is only by exploringthe impact of a road project through its influence on the evolution of the city structure
in terms of the above factors, will it be able to ascertain whether a particular road project adds or subtracts from
national competitiveness.

3.5 Allowing for Impacts In the NIEIR modelling framework
Preceding sections have indicated in a general way how NIEIR's economic models can deal with a range of pos-
sible dynamic impacts of need projects. Some of those impacts may be included in part, at least, in traditional
road evaluations, such as direct impacts on air quality. However, those evaluations do not follow through to
consider impacts at the level of the broader economy. NIEIR's modelling approach can be configured to deal
with impacts of the type considered, provided robust estimates of direct impacts are available and the broad
nature of likely macroeconomic consequences can be specified. The model can then be "tinkered" to trace
more detailed flow-on impacts at national, State and regional levels.

4 ROADS AND THE NATIONAL
ECONOMY. MICRO ANALYSIS
From the above discussion Table 4.1 summarises the range of factors which need to be taken into account for
a comprehensive toad project benefit-cost evaluation of the future. The traditional approach adopts a much
narrower and now unsatisfactory framework compared with what will be required The assessment of the
traditional approach as unsatisfactory is not only made on the basis of the changed strategic context outlined
above but also, as this section will outline, because the traditional approach is not capable of either being
expanded to accommodate a wider perspective or of capturing the differential impact that road projects can
have on the economy.
4.1 The traditional approach

The traditional approach to evaluating the value of need projects:
calculates the direct dollar value of travel time savings in terms of reduced travel costs and productivity
benefits for business and households;
estimates accident cost savings;
adds these benefit components together, and calculates the discounted sum over the life of the road project;
and
divides the resulting sum by the cumulative discounted investment outlay, to obtain a benefit-cost ratio.
The common standard for the traditional analysis is the dollar value of savings generated by the road project
and road project construction costs.
4.2 Capturing city structure and environmental effects

The traditional analysis cannot be extended to accommodate city structure and environmental effects because
the direct dollar value standard does not allow it. The cost-benefit of externalities of road projects cannot be
reduced to a dollar standard equivalent to the direct travel time savings. To incorporate these elements into the
analysis, the only feasible option is to adopt as the common standard, a macroeconomic indicator such as GDP
or, more appropriately as a measure of welfare gain and consumption expenditure. Indeed the inference that
can be drawn from this section is that cost-benefit calculations should be carried out with reference to both
GDP and consumption and the results combined by averaging, if deemed appropriate.
From the theoretical perspective the consumption gain should be preferred over GDP. However, from the
practical perspective in many cases an increase in GDP is a necessary prerequisite for an increase in
consumption at some future date. It would not be appropriate to ignore a shorter term benefit (for example,
employment) from an increase in GDP relative to consumption. Hence the suggestion of averaging the two
measures.
Suppose that, by reducing travel times, a road project results in the reduction of carbon dioxide emissions.
Currently Australia has committed itself to a C02 emission target which is likely to become more binding as
time passes with overt (such as trade penalties) or covert penalties (marginalisation) imposed for unsatisfactory
outcomes. The benefit of the road project in terms of the environmental outcome is in terms of the GDP or,
more likely, the consumption gain to the general economy from not having to implement C02 reduction
measures to the extent that would have otherwise been necessary. The saving in consumption and GDP comes
from the reduced need for enterprises to divert investment from capacity expansion (and hence GDP enhance-
ment) towards higher cost energy saving equipment and for households to pay higher cost for more energy
efficient durable items such as motor vehicles and refrigerators.

NATIONAL ECONOMY
As an alternative example, suppose a freeway project supports city fragmentation (by encouraging settlement on
the fringes) rather than urban consolidation where the city such as Melbourne does not satisfy world best
practice urban efficiency standards. The costs of this will be a higher level of household infrastructure assets
and service provision, which will have to be paid for by increased taxes and service costs (that is, by reduced real
consumption expenditures). The business sector will also pay a cost over an above the additional service and
taxation costs. The urban workforce will fragment, forcing some firms to relocate out of the state or nation.
Those firms that do follow the population to the fringe suburbs will bear relocation costs which, in turn, will
have a negative influence on investment. Moreover business dusters/networks will be broken up, producing a
long-run negative influence on output and productivity. All these costs on business can be translated into a loss
in GDP and consumption. They cannot be translated into a direct "travel time savings" equivalent to obtain an
overall benefit/cost ratio for the road project.
4.3 The relationship between direct travel time savings and GDP and consumption
Implicit in the above argument that the traditional analysis for road project evaluation has to be replaced is the
assumption that the GDP or consumption gain from the project does not equate to the direct travel time sav-
ings. This aspect has been amply demonstrated by the Allen Consulting study (ORANI model) results. These
results are presented in Table 4.2. The GDP gain is significantly higher than the direct savings while the rela-
tionship between the consumption gain and direct costs is highly variable.
4.4 Direct travel time savings and differential macro (economy-wide) impacts
The results in Table 4.2 are not totally conclusive, at least in relation to the GDP measure, for rejecting the tra-
ditional approach. For example, if there is a fixed relationship between GDP and direct savings, then the tradi-
tional approach could be utilised by "scaling up" the direct savings by the appropriate multiplier. The GDP mul-
tiplier suggested from Table 4.2 is 1.6. The question then is whether there is likely to be a reasonably constant
relationship between direct travel time savings and GDP. The answer is no, both on theoretical and empirical
grounds.
Table 4.1: Factors influencing road project investment evaluation

A Direct household Impacts and outcomes
(i) Reduced travel times

(ii) Lower transport costs
(iii) Increased leisure time
(iv) Increased workforce commitment/higher real Incomes
(v) Reduced accident costs (repair/injury/loss of fife)
B Direct enterprise Impacts and outcomes
(I) Reduced travel times

(ii) Access to markets
(iii) Reduced freight costs
(iiv) Increased workforce commitment and real Incomes
(v) Increased profitability and/or reduced prices
(vi) Increased Investment and output
C Positive and negative externalities
(1) Emission enhancement/reduction

(ii) City structural evaluation and competitiveness
(ill) Workforce integration and efficient skill matching
(iv) Equality of opportunity
D Resource costs
(i) Unutilised resources

(ii) Fully utilised resources
(iii) Balance of payments constraint

Table 4.2: ORANI model results: relationship between macro Indicators and direct savings
Ratio of GDP gain to direct Ratio of consumption gain
savings to direct savings
Rural national 1.8 0.8

Rural arterial 1.7 0.7
Rural local 1.5 0.0
Urban freeway 1.7 1.2

Urban arterial 1.6 1.4
Urban local 1.7 0.0
Source: Allen Consulting (1993). Derived from information contained in Tables 6.4 and 6.5.
4.5 The expectation of differential travel time impacts: theoretical aspects

There are a number of channels by which travel time savings (Ills) could effect the national economy. The
three major channels of influence are shown in Figure 4.
The assumption made here is that the road project being evaluated is in Victoria.
Reduced travel time savings involve a direct gain in real household income from Victorian households as trans-
port costs are reduced. Reductions in travel time savings will also lower business sector costs and prices. To
the extent that these prices influence goods and services prices consumed by the household sector, they will
reinforce the direct effects of the TI'S on the household sector.
The impact of TTS on industry can take two directions. In those industries where mark-up pricing on prime
costs is the norm, lower input prices will lead to lower costs and enhanced industry competitiveness. For non-
tradable industries such as the tertiary sector and, in particular, the retail trade, technical services and entertain-
ment sectors, this will lead to increased demand servicing the local household sector. For tradable industries,
the increased competitiveness will lead to increased exports to other States and/or overseas, as well as
increasing the likelihood of a redirection of some capacity expansion to Victoria.
For industries where product prices are set by world markets, reductions in input costs of Victorian
manufacturers will tend to increase real cashflow and increase the funds available for investment. For these
industries, the direct stimulus to economic activity comes from investment and, over the longer run, from pro-
duction expansion allowed by the capacity expansion associated with the investment decision.
There will be a difference in the long run dynamics of the response to industry input price reductions
depending on whether industry profits or prices are the variable most directly affected by the reduction in costs.
For those industries where output prices are the most sensitive variable, the increase in industry output will, over
time, tend to reach a plateau with investment failing off to levels that would have otherwise been achieved
(Figure 5(a).
On the other hand, those industries where profits (cashflow) are most directly influenced by reductions in
travel time savings, it will be investment which will tend to reach a plateau with the change in output
continually rising, as illustrated in Figure 5(b). The less the distribution of profits to the household sector
and/or the government sector via higher tax payments, the greater will be the increase in investment and out-
put. Figure 5(c) compares the output expansion schedule from Figures 5(a) and (b).

NATIONAL ECONOMY
The conclusions from Figures 5(a) to (c) is that the more a road project favours the household sector and the
household related commercial sector, the more likely there will be only a one-off gain in industry activity. That
is, the GDP/consumption gain will stabilise. On the other hand, the more a road project favours the
tradable sector and the commercial business service sector, the more likely the gain will not stabilise with sus-
tained long term increases in GDP/consumption gain. That is, there will be no stable
relationship between the direct savings impact and the ultimate GDP/consumption gain.
4.6 Travel time savings and the macroeconomy: model-based empirical estimates
A case study to illustrate these impacts can be constructed from a recently completed NIEIR report for
VicRoads, "Princes Highway West Economic Impact Study", October 1995.
The project involved a significant upgrade for the Princes Highway by the addition of an extra lane to each
carriageway for most of the length between the Westgate Freeway junction and the Corio Overpass. This
particular case study involved a ten year construction period, with $15 million expenditure per year in the first
four years of the project rising to $21 million in the latter years of the project. The total capital cost was $190
million.
The full project direct value of travel time savings are shown in Table 4.3 by industry. The overall total benefit
is $34 million for the year shown, year 11.
Figure 4 Travel time savings and the macroeconomy ® channels of causation

Figure 5(a) Business dynamics of input price reductions to industry. Lower industry
TIME
Figure 5(b) Unchanged industry output prices
TIME
A 0
Figure 5(c) Range of industry output responses

Change in industry output
TIME
Gmmw Output ammmmm Investment

Table 4.3 Road user benefit allocations by sector and region: Princes Freeway West upgrading ($ million)
Option I = three year construction period
Benefits In year 11 Baron region South West Melbourne region Three regions
Bus- Bus- Bus- Bus-
Trucks mess Trucks mess Trucks mess Trucks mess
Sector share cars Total share cars Total share cars Total share cars Total Victoria Australia
Agriculture 0.2976 0.2628 0.5604 0.3348 0.219 0.5538 0.3534 0.0146 0.368 0.9858 0.4964 1.4822 1.514352 1.607592
Mining 0.2232 0.0146 0.2378 0 0 0 0.2232 0.0146 0.2378 0.4464 0.0292 0.4756 0.485917 0.515835
Food 0.7254 0.146 0.8714 0.3348 0.073 0.4078 1.0602 0.1314 1.1916 2.1204 0.3504 2.4708 2.524397 2.679826
TCF 0.0186 0.2336 0.2522 0.0558 0.0146 0.0704 0.0744 0.1314 0.2058 0.1488 0.3796 0.5284 0.539862 0.573102
Wood 0.0744 0.073 0.1474 0.0558 0.0146 0.0704 0.0186 0.0584 0.077 0.1488 0.146 0.2948 0.301195 0.31974
Paper 0.0372 0.0584 0.0956 0.0186 0 0.0186 0.0744 0.1314 0.2058 0.1302 0.1898 0.32 0.326941 0.347072
Petroleum, chemicals 0.8184 0.1168 0.9352 0.0372 0.0146 0.0518 0.1302 0.0584 0.1886 0.9858 0.1898 1.1756 1.201101 1.275054
Non-metallic minerals 0.6882 0.0876 0.7758 0.093 0 0.093 0.4836 0.0292 0.5128 1.2648 0.1168 1.3816 1.41157 1.498482
Basic metals 0.5208 0.1606 0.6814 0.186 0.0146 0.2006 0.6696 0.0292 0.6988 1.3764 0.2044 1.5808 1.615091 1.714534
Metal products 0.0186 0.073 0.0916 0.0186 0 0.0186 0.0372 0.0876 0.1248 0.0744 0.1606 0.235 0.240098 0.254881
Transport equipment 0.2046 0.365 0.5696 0 0 0 0.2046 0.1314 0.336 0.4092 0.4964 0.9056 0.925244 0.982213
Other machinery 0.0186 0.0584 0.077 0.0186 0.0146 0.0332 0.0186 0.1606 0.1792 0.0558 0.2336 0.2894 0.295678 0.313883
Misc. manufacturing 0.093 0.0292 0.1222 0.0372 0 0.0372 0.1302 0.0876 0.2178 0.2604 0.1168 0.3772 0.385382 0.409111
EGW 0 0.1022 0.1022 0 0.0146 0.0146 0 0.0438 0.0438 0 0.1606 0.1606 0.164084 0.174187
Construction 4.557 0.4526 5.0096 0.1488 0.0438 0.1926 4.0362 0.365 4.4012 8.742 0.8614 9.6034 9.811717 10.41584
Wholesale & retail trade 0 1.3432 1.3432 0 0.2044 0.2044 0 1.3724 1.3724 0 2.92 2.92 2.983341 3.167028
Transport & storage 0 0.2774 0.2774 0 0.0292 0.0292 0 0.292 0.292 0 0.5986 0.5986 0.611585 0.649241
Communications 0 0.073 0.073 0 0.0146 0.0146 0 0.1314 0.1314 0 0.219 0.219 0.223751 0.237527
Finance, property &
business services 0 0.4964 0.4964 0 0.0438 0.0438 0 0.8614 0.8614 0 1.4016 1.4016 1.432003 1.520174
Public administration 0 0.1606 0.1606 0 0.0438 0.0438 0 0.2628 0.2628 0 0.4672 0.4672 0.477334 0.506725
Community services 0 1.3286 1.3286 0 0.219 0.219 0 1.0804 1.0804 0 2.628 2.628 2.685007 2.850325
Rec. & personal services 0 0.5986 0.5986 0 0.073 0.073 0 0.4234 0.4234 0 1.095 1.095 1.118753 1.187636
Totals 8.2956 6.5116 14.8072 1.3392 1.0512 2.3904 7.5144 5.8984 13.4128 17.1492 13.4612 30.6104 31.2744 33.2
NATIONAL ECONOMY
4.7 The case studies
Appendix A contains the results from NIEIR's IMP model of the national and State economy. There are five
case studies shown, which illustrate how macroeconomic impacts may vary.
1 The first case is the reference case and is the same as the original published case, except that construction
impacts have been excluded.
2 The second case is where the travel time savings in Table 4.4 have been restructured to favour the household
sector and those industries which strongly serve the household sector, like community services and
entertainment.
3 The third case is the same as case 1 with the exception that the model is run under balance of payments
constraint mode.
4 The fourth case is the same as case 2 with the exception that the model is run under balance of payments
constraint mode.
5 Case 5 is the case of the construction effect only where the model is run under balance of payments
constraint mode.
4.8 Different modes of model use

The technical method used to apply econometric models for project evaluation is to prepare a base solution of
the national and State and/or regional economies to the selected terminal date, (for example, 2020). The base
solution does not contain the project. Next a disturbed solution is prepared where the project is included. The
difference between the base and disturbed solution for selected variables (GDP, consumption expenditure etc.)
then becomes the base data input for the calculation of evaluation criteria.
A key decision is determining the outcome for evaluation criteria as the selection of the mode of model use, or
how the base and disturbed solutions interact. In technical terms this requires determining (by appropriate
equation selection) how:
tax rates;
government expenditures;
interest rates;
exchange rates; and
wage rates
will change in response to departures of variables from their base solution level. There are four basic modes
(determined by equation sets) which describe the range of responses possible. They are:
I the balance of payments constrained mode;
2 the labour resource constrained mode;
3 the investment crowding out mode; and
4 the direct model.

4.8.1 The balance of payments constrained mode
The balance of payments constrained mode reflects the case where an economy is operating at its maximum
acceptable current account deficit position, which forces a sub-optimal outcome for GDP and employment
growth. Any deterioration in the current account deficit for the disturbed case triggers changes in exchange

NATIONAL ECONOMY
rates, interest rates and fiscal policy settings. These changes continue until the current account deficit is forced
back (by general economic contraction) to the levels prevailing in the base case.
The reverse is also true. Any project which results in an improvement in the current account deficit will trigger
changes until the economy is expanded to the point where the current account deficit is the same as the base
case.
As has been pointed out previously in this paper, the balance of payments constrained mode is a relevant mech-
anism describing how the Australian economy will respond to changes in economic shocks on a long term basis.
4.8.2 The labour resource constrained mode

The labour resource constrained mode applies when the unemployment rate (or the employment level) replaces
the current account deficit. In this case wage rates and inflation adjust to force the economy back to the base
unemployment rate or employment levels.
At least until the second decade of the next century when the post World War II "baby boomers" start passing
out of the workforce it is very unlikely that Australia's unemployment rate will be reduced to desired levels.
Even when unemployment rates were low, however, over the 1950 and 1960 decades, it is unlikely this constraint
mode was relevant as variations in the immigration rate accommodated growth. This still happens. Over the
last decade the net immigration rate has varied between 30,000 and 150,000 over the course of the cycle and
this type of variation will continue over the next cycle.
After 2010 it is also likely that the level of immigration will return to the heights of the 1950 and 1960 decades.
This will be driven by external factors as Australia attempts to redefine its culture reference points with the
ascendancy of power structures.
Accordingly the labour constrained mode is not a selection NIEIR favours for project evaluation.
4.8.3 The investment crowding out mode

The investment crowding out mode allows for investment displacement. It is most relevantdirect
when invest-
ment imposts are directly placed on enterprises (investments to meet for example, environmental targets) and
where the enterprises either because of
competitive forces as is the case for enterprises engaged in the export of goods and services; or
because of financial balance sheet or internal cashflow constraints,

can only finance the additional investment requirements by substituting investment outlays that would have been
undertaken in the base case. In this case the investment imposts would result in a reduction in effective capac-
ity for the disturbed case vis-a-vis the base case with a corresponding reduction in economic activity.
By definition the investment crowding out mode is appropriate when investment programs are directly sup-
ported by private sector enterprises. This is not the case for a large public sector road project.
4.8.4 The direct mode

The direct mode is where the disturbed case is not allowed to interact with the base case. That is, the values for
interest rates, wage rates, exchange rates, and other policy instruments are set at the same level for both the base
and disturbed solutions. The direct mode is appropriate when on a long term basis it is felt that the economy:
will have an unemployment rate above the desired level;
will have some flexibility in determining its current account deficit (or the project leads to an improvement
in the current account deficit).

NIEIR's view is that if the road project can be shown to have a positive impact on the current account balance
then the direct mode is the most appropriate for evaluation. If this is not the case then the balance of payments
constrained mode should be selected.
This selection rule will mean that projects which have a positive impact on the balance of payments will be
under-estimated in terms of the probable long run benefit, while projects which do not have a positive impact
on the balance of payments will have to have substantial other benefits to gain acceptance. Accordingly, for the
case examined below, the direct and balance of payments modes will be applied.
4.9 The results

Summary indicator results derived from the Appendix tables are shown in Table 4.4. The summary indicators
suitably verify the conclusions and expectations developed previously in this paper: that is, considerable
variation between the GDP gain and direct travel time savings.
It should be noted that under adverse balance of payments constrained conditions, that is cases 4 and 5, Victoria
does better than the national economy because the burden of adjustment is applied to the whole nation through
central monetary and fiscal policies. The converse is true under positive balance of payments adjustment, as
illustrated by case 3.
That is, under the balance of payments mode the benefits/costs are disproportionately spread to the States
which do not have the project. Thus, under case 3 Victoria receives 45% of the national GDP gain compared
with the direct mode gain of 55%. For case 4 the year 2020 increase in GDP is $6 million at the national
level and $17 million (1990 prices) at the Victorian level. In this case Victoria redistributes $11 million of
non-Victorian State GSP towards itself. This represents the cost the non-Victorian States must pay for the
project under the balance of payments constrained mode. This explains why all States should have an interest
in major projects, no matter where they are located, and why the Federal authorities have a responsibility for
rigorous assessment.
Case 5 demonstrates why it is preferable to use consumption (as well as GDP) as an overall indicator. During
the construction phase under balance of payments mode GDP is left more or less unchanged while con-
sumption falls by $10 million per year (Appendix A). Thus, the benefit-cost ratio would be the cumulative
discounted consumption change in the numerator as a result of the project operation while the cumulative
discounted consumption loss during the construction phase would be in the denominator. This approach
would be in accordance with welfare theory.
Accordingly, Table 4.4 also includes project national benefit-cost ratios over a 1997-2020 analysis period, calcu-
lated in terms of discounted consumption gains (benefits) divided by the discounted consumption lost during
the construction phase, using a 5% real discount rate. These ratios range from a low of 2.2 for Option 4, the
option which directs benefits towards the household sector and with a balance of payments constraint pulling
back prospective benefits (as gains leak into increased imports), to a high of 15.1 for Option 3. That option
directs benefits towards trade exposed sectors, again with the balance of payments constraint operative. This
time, however, the constraint is eased by the improving competitiveness in the trade exposed sectors, allow-
ingsecondary economic expansion to follow. Option 1, which excludes the balance of payments effect, has a
more modest BCR than Option 3 but the ratio is still a high 6.4.

NATIONAL ECONOMY
Table 4.4: Model outcomes: selected corporate statistics

Household
Reference bias balance Investment -
balance of of payments - balance of
Reference Household payments - constrained payments
- direct mode biased - constrained mode constrained
direct mode mode mode
Final year 2020 2020 2020 2020 2005
Ratio of final year national GDP

gain to road investment
0.97 0.30 1.60 0.03 0.05
Ratio of national GDP gain 2005

to final year GDP gain
0.22 0.53 0.28 1.90
Ratio of Victorian GSP gain to

national GDP gain - final year
0.55 0.51 0.45 2.70
Ratio of discounted national

consumption to discounted
investment 3.7 3.2 8.6 1.0
Ratio of national final year

consumption gain to direct
industry benefits 2.0 2.1 7.8 0.2
Ratio of discounted
consumption gains during
operation phase to discounted
consumption loss during
construction 6.4 6.2 15.1 2.2
Notes: Final year in 2020. However, it should be noted, the benefits will continue to expand beyond 2020. For
discounting a 5% disount rate was used.
Source: Appendix A, NIEIR.
Figure 6 shows the time path of net discounted consumption impacts. In the early years, when construction is
occurring, consumption is forgone or only increases by a small amount, as part of the route is open. The impact
of project completion in year 10 can be seen,as consumption gains kick up. Gains then tail off in the two
options where benefits accrue mainly to consumption, in contrast to the continuing increases when gains are to
trade-exposed businesses.

NATIONAL ECONOMY
Figure 6 Net discounted national consumption gains from sample

($m 1990 prices: I996Pvs;S%discount rate)
70
50
603.
30
I0
-10
I 4 7 10 13 16 19 22
mmmmm Option I w am ® Option 3

mmmmmm Option 2 so an ® Option 4
The conventional road user benefit-cost ratio is 1.2 over the analysis period to 2020. This is well below the ratios
estimated using discounted consumption changes, the latter being about five times the direct ratio (to 2020) if
benefits go mainly to trade-exposed businesses but the balance of payments constraint is not operative, to over
ten times this direct ratio when both trade-exposed businesses are the key beneficiaries and the balance of
payments constraint is operative.
It should be noted that, with an assumed ten year construction period, an overall analysis period to 2020 only
provides 13 years for full user benefits to accrue. Had a longer analysis period been chosen, such as the more
normal 30 year period, project BCRs would have increased.
In short, the broader economic analysis suggests considerably larger gains than are implied by the traditional
user benefit-cost analysis.
A priority is to determine the qualitative setting for maximum value or hurdle value a project must generate in
terms of consumption gain to consumption loss for a project to gain acceptance. This would have to be set in
relation to the returns generated by other private and public sector projects. The rate identified could turn out
to be high and possibly in excess of four or more.
Table 4.4 also presents other ratios of interest, namely:
the ratio of national discounted consumption gain to discounted investment, and
the ratio of national consumption gain in 2020 to national direct benefits from Table 4.3.

An important point is how, for the direct mode, the national consumption gain to direct benefits is two or more
and eight for the balance of payments constrained mode. For the household bias/balance of payments con-
strained mode the return on the project is poor with a ratio of 0.2.
The overall conclusion is that a wide variation in outcomes is possible and actually the gains can be much greater
than suggested by conventional cost-benefit analysis. To more fully explore the reasons for this the recent study
on the Melbourne Ring Road will be reviewed.
Finally at the macro level the balance of payments constrained mode is much more conducive to positive long
run impacts of road projects than the direct mode. This shows how road projects can mitigate the effects of
the fundamental constraint facing the Australian economy.

5. ROAD EVALUATION STUDIES
USING GENERAL EQUILIBRIUM
MODELS
The Monash (previously ORANI) model is used for road project evaluation studies in Australia.
For the purposes of illustration the following results for a $1.1 billion Victorian road project with direct
benefits of $0.2 billion are based on averaging a number of Monash model result outcomes for a variety of
potential projects. The total annual equilibrium increase in national GDP from the operational phase would be
of the order of $0.25 billion with the increase in Victoria's gross State product being approximately twice the
national impact, or $0.5 billion.
At the national level the final year GDP increase to investment ratio is approximately one fifth, while the ratio
is approximately one half at the Victorian level.
As the direct benefits are $0.2 billion it follows that the national GDP gain is only slightly more, then the
identified direct benefits, as the difference between the national GDP increase and direct benefits, is $0.05
billion.
The results as they stand imply that, from the national perspective, the Road project should not be built, as the
ratio of national or discounted consumption gains to discounted consumption loss during construction is
likely to fall below any plausible minimum setting. Further exploration of the results also suggest that the Road
project should not be built from the Victorian perspective, unless Victoria can prevent other States installing
similar infrastructure.
The reasons for this inference are straight forward. The $0.05 billion gain (in addition to the direct benefits) at
the national level comes from the fact that the road redistributes employment towards Victoria and, as Victoria
has a higher productivity level than the national average, national GDP increases. If the Road project had been
installed in another State with a lower productivity level (for example Queensland) then the national GDP
increase would be less than the direct benefits.
More importantly, in the Australian system of competitive Federalism, the Victorian standard could become the
standard for the nation. Once established in Victoria, the rest of the nation would demand similar appropriate
infrastructure. At the national level this would mean a $1 billion national GDP gain for an outlay of around $5
billion. This is very poor by historical standards. At the Victorian level, since most of the GSP gain is
generated by redistribution of economic activity from other States, the movement of other States towards
similar road infrastructure assets would eliminate the net gain to Victoria. That is, Victoria would have invest-
ed $1 billion for a gain equal to the direct benefits.
In this context the Federal authorities should:
not fund the Victorian project; and
not assist other States in undertaking similar investments,
while the Victorian authorities should do all in their power to prevent other States from implementing similar
projects.
This would presumably apply to most major road projects analysed by the Monash model. The general
implication from the model result is that Australia could be generally better off if major road investments
ceased.
These results stand in contrast to the results that would be achieved from the IMP model. The reasons for the
counter intuitive Monash model results can be traced to the:

NATIONAL ECONOMY
mode of model use; and
the microeconomic dynamics
of the Monash model.
The mode of model use is a combination of the resource constrained and investment crowding out modes of
the IMP model. This, by definition, would impose severe constraints on macro enhancement from any stimu-
lus to the economy.
At the micro level all enterprises are assumed to be in optimum equilibrium at desired rates of capacity utilisa-
tion, with investment portfolios allocated around the world to equalise the common "world rate of return"
benchmark. The overall results indicate that any enhancement of business profitability would quickly result in
equilibrium world rate of return being restored by an increase in domestic wage rates and other costs.
Thus, in the model, the economy-wide benefits largely depend on how the household sector gains from the
project:
either directly via travel time savings; or
indirectly from real wage increases.
The effect of the Monash model is thereby, by model design, to reduce the economy-wide gains to the level of
the direct impact. There is absolutely no capturing of the cumulative dynamics of the growth process or allow-
ing the road project to fundamentally improve competitiveness.
In the IMP model the essence of the dynamic adjustment is the capturing of the cumulative dynamics of the
growth process. Firms are not assumed to be in equilibrium but, depending on the general economic environ-
ment, would be:
at sub-optimal capacity utilisation ratios; and
in a position where internal flow of funds (or balance sheet structures) constrain the investment effort.
If the IMP model was used to evaluate the illustrative Road project then the model mechanism would:
allow improvement in capacity utilisation ratios, by providing opportunities for exploiting the improvement
in competitiveness the Ring Road generates to enhance export volumes; and
allow a greater investment effort to be implemented from the direct cost savings.
For a given enterprise this can generate a perpetually increasing investment, capacity enhancing and export
increasing virtuous cycle, which need not result in any fiscal equilibrium starting point being arrived at. That is,
the benefits will keep increasing well beyond the 2020 terminal year selected for the case examined in this paper.
NIEIR believes this is a more accurate assessment of how the real economic world operates than the frame-
work built into the Monash model, as used in the road project study.

APPENDIX
NATIONAL ECONOMY
Reference Case
001 Table A1.1 Formation of National Gross Domestic Product
Total Consumptl Total I Total Exports i Imports I Gross

Private I Expend- I Fixed I Fixed of Goodsi of Goodsi Domestic
Consumpt iture byl Invest- invest- and I and I Product
Expend- General I ment: ment: I services) servicesi
iture Govt. IequipmentIconstructl I I
---------------------------------------------------------------------------------
Unit 1990 SmiItion
------------------------------------------------------------------- --------------
Differences
1997 2.66 0.60 0.66 0.53 0.88 0.89 3.69
1998 5.11 0.68 1.18 1.21 1.80 2.14 7.88
1999 7.14 0.68 1.74 1.70 2.83 3.26 10.97
2000 9.11 0.85 2.39 2.20 4.00 4.37 14.22
2001 11.81 1.07 3.25 3.10 5.55 5.77 18.69
2002 14.97 1.30 4.04 3.65 7.48 7.41 23.75
2003 18.42 1.52 4.60 4.16 9.77 9.07 29.13
2004 22.13 1.74 5.21 4.80 12.48 10.82 35.13
2005 26.17 1.96 6.02 5.31 15.60 12.85 41.75
2006 30.67 2.19 6.98 6.12 19.11 15.16 49.44
2007 35.64 2.44 7.92 6.71 23.10 17.73 57.66
2008 40.25 2.52 8.81 7.40 27.34 20.24 65.75
2009 44.72 2.59 9.71 8.02 31.77 22.72 73.72
2010 49.08 2.67 10.51 8.59 36.47 25.15 81.75
2011 53.53 2.75 11.18 9.17 41.40 27.60 89.88
2012 58.03 2.83 11.89 9.51 46.55 30.07 98.19
2013 62.66 2.92 12.52 9.79 52.03 32.57 106.72
2014 67.52 3.00 13.30 10.24 57.75 35.23 115.78
2015 72.78 3.09 14.20 11.00 63.76 38.12 125.66
2016 78.31 3.19 15.19 11.37 70.07 41.17 136.06
2017 84.28 3.29 16.30 12.15 76.75 44.50 147.28
2018 90.66 3.38 17.55 13.18 83.77 48.08 159.38
2019 97.48 3.48 18.87 14.38 91.13 51.89 172.25
2020 104.52 3.59 20.20 15.15 98.93 55.82 185.28

Reference Case
002 Table A1.2 Victorian Macro-economic indicators
Total Consumptl Total I Total I Exports I Imports Gross House-

Private Expend- I Fixed Fixed I Inter- ( Inter- State hold
Consumpt iture bye Invest- I Invest- I state S. state Products receipts
Expend- General ( ment:I ment: and I and
J
.I
I I
iture Govt. lequipmenticonstructi overseasi overseas I I
Unit 1
1990 million I
Differences
1997 1.86 0.60 0.30 0.27 1.13 1.62 2.19 3.80
1998 3.25 0.69 0.58 0.52 2.47 3.37 4.27 5.61
1999 4.21 0.69 0.90 0.76 3.73 4.91 5.76 6.76
2000 5.28 0.85 1.24 0.99 5.21 6.65 7.34 8.48
2001 6.78 1.08 1.76 1.25 7.18 9.01 9.52 10.97
2002 8.58 1.30 2.28 1.67 9.55 11.88 12.17 13.82
2003 10.49 1.53 2.74 1.86 12.28 14.83 14.95 16.73
2004 12.54 1.75 3.30 2.06 15.46 18.12 18.05 19.90
2005 14.82 1.97 4.01 2.39 19.09 21.97 21.62 23.44
2006 17.34 2.20 4.80 2.85 23.21 26.34 25.70 27.35
2007 20.14 2.45 5.57 3.30 27.86 31.12 30.18 31.70
2008 22.59 2.53 6.33 3.69 32.74 35.87 34.41 35.19
2009 24.91 2.60 7.12 4.06 37.83 40.69 38.59 38.63
2010 27.24 2.68 7.94 4.41 43.14 45.62 42.86 42.13
2011 29.63 2.76 8.76 4.70 48.69 50.69 47.28 45.77
2012 32.13 2.84 9.55 5.00 54.49 55.88 51.93 49.59
2013 34.75 2.93 10.39 5.29 60.56 61.23 56.84 53.59
2014 37.56 3.02 11.28 5.64 66.95 66.91 62.15 57.92
2015 40.59 3.11 12.24 6.07 73.73 72.89 67.87 62.59
2016 43.83 3.20 13.25 6.59 80.82 79.24 73.98 67.56
2017 47.27 3.29 14.35 7.10 88.38 85.95 80.46 72.83
2018 50.92 3.39 15.53 7.68 96.36 93.07 87.38 78.45
2019 54.79 3.50 16.81 8.27 104.79 100.57 94.74 84.36
2020 58.82 3.60 18.19 8.86 113.58 108.41 102.43 90.52

NATIONAL ECONOMY
Reference Case
004 TabLe A1.3 Discounted Culumative Increase Welfare Indicators (5 percen
Gross Product
I Victoria lAustralial
I I I
I I I
I I I
Unit $1990 Million
Differences
1997 0.01 1.48 3.11
1998 0.08 4.11 9.33
1999 0.19 7.46 17.33
2000 0.31 11.42 26.94
2001 0.46 16.17 38.66
2002 0.63 21.78 52.46
2003 0.83 28.16 68.15
2004 1.05 35.29 85.61
2005 1.30 43.21 104.87
2006 1.57 51.93 125.98
2007 1.87 61.41 148.80
2008 2.19 71.43 172.90
2009 2.54 81.83 197.92
2010 2.89 92.53 223.65
2011 3.27 103.46 249.82
2012 3.65 114.58 276.28
2013 4.05 125.84 302.94
2014 4.45 137.25 329.72
2015 4.87 148.78 356.64
2016 5.29 160.43 383.63
2017 5.72 172.16 410.67
2018 6.16 183.95 437.75
2019 6.61 195.79 464.88
2020 7.06 207.64 491.89

005 Table A1.4 Government Taxation Receipts and Employment Aggregates
1 - I I
Common- VictorianiVictorian ITotat IVictorianlNationall
wealth Receipts IGrant (Victorian Total Employ- I
Receipts) IAssistancelReceipts (Employ- Iment I
I Iment I I
I
I I I I I I
------------------------------------------------------------------------
Unit $1990 Million I number
------------------------------------------------------------------------
Differences
1997 0.70 0.11 0.03 0.14 0.04 0.07
1998 1.72 0.26 0.06 0.32 0.08 0.14
1999 2.65 0.39 0.10 0.49 0.11 0.21
2000 3.56 0.52 0.13 0.65 0.14 0.28
2001 4.69 0.68 0.17 0.85 0.19 0.38
2002 6.00 0.87 0.22 1.09 0.24 0.48
2003 7.44 1.08 0.28 1.35 0.30 0.60
2004 9.01 1.31 0.34 1.64 0.36 0.72
2005 10.76 1.57 0.40 1.97 0.44 0.86
2006 12.75 1.88 0.48 2.35 0.52 1.02
2007 14.94 2.21 0.56 2.76 0.61 1.19
2008 17.16 2.55 0.64 3.18 0.70 1.36
2009 19.36 2.88 0.72 3.60 0.79 1.54
2010 21.58 3.21 0.81 4.01 0.88 1.71
2011 23.80 3.56 0.89 4.44 0.97 1.88
2012 26.05 3.91 0.98 4.88 1.07 2.06
2013 28.38 4.29 1.06 5.34 1.17 2.24
2014 30.83 4.69 1.15 5.84 1.27 2.43
2015 33.47 5.12 1.25 6.37 1.39 2.63
2016 36.27 5.59 1.36 6.94 1.51 2.85
2017 39.27 6.08 1.47 7.55 1.64 3.08
2018 42.48 6.61 1.59 8.19 1.78 3.34
2019 45.95 7.17 1.72 8.88 1.93 3.60
2020 49.50 7.76 1.85 9.60 2.08 3.88
------------------------------------------------------------------------ -

NATIONAL ECONOMY
Reference Case
006 Table A1.5 Labour Force Aggregrates

----------------------------------------------------
National I
------------------------------------------
Populat- I WorkforcelEmptoy- jUnemploy-I
ion Invent Iment I
I -I I
----------------------------------------------------
Unit 1000
----------------------------------------------------
Differences
1997 0.00 0.00 0.07 -0.07
1998 0.00 0.02 0.14 -0.13
1999 0.00 0.05 0.21 -0.16
2000 0.00 0.08 0.28 -0.20
2001 0.00 0.13 0.38 -0.25
2002 0.00 0.17 0.48 -0.31
2003 0.00 0.22 0.60 -0.37
2004 0.00 0.28 0.72 -0.44
2005 0.00 0.35 0.86 -0.51
2006 0.00 0.42 1.02 -0.60
2007 0.00 0.50 1.19 -0.70
2008 0.00 0.59 1.36 -0.78
2009 0.00 0.68 1.54 -0.85
2010 0.00 0.78 1.71 -0.93
2011 0.00 0.87 1.88 -1.01
2012 0.00 0.97 2.06 -1.09
2013 0.00 1.07 2.24 -1.17
2014 0.00 1.16 2.43 -1.26
2015 0.00 1.27 2.63 -1.37
2016 0.00 1.37 2.85 -1.48
2017 0.00 1.49 3.08 -1.60
2018 0.00 1.61 3.34 -1.72
2019 0.00 1.74 3.60 -1.86
2020 0.00 1.89 3.88 -1.99
----------------------------------------------------

Reference Case
Victoria I
Poputat- I WorkforcelEnploy- jUnerrploy- I
ion I Iment Iment I
I I I I
I I I
Unit 1000
----------------------------------------------------
Differences
1997 0.00 0.00 0.04 -0.04
1998 0.01 0.01 0.08 -0.06
1999 0.02 0.03 0.11 -0.08
2000 0.02 0.05 0.14 -0.10
2001 0.03 0.07 0.19 -0.12
2002 0.04 0.09 0.24 -0.15
2003 0.05 0.12 0.30 -0.18
2004 0.06 0.15 0.36 -0.22
2005 0.08 0.18 0.44 -0.26
2006 0.09 0.22 0.52 -0.30
2007 0.11 0.26 0.61 -0.35
2008 0.13 0.31 0.70 -0.39
2009 0.15 0.36 0.79 -0.43
2010 0.17 0.41 0.88 -0.47
2011 0.19 0.46 0.97 -0.51
2012 0.21 0.51 1.07 -0.55
2013 0.23 0.57 1.17 -0.60
2014 0.25 0.62 1.27 -0.65
2015 0.28 0.68 1.39 -0.71
2016 0.31 0.74 1.51 -0.77
2017 0.33 0.81 1.64 -0.83
2018 0.36 0.88 1.78 -0.90
2019 0.40 0.96 1.93 -0.97
2020 0.43 1.04 2.08 -1.04

NATIONAL ECONOMY
Household Biased Savings

----------------------------------------------------------------------------------
Total Consumptl Total Total Exports I Imports I Gross

Private I Expend- Fixed Fixed of Goods) of Goods[ Domestic
Consumpt iture byl Invest- Invest- and I and I Product
Expend- General ment: ment: services) services[
iture Govt. equipment[construct) I I
Unit 1990 SmiLtion
Differences
1997 6.00 0.00 1.09 0.84 0.00 1.46 5.19
1998 10.08 0.00 1.65 1.44 0.01 3.12 10.25
1999 12.78 0.00 2.19 2.19 0.08 4.29 13.34
2000 14.83 0.00 2.59 2.37 0.15 5.10 15.03
2001 18.00 0.00 3.21 2.80 0.22 6.12 17.88
2002 21.84 0.00 3.70 3.25 0.33 7.36 21.59
2003 25.69 0.00 3.66 2.96 0.42 8.35 24.47
2004 29.56 0.00 3.66 3.05 0.52 9.25 27.38
2005 33.61 0.00 4.01 3.22 0.65 10.37 30.94
2006 37.91 0.00 4.44 3.63 0.80 11.68 34.94
2007 42.52 0.00 4.79 3.87 0.95 13.03 39.00
2008 45.34 0.00 4.78 3.83 1.16 13.91 41.41
2009 47.23 0.00 4.77 3.63 1.35 14.45 42.72
2010 48.42 0.00 4.56 3.36 1.58 14.66 43.34
2011 49.47 0.00 4.27 3.07 1.77 14.76 43.69
2012 50.34 0.00 3.83 2.36 2.00 14.71 43.72
2013 51.36 0.00 3.54 2.15 2.24 14.72 44.16
2014 52.63 0.00 3.44 1.99 2.45 14.92 45.19
2015 54.22 0.00 3.57 2.04 2.69 15.37 46.72
2016 56.11 0.00 3.84 2.35 2.95 15.97 48.78
2017 58.20 0.00 4.19 2.69 3.21 16.75 51.25
2018 60.41 0.00 4.65 3.08 3.51 17.60 53.69
2019 62.67 0.00 5.05 3.42 3.84 18.49 56.19
2020 64.94 0.00 5.38 3.53 4.16 19.29 58.47
----------------------------------------------------------------------------------
TOWARDS BETTER PRACTICE III


--------------------------------------------------------------------------------------------
Total Consumptl Total Total Exports Imports Gross House-

Private I Expend- I Fixed Fixed Inter- i Inter- State hold
Consumpt I iture byl Invest- Invest- I state I state I Product) receiptsl
Expend- General I
ment: went: i and I and I I I
iture Govt. Iequipmentlconstructl overseas overseas' I I
--------------------------------------------------------------------------------------------
Unit l 1990 Smillion i
--------------------------------------------------------------------------------------------
Differences
1997 5.21 0.00 0.45 0.37 0.48 2.81 3.13 10.62
1998 7.88 0.00 0.68 0.56 1.05 4.93 5.52 13.23
1999 9.06 0.00 0.89 0.72 1.48 6.14 6.53 14.01
2000 10.30 0.00 1.02 0.82 1.79 7.17 7.18 16.09
2001 12.63 0.00 1.32 0.88 2.20 8.85 8.46 20.22
2002 15.45 0.00 1.61 0.98 2.71 10.95 10.21 24.68
2003 18.36 0.00 1.71 0.91 3.05 12.78 11.84 29.06
2004 21.26 0.00 1.88 0.77 3.46 14.55 13.45 33.41
2005 24.28 0.00 2.15 0.89 3.94 16.64 15.37 38.02
2006 27.36 0.00 2.40 1.00 4.50 18.84 17.37 42.69
2007 30.73 0.00 2.58 1.22 5.08 21.18 19.52 47.91
2008 32.48 0.00 2.59 1.14 5.55 22.57 20.56 49.69
2009 33.62 0.00 2.67 1.01 5.92 23.59 21.08 51.08
2010 34.51 0.00 2.69 0.91 6.20 24.30 21.41 52.37
2011 35.40 0.00 2.67 0.75 6.42 24.92 21.77 53.71
2012 36.34 0.00 2.63 0.65 6.57 25.48 22.15 55.14
2013 37.34 0.00 2.61 0.48 6.77 26.01 22.66 56.69
2014 38.50 0.00 2.64 0.53 7.08 26.73 23.51 58.51
2015 39.77 0.00 2.72 0.62 7.43 27.61 24.47 60.48
2016 41.13 0.00 2.81 0.70 7.91 28.61 25.55 62.58
2017 42.58 0.00 2.99 0.88 8.44 29.81 26.75 64.80
2018 44.06 0.00 3.18 0.98 9.00 31.04 27.95 67.04
2019 45.55 0.00 3.41 0.99 9.60 32.32 29.08 69.28
2020 47.08 0.00 3.65 1.07 10.18 33.63 30.28 71.60

NATIONAL ECONOMY
004 Table A2.3 Discounted Culumative Increase Welfare Indicators (5 percen

------------------------------------------------------------------------
I I
Gross Product I
BINES I Victoria $Australial

I I I I
I I i I
I I I I
Unit $1990 Million

-------------------------------------------
Differences
1997 0.09 2.11 4.42
1998 0.24 5.54 12.53
1999 0.41 9.33 22.27
2000 0.58 13.21 32.44
2001 0.77 17.44 43.66
2002 0.97 22.14 56.21
2003 1.20 27.18 69.36
2004 1.43 32.50 83.02
2005 1.67 38.14 97.30
2006 1.93 44.03 112.24
2007 2.19 50.18 127.69
2008 2.45 56.17 142.90
2009 2.70 61.87 157.43
2010 2.93 67.22 171.07
2011 3.16 72.26 183.80
2012 3.37 77.01 195.61
2013 3.57 81.51 206.66
2014 3.76 85.84 217.12
2015 3.94 90.00 227.13
2016 4.12 94.03 236.82
2017 4.30 97.93 246.23
2018 4.46 101.71 255.36
2019 4.63 105.34 264.22
2020 4.79 108.85 272.74


------------------------------------------------------------------------
I I I I I I
Common- I VictorianlVictorian ITotal IVictorianlwationall
wealth I Receipts (Grant (Victorian ITotal (Employ- I
Receipts) IAssistancelReceipts (Employ- Iment I
I I I Iment I I
I I I I I I

------------------------------------------------------------------------
Differences
1997 1.00 0.16 0.04 0.20 0.06 0.10
1998 2.27 0.34 0.08 0.42 0.11 0.20
1999 3.29 0.46 0.12 0.58 0.14 0.27
2000 3.92 0.54 0.15 0.68 0.16 0.33
2001 4.65 0.63 0.17 0.80 0.20 0.40
2002 5.56 0.74 0.21 0.95 0.23 0.48
2003 6.38 0.87 0.24 1.10 0.27 0.55
2004 7.20 1.00 0.27 1.26 0.31 0.63
2005 8.12 1.14 0.30 1.44 0.36 0.71
2006 9.16 1.29 0.34 1.63 0.40 0.81
2007 10.26 1.46 0.38 1.83 0.45 0.90
2008 11.06 1.57 0.41 1.98 0.48 0.97
2009 11.56 1.63 0.43 2.06 0.50 1.01
2010 11.82 1.67 0.44 2.11 0.51 1.04
2011 11.95 1.69 0.45 2.14 0.53 1.05
2012 11.98 1.73 0.45 2.17 0.54 1.06
2013 12.08 1.76 0.45 2.21 0.55 1.07
2014 12.30 1.82 0.46 2.28 0.56 1.09
2015 12.66 1.89 0.47 2.36 0.58 1.12
2016 13.16 1.97 0.49 2.46 0.61 1.17
2017 13.78 2.06 0.52 2.57 0.63 1.22
2018 14.44 2.15 0.54 2.69 0.66 1.28
2019 15.13 2.24 0.57 2.81 0.69 1.33
2020 15.77 2.34 0.59 2.92 0.72 1.39

NATIONAL ECONOMY
NationaL I
------------------------------------------
Populat- I WorkforcelEmploy- ;Unemploy- y
ion I iment Invent I
I I
----------------------------------------------------
Uni t °000
Differences
1997 0.00 0.00 0.10 -0.10
1998 0.00 0.02 0.20 -0.18
1999 0.00 0.07 0.27 -0.21
2000 0.00 0.12 0.33 -0.22
2001 0.00 0.16 0.40 -0.25
2002 0.00 0.19 0.48 -0.29
2003 0.00 0.23 0.55 -0.32
2004 0.00 0.28 0.63 -0.35
2005 0.00 0.32 0.71 -0.40
2006 0.00 0.36 0.81 -0.45
2007 0.00 0.41 0.90 -0.49
2008 0.00 0.46 0.97 -0.51
2009 0.00 0.50 1.01 -0.51
2010 0.00 0.54 1.04 -0.50
2011 0.00 0.56 1.05 -0.49
2012 0.00 0.58 1.06 -0.48
2013 0.00 0.59 1.07 -0.48
2014 0.00 0.59 1.09 -0.50
2015 0.00 0.60 1.12 -0.52
2016 0.00 0.61 1.17 -0.55
2017 0.00 0.63 1.22 -0.59
2018 0.00 0.66 1.28 -0.62
2019 0.00 0.68 1.33 -0.65
2020 0.00 0.72 1.39 -0.67
----------------------------------------------------

Victoria I
--------------- ---------------------------
PopuLat- I WorkforcelEmploy- (Unemptoy- i
ion Iment Iment

I I I I
I I I I
----------------------------------------------------
Unit '000
----------------------------------------------------
Differences
1997 0.01 0.00 0.06 -0.06
1998 0.01 0.02 0.11 -0.09
1999 0.02 0.04 0.14 -0,09
2000 0.03 0.06 0.16 -0.10
2001 0.03 0.08 0.20 -0.11
2002 0.04 0.10 0.23 -0.14
2003 0.05 0.12 0.27 -0.16
2004 0.06 0.14 0.31 -0.17
2005 0.06 0.16 0.36 -0.20
2006 0.07 0.18 0.40 -0.22
2007 0.08 0.21 0.45 -0.24
2008 0.09 0.23 0.48 -0.25
2009 0.10 0.26 0.50 -0.25
2010 0.10 0.27 0.51 -0.24
2011 0.11 0.28 0.53 -0.24
2012 0.11 0.29 0.54 -0.24
2013 0.11 0.30 0.55 -0.25
2014 0.12 0.30 0.56 -0.26
2015 0.12 0.31 0.58 -0.27
2016 0.13 0.32 0.61 -0.28
2017 0.13 0.34 0.63 -0.30
2018 0.14 0.35 0.66 -0.31
2019 0.14 0.36 0.69 -0.32
2020 0.15 0.38 0.72 -0.34

NATIONAL ECONOMY
Reference Case Balance of Payments Adjustment

----------------------------------------------------------------------------------
Total Consumpt) Total I Total ( Exports ( Imports I Gross

Private I Expend- ( Fixed Fixed ( of Goods of Goodsi Domestic
Consumpt iture byl invest- Invest- I and I and I Product
Expend- General I ment: went: I servicesi services
iture Govt. 1equipmentlconstructl I I
Unit 1990 $million
Differences
1997 2.66 0.60 0.66 0.53 0.88 0.89 3.69
1998 5.11 0.68 1.18 1.21 1.80 2.14 7.88
1999 10.45 0.68 2.34 2.11 2.83 4.04 13.72
2000 17.66 0.85 3.82 3.56 4.00 6.79 22.38
2001 26.73 1.07 5.76 5.14 5.57 10.34 33.28
2002 36.86 1.30 7.84 7.30 7.56 14.46 45.75
2003 47.16 1.52 9.58 8.54 9.93 18.58 57.88
2004 57.63 1.74 11.32 10.23 12.72 22.73 70.31
2005 68.09 1.96 12.86 11.31 15.96 26.89 82.81
2006 78.52 2.19 14.04 12.02 19.61 30.88 95.00
2007 89.05 2.44 15.02 12.69 23.73 34.82 107.38
2008 99.00 2.52 15.84 13.08 28.15 38.57 119.34
2009 108.81 2.59 16.61 13.53 32.75 42.29 131.34
2010 118.45 2.67 17.39 13.67 37.62 45.94 143.19
2011 128.39 2.75 18.22 14.35 42.72 49.72 155.72
2012 138.63 2.83 19.24 14.81 48.13 53.77 168.81
2013 149.22 2.92 20.34 15.51 53.82 58.01 182.63
2014 160.19 3.00 21.67 16.25 59.80 62.49 197.19
2015 171.61 3.09 23.10 17.36 66.11 67.25 212.69
2016 183.47 3.19 24.71 18.42 72.75 72.28 228.97
2017 195.64 3.29 26.30 19.64 79.73 77.50 245.78
2018 208.00 3.38 27.97 20.57 87.10 82.82 262.81
2019 220.64 3.48 29.57 21.68 94.87 88.25 280.34
2020 233.61 3.59 31.23 22.81 103.04 93.88 298.69
----------------------------------------------------------------------------------

Reference Case : Balance of Payments Adjustment
Total Consumptl Total Total Exports imports Gross House-

Private Expend- I Fixed Fixed Inter- Inter- State hold
Consumpt iture by[ Invest- invest- state state I Product) receipts)
Expend- General I ment: ment: and and I
iture Govt. lequipmentlconstructl overseas) overseas) I I

---------------------------------------- ---------------------------------------------------
unit I
1990 $million
Differences
1997 1.86 0.60 0.30 0.27 1.13 1.62 2.19 3.80
1998 3.25 0.69 0.58 0.52 2.47 3.37 4.27 5.61
1999 4.98 0.69 0.99 0.83 4.14 5.43 6.48 8.32
2000 7.25 0.85 1.51 1.23 6.45 8.16 9.45 12.08
2001 10.20 1.08 2.24 1.68 9.38 11.78 13.27 16.83
2002 13.53 1.30 3.02 2.31 12.86 16.10 17.70 22.02
2003 16.95 1.53 3.75 2.69 16.65 20.56 22.08 27.19
2004 20.44 1.75 4.60 3.00 20.91 25.36 26.69 32.48
2005 24.06 1.97 5.54 3.41 25.48 30.60 31.58 37.99
2006 27.79 2.20 6.47 3.81 30.41 36.09 36.66 43.66
2007 31.71 2.45 7.38 4.18 35.80 41.90 42.05 49.65
2008 35.26 2.53 8.22 4.46 41.38 47.60 47.16 54.80
2009 38.72 2.60 9.10 4.77 47.19 53.36 52.30 59.96
2010 42.20 2.68 9.96 5.08 53.22 59.20 57.56 65.21
2011 45.84 2.76 10.82 5.43 59.57 65.27 63.19 70.77
2012 49.64 2.84 11.70 5.82 66.26 71.59 69.15 76.59
2013 53.62 2.93 12.69 6.18 73.32 78.18 75.47 82.66
2014 57.83 3.02 13.74 6.65 80.74 85.13 82.26 89.10
2015 62.25 3.11 14.87 7.15 88.57 92.45 89.44 95.86
2016 66.89 3.20 16.11 7.69 96.83 100.18 97.04 102.95
2017 71.73 3.29 17.43 8.30 105.48 108.31 105.01 110.32
2018 76.74 3.39 18.81 8.87 114.52 116.77 113.27 117.95
2019 81.95 3.50 20.28 9.48 123.97 125.57 121.95 125.88
2020 87.35 3.60 21.86 10.09 133.90 134.77 131.04 134.10

NATIONAL ECONOMY

------------------------------------------------------------------------
Gross Product
I Victoria lAustralial
I l l
I I I
l l l
-------------------------------------------
Unit $1990 Million
Differences
1997 0.01 1.48 3.11
1998 0.08 4.11 9.33
1999 0.21 7.88 19.37
2000 0.39 12.95 34.39
2001 0.63 19.54 55.22
2002 0.94 27.69 81.73
2003 1.29 37.10 112.83
2004 1.68 47.65 147.84
2005 2.11 59.21 185.99
2006 2.57 71.63 226.63
2007 3.06 84.83 269.17
2008 3.57 98.56 312.91
2009 4.10 112.66 357.49
2010 4.65 127.03 402.51
2011 5.21 141.64 447.87
2012 5.79 156.44 493.39
2013 6.37 171.40 539.01
2014 6.96 186.49 584.63
2015 7.56 201.69 630.16
2016 8.17 216.96 675.57
2017 8.79 232.27 720.68
2018 9.40 247.56 765.38
2019 10.02 262.80 809.52
2020 10.64 277.96 853.06

( I I I I I
Common- ( Victorian(Victorian (Total (Victorian(National(

wealth ( Receipts (Grant (Victorian (Total (Employ- I
Receipts( (Assistance(Receipts (Employ' (went (
( ( ( (ment ( (
( ( ( ( ( (
Unit $1990 Million ( number

------------------------------------------------------------------------
Differences
1997 0.70 0.11 0.03 0.14 0.04 0.07
1998 1.72 0.26 0.06 0.32 0.08 0.14
1999 3.19 0.43 0.12 0.54 0.12 0.26
2000 5.26 0.64 0.20 0.83 0.18 0.45
2001 7.99 0.91 0.30 1.20 0.26 0.68
2002 11.22 1.24 0.42 1.64 0.35 0.94
2003 14.53 1.57 0.54 2.10 0.45 1.22
2004 17.93 1.93 0.67 2.58 0.55 1.50
2005 21.33 2.30 0.80 3.08 0.65 1.79
2006 24.71 2.69 0.92 3.60 0.76 2.07
2007 28.12 3.10 1.05 4.14 0.88 2.36
2008 31.42 3.51 1.18 4.67 0.99 2.63
2009 34.71 3.91 1.30 5.20 1.10 2.90
2010 37.97 4.32 1.42 5.73 1.21 3.17
2011 41.35 4.75 1.55 6.28 1.33 3.45
2012 44.88 5.20 1.68 6.87 1.46 3.73
2013 48.60 5.68 1.82 7.49 1.59 4.04
2014 52.53 6.20 1.97 8.15 1.73 4.36
2015 56.67 6.75 2.12 8.85 1.88 4.70
2016 61.05 7.33 2.29 9.59 2.03 5.05
2017 65.59 7.94 2.46 10.38 2.20 5.42
2018 70.24 8.57 2.63 11.19 2.37 5.80
2019 75.02 9.24 2.81 12.03 2.55 6.19
2020 79.97 9.94 2.99 12.91 2.73 6.59

NATIONAL ECONOMY

----------------------------------------------------
National I
------------------------------------------
Populat- I WorkforcelEmptoy- IUnemptoy- I
ion I Iment Iment I
I I I I
I I I I
--------------------------------------------
Unit '000
----------------------------------------------------
Differences
1997 0.00 0.00 0.07 -0.07
1998 0.00 0.02 0.14 -0.13
1999 0.00 0.05 0.26 -0.22
2000 0.00 0.10 0.45 -0.35
2001 0.00 0.17 0.68 -0.50
2002 0.00 0.28 0.94 -0.67
2003 0.00 0.41 1.22 -0.81
2004 0.00 0.55 1.50 -0.95
2005 0.00 0.71 1.79 -1.08
2006 0.00 0.86 2.07 -1.21
2007 0.00 1.02 2.36 -1.33
2008 0.00 1.18 2.63 -1.44
2009 0.00 1.34 2.90 -1.56
2010 0.00 1.49 3.17 -1.68
2011 0.00 1.64 3.45 -1.81
2012 0.00 1.79 3.73 -1.94
2013 0.00 1.95 4.04 -2.09
2014 0.00 2.11 4.36 -2.25
2015 0.00 2.28 4.70 -2.42
2016 0.00 2.46 5.05 -2.59
2017 0.00 2.65 5.42 -2.77
2018 0.00 2.85 5.80 -2.95
2019 0.00 3.06 6.19 -3.13
2020 0.00 3.27 6.59 -3.32

Victoria I
Populat- I WorkforcelEmploy- JUnemploy- I
ion Iment Iment I
.I I I I
Unit "000
Differences
1997 0.00 0.00 0.04 -0.04
1998 0.01 0.01 0.08 -0.06
1999 0.02 0.03 0.12 -0.09
2000 0.02 0.05 0.18 -0.13
2001 0.03 0.08 0.26 -0.19
2002 0.04 0.11 0.35 -0.24
2003 0.05 0.15 0.45 -0.30
2004 0.06 0.20 0.55 -0.35
2005 0.07 0.25 0.65 -0.41
2006 0.08 0.30 0.76 -0.46
2007 0.10 0.35 0.88 -0.52
2008 0.11 0.41 0.99 -0.58
2009 0.13 0.47 1.10 -0.63
2010 0.15 0.53 1.21 -0.68
2011 0.17 0.59 1.33 -0.74
2012 0.19 0.65 1.46 -0.80
2013 0.21 0.72 1.59 -0.87
2014 0.23 0.79 1.73 -0.94
2015 0.26 0.86 1.88 -1.02
2016 0.28 0.94 2.03 -1.09
2017 0.31 1.02 2.20 -1.18
2018 0.34 1.10 2.37 -1.26
2019 0.37 1.20 2.55 -1.35
2020 0.41 1.29 2.73 -1.44

NATIONAL ECONOMY
Household Bias Project : Balance'of Payments Adjustment
Total ConsuRptl Total Total Exports I imports I Gross

Private I Expend- I Fixed Fixed of Goods[ of Goods[ Domestic
Consumpt iture byl invest- invest- and I and I Product
Expend- General I ment: ment: services) services[
iture Govt. lequipmentlconstructl I I
Unit 1990 $million
Differences
1997 6.00 0.00 1.09 0.84 0.00 1.46 5.19
1998 10.08 0.00 1.65 1.44 0.01 3.12 10.25
1999 11.31 0.00 1.94 1.91 0.08 3.96 12.13
2000 11.09 0.00 1.97 1.89 0.15 4.07 11.63
2001 11.45 0.00 2.17 1.96 0.22 4.19 11.75
2002 12.31 0.00 2.12 1.96 0.28 4.39 12.34
2003 12.98 0.00 1.52 0.97 0.35 4.24 11.78
2004 13.70 0.00 1.02 0.65 0.41 4.01 11.59
2005 14.69 0.00 0.91 0.50 0.50 4.07 12.31
2006 16.13 0.00 1.17 0.69 0.57 4.50 13.84
2007 18.19 0.00 1.48 1.11 0.66 5.20 16.06
2008 18.56 0.00 1.50 1.20 0.80 5.51 16.78
2009 18.05 0.00 1.57 1.17 0.92 5.47 16.34
2010 16.81 0.00 1.41 0.98 1.04 5.16 15.09
2011 15.39 0.00 1.09 0.69 1.16 4.67 13.56
2012 13.77 0.00 0.57 0.20 1.28 3.99 11.56
2013 12.03 0.00 -0.03 -0.48 1.41 3.17 9.44
2014 10.47 0.00 -0.36 -0.80 1.51 2.52 7.91
2015 9.25 0.00 -0.46 -0.92 1.60 2.12 7.03
2016 8.33 0.00 -0.50 -0.75 1.72 1.86 6.59
2017 7.59 0.00 -0.36 -0.64 1.84 1.78 6.34
2018 7.03 0.00 -0.12 -0.43 1.97 1.80 6.31
2019 6.67 0.00 0.17 0.01 2.10 1.91 6.66
2020 6.20 0.00 0.34 0.00 2.26 1.96 6.44

Household Bias Project : Balance of Payments Adjustm

--------------------------------------------------------------------------------------------
Total Consumptl Total I Total Expor ts I Imports Gross House-
Private Expend- I Fixed ( Fixed Inter - ( Inter- State hold
Consumpt iture byl invest- ( Invest- state I state Products receipts
Expend- General ( ment: ( ment: and ( and
I
iture Govt. 1equipmentIconstructl overseas overseas)
Unit 1
1990 $million I
Differences
1997 5.21 0.00 0.45 0.37 0.48 2.81 3.13 10.62
1998 7.88 0.00 0.68 0.56 1.05 4.93 5.52 13.23
1999 8.71 0.00 0.84 0.67 1.31 5.90 6.20 13.30
2000 9.39 0.00 0.90 0.73 1.29 6.50 6.25 14.45
2001 11.07 0.00 1.11 0.66 1.30 7.60 6.81 17.55
2002 13.23 0.00 1.29 0.74 1.34 9.10 7.84 21.01
2003 15.44 0.00 1.27 0.50 1.16 10.23 8.64 24.33
2004 17.70 0.00 1.30 0.38 1.06 11.37 9.59 27.73
2005 20.08 0.00 1.46 0.41 1.05 12.76 10.84 31.39
2006 22.60 0.00 1.63 0.61 1.20 14.42 12.37 35.27
2007 25.43 0.00 1.74 0.80 1.45 16.25 14.05 39.69
2008 26.70 0.00 1.72 0.78 1.60 17.24 14.76 40.77
2009 27.35 0.00 1.76 0.71 1.65 17.84 14.88 41.41
2010 27.70 0.00 1.76 0.58 1.58 18.12 14.73 41.87
2011 28.05 0.00 1.74 0.46 1.44 18.31 14.59 42.40
2012 28.40 0.00 1.63 0.27 1.22 18.35 14.40 42.93
2013 28.79 0.00 1.57 0.09 0.94 18.32 14.25 43.53
2014 29.31 0.00 1.52 0.07 0.75 18.46 14.40 44.39
2015 29.95 0.00 1.50 0.13 0.63 18.70 14.73 45.40
2016 30.69 0.00 1.52 0.25 0.60 19.14 15.21 46.58
2017 31.48 0.00 1.58 0.33 0.61 19.65 15.69 47.79
2018 32.34 0.00 1.70 0.41 0.67 20.26 16.26 49.12
2019 33.24 0.00 1.83 0.49 0.80 20.95 16.84 50.48
2020 34.13 0.00 1.99 0.51 0.84 21.64 17.36 51.82

NATIONAL ECONOMY
Household Bias. Project a Balance of Payments Adjustment

------------------------------------------------------------------------
Gross Product
SINES I Victoria JAustratial
I
I I I
Unit $1990 Million

-------------------------------------------
Differences
1997 0.09 2.11 4.42
1998 0.24 5.54 12.53
1999 0.40 9.15 21.38
2000 0.55 12.53 29.29
2001 0.69 15.92 36.65
2002 0.84 19.54 43.86
2003 0.99 23.24 50.24
2004 1.14 27.06 56.07
2005 1.30 31.04 61.74
2006 1.47 35.24 67.69
2007 1.65 39.66 74.03
2008 1.83 43.96 80.23
2009 1.99 47.98 85.78
2010 2.14 51.67 90.53
2011 2.28 55.05 94.50
2012 2.40 58.15 97.63
2013 2.52 60.98 100.00
2014 2.62 63.63 101.84
2015 2.72 66.14 103.35
2016 2.81 68.54 104.67
2017 2.90 70.83 105.84
2018 2.99 73.02 106.93
2019 3.07 75.13 107.99
2020 3.15 77.14 108.94
-------------------------------------------

Household Bias Project a Balance of Payments Adjustment

------------------------------------------------------------------------
I I I I I I
Common- VictorianlVictorian Total IVictorianlWationall
wealth Receipts (Grant (Victorian (Total (Employ-
Receipts) IASSistancelReceipts (Employ- Iment
I I I Iment I I
I I I I
------------------------------------------------------------------------
------------------------------------------------------------------------
Differences
1997 1.00 0.16 0.04 0.20 0.06 0.10
1998 2.27 0.34 0.08 0.42 0.11 0.20
1999 3.05 0.45 0.11 0.56 0.13 0.25
2000 3.21 0.48 0.12 0.60 0.14 0.26
2001 3.25 0.52 0.12 0.64 0.16 0.28
200,2 3.36 0.58 0.12 0.71 0.18 0.29
2003 3.29 0.65 0.12 0.77 0.21 0.28
2004 3.25 0.72 0.12 0.84 0.23 0.28
2005 3.35 0.81 0.13 0.94 0.26 0.30
2006 3.69 0.92 0.14 1.06 0.29 0.33
2007 4.20 1.05 0.16 1.20 0.33 0.37
2008 4.52 1.13 0.17 1.30 0.35 0.39
2009 4.55 1.16 0.17 1.33 0.36 0.39
2010 4.30 1.16 0.16 1.33 0.36 0.37
2011 3.92 1.16 0.15 1.30 0.36 0.34
2012 3.42 1.14 0.13 1.27 0.36 0.30
2013 2.86 1.13 0.11 1.24 0.36 0.25
2014 2.39 1.13 0.09 1.23 0.36 0.21
2015 2.07 1.15 0.08 1.23 0.36 0.18
2016 1.90 1.18 0.07 1.26 0.37 0.16
2017 1.80 1.22 0.07 1.29 0.38 0.15
2018 1.78 1.26 0.07 1.33 0.39 0.15
2019 1.85 1.31 0.07 1.38 0.41 0.15
2020 1.84 1.35 0.07 1.42 0.42 0.15
------------------------------------------------------------------------

NATIONAL ECONOMY
Household Bias Project ; Balance of Payments Adjustment

----------------------------------------------------
National I
Poputat- I WorkforcelEmptoy- JUnemptoy-

ion Iment Iment I
I I
Unit 1000
Differences
1997 0.00 0.00 0.10 -0.10
1998 0.00 0.02 0.20 -0.18
1999 0.00 0.07 0.25 -0.18
2000 0.00 0.11 0.26 -0.15
2001 0.00 0.13 0.28 -0.14
2002 0.00 0.15 0.29 -0.14
2003 0.00 0.16 0.28 -0.13
2004 0.00 0.16 0.28 -0.13
2005 0.00 0.16 0.30 -0.14
2006 0.00 0.16 0.33 -0.17
2007 0.00 0.17 0.37 -0.20
2008 0.00 0.19 0.39 -0.20
2009 0.00 0.21 0.39 -0.18
2010 0.00 0.22 0.37 -0.15
2011 0.00 0.21 0.34 -0.13
2012 0.00 0.20 0.30 -0.09
2013 0.00 0.18 0.25 -0.07
2014 0.00 0.16 0.21 -0.05
2015 0.00 0.14 0.18 -0.05
2016 0.00 0.12 0.16 -0.05
2017 0.00 0.10 0.15 -0.05
2018 0.00 0.09 0.15 -0.06
2019 0.00 0.09 0.15 -0.07
2020 0.00 0.08 0.15 -0.06
----------------------------------------------------

Household Bias Project o Balance of Payments Adjustment
Victoria I
Poputat- I WorkforcelEmploy- IUnemploy- I
ion I Iment Iment I
I I I I
I I I I
Unit '000
Differences
1997 0.01 0.00 0.06 -0.06
1998 0.01 0.02 0.11 -0.09
1999 0.02 0.04 0.13 -0.09
2000 0.03 0.06 0.14 -0.08
2001 0.03 0.08 0.16 -0.09
2002 0.04 0.09 0.18 -0.10
2003 0.05 0.10 0.21 -0.11
2004 0.06 0.11 0.23 -0.12
2005 0.07 0.13 0.26 -0.13
2006 0.08 0.15 0.29 -0.15
2007 0.09 0.17 0.33 -0.16
2008 0.10 0.19 0.35 -0.16
2009 0.11 0.21 0.36 -0.15
2010 0.11 0.22 0.36 -0.14
2011 0.11 0.22 0.36 -0.14
2012 0.12 0.23 0.36 -0.13
2013 0.12 0.23 0.36 -0.13
2014 0.13 0.23 0.36 -0.13
2015 0.13 0.23 0.36 -0.13
2016 0.14 0.24 0.37 -0.13
2017 0.14 0.24 0.38 -0.14
2018 0.15 0.25 0.39 -0.14
2019 0.15 0.26 0.41 -0.15
2020 0.16 0.27 0.42 -0.15
----------------------------------------------------

NATIONAL ECONOMY
Construction cost

----------------------------------------------------------------------------------
Total I Consumptl Total Total I Exports Imports Gross

Private I Expend- Fixed Fixed I of Goods of Goods Domestic
Consumpt I iture bye Invest- Invest- I and and I Product
Expend- ( General ment: I ment: ( servicesi servicesi
iture ( Govt. (equipmentIconstructl I
Unit 1990 $million

----------------------------------------------------------------------------------
Differences
1997 -7.92 0.00 0.32 15.56 0.05 1.00 7.88
1998 -9.61 0.00 0.49 15.80 0.16 0.58 6.03
1999 -13.30 0.00 0.72 15.80 0.25 -0.07 3.38
2000 -10.19 0.00 2.70 27.33 0.32 2.23 15.09
2001 -9.86 0.00 2.06 22.77 0.41 2.70 13.94
2002 -10.42 0.00 0.95 22.29 0.54 1.84 11.09
2003 -10.92 0.00 1.42 22.50 0.66 1.63 10.78
2004 -10.95 0.00 1.75 22.41 0.74 1.86 11.28
2005 -11.09 0.00 1.43 21.97 0.87 1.76 10.78
Construction Cost
Total I Consumptl Total Total I Exports Imports Gross House-

Private I Expend- Fixed I Fixed Inter- Inter- ( State hold
Consumpt iture bye Invest- Invest- state state ( Product) receipts
Expend- General ment: ment: and and I I
iture Govt. 1equipment1constructl overseas) overseas) I I
Unit 1' 1990 $million

------------------------------------------------------------------------------- ------------
Differences
1997 3.40 0.00 0.80 16.04 -0.67 8.58 12.41 5.65
1998 3.42 0.00 1.14 15.94 -0.76 8.98 11.63 5.04
1999 2.48 0.00 1.58 15.91 -0.87 9.10 10.74 3.23
2000 5.77 0.00 3.29 27.07 -0.12 16.05 20.11 10.47
2001 5.86 0.00 4.04 22.43 0.19 16.45 18.02 8.88
2002 ,5.19 0.00 3.82 21.32 0.04 15.41 16.07 7.31
2003 4.77 0.00 4.00 21.14 0.28 15.25 15.72 7.02

2004 4.82 0.00 4.60 21.30 0.44 15.93 16.16 7.33
2005 4.77 0.00 4.09 21.35 0.46 15.81 15.98 7.18
--------------------------------------------------------------------------------------------

Construction Cost
004 Table A5.3 Discounted Culunative Increase Welfare Indicators (5 percen
I I
Gross Product
l BINES I Victoria lAustratial
I I I I
I I I I
I I I I
Unit $1990 Million
Differences
1997 0.03 16.74 14.85
1998 0.04 24.06 19.64
1999 0.03 30.32 22.17
2000 0.04 41.14 32.35
2001 0.10 50.16 41.14
2002 0.10 57.60 47.61
2003 0.10 64.33 53.43
2004 0.10 70.74 59.09
2005 0.11 76.62 64.09
Construction Cost
I I I I I I
Common- VictorianlVictorian ITotal IVictorianiNationatl

wealth Receipts (Grant (Victorian (Total lEmploy- I
Receiptsl IAssistancelReceipts lEmploy- Iment I
I I Iment I I
I I I I I i
Unit $1990 Million number

------------------------------------------------------------------------
Differences
1997 2.02 0.85 0.08 0.93 0.18 0.06
1998 1.87 0.93 0.07 1.00 0.20 0.04
1999 1.23 0.88 0.05 0.93 0.20 0.00
2000 3.27 1.35 0.12 1.46 0.34 0.17
2001 3.64 1.40 0.14 1.53 0.32 0.15
2002 3.38 1.34 0.13 1.47 0.30 0.13
2003 3.12 1.27 0.12 1.38 0.30 0.14
2004 3.12 1.27 0.12 1.38 0.30 0.14
2005 3.04 1.26 0.11 1.38 0.30 0.12
------------------------------ ---------------------__--_._-__.------.--

NATIONAL ECONOMY
Construction Cost
National
Populat- I WorkforcelEmpLoy- jUnemptoy-I

ion Iment Iment I
I 1
Unit '000
Differences
1997 0.00 0.02 0.06 -0.05
1998 0.00 0.03 0.04 -0.01
1999 0.00 0.03 0.00 0.03
2000 0.00 0.02 0.17 -0.15
2001 0.00 0.04 0.15 -0.11
2002 0.00 0.07 0.13 -0.06
2003 0.00 0.08 0.14 -0.06
2004 0.00 0.08 0.14 -0.06
2005 0.00 0.08 0.12 -0.05
Construction Cost
Victoria
Populat- I WorkforcelEmptoy- jUnemploy- I
ion I Iment Iment I
Unit '000
Differences
1997 0.04 0.05 0.18 -0.14
1998 0.07 0.09 0.20 -0.10
1999 0.08 0.12 0.20 -0.08
2000 0.10 0.14 0.34 -0.20
2001 0.11 0.17 0.32 -0.14
2002 0.12 0.20 0.30 -0.10
2003 0.12 0.21 0.30 -0.10
2004 0.12 0.20 0.30 -0.10
2005 0.12 0.20 0.30 -0.09

I.III
ROADS
IN THE
NATIONAL
ECONOMY
DR GLENN OTPO & DR GRAHAM VOSS

(SCHOOL OF ECONOMICS, UNIVERSITY OF NEW SOUTH WALES)
OUTLINE
EXECUTIVE SUMMARY 137
1. MACROECONOMIC FRAMEWORK 138
2. MEASUREMENT OF MACROECONOMIC BENEFITS OF 139

PUBLIC INVESTMENT
2.1 Traditional aggregate demand analysis 139
2.2 Supply-side analysis of public investment 140
2.3 Some qualifications of these studies 143
3. RESPONSE OF THE PRIVATE SECTOR 145

3.1 Short-run response to cost reductions 145
3.2 Medium and longer term responses 146
4. MACROECONOMIC RESPONSES IN THE AUSTRALIAN ECONOMY 149

5. MODELLED EXAMPLE 153

5.1 A productivity example for Australian road capital 153
6. SUMMARY 155
END NOTES 156
REFERENCES 157

NATIONAL ECONOMY
EXECUTIVE SUMMARY
The attached report provides an overview of the various ways in which public infrastructure, of which the stock
of roads is an important component, can affect the overall performance of the economy. There has recently
been a renewed interest in this issue from both policymakers and economists. There is a growing literature,
primarily empirical, that seeks to measure the macroeconomic benefits of the existing stock of public
infrastructure as well as those that might flow from additional investments. This report draws on the existing
literature to answer a number of questions.
How can the macroeconomic benefits of public investment be measured?
What are the likely responses of the private sector to an increase in public spending on roads?
What is the empirical evidence on the relationship between roads capital and the productivity of the private
sector for Australia?
The traditional means of evaluating public investment projects is through cost-benefit analysis. However cost-
benefit studies do not always capture the economy wide or macroeconomic benefits of public infrastructure and
consequently tend to understate the true rate of return to additional investment in infrastructure. This fact has
motivated the recent literature which examines the macroeconomic relationship between the aggregate stock of
public infrastructure and private sector output or productivity. Consistent with this criticism of cost-benefit
analyses, implied rates of return to additional public investment obtained from macroeconomic studies tend to
be higher than those obtained from cost-benefit studies.
The principal focus of macroeconomic studies of public infrastructure has been on the productive
contribution of public infrastructure to private production. A number of studies have attempted to estimate
the contribution that the aggregate stock of public infrastructure makes to private sector production, for
example, does it raise productivity and lower costs of the private sector. Many of these studies have found
that public infrastructure is an important determinant of private sector productivity and that returns to exist-
ing infrastructure are relatively high. These macroeconomic studies are not without their problems and critics.
For example, finding a strong positive correlation between private productivity and public infrastructure does
not by itself indicate a particular direction of causality.
In addition to summarising the macroeconomic studies and interpreting their results in the context of Australian
road infrastructure, the current study also examines the specific means by which public infrastructure is likely
to improve private sector productivity. The principal effect of improved road infrastructure would seem to be
a reduction in the operating costs of firms. It is not clear, however, the extent to which these costs are likely to
be passed on to consumers; this largely depends upon the degree of competition in the industry concerned. For
industries that operate as part of an international market, the reduction in costs may significantly improve the
international competitiveness of firms in these industries. Additional effects of improved roads infrastructure
may include improved distribution techniques, stronger growth due to network effects and increased private
sector investment.
Finally, the report provides a simple modelling exercise for Australia which suggests that the rate of return to
additional investment in toad capital may be quite high, although there is a fair degree of uncertainty
surrounding the estimated value. These findings are in line with results that have been obtained for the United
States.

1 MACROECONOMIC FRAMEWORK-
Over the medium term, the macroeconomic performance of the Australian economy, now increasingly
integrated with the global economy, will be influenced by two principal factors:
the shocks, internal or external, that hit the economy;

the policy environment that is established over this period to deal with these disturbances.
The difficulty with predicting the disturbances likely to affect the Australian economy in the immediate future
has tended to focus macroeconomic policy not on specific responses to these disturbances but rather making
the Australian economy more flexible and productive in face of these disturbances. The recent focus on the
importance of aggregate infrastructure provision can be viewed as a part of this refocussing of policy making
on the productivity of the Australian economy.
In Australia the traditional macroeconomic policy instruments have been monetary, fiscal and wages policy (for
example, the Accord). Over the last ten or fifteen years there has been a changing view about how the tradi-
tional instruments should be used. While it is still accepted that monetary and fiscal policy may have a role to
play in stimulating the economy during a deep recession, the belief that these policies should be actively used
to manage the economy over the entire business cycle is no longer widely held.'
In terms of fiscal policy, there is a growing acceptance that the Federal government should aim to ensure a
structural budget balance over the business cycle. Given the existing magnitude of the budget deficit and the
Coalition's commitment not to raise taxes (over the next three years) this points to the need for substantial cuts
to government spending. How these cuts are to be distributed across the various government spending pro-
grammes has yet to be determined, however there is no reason to believe that public infrastructure expenditures
will be completely insulated from such cuts. This suggests that existing public resources will need to be used as
efficiently as possible, new projects will need to be as well-designed as possible, and that the role of the private
sector in the provision of some infrastructure services will increase.
A further aspect of the policy environment which is likely to be of considerable importance over the next few
years is microeconomic reform such as labour market deregulation, competition policy, tariff policy, corporati-
sation and privatisation. There is a growing realisation that changes in government regulations can have impor-
tant implications for the performance of the aggregate economy. According to the 1995-96 Budget papers, the
Treasury views the need to increase Australia's productive capacity as an important challenge for macroeconomic
reform; properly implemented, such reforms are likely to lead to increased investment and provide for more
efficient use of existing capital, both publicly and privately operated.
Finally, we anticipate the growing internationalisation of the Australian economy will require, in addition to the
macroeconomic reforms identified by Treasury, suitable infrastructure investment to support the development
of the tradables sector.
138 ROADS IN THE COMMUNITY'

NAI'IO:NAL ECONOMY
2. MEASUREMENT OF
MACROECONOMIC BENEFITS OF
PUBLIC INVESTMENT
To assess the contribution to private production of a component of public infrastructure such as land-based
transportation infrastructure and to address issues of further investment or maintenance, economic principles
suggest the use of cost benefit analysis. However, even if carefully done, cost-benefit studies are generally con-
sidered to be unable to measure all of the benefits and costs of many public investment projects, primarily
because of the benefit externalities associated with these projects which are difficult to identify and measure.
For these reasons, a large literature now exists which considers the relationship between public infrastructure of
various types and macroeconomic performance. The hope is that what fails to show up in the cost benefit stud-
ies will show up in the macroeconometric studies.
This section considers the relationship between public infrastructure and macroeconomic performance with
particular emphasis on the nature of the benefits arising from increased public investment expenditure. This
involves first considering a traditional aggregate demand analysis of public expenditure and then considering the
large supply-side macroeconometric literature which was initiated by Aschauer (1989a). The majority of this lit-
erature considers some aggregate measure of public infrastructure capital and not specifically road infrastruc-
ture. However, as road infrastructure is a substantial component of total public infrastructure the conclusions
are directly applicable. (For example, for Australia in end June 1994 the proportion of the gross capital stock
of the general government sector which is road capital was roughly 30% and it is the largest single component
reported by the Australian Bureau of Statistics.)
1.2.1 Traditional aggregate demand analysis

Government expenditure on road infrastructure is a component of aggregate demand. As such, one means of
assessing the implications of this type of public expenditure is within a standard macroeconomic model of
aggregate demand and supply for an economy which is operating at less than full capacity. In this case, the
primary economic benefit is the dampening of the business cycle. In particular, in recessionary periods, the
benefits are lower unemployment and increased use of other productive resources being used below capacity.
The benefit of reduced unemployment and increased stability of the economy as a whole must, however, be
weighed against the associated costs. Any new public expenditure initiative must either raise the overall tax
burden in the economy, raise the public sector deficit or reduce expenditure elsewhere. Tax-financed
expenditure has associated distortions which impose a cost on the economy as a whole. For example, the
income taxation system distorts work effort decisions of private individuals (see Boadway and Wildasin 1984).
Alternatively, if funding for new investment is based upon a user-pays principle then the distortion effects are
much less severe. Deficit-financed expenditure has, ultimately, similar effects as tax-financed expenditure since
at some stage the public sector debt is repaid. However, it also has the immediate effect of raising the public
sector deficit. The general problem identified with higher public sector deficits is an increase in domestic real
interest rates. In a recent OECD study, Orr, Edey, and Kennedy (1995), evidence is presented which suggests
that public sector deficits do increase the real interest rate faced by small open economies. This study also
suggests that if public sector deficits are primarily financed from abroad, implying a rise in the current account
deficit, then the impact on real interest rates is even more severe. The increase in real interest rates may crowd
out private investment, both residential and non-residential.
Finally, if new public investment expenditure displaces existing expenditure elsewhere then the assessment of

benefits must be weighed against the cost of these foregone alternatives.
There are further effects of public expenditure in these models. First, the expansion in public expenditure by
increasing aggregate demand will, in an open economy with a high degree of capital mobility, lead to an
appreciation of the nominal exchange rate. With sufficient nominal rigidities in the economy, this makes the
existing export sector less competitive and may initiate a decline in this sector. Finally, if the expansion in
aggregate demand occurs at or near full capacity and the expansion is accommodated by an increase in the
money supply then the expansion may be inflationary. To the extent that inflation is a problem in the
economy this is a potential cost of the expansionary aggregate demand effects from increased public sector
investment.
There are a number of problems with applying the above analysis to investment expenditure on road infra-
structure. First, the magnitude of such investment expenditure is relatively small; in 1993-94 road investment
was a little over one half of 1% of gross domestic product so the macroeconomic effects in terms of aggre-
gate employment, exchange rate appreciation, inflation and so forth are unlikely to be significant. A practical
gauge as to the extent of these effects might be had by employing an econometric aggregate demand model of
the macroeconomy such as the Murphy model (Murphy 1988). These econometric models of aggregate
demand, however, are currently in some disrepute for a number of important theoretical and
econometric reasons.
What then is available from this type of analysis? In summary, an aggregate demand analysis of public
investment expenditure would identify the increased use of previously idle resources, in particular an increase
in employment, as the principal benefit. And in general this seems a reasonable focus for a substantial public
investment programme, at least in the short run. (Aschauer 1983 also makes this point.) Note however that for
this to be a true benefit, it must be an increase in aggregate employment and not a redistribution of the exist-
ing employed labour force.
1.2.2 Supply-side analysis of public investment

The principal focus of the macroeconometric literature concerning public infrastructure has been on the
productive contribution of public infrastructure to private production. This is a supply side perspective in
contrast to the aggregate demand perspective discussed above. The underlying theoretical premise, which does
not seem controversial, is that aggregate private production has as an input the services from publicly provided
infrastructure (for example, transportation, communication, health, and education infrastructure). On the basis
of this premise, a large empirical literature assesses the significance of various measures of aggregate public
infrastructure as inputs to aggregate private production. In addition, this literature also attempts to evaluate the
existing levels of infrastructure; indeed, Aschauer's (1989a) influential work in this regard attempts to identify
the decline in public investment in the United States as a contributing source to the well-documented
productivity decline in the United States during the last two decades. What follows is a review of this literature
with an emphasis on the means by which it assesses the benefits of public investment expenditure. We also
discuss the difficulties identified in the literature with interpreting these results. As before, much of the
discussion will focus on aggregate measures public investment; however, in a number of instances the research
has explicitly focused on road infrastructure.
The identification of public infrastructure as an input to private production is not controversial. What is con-
troversial is the use of macroeconometric analysis to investigate its significance and whether or not existing
levels of aggregate infrastructure are inappropriate. A more natural means of identifying and evaluating the
contribution of public infrastructure to private production would be to use cost benefit analysis on specific
projects. (This is a principal conclusion of EPAC 1988.) What might justify the use of econometric studies of

NATIONAL ECONOMY
the aggregate provision of public infrastructure - that is, studies which make no allowance for the exact nature
of public investment or its location within the aggregate economy?
The question has been explicitly addressed in detail by a number of authors, see for example Gramlich 1994
and, in particular, Hulten 1993. The answer generally proposed within the literature is that project-based
cost benefit analyses do not always adequately measure all of the indirect benefits from public infrastructure
expenditure. Consequently, the results from aggregate studies may usefully supplement project-based studies.
Evidence often cited for this are the generally very much higher returns to public investment implied by macro-
econometric studies compared to project-based studies. Very little work, however, has been done to investigate
the source of this discrepancy. Hulten (1993) is one exception and argues that the usefulness of macro
econometric studies depends upon the nature of the project and the structure of the private economy.
Unfortunately, no practical conclusions are immediate from his analysis.
With these concerns in mind, we now consider the various means by which macroeconometric studies have
assessed the benefits of public investment.
Productivity studies
These studies follow the work of Aschauer (1989a) and form the bulk of the empirical literature. The basis for
these studies is a specification for private production that depends upon, in addition to private inputs, public
infrastructure. Measures of the latter can be quite specific, such as road capital (Attaran and Auclair 1990 and
Otto and Voss 1993), or more general, such as the non-military public capital stock (Aschauer 1989a). These
studies, once the various measures have been determined, examine the relationship between some measure of
private sector productivity and the stock of public capital. The measures of private sector productivity
considered are generally either private capital productivity (private output per unit of private capital) or total
private factor productivity (private output per weighted average of private inputs).
Studies which follow Aschauer (1989a) and use time series analysis uniformly find a positive and significant
relationship between productivity and public capital. For Australia, Otto and Voss (1993,1994,1996a,b) provide
evidence of such a relationship with the last two references providing the more robust results. If these studies
are correct (and there now exists a wide-range of time series studies for different countries which give broadly
similar conclusions) and identify a stable relationship between the public and private sector then they provide
some useful information. (Issues of parameter instability have been raised in Otto and Voss 1996b and Voss
1996a.) First, one may infer from these studies the effects of significant changes in the levels of public
investment expenditure. For example, Aschauer's study was in part responsible for focusing the attention of
public policymakers on the declining share of public investment in the United States economy. Second, the
studies usually provide a rate of return to increased public investment. To the extent that these capture
external benefits otherwise overlooked they may assist in decision-making either by suggesting that the
cost-benefit analysis be extended or by weighing both methods to arrive at a decision.
Other studies of productivity effects use panel data techniques (pooled time series and cross section data). The
basis for these studies, a private sector production function dependent upon private and public sector inputs, is
the same as for time series studies. With these studies, however, the conclusions have not been as uniform as
with the time series studies. For example, Holtz-Eakin (1994) analyses infrastructure provision across the
United States using State data and finds no significant contribution of public infrastructure to private sector
productivity. He argues that his results correctly account for State-specific effects such as land area,
endowments of raw materials, location and so forth.
Canning and Fay (1993) also use panel data but explicitly consider transportation infrastructure. Their panel
consists of 96 countries for the period 1960-85. As with Holtz-Eakin, they find that transportation infrastruc-
ture is an insignificant determinant of private production when country specific effects are allowed for. Despite

the lack of statistical significance, they calculate the social rate of return to road construction in each country.
This is measured by their point estimate of the marginal product of an additional kilometre of road divided by
the cost of construction.
Reconciling the results from the time series studies with the panel regression studies is difficult. One line of
reasoning has argued that the panel studies, focused on the State level, are unable to identify all of the external
benefits which are measured using aggregate time series data. However, Holtz-Eakin (1994) does his analysis by
region (aggregation of integrated States) and finds similar results for the State analysis so that the aggregation
fails to find any additional effects.
Box 1: An algebraic summary of productivity studies
Private production:
Y= ZKaNPG7
where
Y - private production
Z - a measure of technological change
K - private capital services
K - private capital services
N - public capital services (infrastructure)
The private output elasticity of public capital:
oY1,0GxGIY=y
This measures the %age change in private production from a %age change in public capital.
In logarithms (lower case) and assuming constant returns to scale (o:+R+y = 1) production is
written in intensive form
y-k=z+p(n°k)+y(g-k)
which links capital productivity to the ratio of public to private capital stocks via the elasticity
parameter y.
All other productivity relationships are variants of this simple example.
As far as Australia is concerned, no panel regressions studies have been performed to our knowledge, either for
road capital or aggregate public capital, so it is not clear whether similar results to Holtz-Eakin would be
obtained for Australia. Nonetheless, the panel regression results of Holtz-Eakin and others are an important
qualification to all macroeconometric studies and indicate the need for further research.
Finally, there are a number of studies which use aggregate cost functions rather than production functions to
describe the relationship between the private and public sector, see for example Berndt and Hansson (1991) and
Takahashi and Maki (1992). Although different in their estimation procedure and structure, cost function
studies are closely related to the productivity studies; in particular, they have underlying them a similar

NATIONAL ECONOMY
description of aggregate private production. They do however allow for an alternative means of evaluating pub-
lic investment, and that is by estimating the reduction of private sector costs available from public infrastruc-
ture investment.
In summary, the productivity studies
relate some measure of private sector productivity to the stock of public infrastructure; that is, public
infrastructure is a determinant of private sector productivity
provide measures of the returns to aggregate measures of public capital
There are some issues concerning the robustness of these results, see the above discussion of panel data
studies; further, there are a number of econometric issues which we consider further below
Investment studies
The previous discussion centred on empirical studies which, in one way or another, attempt to estimate the
production technology of the aggregate private economy. Another means of investigating the response of the
private sector to changes in public investment (as above, this literature considers aggregate measures of public
investment) is to examine the relationship between investment in the two sectors. (Examples are Aschauer
1989b and Erenburg and Wohar 1995.) From a supply-side perspective, if public infrastructure is a productive
component of private production then an increase in the former, by raising the productivity of private capital,
should induce an expansion in private investment. An advantage of this literature is that relatively little
structure which is imposed on the estimation process. Further, it considers a specific mechanism by which
public investment increases private sector production. The disadvantage is that the relationship between
investment in the two sectors does not give any immediate conclusions concerning the welfare benefits of
public investment.
Growth studies
A further approach to analysing the benefits of public infrastructure in the macroeconomy is to investigate the
long-run relationship between overall economic growth and public infrastructure services. One means of doing
this are cross-section growth studies which analyse the determinants of economic growth for a large set of
countries. Two examples of these studies are Canning and Fay (1993) and Easterly and Rebelo (1993). Easterly
and Rebelo (1993) is particularly useful, employing a very extensive data set collected by the World Bank. Their
results indicate that while total consolidated public investment is not a significant determinant of per capita
growth, transportation and communication investment (a joint measure) is a significant and relatively important
determinant of economic growth. Canning and Fay (1993), in addition to their productivity analysis, also
estimate models for the growth rate of output across their panel data set. Their results indicate that trans-
portation infrastructure has little immediate effect on output but tends to affect the rate of growth over a long
period of time by increasing total factor productivity.
1.2.3 Some qualifications of these studies

The empirical studies, in particular the productivity studies which have received the most attention, have been
criticised for a variety reasons. The best summary of these criticisms is presented in Gramlich (1994). Two
criticisms of the econometrics seem to us important: causality and parameter stability. The first concern queries
whether the direction of causality is from public investment to private production or private production to
public investment. Both directions may be plausibly explained and there is empirical evidence to suggest that
there is bi-directional interdependence between the public and private sector, see Otto and Voss (1996a) and

Voss (1996b). The difficulty with this interdependence, unless properly accounted for in the estimation
procedure, is that it leads to inaccurate estimation results. A great many of the studies in this literature,
especially the earlier studies, are open to criticism from this perspective.
The second concern is parameter stability or, more simply, whether or not the relationships estimated between
the public and private sector have been stable over the period in question. Given the extent of structural change
in economies like Australia over the last three decades it seems quite likely that the relationships may exhibit
some instability. And indeed, the evidence for Australia presented in Otto and Voss (1996 a,b) suggests that for
aggregate measures of public capital there is evidence of instability. However, in Otto and Voss (1993), where
we consider road capital explicitly, we find no overwhelming evidence of instability.
Box 2:A summary of the macroeconometric studies

Productivity studies
The effect of an increase in public infrastructure on:
private capital productivity
private total factor productivity
private production
private sector production costs
Other measures available:
rates of return on public capital (to be compared to private sector rates of return)
rates of return on components of public capital (to be compared to other components of public capital)
cost reductions to the private sector of an increase in public capital
Investment studies
The effect of
an increase in public investment on private investment, short and long run
Cross section growth studies

The long-run effects of the average level of public investment on:
per capita economic growth

3. RESPONSE OF THE PRIVATE SECTOR
Here we review some of the possible responses of individual firms to increased public investment expenditure with spe-
cific emphasis on road-based infrastructure investment. This summarises many suggested effects in the literature, both
direct cost effects identified in the cost-benefit analysis literature as well as the indirect effects thought to underlie the exter-
nal benefits identified in the macroeconometric literature. The following section considers the implications of these firm
level responses for the Australian economy as a whole.
One means of organising these ideas is on the basis of a simple timeframe. We first consider the short-run response to the
cost reductions brought about by improved road services, a period without significant
organisational re-structuring or physical investment by firms and no significant changes in market structure. We then con-
sider the longer-run responses as firms restructure their organisation. These latter responses tend to be associated with the
indirect effects of public investment and are generally quite difficult to measure.
1.3.1 Short run response to cost reductions

Road investment (if properly designed), road maintenance, and improved road management can significantly reduce the
operating costs of firms which are reliant on land-based transportation. The immediate cost
reductions generally recognised by cost benefit studies arise from reductions in travel time (improved routes, reduced con-
gestion, improved traffic flow), reduced vehicle operating costs, and improvements in traffic safety. A cost benefit study
would measure the social benefits of this cost reduction as best as possible and compare this to the social costs of the
investment expenditure.
One feature of some interest is the extent to which the cost reductions experienced by firms are passed through to con-
sumers.; This gives an indication of the distribution of gains between the firms involved and the final consumers, which
may have an important influence on policy decisions as well as implications for the economy as a whole, a point we return
to in the following section. There seems, however, to be relatively little work which addresses directly the extent to which
cost-reductions due to infrastructure investment are passed through to lower prices. Theoretically, the extent of pass
through will clearly depend upon the market structure of the industries involved.
If there are a large number of firms acting competitively in an industry, then the degree of pass through will depend upon
the relative elasticities of demand and supply for the final
product. This is equivalent to
dentifying the incidence of taxation. In many instances, however, the assumption of purely competitive behaviour by firms
may be inappropriate. The industries of interest may be characterised by a small number of large firms in which case the
pricing effects of cost reductions will differ from the competitive case.4
With a small number of firms acting strategically, the pass through of cost reductions is difficult to predict,
different market structures, information asymmetries and strategic behaviour give rise to different conclusions. For exam-
ple, if firms set prices strategically and there is a reduction in costs firms may be reluctant to lower their price recognising
that doing so is unlikely to improve their market share, as other firms are likely to follow, and may reduce existing market
rents of producers. A related literature which has many of the same issues is the exchange rate pass through literature which
considers the extent to which changes in the nominal exchange rate are passed through to import prices; see for example
Krugman (1986).
An alternative explanation of slow price adjustment comes from the macroeconomic literature. This is the menu cost argu-
ment associated with Gregory Mankiw of Harvard University, for example, Mankiw (1985). Here firms are argued to be
reluctant to change prices because of the (possibly small) costs of doing so and only change prices if the change in costs
are substantial.
Whatever its source, this sort of price rigidity is thought to characterise a great many industries and suggests that cost reduc-
tions may not pass through to consumers for some considerable time.

1.3.2 Medium and longer term responses
Here we consider a timeframe of sufficient length to allow for re-organisation of the firm (for example,
adoption of new technologies), new investment, and changes to the market structure, specifically the entry of
new firms. This re-organisation is assumed to arise because of the improved road transportation facilities
available from new investment or improved maintenance.
Other modes of transportation

One immediate re-structuring response of firms (and consumers) to improved road transportation would be to
substitute away from other forms of transportation, rail transport being the most obvious example. This will
further reduce the costs (or equivalently increase productivity) of firms dependent upon land-based trans-
portation. There is also the possibility that improved road services may cause substitution between different
forms of road transportation, for example, a greater use of heavier vehicles, which may further reduce costs.
This is, however, a very narrow aspect of the relationship between different modes of transportation and
improved road infrastructure. If the effect of road investment is to improve the network which links all trans-
portation services (land, air and sea) together then there may in fact be an offsetting increase in the use of other
transportation modes. This involves viewing road-based transportation not as a single means of transport ser-
vices but as a single component of a larger transportation network.
Cox (1994) discusses the extent to which these concerns about the overall transportation network are addressed
in the United States and Australia. While it is clearly recognised as being of some importance by policy
makers, what is not clear is whether the existing structure of decisionmaking in Australia, with its State-based
orientation, is suited to addressing these concerns. Furthermore, it is unlikely that these effects will be fully
measured by traditional cost-benefit studies.
Improvements in transportation networks

Road infrastructure investment can lead to substantial improvements in the transportation network used by
firms both to avail themselves of inputs and to market and sell their final goods. Substantial improvements in
transportation networks can give rise to a number of responses by firms which further enhance their
productivity.
The first of these are innovations in distribution methods. Aschauer (1993) reproduces a set of results of case
studies from the United States concerning the link between transportation and productivity (these studies were
undertaken by the Federal Highways Administration in the United States). He presents these results arguing that
they demonstrate the extent to which
"...infrastructure investment works to improve the productive atmosphere... thereby allowing firms
to capture economies of scale and achieve productivity gains (p. 12).
Many of these case studies identify the benefits to firms of improved transportation networks on the means of
distributing its products (as a supplier) or receiving intermediate inputs to production. An obvious example is
the need for a well-maintained reliable transportation network for operating just-in-time deliveries.
The whole issue of reliability of the transportation network, which is crucial in consideration such as these, is
addressed in Quarmby (1989). He makes explicit, by considering the distribution methods of a major United
Kingdom food retailer, the dependence of new and more productive distribution methods on a reliable
transportation network. He states:

NATIONAL ECONOMY
'A key feature of any improvement in the road network is what it does for the predictability of
journey times"(p. 87).
He further notes that current cost benefit practices are unlikely to fully account for the beneficial structural
changes in distribution logistics.
A related effect of improved transportation networks is improved access to input supply, in particular labour
supply. This improves the ability of the firm to hire the most appropriate staff and gives staff more flexibility
in their work arrangements both of which may lead to increased labour productivity and hence lower costs. This
effect also features in the case studies described by Aschauer (1993).
In both cases, improved distribution logistics or access to labour supply, the relevant concern may not be the
road transportation network in isolation but an intermodal system. For example, distribution logistics may
depend upon reliable road infrastructure to allow for connections with rail or port services. Improvements in
one component of the intermodal network, such as road infrastructure, may lower some costs but if other
components remain at previous levels of service then substantial changes to the distributional structure may not
eventuate thus preventing further cost reductions from improved distribution technologies (for example, Just-
In-Time) to be realised. As before, a proper assessment of new road investment should include its relationship
with other service modes.
Investment
All of the above can in principle take place without necessarily expanding a firm's physical capacity of produc-
tion. In some cases, however, an expansion of transportation services may lead to a desire by firms to expand
investment in physical capital and increase employment. We now consider the various incentives faced by firms
as the road transportation services rise.
To the extent that the increase in infrastructure investment raises the productivity of the firm's existing plant
and equipment it will tend to raise the rate of return on private capital. Since the services of the additional infra-
structure are generally supplied at zero direct costs, there would seem to be a strong incentive for the firm to
immediately increase the utilisation rate of its existing private capital and eventually expand its productive
capacity by an expansion of investment in new plant and equipment and an expansion of employment.
For example, the development of an improved transportation link increases the return to investment in heavier
freight vehicles for a transportation firm. If this increase in return is sufficiently high then the firm may increase
its investment in these vehicles. (This is based upon the discussion in Quarmby 1989.)
In the above analysis we are implicitly assuming that the roads capital is complementary to the private capital
used by the firm. If the public infrastructure were to substitute for existing private capital then there would be
no incentive for the firm to undertake new investment, in fact the firm may seek to actually replace its (costly)
private capital with the (unpriced) public capital. Here we see a case of firms directly substituting its private
capital for public capital. For example, improvements in road quality can reduce vehicle maintenance costs and
lead firms to defer replacement of vehicles.
There is a further effect which may offset the increase in private investment. Although a private firm will not
necessarily pay a direct price for the services of roads infrastructure, any increase in public spending on roads
involves a resource (or opportunity) cost. The firm will clearly bear some of this cost, although not
necessarily in proportion to the benefits it receives.

How might these costs arise for an individual firm? Three possible channels are:
1 Higher interest rates due to the demands of the public sector on the pool of savings available. This effect is
mitigated by the degree of access to foreign capital markets.
2 Higher prices for capital goods and services. If the public sector demand for capital goods raises the domes-
tic prices of these goods, then this will reduce the demand of the private sector. For example, an expansion
of road investment increases the demand for and raises the price of construction materials, labour, and
machinery (and possibly land).
3 Higher current or future taxes including user pay fees for new infrastructure developments.
In its investment response to an increase in spending on transportation infrastructure a firm will tend to
balance these various incentives.

4. MACR ECONO RESPONSES IN .IC
THE AUSTRALIAN ECONOMY
The previous section identified the responses of firms to an increase in road transportation services. These firm
level responses have implications for the macroeconomy which we now consider. These are organised in the
same manner as in the previous section: shortrun responses and medium to long term responses.
4.1 Short run response to cost reductions

An improvement in road transportation services reduces the costs of production for firms which rely on these
services. This has the potential to benefit both producers and consumers, the distribution of these benefits
throughout the economy depending upon the extent to which these cost reductions are passed through to
consumers.
The distribution of gains in situations such as these may be of considerable interest to policy makers and will
depend, by and large, on the competitive structure of the market. Certainly there is little political justification
for improved transportation services, which come at the expense of the entire electorate, if the benefits accrue
primarily to firms and their shareholders. Such a situation suggests that new transportation services may be
better operated on a user-pay principle.
The extent of pass through, however, may have further implications beyond the distribution of productivity
gains - it may also have implications for the structure of the Australian economy, in particular the tradable
goods sector. If reduced costs arising from improved transportation services are passed through then this
improves the competitiveness of Australian tradable goods sector (at least those dependent in a significant way
on road transportation) and may assist in its development. This involves more competitive pricing of Australian
exports as well as of Australian import-competing commodities.
Apart from the structural change of the Australian economy which may arise from an improvement in
productive infrastructure, there may be beneficial externalities for economic growth from a further developed
export sector. A commonly cited example of these externalities are the economies of scale available from
larger markets. A further example is the greater possibility for technology transfer which arises as the export
sector of an economy develops.
For both these reasons, the distributional issues and the structural effects, the extent to which cost reductions
are passed through to prices may be of considerable importance to policy makers. However, there seems to be
relatively little existing work which directly assesses this passthrough effect and we are unable to provide any
specific predictions.
It may be possible, however, to obtain predictions, depending upon the market structure, in the following
manner. If the market structure is reasonably viewed as being competitive, then a general equilibrium model
such as ORANI may be a suitable means of investigating these issues. Allen Consulting (1993) has in fact used
this model to investigate the productivity gains throughout the economy of reduce costs arising from road infra-
structure investment; the pass-through effects would be implicit in their simulations. If, however, there are
concerns about the conclusions from an empirical general equilibrium model which may not adequately model
the non-competitive behaviour of industries then it might be necessary to examine the price effects using dif-
ferent statistical techniques. We know of no such work but offer the following suggestion. Most non-
competitive models of firm behaviour will have a simple mark-up of price over marginal cost. Using this as a
basic framework and panel data for a set of industries, one should in principle be able to estimate the
pass-through effect of a change in infrastructure services. The basic model is:

p(i,t) = (1 + mu(i)) mc(i,t)
mc(i,t) = f(t,w(i,t), change in public capital services)
where p(i,t), mu(i), w(i,t) and mc(i,t) are industry price, industry mark-up, industry factor prices and marginal
cost respectively.
4.2 Medium and longer term responses

Other modes of transportation
As indicated previously, an increase in road transportation may have a detrimental effect on other transporta-
tion services, in particular rail transportation. In terms of the aggregate economy what is of some issue is the
policy response that this elicits. This will depend very much on how policymakers view the transportation
services of the economy as a whole-If policy makers view these two modes of transportation purely as com-
peting means of services so that investment expenditures are not designed to develop the entire transporta-
tion network, then there may be considerable resistance to road investment expenditure. This resistance may
come from groups with a direct or indirect stake in the transportation sectors which suffer at the expense of
the development of road services. However, if investment expenditures are made
ith the focus on the entire transportation network, including all modes of transportation, then there may be
less political resistance to expenditure and, more importantly, the expenditure is likely to be more effective.
Improvements in Transportation Networks

An improvement in the transportation network is likely to lead to further productivity gains as firms are able
to reorganise to take advantage of these services. This includes improved distribution and production tech-
nology which is dependent upon reliable transportation services as well as improved access to labour supply.
The aggregate effect of the productivity gains due to improved transportation network services are very diffi-
cult to measure directly and, as noted above, are unlikely to be captured in standard cost benefit studies.
These effects then justify the use of aggregate macroeconometric studies and may explain in part the perva-
sive effects road investment has throughout the economy, witnessed through the high returns to road invest-
ment in macroeconometric studies such as the results reported in the following section, or the conclusions
from the Allen Group (1993) ORANI simulations.
Further, as with the discussion of the direct cost reduction effects previously, these indirect productivity gains
may further enhance the tradables sector of the Australian economy with the subsequent effects outlined above.
Finally, it may be argued that improved networks will lead to the development of trade not only externally but
within Australia as well. This arises as costs of transportation are reduced allowing firms to specialise and reap
economies of scale. This increases the productivity of existing producers and may give rise to new productive
opportunities, both of which should increase the productive capacity of the economy.
These benefits of improved network are very difficult to identify and quantify and seemingly justify aggregate
macroeconometric studies. However, in his discussion of these network effects, Hulten (1993) notes that
macroeconometric studies are likely to provide biased or incomplete information concerning the contribution
of public capital to private production. This arises because the macroeconometric studies treat all public capi-
tal as equivalent; however, in terms of a network, different investment projects of the same value can have
significantly different effects on output. This suggests that considerable care must be taken when evaluating
the effect investment projects will have on the network structure. Relying on historical effects may be
nappropriate because of the very different effects existing projects may have on the network relative to
previous expenditures.

NATIONAL ECONOMY
Investment
At the firm level, the effect of increased public investment depended upon the balance of two effects: the
increased productivity of private capital and labour from improved infrastructure services and the increased
costs of investment expenditure due to increased use of existing resources by the public sector.
The net effect across firms will determine the aggregate response of private investment to increases in public
investment expenditure. Two studies for the United States have considered this relationship, Aschauer (1989b)
and Erenburg and Wohar (1995).
Aschauer (1989b) presents some empirical evidence on this issue for the United States using a simple dynamic
model. He looks at the effect of aggregate public investment on the level of private investment and also on the
rate of return to private capital. He finds that (other things constant) an increase in non-military public invest-
ment spending crowds out private investment spending almost one-for-one over the course of a year. The exact
mechanism by which this crowding out occurs cannot be identified from Aschauer's model but the reasons out-
lined above are possible explanations.
The crowding out result, however, is a short run phenomenon of his model. He further examines the
dependence of the return to private capital on public infrastructure services. His results suggest that the rate
of return to private capital is positively related to the stock of public capital. Thus an increase in public
investment spending raises the rate of return to existing private capital, which stimulates additional investment
by firms in the private sector. This is a longer run phenomenon.
Aschauer simulates the effect of a 1% rise in the ratio of non-military public investment to the stock of private
capital over the period 1970 to 1986. He finds an initial decline in the ratio of private investment to the stock
of private capital (relative to the historical outcome) with a subsequent (1974 onwards) rise which exceeds its
historical level. This suggests that the balance of the crowding out and the productivity enhancing effects of
an increase in public investment is positive.
While the actual figures from Aschauer's study cannot be directly translated to the Australian context, evidence
from Otto and Voss (1993,1994) suggests that the stock of public capital (and in particular roads capital) does
have a significant positive effect on the marginal product of private capital. Thus it seems reasonable to
speculate that similar results for Australia would be obtained.
Additional results for the United States are provided in Erenburg and Wohar (1995). They use a bivariate
vector autoregression which imposes less structure than Aschauer's model. The find that public investment has
a significant effect on private investment with an insignificant cumulative effect. The pattern of effects
however is consistent with Aschauer's results even if the balance of the effects differs: the initial response is
one of crowding out with subsequent positive effects on private investment. There are additional effects from
public investment which arise within an intertemporal general equilibrium model of fiscal policy which serve to
strengthen the investment effect. Baxter and King (1993) demonstrate that a permanent increase in public
investment expenditure, by raising the tax burden in steady State, permanently raises labour supply. This raises
the marginal product of private capital in steady State and so must give rise to an increase in steady State levels
of private investment. How important this is empirically is difficult to say, the more so because the predictions
concern steady State.

Two final comments on these issues are required. First, what is of interest here is the net increase
in investment for the economy as a whole. In certain instances, the development of infrastructure
investment will cause an increase in investment at the expense of other sectors so that no net gain
is recorded. Second, whether a net increase in investment is desirable is not dear. It depends
upon whether the aggregate level of investment in the economy is consistent with some social
optimum. The dominant empirical role for investment (of all types) in economic growth has led
some analysts to overlook that investment involves foregone consumption; reconciling the balance
between these two demands on current resources is not an easy task.

NATIONAL ECONOMY
5. MODELLED EXAMPLE
In this section we present some evidence for Australia on the impact of road capital on private sector produc-
tivity. The methodology used is that which was popularised by Aschauer (1989a) and is outlined in Box 1.
1.5.1 A productivity example for Australian road capital

Following Attaran and Auclair (1990) we estimate a variant of the basic model presented in Box 1.
y-k=ao+att+a3cu+a4(n-k)+ag(r-k)+a6(nr-k)+e
where
y = private sector output

k = private sector capital (gross)
n = private sector labour
r = stock of roads capital (gross)
nr = general government capital less roads capital (gross)
cu = cyclical fluctuations (unfilled vacancies reported by CES)
t = linear time trend
e = disturbance term
This model can be estimated using annual data for the period 1966-67 to 1993-94. The exact method of con-
structing these variables is given in Otto and Voss (1994).
Estimation of the model by OLS gives the following results.
y-k=-6.658-0.004t+0.000cu+0.500(n-k)+0.336(x-k)+0.064(nr-k)
where the t-statistics are: 2.54,1.31,1.07,3.46,0.79, and 0.25. The R-squared is 0.960 and the Durbin-Watson sta-
tistic is 1.886.
One problem with estimating the above model is that the roads and non-road general government capital vari-
ables are highly co-linear, thus when both are included in the model neither is individually significant in a sta-
tistical sense. If one excludes (nr-k) on the basis that it has the lowest t-statistic, the coefficient on (r-k) becomes
0.429, with a t-statistic of 2.24, whereas if (r-k) is omitted the estimated coefficient on (nr-k) is 0.243, with a t-
statistic of 2.08. These results suggest that both roads and non-roads capital have a significant effect on pri-
vate sector productivity.
One solution to the co-linearity problem is to impose the restriction that the elasticity coefficients on (r-k) and
(nr-k) are equal. This restriction is not rejected by the data and gives a plausible elasticity estimate for both types
of public capital of 0.164, with a t-statistic of 2.21. Estimation under the equality restriction gives the follow-
ing results:
y-k=-6.597-0.004t+0.000cu+0.514(n-k)+0.164(r-k)+0.164(nr-k)
where the t-statistics are: 2.95, 1.31, 1.41, 3.73, 2.21, and 2.21. The R-squared is 0.960 and the Durbin-Watson
statistic is 1.891.

Since we assume constant returns to scale across all inputs the above results imply a private capital elasticity of
0.158, which is approximately the same as that obtained by Attaran and Auclair (1990) in their study for the
United States.
The above results have the following implications:

Over the period 1966-67 to 1993-94, the stock of roads capital has been an important influence on the pri-
vate sector capital-productivity.
All else equal, a 10% increase in the stock of roads capital will raise private sector output in the current year
by about 1.6%.
The rate of return to new investment in roads can be calculated by computing the marginal product for roads
capital. This is given as 0.164(Y/R.
In 1993-94 our measure of private output was 179.8 billion dollars while the end-year roads stock was 73.8
billion dollars (both are gross measures in constant 1989-90 prices). Thus the marginal product of a one
unit addition to the roads capital stock is 0.40, which implies a rate of return of 40% in the first year.
Sensitivity of these results

We can think about the sensitivity of the above results in a number of ways.
First the estimated elasticity of roads capital has a standard error of 0.074. Thus a 95% confidence interval
around our point estimate is given by the range [0.019,0.309].
Using the figures above, this gives a range for the marginal product of road capital of [0.046,0.753], that is
from 4.6% to 75.3%.
Alternatively, we can compare the estimates we obtain with other studies of road infrastructure in the macro-
economy. As noted above, the point estimates from the regression are similar to Attaran and Auclair (1990).
These numbers are also broadly consistent with another study of the United States highway infrastructure, Finn
(1993). She uses quite different estimation techniques which are based upon the firm's optimisation problem
and, further, she allows for congestion of highway infrastructure within her model. Her point estimate of the
private output elasticity of government highway capital is 0.158; the range of implied rates of return are
[0.008,1.736], that is from 0.8 of 1% to 173%.

NATIONAL ECONOMY
6. SUMMARY
The principal conclusions of the report may be summarised as follows:
The roads stock represents an important component of Australia's public infrastructure. There is a signifi-
cant macroeconomic literature suggesting that such core public infrastructure can have quantitatively impor-
tant effects on: aggregate private sector productivity, investment and long-run economic growth.
These macreconomic benefits may not be adequately measured in traditional cost-benefit studies. This may
explain the relatively higher rates of return to infrastructure investment in macroeconomic productivity stud-
ies than are typically obtained from cost benefit studies.
The macroeconomic studies are not without their problems. In particular, it is difficult to identify the direc-
tion of causality between aggregate production and infrastructure in aggregate data.
A principal effect of improved infrastructure investment is reduced operating costs. However, it is unclear as
to what extent these reduced costs may be passed through to consumers. This will depend upon the degree
of competition within the relevant industries. A possible implication of reduced costs may be improved
international competitiveness.
Additional effects of improved infrastructure may include improved distribution techniques (lower costs
through adopting new distribution technologies), improved economic growth due to network effects, and
increased private sector investment due to increased returns.
Results from an empirical modelling exercise for Australia suggest that the rate of return to additional invest-
ment in road capital may be quite high, of the order of 40%, although the standard error (and consequent-
ly the uncertainty surrounding it) is quite high.

END NOTES
Monetary policy is increasingly being directed at keeping inflation within a certain target range, for example, in Australia the
current target is to keep the underlying inflation rate at less than 2 to 3% per year. It seems likely that the Coalition gov-
ernment will not reverse this policy and may move further in this direction by changing the Reserve Bank Act to give the
RBA a single goal of targeting inflation.
There is an additional complication when considering the aggregate demand effects of public investment. Since public
investment is likely to have a supply side effect, increasing productivity; it would be necessary to have this effect modelled
as well. This would likely require substantial development of any existing macroeconometric model.
This issue need not arise in cost-benefit studies directly as the considerations of the gains to producers, via reduced costs,
is equivalent to measuring social gains, distributional issues aside. Diewert (1986) provides a complete theoretical treatment
of measuring the benefits to infrastructure investment
Note that a small number of existing firms does not guarantee non-competitive behaviour. If new firms can enter with lit-
tle cost then this may be sufficient to induce competitive behaviour by existing firms, in this case the pass through of
reduced costs. This is the theory of contestable markets, see Baumol, Panzar and Willig (1982).

REFERENCES
Allen Consulting (1993), Land Transport Infrastructurr. Maximising the Contribution to Economic Growth, report for the
Australian Automobile Association.
Aschauer, DA (1989a), "Is Public Capital Expenditure Productive?", Journal of Monetary Economics 23, 177-200.
Aschauer, DA (1989b), "Does Public Capital Crowd Out Private Capital", Journal of Monetary Economics 24, 171-188.
Aschauer, DA (1993), Public Capital, Productivity, and Macroeconomic Performance: a Literature Review, report pre-
pared for Apogee Research Incorporated.
Attaran, K and P Auclair (1990), "Highway Stock and Private Sector Productivity", Transportation Research Record 1274,
119-124.
Baumol, W Panzar, J and R Willig (1982), Contestable Markets and the Theory of Industry Structure, New York, Harcourt
Brace Jovanovich.
Baxter, M and R King (1993), "Fiscal Policy in General Equilibrium", American Economic Review 83, 315-334.
Berndt, ER an d B Hansson (1991), Measuring the Contribution of Public Infrastructure Capital in Sweden, NBER Working
Paper 3842.
Boadway, RW and DE Wildasin (1984), Public Sector Economics, Toronto, Little, Brown and Company.
Canning, D and M Fay (1993), The Effect of Transportation Networks on Economic Growth, Columbia University
Department of Economics Discussion Paper.
Cox, JB (1994), Refocusing Road Reform, report for the Business Council of Australia.
Diewert, E (1986), The Measurement of the Economic Benefits of Infrastructure Services, Springer-Verlag, Berlin.
Easterly, R and S Rebelo (1993), "Fiscal Policy and Economic Growth",Journal of Monetary Economics 32, 417-458.
Economic and Planning Advisory Council (EPAC 1988), Economic Infrastructure in Australia, Council Paper 33,
Canberra.
Erenburg, SJ and ME Wohar (1995), "Public and Private Investment Are There Causal Linkages", Journal of
Macroeconomics 17, 1-30.
Finn, M (1993), "Is All Government Capital Productive?", EconomicQuarterly 79, 53-80.
Gramlich, EM (1994), "Infrastructure Investment A Review Essay", Journal of Economic literature 32, 1176-1196.
Holtz-Eakin, D (1994)," Public Sector Capital and the Productivity Puzzle",(February) The Review of Economics and
Statistics, 13-21.
Hulten, CR (1993), Public Capital and Economic Growth: the Micro-Macro Linkages, report prepared for Apogee Research
Incorporated.
Krugman, P (1986), Pridng to Market lVben the Exchange Rate Changes, National Bureau of Economic Research
Discussion Paper 1926.
Mankiw, G (1985), "Small Menu Costs and Large Business Cycles: A Macroeconomic Model of Monopoly", Quarterly
Journal of Economies 50, 529-37.
Murphy, CW (1988), "An Overview of the Murphy Model", Australian Economic Papery 27, 175-199.
On, A Edey, M and M Kennedy (1995), "The Determinants of Real Long-Term Interest Rates: 17 Country Pooled-
Time Series Evidence", OECD Working Papers 155.
Otto, G and G Voss (1993), Road Capital and Private Production in Australia, paper commissioned by the Allen Consulting
Group.

Otto, G and G Voss (1994), "Public Capital and Private Sector Productivity", The Economic Record 70, 121-132.
Otto, G and G Voss (1995), "Public Capital and Private Sector Productivity": A Review of the Empirical Evidence,
The Economic and Labour Relations Review 6, 52-70.
Otto, G and G Voss (1996a), "Public Capital and Private Production in Australia", Southern Economic Journa!
Otto, G and G Voss (1 996b), Is Public Capital Provision Efficient?, University of New South Wales School of Economics
Discussion Paper 96/10.
Quarmby, DA (1989), "Developments in the Retail Market and Their Effects on Freight Distribution," Journal of
Transportation Economics and Policy 23, 71-87.
Takahashi, H and A Maki (1992), Japans Public Infrastructure Capital Stock. an Empirical Study of Returns to Scale, paper pre-
sented to the 1992 Australasian Meeting of the Econometric Society.
Voss, G (1996a), The Stability of the Long-run Relationship Between Public Capital and Private Production, mimeo, University
of New South Wales.
Voss, G (1996b), Public Investment in Canada, University of New South Wales School of Economics Discussion Paper
96/5.

11
ROADS
IN THE
RU
CONTEXT
MR IAN GORDON
(TRANSPORT CONSULTANT)
Acknowledgements
Particular thanks are due to Doug Kneebone (Consultant Coordinator) and Alan Collins (Program Assistant)
for their help and comments on the preparation of the report.
The assistance of the liaison officers in road authorities and trasnport organisations in providing a substantia
volume of reports, documents and data is gratefully acknowledged.
OUTLINE
1. INTRODUCTION 163
1.1 Background 163
1.2 How the information is organised 163

1.3 Rural and remote Australia 164
1.4 Roads serving rural and remote Australia 165
2. TRANSPORT SYSTEMS SERVING RURAL AUSTRALIA 168

2.1 Services provided 168
2.2 Transport costs in rural industry 173
2.3 Changes affecting rural transport 174
2.4 Conclusions and implications 178
3. CUSTOMER EXPECTATIONS AND CONCERNS 180

3.1 General 180
3.2 Expectations of the road system 180
3.3 Needs and concerns 182
3.4 Summary 184
4. CURRENT ROAD PERFORMANCE AND MANAGEMENT 185

4.1 Quality of the road system 185
4.2 The safety record of rural roads 194
4.3 Some economic impacts of road quality on rural industry 194
4.4 Roads and the environment 195
4.5 Identified problems and better practice 196
5. INTEGRATING ROADS WITH OTHER TRANSPORT MODES 200

5.1 The context of transport integration 200
5.2 The requirements 202
5.3 Delivering improved outcomes 203
6. INTEGRATION OF ROADS WITH REGIONAL DEVELOPMENT 204

6.1 Austroads policy 204
6.2 Regional development in Australia 204

6.3 Roads as an instrument of regional development 206

7. INSTITUTIONAL ARRANGEMENT - INTEGRATING ROADS 208
7.1 General funding arrangements 208
7.2 Roads responsibilities and funding 208
7.3 Interaction and coordination 210
7.4 Key issues for better practice 212
7.5 Better practice in rural roads management 214
8. FINDINGS, CONCLUSIONS AND RECOMMENDATIONS 215

8.1 Findings 215
8.2 Conclusions and recommendations 217
REFERENCES 220
APPENDIX 223

L INTRODUCTION
INTRODUCTION
I.1 Background
Roads in the Rural Context, examines the road system from the rural user perspective; that of the residents,
businesses and enterprises in rural/remote Australia, the transport providers which serve regional economic and
social needs and the general users of the rural road system.
Previous major overviews of the Australian road system (NAASRA 1984, TAROR 1987) concentrated atten-
tion on the engineering and economic aspects of road provision and maintenance, and the funding requirements
to meet assessed deficiencies in the system.
Roads are the major arteries through which rural and remote Australia delivers its products to market and
receives the commodities, goods and services required for economic and social well-being. Roads give access
to the variety of public and private services which provide for the health, education, job training, welfare, enter-
tainment and cultural needs of the rural community. Roads provide for the mobility by which isolation and
loneliness can be reduced through interaction with other people.
Roads are essential in the life of the rural community. A reasonable objective would be to achieve, through best
practice, a road system which contributes to its economic and social functioning. To do that requires that the
views and needs of the user are an integral component of the planning and management of the system.
Key questions which confront road and transport authorities and local government in seeking to meet this
objective are:
What are the needs and perceptions of rural road users?
Do present policies, strategies and practices in road provision and management meet user needs?
What changes can be made to provide a more effective service, which minimises the adverse impacts of
roads and maximises overall benefits, within the limits of funding availability?
1.2 How the information is organised

This section of the report is divided into seven chapters.
Chapter 1 gives a brief description of rural and remote Australia and of the roads servicing the rural com-
munity
Chapter 2 describes the use made of road, rail, air and sea in moving freight and passengers. This chapter
also reviews changes in transport regulation and technology which have affected the movement of toad
freight.
Chapter 3 examines the views of rural and remote people and other users of the road system, and identifies
major concerns.
Chapter 4 examines the performance of the categories of roads in meeting major concerns. It suggest
changes to improve the quality of service.
The final three chapters are concerned with organisational and other factors which affect the delivery of better
service to rural industry and residents.
TOWARDS SETTER PRACTICE 163

Chapter 5 - The Integration of Roads with other Transport modes -- reviews the factors which have
affected interaction between the transport modes serving the freight needs of rural industries.
Chapter 6 ----- Roads in the Regional Economy - reviews expectations of future demand for Australia's
major rural commodities. It examines available information on the importance of roads in assisting region-
al growth.
Chapter 7 is concerned with the institutional matters which affect how well rural and remote people are
served by the road system.
Chapter 8 summarises the conclusions and recommendations arising from the report.
1.3 Rural and Remote Australia

1.3.1 Land area and use
The rural and remote areas of Australia are shown on Figure 1.1. The boundaries are the same as those in the
1984 National Association of State Road Authorities (now Austroads) Roads Study, to allow comparisons to be
made where relevant. Rural areas are defined as those lying outside towns of population greater than 1,000, but
within local government areas where the population density is greater than 0.3 person/km2. Remote areas have
population densities less than this figure. Whilst there has been some movement of population in the period
since 1984, it is unlikely to affect conclusions drawn from general comparisons.
The rural area of Australia is concentrated in two widely separated regions. One region covers the eastern and
south-eastern coastal area of Australia, including Tasmania. The other region comprises the south west region
of the continent centred on Perth. These areas cover the intensive agricultural regions of Australia.
The remote region, which contains some 79% of the area of Australia covers the northern tropical and central
and southern arid regions of the continent. A vast area is not serviced by public roads. This covers almost half
of Western Australia to the eastern border, the north-western third of South Australia, and a large part of the
western area of the Northern Territory. Other large and mainly undeveloped areas occur in the far north of
Western Australia, the Arnhemland region of the Northern Territory and the Simpson Desert area.
Land under use is mainly grazing - beef and sheep production - but there are significant areas of tourism
development and potential, and large mineral and energy resources. Considerable areas of land, particularly in
Queensland, the Northern Territory and South Australia, are owned by or under the control of Aboriginal
Community Councils. Roads provide the only means of land transport over most of the remote region.
Figure 1.1 Rural and remote Australia

THE RURAL. CONTEXT
Approximately 467 million hectares, about 61% of the total land surface of Australia, is used for agricultural
activities. Grazing, on either native or improved pastures, is by far the dominant agricultural activity in terms
of area. By comparison, the area under cropping is only 17 million hectares, or 4% of the total agricultural
area. Despite its small land area, the value of cropping output is about the same as that for grazing (Hues,
Petersen et al 1993).
Mining and energy development has been instrumental in developing new infrastructure including town, ports
and railways, particularly in the north of Queensland, northern Western Australia and the Northern Territory.
The land area used for mining is minimal by comparison with agriculture, but exceeds agriculture in terms of
gross value of output and value of exports.
1.3.2 Population
There were 2,456,200 people living in rural areas(outside towns of 1,000 people or more) at the 1991 census.
This was some 14.6% of the Australian population. The number of rural residents increased slightly in the
10 years from 1981 to 1991. This growth was concentrated mainly in the coastal areas along the eastern
seaboard and to the north in the Cairns, Townsville, Rockhampton and Bundaberg regions. According to the
Australian Bureau of Statistics the changes in the population profiles in these areas indicate that retirement
migration and tourism played a significant role in their growth. Rural population declined in proportionate
terms to the State population in South Australia, Western Australian and Queensland. the Queensland situa-
tion is affected by the high level of migration from other States to Queensland urban areas in the period.
Since 1990 there has been further population loss in marginal farming areas.
1.4 Roads Serving Rural and Remote Australia

1.4.1 Components of the road system
Roads serving rural Australia extend well beyond the generally accepted classification of "rural roads". The
movement of goods within or between regions, and to and from urban areas utilises all components of the
non-urban road system. The national highway system and rural arterials are the main channels for inter-
regional movement and transport between the capital cities, major transport centres and their rural hinter-
lands. Because of the economic dominance of most capital cities in relation to the State, the arterial road sys-
tems generally form a distinctive pattern, focussing on the capital city and major ports. Local roads provide
the initial aggregation system for rural production and the final distribution system for goods and services for
rural needs. They also provide for the local day-to-day household, business, education, social and recreational
trips.
Most of the road system is outside of urban areas

The total length of the Australian road system is estimated between 801,000 km and 810,000 km, depending
on whether roads outside the control of Federal, State and local government are included. The non-urban
components of the system, are set out in the following table and illustrated in Figure 1.2. They comprise
over 80% of the total road length.

Table 1.1: Length of non-urban roads by functional classification - 1994
Road function type kms
National highway 19,300
Rural arterial 110,300
Rural local 587,600
Total rural 717,200
1.includes roads in the unincorporated areas, NSW, SA, but does not include aboriginal access roads (about 8,000 km) in
the NT, which require a permit to use.
Source: RTC Mass Limits Review
Roads in the table range from multi lane divided roads (including freeways) to single lane bladed tracks. Some
450,000 kilometres, 77% of the total length of the rural local road system, are unsealed. Most of these roads
are the responsibility of rural local government or are within the unincorporated areas of New South Wales,
South Australia and Northern Territory and maintained by the State/Territory road authorities.
Remote regions have restricted access

In the remote regions of Australia flat bladed tracks account for some 29% of the total road length (NAASRA
1984). This type of road and formed roads of poor quality are invariably closed for long periods in the wet sea-
son in northern areas. In and areas local roads are closed after infrequent rain. The national highway system
and some State arterials generally provide continuity of interstate and inter-regional movements in all season in
remote localities.
1.4.2 The uses and users of the rural road system

The Australian non-urban road system provides for three broad classes of travel needs:
transport within the rural regions.
transport between the cities.
° transport between the cities and rural regions.
Various studies show that:
local and regional traffic dominates interstate corridors.
national and State road networks are important to rural people.
types of freight, transport means, and roads used, vary from area to area.
key stakeholders of the rural road system are spread throughout the urban and non-urban communities.
Figure 1.2 State highways

THE RURAL CONTEX"T"
Local and regional traffic dominates interstate corridors

According to the Bureau of Transport and Communications Economics (BTCE 1994) road traffic on the major
interstate corridors is dominated by local and regional traffic. Demand projections suggest that this will con-
tinue. Adelaide to Perth and National Highway links to Darwin are the only links with a significant percentage
of intercapital city movement.
The national highway system, therefore, is important to the rural sector. In the remoter regions of Australia the
national system provides the main means of movement between settlements, towns and regional centres.
However, the State rural arterial road networks are the main means of serving rural producers and residents in
the more densely settled areas in Australia.
Types of freight transport

The types of freight vary by region. In sparsely settled areas the main movements are cattle, sheep, wool and
mining outputs, all of which may travel over long distances.
In the more densely settled areas outward movements may include sugar, grains, cotton, timber, horticultural
and dairy products, and quarry materials. Most of this movement is local and short haul. The commodities car-
ried dictate the type of road transport to be used. That usually means different needs for outputs and inputs.
Local road networks and local arterial systems provide the means for distributing freight to and from rural prop-
erties and for accessing the business, educational, health, recreational and cultural facilities in the local town or
regional centres.
Stakeholders are spread throughout the urban and non-urban communities

The range of uses of the rural and remote area road systems means that the needs and perceptions of the rural
road user extends beyond those of the people who live, work and do business in rural areas.
It is also necessary to consider the road systems from the perspective of.
organisations and businesses that buy or transport rural outputs.
road-based public transport services.
road-based transport of materials, goods and services to rural and remote regions.
urban travellers and tourists.

2. TRANSPORT SYSTEMS SERVING
RURAL AUSTRALIA
2.1 Services Provided
2.1.1 Roads
Roads have a pervasive role, and impact directly on day-today life. Road conditions and performance, and the
effects on accessibility, movement and the environment, are of considerable interest and debate in the Australian
community. By comparison, the functioning of other transport modes - rail, air and sea - whilst important
economically and socially, do not have the same transparency. Their impacts on day-to-day life are, generally,
less observable.
The road system provides the primary network for travel by the Australian community, and the means of move-
ment of most non-bulk freight. By comparison with other transport, its functions are both intensive and exten-
sive. Roads provide the means of access and movement at the individual and local level, as well as transport
across the land mass of Australia. Roads also provide the principal feeder and distributive function for other
modes of transport - for example, the movement of passengers to and from airports, and the aggregation of
grain for bulk movement by rail. These intermodal functions and the need to integrate roads with the other
transport modes are considered later.
The freight task is mainly within State boundaries

The current performance of all modes of transport in the non-urban movement of freight and passengers is
shown in Table 2.1 and illustrated in Figures 2.1 and 2.2. The freight movements in the table include bulk and
non bulk transport of goods intraState and interstate. The growth of non-urban road freight transport has aver-
aged 6.6% per annum since 1971-72, well in excess of rail (3.5%).
The intraState land transport of freight, outside of major urban centres, is substantially higher than interstate
movement, even when private rail movement of bulk commodities is excluded.
IntraState movements by road accounted for 33 billion tonne-kilometres, some 53% of the total non-urban road
task. For government railways, movement of intraState freight was some 44 billion tonne kilometres, 85% of
the total rail task. Taken together the intraState movement of freight was approximately 67% of all non-urban
land freight movement in 1991 (see Figure 2.3).
The expression of the transport task in tonne-kilometres (tonnage carried multiplied by distance) disguises the
difference in total tonnages moved by the various modes. Road transport movements, with the exception of
interstate haulage, are generally of a shorter distance than rail, which in turn are shorter than sea transport
movements.
Table 2.2 sets out the task performed byroad, rail and sea in terms of tonnes carried by each mode. The fig-
ures do not include movement of freight by private railways. The tonnage transported includes urban move-
ment of freight and the figures in Table 2.2, therefore, are not directly comparable with Table 2.1.
It is clear that road transport carries the major tonnage of freight within urban areas, intrastate and interstate.
The dominance of freight movements which remain within State boundaries is evident. Less than 10% of
freight is moved interstate and over 40% of all freight moved is within capital cities and nearby areas.
Road passenger movements

Non-urban passenger movement in 1991 by all transport modes, in passenger kilometres, is set out in Table 2.1
and illustrated in Figure 2.2. Travel by road accounts for nearly 82% of all passenger movements. The use of
cars for non-urban travel has declined from a high of 72% of all passenger movements in 1976 to 61% in 1991.
Passenger movement by bus has increased nearly fourfold in the same period, with significant growth com-
mencing in the mid 1980s. The figures for 1991 show that bus movements were 13.9% of total passenger kilo-
metres, and of the same order as air travel.

THE RURAL, CONTEXT
Figure 2.1 Freight transport non-urban, 1991
100
80
20
0
Road Sea Private Rail Government Rail
Figure 2.2 Passenger transport non-urban, 1991
Air Rail Other Bus Car

Figure 2.3 Land freight transport non-urban, 1991
Billion Tonne Kilometres
Intrastate Interstate
Road
2.1.2 Services provided by rail

The government-owned railway network in Australia extends from Cairns in North Queensland to Western
Australia, including a separate railway system serving Tasmania. Strategically, it can be viewed as consisting of
two components; the intercapital mainline system and a series of networks providing regional services in each
of the States.
The mainline system

The mainline system is shown in Figure 2.4. It extends along the eastern seaboard from Cairns to Brisbane,
through Sydney to Melbourne, and thence to Adelaide and Perth. The system also includes a direct link from
Sydney via Broken Hill to Adelaide, a spur from the East-West line at Tarcoola to Alice Springs in the Northern
Territory, and the Hobart to Burnie link in Tasmania. With completion of the rail standardisation project
between Adelaide and Melbourne in May 1995, the mainline system provides standard gauge connection from
Brisbane to Perth. Cairns to Brisbane, and Hobart to Burnie, are narrow gauge.
The National Rail Corporation (NR), incorporated as a private company in 1991, is responsible for the inter-
state movement of freight. State railways retain responsibility for intrastate services. Recently a new private rail
freight company has commenced operation on the national rail network using NR rolling stock. Interstate rail
freight is essentially non-bulk and accounts for less than 20% of interstate land freight movement.

THE RURAL CONTEXT
Table 2.1: Passenger and feight tansport task non-urban movement ® 1991
Road Rail Rail private sea' Air2 Total
Government
All freight
Tonne kilometres
61.15 52.0 37.0 97.0 0.15 247.3
(billions)
Percentage 24.8 21.0 15.0 39.2 - 100.0
Passengers Car Bus Other

Passenger 6.63'
kilometres
59.2 13.5 2.48 0.14 15.16 97.1
(billions)
Percentage 61.0 13.9 6.9 2.5 - 0.1 15.6 100.0
Includes Bass Strait ferries and coastal cruises.

Includes domestic airlines, commuter airlines and general aviation.
Other includes motorcycles and non-business use of LCVs and trucks.
Source: Cosgrove and Gargett
Table 2.2 - Domestic freight movement by transport mode ('000 tonnes) 1994-95
Type of movement Road Rail Sea'
% % %
Within capital2 centre regions 767701 45.1 38807 2.3
Between capital and major 196947 11.6 154229 9.0 -

regional centres
Regional within
State/Terntory 207657 12.2 165977 9.7 13548 0.8
InterState 85104 5.0 41489 2.5 31724 1.9
Total 1257409 73.8 400542 23.5 45272 2.7
Sea transport does not include export tonnage. Regional within State for sea transport refers to movements between ports
within the State/Territory.
2
Within capital centre regions, includes movement in the region surrounding the State capital.
Source: Adapted from BTCE Report - Building for the Job
Regional networks vary in coverage

The regional networks, within States, vary in intensity of coverage and penetration into the sparsely populated
areas. The Queensland narrow gauge railway system extends well inland as a result of mining requirements in
the central northern areas of the State. In New South Wales the inland coverage is less extensive, and, with the
exception of the line to Broken Hill, is confined to approximately one third of the State area nearest the coast.
The broad gauge railway system in Victoria covers all of the State with the exception of the mountainous region
in the north-east. The South Australian broad gauge system and the Western Australian narrow gauge system
are confined to small areas in those States. They generally cover the near coastal wheat farming and intensive
agricultural areas. The general regional coverage is shown on Figure 2.4.

The standardisation of the Melbourne-Adelaide mainline has resulted in several grain lines in the Western
Wimmera of Victoria and the "mallee" and south east regions of South Australia being severed from the
remainder of the broad gauge system. Decisions have been made to convert the affected lines to standard gauge
with the exception of the line serving Mt. Gambier in the south-east of South Australia.
As shown in Figure 2.3, government railways have a greater share than road freight in the intraState movement
of freight in tonne-kilometre terms, although the actual tonnage carried is less. IntraState freight is dominated
by the movement of bulk commodities; minerals, grains and other primary products from inland areas to coastal
city markets and export ports.
Passenger movement by rail is small

Only 2.5% of total non-urban passenger transport in 1991 was by rail. Non-urban passenger transport by rail
has not been significant in the last 20 years. Progressive deregulation of long distance passenger road transport
has occurred. Decisions by State railway system to withdraw unprofitable rail passenger services have resulted
in a general decline in the proportion of passenger traffic moved by rail. In many cases rail passenger services
have been replaced by bus services operated by the railways or by private enterprise.
Figure 2.4 Railways
2.1.3 General aviation

Air passenger transport in Australia grew by nearly 300% in the 20 year period 1971-91, and now performs more
than 15% of the total passenger transport task in passenger-kilometre terms. The distance weighted freight task
performed by aviation is less than 1% of the total (only 150,000 tonnes of commodities per annum). Freight
is generally confined to high value and urgent cargo. The commercial aviation industry comprises the mainline
domestic aviation services, commuter airlines and general aviation services.
From a rural and remote areas perspective, the services provided by commuter airlines, and the availability of
general aviation, are of most interest. Commuter airlines now operate regular services in all States, providing
connections between regional centres and the major airports.

THE RURAL CONTEXT
General aviation provides an indispensable service in the remoter regions. The mining and energy sector is a
significant user for exploration, crewing and provisioning of offshore oil and gas platforms. With less empha-
sis on developing mining towns to house employees and their families, air services are being used increasingly
for "ly-in/fly-out"mining operations. In the northern areas of Australia general aviation provides courier, mail
and general passenger and supply services. It is often the only means of access for cattle properties and small
communities during the height of the wet season.
2.1.4 Domestic shipping services

Coastal shipping services perform nearly 40% of the non-urban freight task (tonnes kilometres) but carry less
than 3% of the total tonnage moved. Bulk cargoes, which mainly use dedicated vessels, comprise 94% of total
cargo movement. Sea transport of domestic freight increased during the period 1971-81 and has declined sub-
sequently.
The movement of passengers by sea has remained constant in terms of passenger kilometres in the 20 year peri-
od 1971-91, but comprises less than 0.2% of total passenger kilometres. Domestic passenger traffic is confined,
principally, to the Bass Strait ferry services to Tasmania.
Services to rural and remote areas

Other than the Bass Strait services which perform a Statewide function, the major linkages serving rural and
remote areas of Australia are along the north-east and northern coastline, and until recently the north-west
coastline of Australia.
The movement of petroleum, diesel and aviation fuels to regional centres for further distribution by road or rail
is a significant service. For example, some 300 million litres of diesel fuel per annum is carried by sea to region-
al ports in North Queensland for use in mining operations (Queensland Transport). Cairns and Darwin are
both important centres for barges and small vessels serving remote communities in northern Australia. Services
from Cairns extend to the top of Cape York and to the Torres Strait Islands and Thursday Island. Barge ser-
vices from Darwin supply predominantly aboriginal communities. Services extend along the Arnhem land coast-
line and offshore islands as far as Groote Eylandt to the east, Melville and Bathurst Islands to the north and
communities in the Joseph Bonaparte Gulf to the west of Darwin.
Until recently West Australian State Ships (WASS) provided services to major regional and mining centres along
the north-west coast of Western Australia as far as Darwin. These services terminated in 1995.
2.2 Transport Costs in Rural Industry

Road transport costs are not a large component of rural industry costs
The National Transport Planning Taskforce report (December 1994) provides the most comprehensive analy-
sis of the significance of freight transport in the cost structure of various industry sectors in Australia.
The transport costs for industries which are predominantly rural or remote area activities are shown in Figure
2.5. These costs are the dollar value of freight services by mode used to directly and indirectly produce one
hundred dollars of industry output.
Road freight costs are within the range of 2 to 3% of output costs for most industries considered. The meat
and milk sectors and the non-metallic minerals industry have higher road transport and overall transport costs.
Road freight costs are between 76% and 93% of total freight costs with the exception of the petroleum and
coal industries, in which sea transport costs are significant. Although the majority of output from the major
mining activities is moved by rail, mining operations depend almost exclusively on the road system for their
inputs and access to services. Considerable variability around the average figures is likely for each industry as a
result of locational factors.

Industry developed estimates of road transport costs are scant, but quoted examples are generally considerably
higher than the above figures. Queensland Transport industry reviews indicate road transport costs are of the
order of 5-8% of cattle value for beef cattle from southern and central Queensland. Road transport costs vary
from 12-15% of total operating costs for base metal mining, including the road transport of concentrate. A
Victorian survey, Regional Industry Transport Needs and Demands, covered a range of industries in regional
centres. It provides industry estimates in which transport costs as a component of company sales averaged
around 7%.
2.3 Changes affecting Rural Transport

2.3.1 Microeconomic reform in the transport sector
The process of microeconomic reform, which was initiated in the later part of the 1980s, resulted in a range of
enquiries into the functioning of the Australian transport system. Subsequent changes have been made in
Federal, State and Territory legislation relating to the regulation of transport. Changes in industry and institu-
tional arrangements, and reforms in management and work practices have also resulted.
Domestic aviation, road and rail transport, the waterfront industry, and coastal shipping have been the subject
of public enquiry or industry examination. These investigations included:
The Royal Commission into Grain Storage, Handling and Transport ---- 1988.
The InterState Commission Waterfront Enquiries of 1987-89 leading to the establishment of the Waterfront
Industry Reform Authority in 1989.
The Industries Assistance Commission Coastal Shipping Report 1987.
Institutional investigation of rail transport leading to the formation of the National Rail Corporation (NR)
in 1991 and major investment in rail infrastructure.
The establishment of the National Road Transport Commission (NRTC) in 1992.
The effects of waterside industry reform, and changes to the single voyage permit system for coastal shipping
resulting from the IAC Enquiry, are outside the scope of this review Changes in the railway system organisa-
tion and practices will have consequential effects on rail and road competition for freight movement. The main
impacts for rural Australia flow from the Federal and State decisions related to the deregulation of the move-
ment of specific commodities previously directed to rail.
Figure 2.5 Freight Service Transport service costs by industry ($ of transportl$100 output)
Non metallic Petroleum & Mining Meat & Milk Forestry Agriculture
minerals coal
Road Sea
Rail Air

THE RURAL CONTEXT
Reform in grain transport and handling has been extensive

The Royal Commission into Grain Storage, Handling and Transport and the subsequent Wheat Marketing Act
of 1989 resulted in major changes in Australia's grain distribution system. The 1989 Act allowed the Australian
Wheat Board to operate in all grains as well as wheat. The Board can adopt the lowest cost methods of stor-
age, handling and transport across State borders including export grain.
IntraState movement of grains remains under State jurisdiction and operates in a deregulated environment with
the exception of Victoria and Queensland. Grain movement in Victoria is regulated to rail for distances in
excess of 60 kilometres from the point of consignment. This traffic is expected to be deregulated at the end
of 1995. In Queensland the distance limit is 40 kilometres, with some specific exemptions. According to Allen,
Hall et al (ABARE 1991) major changes had resulted by 1991 in infrastructure and practices arising out of the
recommendations of the Royal Commission. Changes included deregulation of the domestic wheat market, the
closure of a number of less efficient branch lines in the, New South Wales, Victorian and South Australian rail
systems, and the opening of new port facilities at Port Kembla and Fisherman Islands.
Recent changes in transport regulation

The National Road Transport Commission (NRTC) was established in 1992 to develop nationally consistent
arrangements for the registration, regulation and charging of all vehicles with a maximum loading of more than
4.5 tonnes and licensing drivers of heavy vehicles. Subsequently responsibilities were extended to light vehicle
construction standards and national road rules.
Heavy vehicle registration fees have been set by the NRTC based on the PAYGO system. The PAYGO method-
ology assigns current "road track" expenditure of construction and maintenance of the road system to differ-
ent types of vehicles on the basis of equivalent standard axles and vehicle kilometres travelled. The system is
designed to recover annual road outlays averaged over the previous three years. Results of studies show that
there has been an under-recovery of road expenditures in rural areas and an over-recovery of expenditures in
urban areas.
Reform proposals adopted by the Australian Transport Council (ATC) Ministerial Council in April 1995 rectify
many problems for heavy vehicle operators. Previously operators were required to comply with a range of dif-
fering State and Territory requirements relating to registration, load and dimension limits, and management of
heavy commercial vehicles. The reforms are consistent with Recommendations of the National Transport
Planning Taskforce:
"Governments should implement the NRTC recommendations for nationally consistent road
transport regulations and charges by July 1995."
The reforms approved by the ATC were progressively introduced during 1995 and 1996.
The essential features of the reforms are:
the introduction of common rules for vehicle mass and loading, common registration and roadworthiness
standards and management of defective vehicles.
improved productivity of B-doubles and other heavy vehicles.
reforms directed to driver and operational requirements, leading to safer transport operation.
a mass management accreditation program, national heavy vehicle registration.
charges and reduced mass permits.

2.3.2 Road transport technology
Heavy transport vehicles used for regional or intercity freight movement fall into three general categories:
1 Semi-trailers (6 axle articulated vehicles) which have an overall maximum length of 20 metres (truck and trail-
er) and a gross combination mass (GCM) of 42.5 tonnes.
2 Medium combination vehicles, which include standard B-doubles and truck-trailer combinations limited to a
maximum length of 23 metres and a GCM of 59 tonnes. The Australian Transport Council in April 1995
approved the use of heavy (tri-tn) B-doubles with a maximum length of 25 metres and a GCM of 62.5
tonnes.
3 Road trains which have a number of possible configurations, but most commonly fall into two classes. These
are double road trains with a maximum allowable length of 35 metres and a GCM of 79 tonnes, and triple
road trains with a maximum allowable length of 50 metres and a GCM of 115.5 tonnes.
Other vehicles built for special purposes are approved on a permit basis.
Prime movers, trailer and semitrailer units, individually or in combination, must comply with specific Australian
Design Rules and other operating requirements. Maximum road speed capabilities of the hauling units are lim-
ited by engine management systems, road speed governor or maximum geared road speed capability.
Operating efficiency increases with vehicle size

As illustrated in Table 2.3, there are significant benefits in the theoretical operating efficiency as the vehicle size
and gross vehicle mass increases. These efficiencies have a commensurate effect on the calculated operating
cost per tonne kilometre.

THE RURAL CONTEXT
Table 2.3 - Freight vehicle efficiency
Vehicle Configuration GVM Maximum Maximum Maximum Ratio to Operating

(tonnes) load speed payload semi trailer cost
(tonnes) (kph) tonne km Maximum cents per
per hour tonne tonne km
(1) (2) (3) (2) x (3) kilo per hour
Semi trailer 42.5 26.5 100 2650 1 7

(6 axle articulated)
B-double 59 38 100 3800 1.43 6
Heavy B-double 62.5 40.5 100 4050 1.52 6
Double road train 79 52.5 90 4725 1.80 5
Triple road train 115.5 78.5 80 6280 2.37 <5
By comparison with a stan dard semitrailer, the number of units required for a given freight task reduces con-
siderably, by about a third for B-doubles and one half or more for road trains. Road maintenance costs per
tonne of payload moved also reduces with vehicle size because of the better payload efficiency, provided that
the road standard is suitable.
Heavy vehicles are not a new innovation

Road trains have been a traditional form of transport in the Northern Territory and the remote areas of Western
Australia, South Australia, Queensland and New South Wales. Their genesis can be traced to the Government
Road Train, designed by the Overseas Mechanical Transport Directing Committee in Britain and imported by
the Australian Government in 1934, for use in the Northern Territory (Maddock 1988).
B-doubles were first licensed to operate under permit in 1984, but approval for their operation on an extended
network, particularly in the eastern States, was slow. Reasons included operational safety considerations (traffic
volume and mix, road geometry), the adequacy of older bridge structures, organisational rigidity, and in some
cases political concerns of the potential effect on State rail systems. By 1991 an extensive network had devel-
oped for B-doubles operating under both FIRS registration and State permits. Since then further route exten-
sions have occurred, principally in Victoria. Permits can be granted for B-double operation on suitable roads
off the approved routes. If the additional roads are local council roads, written approval from the council is
required before a permit is granted.
Heavy vehicles are not a large component of the transport fleet

Despite their significant productivity gains, B-doubles comprised only 2% of the national transport fleet in
1994. Road trains are 7% of the total fleet. Reasons advanced include the high capital investment required, the
specialised nature of the vehicle, uncertainty with regard to competitive pricing policies of State railways, and
the effects of the recession on new capital investment. A particular problem cited by operators is the difficul-
ty in obtaining terminal access within urban areas and constraints imposed on operating hours. These con-
straints are of an institutional and/or urban nature, and not related directly to the provision of the rural road
network for B-double operation.

The impacts of low use of B-doubles
There are two major effects of the lower than optimal use of B-doubles.
First, the higher than necessary transport costs imposed on the Australian community. For example ABARE
(1994) have estimated cost savings of the order of $8.9 million per annum in the movement of the eastern
States (excludes Western Australia) grain harvest with the optimal use of B-doubles on available (1991) routes.
This saving is equivalent to 62 cents per tonne harvested. Unconstrained access by B-doubles to the total road
network would increase savings by an additional $2.8 million per annum. There would be offsetting costs in
bringing some parts of the network up to the required standard. The most significant impact would be on the
use of 6 axle articulated trucks, although rail is estimated to lose around 23% of its current transport share. The
greatest impact on rail would occur in Victoria.
Second, the effect on road infrastructure investment, through the use of B-doubles. According to the Bureau
of Transport and Communications Economics (BTCE 1994), if all six-axle trucks on major intercapital city cor-
ridors (principally the national highway system) were replaced by B-doubles thus reducing truck volumes, the
impact would be significant. Road infrastructure upgrading could be delayed by up to four years on the Hume
Highway and less than two years on other corridors. However, because of the superior cost efficiency of B-
doubles there would be some modal shift from rail to road. This would reduce the effect and result in a lesser
delay to road investment requirements. Given the justified assessed total capital expenditure on all corridors is
of the order of $11.3 billion to the year 2014-2015, ($1.3 billion on the Hume Highway), outside of urban areas,
the potential savings as a result of deferred investment requirements are substantial. Similar effects could be
expected on rural arterials carrying a high proportion of heavy vehicles in the traffic stream.
2.4 Conclusions and Implications

The intraState movement of freight is the major component of the land transport task in Australia. Road and
rail both perform major roles in terms of tonne-kilometres of freight moved, although road transport carries
most in tonnage terms. The ability to reduce transport costs to rural producers and mining and energy opera-
tions which utilise public transport infrastructure is affected, in large measure, by the efficiency of service pro-
vision by both modes.
Changes in national regulations have increased allowable load limits. Potential further changes in heavy vehicle
technology and changes in modal freight movement as a result of transport deregulation in some areas will have
a continuing effect on transport costs and road requirements. The need to reduce transport costs to maintain
export competitiveness for agricultural and mining production will increase pressure on the rural arterial and
local roads, in regard to both the road standard and level of maintenance provided.
2.4.1 The four key elements in the transport system

From the viewpoint of the agricultural and mining industries and rural-based businesses, the critical elements
appear to be-.-
the quality of relevant components of the national highway system, the State rural arterial roads, and major
local roads serving rural areas.
the capability of operating the most efficient road transport for specific tasks on all components of the road
system.
the accessibility of capital city warehousing, processing and distributive systems for rural outputs, and for the
supply of goods and services to rural areas.
the accessibility and efficiency of intermodal transfer operations, for example, road/rail and road/port inter-
faces.

THE RURAL CONTEXT
2.4.2 Transport efficiency in intrastate transport

The dominance of the task in the movement of freight and people within regions, between regions and associ-
ated transport centres, and within cities (75% of the transport task in tonne kilometres) results in a somewhat
different picture of transport needs than usually portrayed. The picture which emerges is not that of a web of
transport lines connecting capital centres, and major centres. Rather it is better envisaged as beads of transport
activity of varying sizes strung along a national transport chain.
The transport efficiencies which are to be sought are those which relate to the movement of goods regionally
and intraState, as well as the lesser national requirements. The way in which State and regional transport sys-
tems are developed, the interrelation between road, rail and ports and the effectiveness of the interfaces between
them, therefore, are of primary concern in achieving an effective transport strategy.
A change of perspective is needed

This does not detract from the fundamental requirement of obtaining national consensus on transport policies,
and implementation of standards and regulatory requirements relating to transport infrastructure and operation
in a modal context. Rather it requires an additional perspective, by assessing transport needs, impacts and future
scenarios in a "vertical" process - the local, regional and State transport relationships.
The difference in perspective is illustrated by the work of the Australian Bureau of Agriculture and Resource
Economics. Their approach is to examine the movement of major commodities (for example grain) from
source to destination. The cost of the various transport components in the overall task are apparent. The effect
of transport policies and regulation can be examined and quantified. By comparison, most road transport mod-
elling takes an aggregated and unimodal approach in examining transport strategies and requirements. The insti-
tutional implications of developing a better outcome in the integration of roads in the local, regional and State
planning process and intermodal integration are discussed in Chapter 7 of the report.

3. CUSTOMER EECTATI NS AND
CONCERNS
3.1 General
A number of reports are available on user attitudes to the road system. They provide useful guidance on the
views, attitudes and expectations of different sections of the Australian community.
Austroads and State Road Authorities have undertaken studies in the last five years to aid development of a
strategic and policy framework for the future planning and management of the road network. Interest groups
and organisations have also undertaken surveys of user expectations of the road system.
The emphasis of the surveys and responses varies. They range from the broader policy issues relating to the
funding, overall performance and strategic needs of road provision and management, to the adequacy of road
service from the perspective of the general user or selected segments of the population. The material reviewed
is extensive and main references are listed in the bibliography.
The major concerns of customers

Customer expectations and attitudes to roads are examined from two perspectives:
1 the performance requirements and features of roads.
2 the general outcomes, specific issues and features of roads which need to be addressed.
Both perspectives are important. Consideration of only the deficiencies loses sight of features which are "high-
ly valued" where present performance is considered good or adequate.
3.2 Expectations of the Road System

The expectations of the road system and the features of "a road" which are regarded as important, are affect-
ed by the use being made of it.
3.2.1 Corporate users (key stakeholders)

For corporate users the emphasis is on economic outcomes of road provision and management. Major require-
ments are reduction of road user resources costs (vehicle operating costs, accident costs, travel time), the avail-
ability of economic--based choices for transport use, a national approach to transport regulation, and better
accessibility to warehousing, supply and distributive centres.
3.2.2 Rural business and commercial users

The qualities required by rural business and commercial users are more directly related to the regional network.
The Victorian survey of rural business (Department of Business and Employment) found that the most high-
ly valued requirements were accessibility to markets and the directness and general condition of the road sys-
tem used for the movement of inbound goods.
In the main, transport requirements are confined to the arterial road system, although companies using or pro-
cessing agricultural products (milk, fruit, vegetables, timber, etc.) are required to use minor local roads. The
quality of minor roads for such companies was important and in many instances led to the use of special pur-
pose built vehicles designed to handle narrow, twisting roads and poor surfaces. Because of the dominance of
Melbourne (in this case), as a key source of supply for inbound goods and the major destination of outbound
products, access to and within Melbourne is a key requirement. Future qualities of the rural road system, which
are related to expansion of business are seen as:
extension of duplicated highways.
bypasses around towns.
better maintenance, widening and more passing lanes on local minor roads.

THE RURAL CONTEXT
Road presentation is important

For tour coach operators, the desirable road system qualities are similar to other commercial users, but with some
differing priorities. Load capacity of the road system is less important than the ability to cope with physically
large vehicles. Good landscaping and roadside maintenance, rest areas, and a road surface which results in com-
fortable travel, are seen as desirable qualities because of the presentation effect on tourists.
Figure 3.1 Distribution of top five ranked features
A B C D E F G H I
J
P Q R S
Metro
A Sealed road edges Emergency phones

B Overtaking Lanes Grass mowing on verges
C Good centrelines More town bypasses
D Good edgelines N Natural bush preservation
E Safer intersections 0 Improved rest areas
F Guideposts/reflectors P Road side litter collect
G Smooth ride Q Trees planted near road
H Wider lanes R More tourist info signs
I Less roadside crash hazards S More service centres
j Better dir/distance signs
3.2.3 General road users and rural residents

For urban travellers and tourists, the qualities of the rural arterial roads, rather than local roads, are the domi-
nant considerations. For rural residents where daily travel requirements are locally or regionally based, the qual-
ity of the local roads system - rural local roads and local arterials - are of greater concern.
Nevertheless a fundamental requirement which emerges is the need for a safe road system. Safety in this con-
text relates to both the incidence of accidents, and the provision of road features which aid in making the dri-
ving task simpler and safer.
Safe driving features ranked highly

The ranking of features of the rural road system in an RACV study of member road users are shown in Figure
3.1. The most important are:
good centrelines;
overtaking lanes;
safer intersections;

good edgelines;
guideposts and reflectors;
sealed road edges.
The safety features listed were rated more highly by rural residents than urban travellers. Urban travellers value
ease of travel, comfort provision and route information as additional requirements.
The requirements of self-drive tourists (international, interstate) are similar to those of urban travellers. The
aspects rated as most important in a Victorian study were road safety, signage (information and destination
signs), information on the road system and road marking. The results of studies in other States, though of a
more general nature, are consistent with the Victoria surveys. The provision of overtaking lanes, clear signage
and maintenance of road verges and edges are characteristics rated as highly desirable.
The qualities required by users provide a road "profile" consistent with present design standards for rural arte-
rial roads and with good management practice in their operation. The safety features specified, other than the
provision of overtaking lanes, are low cost requirements. However, all features, with the exception of guide-
posts and reflectors, require that the road surface is sealed.
3.3 Needs and Concerns

Safety is dominant
The requirements for safety qualities of roads are a dominant theme when assessing user concerns. While road
safety performance is rated by the public as the best amongst a range of key public service functions in a Road
and Traffic Authority New South Wales survey (Frank Small & Associates 1995), it remains a priority concern
for 20% of respondents. Accidents and speed are considered major road and traffic problems, and accident
deaths and injuries on roads are of particular concern to rural residents.
The greater emphasis on reduction in road accident trauma by the rural people is evident in all surveys which
distinguish between responses from the two population groups. The higher level of concern results possibly
from the differing frequency of usage of rural roads and the type of usage. Rural residents are more likely to
travel on the local road system, and be involved in accidents. Also the personal and community consequences
are more obvious when residents of small communities are involved in road accidents.
General road users don't like trucks

A second major and widely held concern among general road users, is the volume of truck traffic on roads.
Sharing a road space with trucks is a major concern of respondents to the New South Wales Road Authority
survey. Similar concerns were expressed in regional workshops conducted by VicRoads, and in the survey of
interstate and international tourists. The need for overtaking lanes and wider traffic lanes is linked in some sur-
veys with the perceived problems in passing trucks safely.
Bypasses of towns are favoured

The need for bypasses is also a product of the effect on the amenity by heavy vehicles in regional centres and
towns on major traffic routes. Those surveys which are available, relate to the more intensively developed rural
areas where regional centres are located on major transport routes. The views about the bypassing of com-
mercial and other traffic may be different in more remote areas where passing traffic is a significant contributor
to the local economy. Regional business in Victoria would like to see more bypassing of towns to reduce
travel time and delays.

THE RURAL CONTEXT
Accessibility is a major concern

The roads issues of major concern resulting from a series of regional workshops in Victoria (VicRoads 2000),
which included a good representation of community business and service interests, are shown in Figure 3.2.
The figure represents the number of workshops (maximum 12) at which a particular issue was considered a
major concern. The outcomes can be considered representative of regional centre attitudes in a developed rural
environment. The key aspects, other than those previously noted, relate to the needs of better accessibility of
local and regional roads, and improved roadside management and roads maintenance.
Studies of needs specific to rural and remote communities are limited. Life Has Never Been Easy, a report
based on 13,500 interview responses from women in rural and remote Australia is unique in its coverage and
consideration of women's views. It does, however, include women living in towns of populations up to 100,000.
In response to questions of personal preferences for government spending in rural areas:
69% believed that roads should be a priority and 45.3% stated that more public transport was necessary.
similarly high numbers of rural women identified communication services (telephone-postal) as additional
priorities for government expenditure.
The emphasis on communication is linked closely with isolation and its implications for personal and social well-
being. Isolation is seen by nearly one third of respondents as the single biggest problem for rural women. The
report observes that transport and communication are central to the quality of life in rural Australia. Improved
rural roads were important for women of all ages and in places of an sizes, whether in remote localities or large
country towns. This was especially so for the women in New South Wales, Queensland, South Australia and the
Northern Territory where more women sought increased expenditure on roads than anything else. Heavy wear
and tear on vehicles caused by frequent travel on poor roads and higher petrol costs in country areas were seen
as added imposts.
Figure 3.2 Major issues: regional workshops (Victoria)
Frequency
H I
A Regional Road Links Improved ragional accessibility

B Bypasses Reduction of freight movements and conflicts in towns
C Road Upgrading Better access to services and facilities
D Road Maintenance Better quality of access
E Tourism Improved access to tourist locations
F Funding Better access to services and facilities
G Freight Movement Conservation and protection of flora and fauna
H Road Safety Reduce number and severity of accidents

A study by Kinhill (1990) for the Western Australian Task Force on Road Funding examined resident percep-
tions of needs in five rural and remote local government areas. In all areas the need for more expenditure on
roads was seen as being of higher priority than any other area of government expenditure. The most wide-
spread concern was with the condition of local roads. There was a high level of satisfaction with the national
and arterial system. However 45% of respondents rated the sealed minor road system as poor to terrible, and
68% had the same view of the unsealed roads. Maintenance standards, safety and road width were the three
issues of most concern.
A report for Municipal Association of Victoria (Stanley and NIEIR) on rural local roads notes that the
improvement priorities consistently rated most highly in the survey of farmers were:
improvements to road surface quality (whatever the type of surface), and road widening. The latter empha-
sis is a result of concerns about increasing truck sizes on roads designed for smaller vehicles.
improved safety, reduced wear and tear to vehicles, lower transport costs and improved product value were
the major benefits sought.
These observations are similar to those of Hadingham and others in which road roughness, texture and edge
maintenance were the main factors associated with user acceptability of road conditions.
3.4 Summary
Safety of rural roads and the need to reduce road accident trauma appear as the universal concerns of rural road
users and rural residents. The features of the road regarded as most important are closely associated with safe
driving. They relate mainly to effective operational maintenance of the road - signing, pavement lining and
marking, edge maintenance and general condition of the road surface.
The other needs indicated - wider roads (road lanes), overtaking lanes and bypasses of towns - relate to con-
cerns over the volume of trucks on the roads. The effect of trucks on driving safety (overtaking and passing
of heavy vehicles), and on the environment and amenity of towns on major freight routes, is a common theme.
The concern about truck volumes appears widespread in south east Australia. Respondents in the New South
Wales Road Transport Authority study, while acknowledging the importance of roads for carrying freight, are
concerned about sharing road space with trucks.
There is of course an opposite view. A major issue raised by freight forwarders (NSW Road Freight Strategy
1992) is the effect of road congestion caused by private vehicle use on efficient freight movement. The restric-
tive attitudes of local government and communities toward truck access to industrial and commercial land is
also a major concern. This dichotomy will need to be resolved if the present focus on more efficient freight
movement by utilising heavy combination vehicles is to be accepted by the community.
The need for improvement of local roads in both rural and remote areas appears a major requirement and a
high priority for rural residents. Road access is a fundamental need for social and economic reasons (the eco-
nomic effects of poor roads are discussed later in this report). The New South Wales Road Transport Authority
survey found that country roads, more than metropolitan roads, are a target for community concern. The
majority of respondents agree that city people get a better deal than country people, an even stronger view
among country people.

4. CURRENT ROAD PERFORMANCE
AND MANAGEMENT
4.1 Quality of the Road System
4.1.1 The user perspective
Responses from a number of surveys indicate that Australian community concerns about performance in other
public sectors rank higher than roads.
Roads ranked third behind police/law enforcement and health services in the Roads and Traffic Authority NSW
survey. The Australian Automobile Association national surveys provide similar responses. Concerns about
education, health, law and order and environment rank higher than roads.
These rankings are not consistent across all sectors of the community. Country and regional city respondents
put road needs higher than city respondents.
The conclusion which emerges is that user concerns with road quality and service are closely linked with the
degree of remoteness from urban centres.
The responses indicate that:
major rural highways have improved over the past five years
the service levels of major highways are not seen as barriers to development of regional businesses;
the principal concerns in relation to the main road network are the need for overtaking lanes, heavy vehicle
bypasses around towns, and better accessibility to and through capital cities;
the local road network is seen as providing an inferior quality of service.
4.1.2 The national highway system

The available evidence indicates that the quality of the national highway system has improved.
Sealing of the national highway system was completed in 1989, with reconstruction of the final section of the
Adelaide to Alice Springs link There has been progressive elimination of the narrow two lane sections of the
system, which occur mainly in the northern areas of Australia. Unacceptable road roughness (a measure of road
surface quality) occurs on less than 2% of the system, mainly on remote sections.
Travel on the national highway system has increased by 114% in the period 1981-94, the highest increase in trav-
el demand on any of the functional road categories. National highway system travel accounts for some 12% of
total road use (Cox, Volume 1).
The findings of the BTCE study of intercity roads (the national highway system and the Pacific Highway) are
that:
in general the level of service is good;
performance deteriorates as the road corridors approach capital cities
the links from Brisbane to Sydney, and Brisbane to Cairns provide the poorest performance. Of these the
Pacific Highway between Brisbane and Sydney is the most deficient, and generally unacceptable;
Sections of the Barton Highway to Canberra and some sections of the road between Devonport and Burnie
in Tasmania provide poor service.
General conclusions on future investment needs are provided in Box 4.1. Future variations in demographic pat-
terns and economic activity from those assumed for the study will affect the outcomes. Nevertheless the pro-
jections indicate the level of investment and the broad distribution of needs that can be expected.

4.1.3 The State arterial roads
There is no consolidated view of the State arterial road systems, which provides an overall assessment of cur-
rent performance and future needs.
According to Cox (Volume 1) there has been an increase in the length of the rural arterial system from 98,300
kilometres to 110,300 kilometres in the period 1981-94. The percentage of sealed length has remained gener-
ally the same at 76%. Travel has increased by 38%, although arterial usage has decreased from 27.8% to 25.7%
in the period.
Considerable effort has been made by State Road Authorities in developing State road strategies in the past five
years. In general, these studies have been widely focussed, aiming to support State and regional development
objectives. Consultation with key stakeholders, transport users and the public, provide important elements of
the strategic assessments. The inter-relations with other transport modes and with local government are less
obvious.
The overall impression is that:
the level of service presently provided by the road network cannot be sustained at present or projected like-
ly funding levels;
maintenance needs will be significant;
the level of maintenance expenditure will be increased by present deferred maintenance needs;
a strategic approach will need to be taken to investment decisions to maximise economic gains and to meet
other roads objectives.
Presumably the geographic distribution of funding needs would be consistent with the findings for the nation-
al highway system.
4.1.4 Quality of the rural and remote road systems

The 1984 NAASRA Road Study provides the only national perspective on the quality of rural and remote roads.
The survey required extensive effort, but was confined to the sampling of only some 13% of local government
areas.
The report notes that if such a survey is to be repeated, or if regular monitoring of local roads and transport
activities is envisaged, procedures for routine recording and collation of data will need to be developed. This
has not occurred. There is no adequate data base which enables a comparative assessment in 1995.
Have rural local roads deteriorated?

The salient points which emerged from the 1981 NAASRA study are shown in Box 4.2:

THE RURAL CONTEXT
Box 4.1: Future investment needs are concentrated on the eastern seaboard
The conclusions on strategic investment requirements are as follows but do not include site specific construc-
tion needs such as realignment, flood mitigation work and overtaking lanes.-
* Total corridor investment needs, including the Pacific Highway, total $11.2 billion over the next 20 years.-
Based on traffic demands, some 87% of this investment is required in New South Wales and Queensland.
The New South Wales share of total investment needs is 64%.,
Sections of the network within 50 kilometres of capital cities, Cairns and Burnie require above average
investment. These sections total 5% of the system length but are estimated to need 16% of the capital fund-
ing.-
. Some $1.3 billion (nearly 12% of total investment) is required for bypassing of towns and regional centres-
Box 4.2: Rural local roads

there were 429600 kilometres of local roads of which only 20% (85700 km) were sealed.
if a traffic level of 100 vehicles per day is taken as an economic cut-off point for road sealing, there were:
- over 4100 kilometres (48%) of sealed roads carrying less traffic
- 11800 kilometres of unsealed roads carrying more
- 12600 kilometres of single lane sealed road carrying more than 100 vehicles per day. In Victoria some
The figures indicate a significant misallocation of resources in some regions. Broadly, some 24,400 kilometres
of road should have been sealed or upgraded to two-lane seal and 41,400 kilometres should not have been sealed
initially. The study noted that the merits of desealing such links needed to be examined closely. It also ques-
tioned the methods of distribution of funding to local government at that time (1981) in achieving a consistent
approach to road upgrading and rehabilitation.
Cox (Volume 1) presents evidence that the sealed length of rural (including remote) local roads has increased
by some 15,000 kilometres in the period 1981 to 1994. The results need to be treated with caution. Neither the
1981 data (based on sampling) or the current data can be regarded as definitive. The assessed 3% increase in
sealed road length could be due to data error.
Western Australia was the only State which provided information for this study on both State and local gov-
ernment roads. The comparison with the 1981 NAASRA road survey is tabulated in 1.1 of Appendix I. The
results indicate that both the sealed and unsealed road lengths in the State have reduced by 3000 to 4000 kilo-
metres in both classifications. Within the unsealed category the standard appears to have improved in both rural
and remote areas. The length of paved (gravelled) roads has increased and the lengths of formed and unformed
roads reduced. Similarly the length of single lane sealed roads has reduced in the sealed road category. The
Western Australian detailed figures indicate that the length of sealed road in remote areas carrying traffic vol-
umes less than 100 vehicles per day has nearly doubled from 1800 to 3400 kilometres. These comparisons have
the same data base problems mentioned previously. Nevertheless there is general evidence of some improve-
ment in road standard.

Stanley (1991) in examining the road performance in six rural councils in Victoria concluded that user views of
the system were poorer than those of the earlier NAASRA analysis. The attitudes, possibly, were the result of
deteriorating road conditions. New sealing works in the six municipalities was negligible. Reseals and gravel
resheets occurred more regularly. In no municipality had the rate of reseal/resheet been adequate to maintain
the existing asset stock.
The Review of Local Government Financing (see Chapter 7) provides graphical information of the proportion
of expenditure on roads in relation to total local government expenditure, for each State over the period 1980-
92. There was a general downward trend in all States for the period.
Remote roads outcomes are similar to rural roads

The NAASRA report notes that "roads to which users in sparse rural (remote) areas can aspire to will be little.
different in 1991 compared with 1981. The bulk of the network will still consist of unsealed roads which are
rough and dusty in dry conditions and impassable in the wet, within the limits of funding levels considered."
Funding option covered levels of up to 75% over base funding at the time. Such increased funding levels have
not occurred. However, as indicated previously, there does appear to have been some improvement in remote
area road standards in Western Australia. Whether these results are representative of all States cannot be deter-
mined.
The salient points from the 1984 study are:
Box 4.3: Remote roads

a total network length of 166,700 kilometres.
160,00 kilometres of roads were unsealed, of which 48,900 kilometres were bladed tracks.
some two thirds (4400 kilometres) of the sealed road network carry volumes less than 100 vehicles per
day.
4.2 The safety record of rural roads

The safety or rural roads and the need to reduce road accident trauma is a matter of major concern to rural road
users and rural residents. The available data indicates that their concerns are justified.
4.2.1 Available data bases

The Federal Office of Road Safety Fatality File is the only satisfactory data base for an Australia wide assess-
ment of the rural accident situation. The finalised information is available for the period 1988-92 and is con-
fined to fatal accident occurrence.
An assessment of fatal accidents, whilst informative, does not necessarily cover the factors relating to non-fatal
accidents on Australia's rural roads. State data bases have information covering the wider accident situation ----
injury and property damage - but these have not been aggregated to provide a national picture.
4.2.2 Fatal accidents on rural roads

Nearly two thirds of fatal accidents occur outside major urban areas. Some 48% are rural, 14% occur in rural
towns of population less than 50,000, and the remaining 38% in major urban areas. In 1992 there were 828
fatal accidents in rural areas.

THE RURAL CONTEXT
Whilst rural fatal accidents have declined by 30% over the period 1988-92, this decline has been at a slower rate
than in urban areas. The difference in the rate of decline is significant and cannot be attributed to chance.
Statistics show that fatal accidents in rural areas are much more likely to result in multiple deaths. Multiple
deaths occurred in 69% of fatal accidents in rural areas compared with 31% in urban areas. When accident fre-
quency and number of deaths per accident are combined, the number of people killed in rural accidents is
approximately two to three times higher than urban accidents.
Rural residents have an increased level of risk

Research by Moller(1995) shows that people who live in rural and remote areas have a significantly increased
risk of dying in a road accident. Drivers from rural and remote areas experience higher death rates than their
urban counterparts regardless of age or sex.
Death rates among younger drivers, especially young males, is much greater in rural and remote areas. These
young drivers have a risk level two to three times higher than their city counterparts, who have a higher risk level
than the average driver. In remote areas this higher risk level extends into the older age group (30-39 years).
There are number of possible contributing factors:
exposure to alcohol.
travelling at higher speed.
risk taking behaviour.
failure to wear seat belts.
increased exposure through travelling longer distances.
more night time driving.
greater distance travelled on unsealed or lower standard sealed roads.
greater likelihood of being injured where expert aid is less accessible.
Alcohol, speed, fatigue and failure to wear seat belts are still major factors in rural fatal accidents.
Accident types vary with location

Research by Henderson (1995) and others provides a perspective on the difference in types of fatal accidents
between urban and rural areas. With increasing remoteness from urban areas the frequency of single vehicle
fatal accidents increases and multiple vehicle fatal accidents decreases. Pedestrian accidents reduce with increas-
ing remoteness.
The accident profile, using five locational classifications, is illustrated in Figure 4.1. Single vehicle fatal accidents
rise from 26% in urban areas to 67% in remote areas. Multiple vehicle fatal accidents reduce from 43% in urban
areas to 22% in remote areas.
Henderson also provides a breakdown of the number and percentage of fatal accidents of various types in rela-
tion to road surface and cross section (road stereotype) in rural and remote locations. There are three major
fatal accident types common for all road stereotypes:
single vehicles running off curves.

9 head-on multiple vehicle collisions.
. single vehicles running off straight roads.
The dominant accident type for unsealed roads is running off a curve, which occurs in 40% of fatal accidents.
Head-on collisions increase with improvement in road surface and cross section. Running off a straight road,
which occurs in about 28% of all fatal accidents, is generally consistent for all road stereotypes. The variation
in the three main accident types by road stereotype is illustrated in Figures 4.2. The low incidence of fatal acci-
dents resulting from overtaking (3% or less) is a surprising feature. There is no data available from which fatal
accident firequency (that is, accidents per vehicle/kilometre) can be deduced for the different road stereotypes.
Road factors affecting accident rates

Loss of control on the road shoulder has been identified in Australia and overseas as an important factor in
rural accidents. Henderson noted in analysis of the 1990 Fatality File that loss of control on the road shoulder
accounted for:
43% of off-road accidents on straight sections.
45% of off-road accidents on curves.
71% of on-road overturn accidents on curves.
11% of head-on accidents.
In 90% of the above situations the road shoulders were unsealed.
The significance of loss of control accidents on rural roads, and the positive effects of shoulder sealing have
resulted in the National Road Trauma Advisory Committee (Rural Road Safety Workshop - April 1995) call-
ing for shoulder sealing treatment in high risk areas as one of several measures to reduce rural road trauma.
Figure 4.1 Fatal accident by location
Remote Semi-remote Non-remote Rural boundary Urban
0 Single vehicle Multiple vehicle 0 Pedestrian

THE RURAL CONTEXT
It is worth noting that sealed road shoulders and effective shoulder maintenance are key features of the road
profile sought by rural road users.
Considerable Australian and international research on the incidence of traffic accidents on rural roads is direct-
ed to road design factors, roadside features, topography and land use and traffic volumes However, many of
these aspects can only be dealt with as part of a road reconstruction or upgrading program. This would nor-
mally be carried out over a 40 year cycle.
There are potential low cost safety improvements

The key question is, what can be done to improve the safety of the existing rural roads in their present form.
Literature reviews and expert opinion clearly indicate that road delineation and signing, in addition to shoulder
treatment and maintenance, are effective in increasing driver attention, proper tracking of the vehicle, and reduc-
ing off-road and head-on accidents.
A report by Pak-Poy and Kneebone (1988) for the Federal Office of Road Safety provides estimated costs of
road safety improvements on rural roads and the expected benefit cost ratio which would result. The assess-
ments are based on a wide coverage of relevant international and Australian research. The results of a select-
ed list of treatments are set out in Table 4.1.
The listing is consistent with the user view of key road features (see Chapter 3). The estimated benefit cost
ratios are high and the capital costs are low to moderate. Overtaking lanes also show high returns in selected
locations (BCR 3:1-6:1) but have a high capital cost. The selected improvements rank among the highest in esti-
mated safety returns from a range of available treatments.
Table 4.1: Selected low cost safety improvements for rural roads
Improvement Cost'$ Life Years Maintenance Benefit Cost

Cost "'% Ratio
Warning signs 1251-

(per sign) 400 5-10 - 400:1
Reflectors on posts
including post 2000 5-10 2-5 8:1
(per km)
Edge lines -100mm
both sides (per km) 1500-2500 2-5 5-15 10:1
Raised reflective
pavement markers 4800 3-8 2-5 8:1
(per km)
Sealed shoulders
--1.5m 2400-7200 5-8 15-30 12:1
(per km)
Costs quoted are for 1988.

Maintenance cost is an indicative percentage of capital cost.
Source: Pak-Poy & Kneebone

Figure 4.2 Main accidents by road type
Percentage
Unsealed road Sealed, Sealed, Four lane

unsealed shoulder sealed shoulder
E Head on Off straight Off curve
4.2.3 Have we delivered these basic safety features?

Information on provision of basic safety features is confined to the State road authority road systems in
Tasmania and New South Wales, and the combined State and local government road system in Western
Australia. This information is set out in 1.2 of Appendix I. On the New South Wales and Tasmanian State
road systems, provision of guide posts and hazard signs on both unsealed and sealed roads is high - general-
ly 90 to 100% of road length. Centre lining is provided on the majority of the road system and edge lining on
most of the higher category sealed roads (wide 2 lane roads and multilane cross-section).
The Western Australian composite data reports a generally lower level of provision. Unsealed roads are unlike-
ly to have guide posts and hazard signs. Centrelining of narrow 2 lane seals (40%) and edge lining and shoul-
der sealing of wide 2 lane seals (44%, 22%) is lower than reported for State roads in Tasmania and New South
Wales.
It appears likely that the national highway system and the rural arterial roads have all, or most, of the basic safe-
ty features. This may cover up to 20% of the non-urban road system. From general observation the extent of
provision on the remainder of the road system would be low. Many of the specified features cannot be pro-
vided on unsealed roads. However, basic items such as reflectorised guideposts, and hazard and advisory signs
can be used.

THE RURAL CONTEXT
Do State road safety strategies address the issue?

From available evidence, the assessment of basic safety features of rural roads and development of appropri-
ate programs is not a priority issue in most jurisdictions. Priorities are generally in the areas of driver behav-
iour, excessive speeding, drink driving, driver fatigue and seat belt use. These are acknowledged high priority
areas. Human factors are the highest contributing factor in road accidents, but the most difficult to alter.
The Queensland Road Safety Strategic Plan proposes system-wide introduction of cost effective road safety
measures. These include audio-tactile and overwidth edge lining, rumble strips, shoulder sealing and lane widen-
ing on identified sections of the rural arterial system. The NSW Strategic Safety Plan also notes the high ben-
efit cost ratios of improved road delineation.
The Austroads Road Safety Audit (1992) provides an excellent basis on which to introduce audit systems for
existing roads and the planning of new roads. The objective of road safety audits is to identify what needs to
be done to prevent accidents or reduce their severity. Safety audits should be viewed, therefore, as a duty of
care to users of the road system.. Road safety auditing is in its infancy. Potential benefits reported in British
Studies (as quoted in Road Safety Audit 1992) range from 1-3% reduction in casualty accidents. This level of
achievement in Australia would result in community savings of between $75 million and $225 million per
annum.
The introduction of consistent road safety audit schemes by Federal, State, Territory and local government is a
priority action identified in the National Road Safety Action Plan 1994. The Plan identifies national imple-
mentation by the turn of the century.
The principal headings of the suggested road safety audit for a rural highway are given below:
Box 4.4: Road safety audit of existing rural roads

road alignment
road pavement (width, roughness)
intersection location, treatment
changes in standard
road shoulder condition, width
pavement edges, drop off to shoulders
lateral clearances to roadside objects
guardrailing
table drains, culverts, embankments
signing (number, size, location, sight distance condition)
lining (centrelining, edgelining, lane lining, overtaking lines)
intersection delineation

The adoption of audit procedures for existing roads by road authorities and local government is an example of
better practice. On available evidence its present use is minimal.
4.3 Some Economic Impacts of Road Quality on Rural Industry

Economic evaluation procedures use vehicle operating costs and travel time savings as the main benefits arising
from road investments. Savings as a result of road accident reduction are usually assessed at around 20% of
overall benefits for major investments and rarely affect the outcome. They can be a major factor in localised
road treatment alternatives.
The general approach presumes that the quality of the road has no effect on:
the condition and ultimate value of the commodities carried;
the productive capacity of neighbouring land uses.
These considerations are unlikely to be pertinent where road sealing or pavement quality are not variable fac-
tors. They are relevant to rural and remote roads when decisions on sealing or upgrading of ride quality are
being made. Their exclusion can significantly underestimate benefits in particular circumstances.
4.3.1 Loss in value from transport

Hide damage to cattle and injury, bruising and weight loss to both cattle and sheep result from extended jour-
ney times and carriage over rough roads. No literature has been found which quantifies such losses. They are,
however, a concern in the northern beef industry and in sheep areas.
Carriage of horticultural and fruit products over rough roads decreases the end value of the product by down-
grading and from bruising. Extra packaging is required to reduce the prospective loss, which adds to produc-
tion costs. Stanley (1991) provides estimates of loss in fruit value in one fruit growing shire in Victoria. Losses
due to transport and increased packaging costs are approximately 15% of output value. Reduced yields from
road surface conditions, considered later, increase losses. The implied net loss is estimated at about $7-8 mil-
lion per annum; equivalent to the direct costs of transport, and considerably greater than the shire road bud-
get ($2 million).
4.3.2 Dust effects on agricultural output

Dust from unsealed roads can affect the quantity and quality of fruit production, and the productivity of pas-
ture for dairying.
The following impacts are noted by Stanley:
reduction in tree yield in proximity to dust source, and decrease in effectiveness of spraying.
reduction in pasture yield, estimated at $1,500 per kilometre of road frontage.
reduction of vine production and grape value in winery areas.
The level of loss indicated in particular conditions appears to be greater than the differences in vehicle operat-
ing costs and time savings used in assessing improvements to local roads.

THE RURAL CONTEXT
4.4 Roads and the Environment

4.4.1 The overview
Environmental pollution and degradation of the countryside are not new phenomena. They are products of
the growth in human population and the needs of civilisation. What is new is the visible effects of this process
in global terms and a better knowledge of its consequences. The need for a national approach to ecologically
sustainable development (ESD) has resulted in a National Strategy for Ecologically Sustainable Development
endorsed by Heads of Government in 1992. Related action has been taken preceding, and subsequent to, the
agreement by Federal State and Territory governments. Legislation and required practices relating to the devel-
opment, management and use of resources is now common.
Austroads and road authority initiatives

Austroads has adopted an Environmental Strategy and is in the process of developing strategies and guidelines
in a number of environmental areas. These include national principles for the environmental assessment of
roads, guidelines for noise and air quality, and related programs covering transport policy.
State Road Authorities have developed environmental strategies. These include changes to corporate culture
and development of staff understanding and knowledge of the issues involved. The NSW Roads and Traffic
Authority :Environmental Vision" and the VicRoads "Environment Strategy" are particular examples of com-
mitment to the better management of existing resources and more responsive planning of future needs. There
does not appear to be an equivalent approach to the issue of ecologically sustainable development by local gov-
ernment in Australia.
4.4.2 Challenges in relation to non-urban roads

There are two issues, specific to the rural road network, which appear of most concern:
the delivery of better outcomes in management of the road reserve and associated off-road requirements of
road works;
the reduction of the adverse effects of through traffic on towns and regional centres.
Delivery of better outcomes

The delivery of better management of the rural and remote road networks is a fundamental issue. The rural
road network extends for some 600,000 kilometres through a variety of geographical and climatic regions in
Australia. In many areas the road reserve supports the remnants of original vegetation which has otherwise dis-
appeared through agricultural development. These areas are important biological reserves, provide shelter and
continuity of environment for native fauna, and have useful functions in presenting the Australian landscape to
tourists. Roadside vegetation also reduces soil drift and can provide stock shelter.
The control of adverse work practices, and the provision of good management and rehabilitation processes over
the length of the network, appears more difficult than controlling the outcome of major projects.
The effect of poor planning and construction processes in a project area is immediately visible. Reaction by the
general public, interest groups and environmental agencies is swift and vocal. Good results can be achieved by
sensitive planning and design, quality assurance procedures and effective supervision during construction, and
appropriate post--construction site treatment.
The effect of poor road reserve maintenance practices are less visible but more pervasive. The aggregate result
in terms of environmental loss is likely to be greater. Maintenance and general rehabilitation of the 600,000
kilometres of rural roads requires some 20% of road authority resources and possibly 90% of local government

road funds. The adverse impact of poor management of such large resources can be significant. The impacts
are not confined to the road reserve. Erosion or stream siltation, and despoilation resulting from the extraction
and stockpiling of local materials for road maintenance are some consequences.
The maintenance of the rural road system is the responsibility of 640 rural local government and road author-
ity organisations. The number of organisations involved poses a considerable challenge in the development,
acceptance and application of good practice. Most rural and remote local authorities do not have the resources
to initiate the process. The increasing use of contracts for rural roads, often involving individual contractors,
further extends the organisational difficulties.
Possible arrangements to improve the likely outcome are discussed in the following section.
Town bypasses
The effect of through traffic on the environment and amenity of towns is a major concern of communities on
major freight routes in south east Australia. No survey information has been found for other areas. Experience
indicates that through traffic in towns in remote localities is likely to be seen as beneficial. Servicing through
traffic is a major economic stimulus in many smaller centres.
Literature on the effects of town bypasses is limited. The BTCE report (Working Paper No.11,1994) examines
the effects on Berrima and Mittagong (NSW) of the Hume Highway bypasses. It provides a case study of the
actual outcome of town bypasses, rather than those inferred by prior benefit cost studies.
Berrima (population 655) and Mittagong (population 4240) are different in size. Their economies are broadly
similar, mainly tourism and retailing.
The general conclusions are that:
Bypassing has succeeded in eliminating the heavy vehicle traffic. The effect of bypassing is less evident in
Mittagong because of the continued intrusion of regional light vehicle traffic.
The environment of both towns has improved; Berrima more so than Mittagong.
The short term economic effects for Berrima have been positive, whereas there has been an initial decline in
Mittagong. Berrima has an historical appeal which has been enhanced and its tourist trade has increased.
The longer term benefits for both towns are expected to be positive, but Berrima should do better than
Mittagong.
The findings of the study indicate that the environmental effects of bypassing are positive in both cases. These
effects are not valued in usual benefit cost analysis. Only broad conclusions can be drawn about the likely eco-
nomic effects of other town bypasses. Towns which are particularly attractive to tourists might be expected to
increase their trade, because of the enhanced environment. Other towns may not do as well.
43 Identified Problems and Better Practice

Some issues identified in the preceding sections of the report are discussed in later chapters. Chapter 5 -
Transport Integration, and Chapter 7 - Institutional arrangements, take up issues in these areas.

THE RURAL CONTEXT
This section of the report suggests actions which should be taken to overcome identified deficiencies in two
general areas. These are:
improving community reactions to heavy freight transport.
improving rural road performance.
4.5.1 Improving community reactions to heavy freight transport

The need for freight transport efficiency and the adverse community views of heavy vehicles needs to be
resolved.
Freight movement on rural highways and arterial roads has increased at an average of more than 6% per annum,
and is predicted to rise at a faster rate in the future. More routes have been opened to heavy freight vehicles.
The use of B-doubles can be expected to increase, and further development of heavier freight vehicles is occur-
ring, in the quest for transport efficiency. Considerable effort has been made by Austroads, transport authori-
ties and the road freight industry to ensure safe heavy vehicle operation and responsible behaviour by transport
companies and drivers. This does not address a number of community concerns.
On rural highways
Most roadusers are apprehensive when overtaking heavy freight vehicles on two lane rural highways. The level
of apprehension and degree of difficulty is greatly increased in wet conditions. The wall of spray created by
heavy vehicles makes safe passing impractical. B-double combinations are required to have spray suppression
equipment. Other freight vehicles are not. The National Road Transport Commission through the VSS is
examining improvements to spray suppression on heavy freight vehicles. A report is expected in 1996.
Truck safety
The number of accidents involving heavy vehicles has decreased in line with the general reduction in road acci-
dents. Articulated vehicles, however, are more frequently involved in fatal accidents than other vehicles, both
on the basis of vehicle numbers and distance travelled.
Fatal accidents involving articulated vehicles are more likely on high speed rural roads than in urban areas, by
comparison with other vehicles. However, articulated vehicles were considered to be at fault in only 22% of
multiple vehicle accidents. The outcome for other road users involved is likely to be poor because of the rela-
tive weight difference of the vehicles involved. Lowering of the vehicle mass limits is unlikely to improve sur-
vival levels, as the weight differences between vehicles would remain above the threshold for survival.
Furthermore the requirement for more vehicles to perform the same freight task would theoretically increase
the number of accidents. B-doubles and road trains (as a sub-class of articulated vehicles) are involved in sig-
nificantly fewer accidents.
Lane width, as detailed by Cox (Volume 1) is an important variable in heavy vehicle safety. The provision of
wider lanes (a sealed road width greater than 7 metres) and 1.8 metre shoulders has been found to reduce truck
accidents by 60%, compared with narrow section sealed roads.
Much of the road system does not meet current cross section standards:
89% of the intercity system is two lane highway, and of this 60% is narrow section (BTCE 1994).
Information is not available for State arterials,but the proportion of narrow section seal roads (less than 7
metres) is expected to be higher.
Road features which aid safe driving and overtaking (sealed shoulders, edge lining, centrelining) are likely on
only the most heavily trafficked routes.

Community attitudes may improve with the following actions:
Increased rate of shoulder sealing and edge lining of rural highways. The National Road Trauma Advisory
Council (NRTAC) identified shoulder sealing as one of its priority safety measures.
Priority given to the provision of passing lanes at identified locations on truck freight routes. Some social
weighting factor could be applied in the assessment of funding priorities for passing lanes.
A program which informs the community of the actions being taken, and the need for freight transport effi-
ciency in maintaining our standard of living.
In towns and regional centres

The BTCE study of town bypasses concluded that there are signficant social and environmental benefits, but
these are not captured in normal cost benefit analysis. The conclusion is important. Increased funding prior-
ity for town bypasses on heavily trafficked routes would have a beneficial effect on community concerns about
the adverse impact of heavy trucks.
4.5.2 Improving road performance

Safety of rural roads
The safety of rural roads has been identified as the dominant road user issue. The accident record of Australia's
rural roads is not good and has been the subject of a recent NRTAC national conference.
There is no data from which an assessment can be made of the level of provision of basic road safety features
on the rural road system. Best evidence is that the level of provision is low on arterial roads and generally non-
existent on local roads.
The low priority given to road safety devices appears to derive from:
A confusion in thinking. Safety provisions and road upgrading decisions are not treated separately. Benefits
from road upgrading are assumed to include reduced accident costs. Rural road upgrading is generally not
economically warranted, therefore provision of adequate safety features is ignored.
A lack of motivation. Alford (1995) observes that local government has shown a distinct resistance to
involvement in the broader issues of road safety with the general view that it is an issue to be addressed in
all its aspects by either State or Federal government. Some particular exclusions are made.
An absence of required minimum standards.
Minimum safety standards are a requirements for most products provided to the public. These standards apply
equally to the economy product and its higher priced equivalent. The same philosophy has not been applied to
road provision. The situation appears to be - the lower the quality of the road, the greater the absence of
basic safety features.
A recommendation by the NRTAC from its national conference should be adopted by Austroads.
"States and Territories undertake a safety audit of rural roads to prioritise areas with high existing
and potential crash rates. This will provide information about road deficiencies, traffic flows,
crash history, trauma management locations and causes to enable suitable planning for counter
measures. Priority should be given to training road safety auditors. The Federal Office of Road
Safety should fund an Austroads project to develop a uniform rural data collection system."

THE RURAL CONTEX'T'
The term "rural roads" in the recommendation must be seen to include all rural roads. Local government
should be required to participate in safety audits of its roads to prescribed standards. The Austroads Road
Safety Audit, referred to previously, provides a relevant base from which to initiate action.
A further recommendation should be added to that put forward by the NRTAC.
"Austroads should undertake a complementary program in association with the Federal Office of
Road Safety to assess the minimum requirements for safety features on rural roads of various cat-
egories. These requirements should be accepted as national standards for existing rural roads. A
practicable funding and implementation program should be developed as a component of the
national approach to rural road accident reduction in Australia."
Assistance to local government

Austroads and the Australian Road Research Board have recently completed two projects of technical assistance
to local governments. These are:
1 The Unsealed Roads Manual (ARRB 1993).
2 The Road to Reform - The Local Roads Expenditure Project (Austroads 1993).
Two further projects should be considered.
Development of good environmental practice in road management

Section 4.4.2 sets out the problems in organising effective delivery of good environmental practice over the
length of the rural road system. Some road authorities have developed comprehensive programs covering the
administrative and technical issues involved. Replication of these programs by rural local governments would
be wasteful. Austroads should consider developing a manual, similar to the Unsealed Roads Manual, which pro-
vides a guide to good environmental practice for local government roads.
Assessing rural road needs

The report identifies a number of issues relating to rural roads investment. Local roads decision making is not
based on a systematic approach, as is the case for other classes of roads. The NAASRA study (1984) conclu-
sions in regard to inappropriate rural priorities in road sealing, the need to deseal some roads and seal others, is
an example.
This places local government in a weak position to argue a case for better roads. The general view of econo-
mists is that there has been over investment in rural roads relative to other road needs. This view is not shared
by rural residents, nor apparently by the general public. Rural and remote residents value road access highly.
Very little work has been done in assessing the social performance of roads. The Gunning Shire Study (BTE
1983) and work by Stanley and Starkie (1983) are two rare examples. The NT Department of Transport &
Works has developed a Development Roads Assessment Model (DRAM) which assesses relative road priorities
by weighting different vehicle uses and access needs. The model is a form of multi-criteria analysis.
Some effects of road quality on product value and crop production are identified in Section 4.3. These are not
properly quantified, nor is the list exhaustive. A program to develop better methods of appraisal for rural and
remote roads should be considered. This is consistent with Austroads strategic plan for local government issues
to be included in the national road systems standards and practice,

5. INTEGRATING ROADS WITH
OTHER TRANSPORT MODES
5.1 The Context of Transport Integration
5.1.1 Austroads objectives
The Austroads national road performance model (The Australian Road System Role, Outcome and
Performance) develops five general policy objectives. These policies define the requirements to be met in the
planning and management of the nation's road system. The integration of roads with the other transport sys-
tems of the nation is one of these policy objectives.
The achievements to be realised through the objectives cover a range of economic, social and environmental
outcomes. The way in which transport integration relates to these specified outcomes is not established in the
model.
5.1.2 What is integrated transport planning?

There is a need to clearly State that transport integration does not mean only transport coordination. The lega-
cy of Australia's history of transport coordination is noted later in this section. It is seen as one barrier to the
development of effective transport integration.
Transport integration, in the context of this report, is best defined by the results sought. These are to:
provide efficient movement between the transport modes chosen by the user in fulfilling a transport require-
ment;
ensure initiatives to improve transport provisions in one mode are supported by actions in other connecting
modes.
The general objective is to provide better accessibility and greater transport efficiency through effective inter-
faces between transport modes. It is not about restricting or rationing choices, which have been the product of
transport coordination through regulation.
5.1.3 The importance of roads in transport integration

The pervasive nature of road transport is referred to in Section 2.1.1. Roads provide the general transport fab-
ric for the movement of people and goods. Such movements may use roads entirely, or as a means of access-
ing other modes for part of the overall journey.
Linkages required between other modes (rail-air, rail-shipping) are usually specific to a particular transport task
and therefore more readily identified. By comparison the more generalised role of roads means that adequate
road access is often presumed rather than planned. For example, good interfacing between sea and road trans-
port relies on effective road connection at and within the port area, and also through the wider road network
serving it. The needs of the wider network are often overlooked.
5.1.4 Public sector barriers to integration

Three major institutional barriers to better integration of roads and other transport modes are seen as:
1 the legacy of transport coordination;
2 institutional attitudes;
3 commercial sensitivity.
The historic context ® coordinate and regulate

Australia has a long history of coordination of transport through regulation. This has taken the form of reg-
ulation controlling competition within modes and between modes. Examples of the former are domestic avia-

THE RURAL CONTEXT
tion and coastal shipping. Between mode regulation has been applied principally to rail-road competition. Both
forms of regulation have been largely dismantled, with significant changes in the 1980s.
Historically rail and road have not been comfortable bed-fellows. State moves to control road competition for
both interstate and intraState transport appear to date back to the 1930s. Coordination of transport is the object
most often advanced - the belief that transport infrastructure needs would be reduced by regulating the use
made of each mode. In practice this meant the protection of State investment in railways, by retaining prof-
itable traffic through regulation. Regulation and control of interstate transport was held to be unconstitution-
al in 1954. Subsequent attempts were made to find methods which were constitutionally acceptable.
State regulation of intraState competition between road and rail continued for a much longer period. Vestiges
remain today in the movement of some bulk freight in Queensland and Victoria.
This history provides no tradition of cooperative planning between authorities responsible for different modes.
Institutional attitudes
Institutional rigidities are affected by:
budgetary processes;
structure of government organisation;
individual organisation focus and culture;
commercial requirements.
The budgetary process is competitive. Strategic and program needs, identified by different areas of government,
are assessed against economic, social and political objectives, and the financial resources available.
The amalgamation of some transport functions, or the introduction of an overarching transport policy organ-
isation, may provide a better balance of advice. It does not resolve the real issue of achieving a more integrat-
ed approach to transport.
The focus and culture of organisations is about meeting needs, and providing satisfactory outcomes within their
areas of responsibility, with the funding available. The focus has been narrow There is evidence from
Austroads initiatives and State transport strategy studies that this is changing.
Commercialisation
Microeconomic reform has resulted in fundamental changes in the transport sector:
Railways now operate under a charter to compete for freight on a commercial basis and to become increas-
ingly self-funding.
Port authorities are required to provide better return on assets.
Ownership and the commercial requirements of airport operation have changed fundamentally
Road authorities are under increased pressure to provide a commercial return on the communities road
assets.
The need for commercial returns, and greater competition within or between modes, is not conducive to greater
transparency. The interchange of objectives, strategies and programs to identify opportunities for transport
integration in relation to rural requirements may be diminished.
5.1.5 Integration within the road system

The previous observations apply to Austroads policy of integrating roads with other transport modes. Of equal

importance to rural and remote Australia is the effective integration of the road system itself, leading to
improved accessibility across the system. This matter is not a component of Austroads integration policy. Its
discussion is left to Chapter 7.
Box 5.1: Characteristics of freight movement to, from and within rural Australia
The movement of bulk freight exceeds non-bulk movements.
Outward freight movements are predominantly bulk products. Inward freight is mixed, but mainly non-bulk
Rail dominates bulk freight movement, although road provides an aggregating role for agricultural outputs
State rail is confined generally to areas of intensive agriculture. Road provides the major transport service
5.2 The Requirements

5.2.1 Major inter-modal opportunities
The conclusions in preceding chapters which identify the principal areas for transport integration are sum-
marised in Box 5.1.
The movement of bulk commodities appears to provide the principal opportunities for improved transport inte-
gration. In the roads sector these are:
the aggregation function of road to rail for agricultural produce;
the interfaces between roads and ports for export movements.
Opportunities for inward movement of freight appear less. Petroleum and distillate distribution is one area, but
this is generally well-integrated by suppliers.
5.2.2 Needs are specific to sectors

Most bulk movements of freight have specific requirements and usually require specialised transport. They can-
not be treated in aggregate, but require examination on a commodity basis. Transport needs can vary season-
ally and on a longer term basis.
For example, the pattern of grain transport is influenced by:
seasonal conditions which can vary from region to region;
changes in the level and pattern of world demand;
terminal and sub-terminal storage capacity outside port areas;
port infrastructure constraints in relation to storage, loading rates and limitations on draft, length and beam
of dry bulk carriers;
differing markets for different types or grades of grain.
Different factors will affect the movement of other products.
5.2.3 The key players

The key players are not those who have been prominent in the road authority and Austroads consultative
processes. They fall into several groups.

THE RURAL CONTEXT'
Boards and corporations which manage the movement and/or sale of agricultural commodities such as:
- The Australian Wheat Board.
- The Australian Meat and Livestock Corporation.
Major companies in agro business, mining and tourism.
Industry associations and representative organisations.
Australian Bureau of Agriculture and Resource Economics in relation to economic research, market fore-
casts and transport modelling.
National Forums of other transport mode authorities.
5.3 Delivering improved outcomes

5.3.1 The main task
The transport review (Chapter 2) concluded that movement of both bulk and non-bulk freight on intraState
systems dominated rural and remote area transport requirements. The finding leads to the conclusion that the
greatest gains from transport integration are within the States and the Northern Territory. The major freight
carrying and handling components of the system - rail, road and ports - are State/Territory responsibilities.
South Australia, Tasmania and the Northern Territory are partial exceptions, as rail services are operated by
Australian National.
The extent to which road authorities have initiated or assisted in the development of integrated transport strate-
gies requires a State by State review. Such an examination is beyond the scope of this report.
Review of available State strategic roads studies suggests that integration of roads with other modes has been
given more attention in the urban than the rural environment.
This view is supported by a review of reports on options in relation to rail lines in South Australia and Victoria
affected by the standardisation of the Melbourne to Adelaide rail link.
5.3.2 Better practice

The assessment indicates that the main opportunity of delivering better outcomes from modal integration in
rural and remote Australia lies with State instrumentalities. This involves closer interaction with key stakehold-
ers in the movement of rural commodities across State transport systems. An example of better practice is pro-
vided by Victoria. Articulated vehicles carrying fully loaded 40 foot containers of export product are able to
use the local road systems within a 50 kilometre radius of the rail heads at Mooroopna and Meribein to access
crane loading facilities.
Austroads can assist in meeting its policy objectives by developing a better understanding of the needs of key
stakeholders at the national level. Actions which can be taken to develop a national framework for better prac-
tice include:
the identification of legislative and institutional constraints to the more effective integration of roads and
other modes to serve the rural economy.
the assessment of international policies and practices in the multi-modal movement of major (bulk) com-
modities. This should include the evolution of non-road based options (for example, pipelines).

6. INTEGRATION OF ROADS WITH
ION. DEVELOPMENT
6.1 Austroads Policy
The integration of roads with land use planning and regional development priorities is a further Austroads
objective. Increased regional development, including tourism, mining, agriculture, growth of regional centres
and urban development by new and improved roads is a specific economic outcome identified by key stake-
holders. The provision of new or improved roads to enhance accessibility and reduce travel costs is identified
as an instrument of change. No measurement of the desired outcome is provided.
6.2 Regional Development in Australia

6.2.1 The historical perspective
Butler and Mandeville (Regional Economics, University of Queensland Press) observed in 1981 that the high
degree of urbanisation, together with the resultant decline and instability in rural areas, is seen by regional econ-
omists as the 'Australian regional problem".
The reasons which they advance based on historic evidence to the mid 1970s, parallel the situation in 1995.
Policies to reduce the rural to urban disparity in economic development in the last 20 years apparently have not
been effective. The problem is not only Australia's. A similar situation has resulted in the United States, as a
result of a crisis in agriculture and the drop in energy and metal prices during the 1980s.
6.2.2 The rural outlook

Changes in regional economies will affect transport needs
Road transport requirements will be affected over the longer term as regional economies change and diversify.
Various studies indicate longer term changes in the level of outputs in:
broad acre farming;
cattle production;
mining.
A number of changes are evident in the rural sector. The feedlot industry has increased markedly in the past
ten years. At the end of 1992 feedlot capacity was around 10% of annual cattle turnoff. Continued expansion
of capacity is expected to satisfy increased local and export demand for quality grain fed beef. Farm consoli-
dation is occurring in broadacre agriculture in response to the need for further efficiencies in grain production.
Agricultural and horticultural producers have diversified into new product areas to serve overseas markets. The
development of regional industries is also evident and a number of regions are looking to tourism to reduce
their reliance ont the primary sector. These changes can be expected to increase both the variety and volume
of road transport needs.
Agricultural expectations
Australian rural industry productivity levels are well above the OECD average (EPAC 1993). However, long
term changes in world markets and overseas trade and agriculture policies have adversely affected commodity
prices. The recession in Australia and recent drought conditions in much of eastern and northern Australia,
have also affected the viability of rural producers and local business. World commodity prices have decreased
substantially since 1988-89. It is expected that there will be further easing of commodity prices in 1995-96 and
beyond (ABARE 1995). Beef production, however, is expected to increase substantially as prices rise during the
1990s. Beef cattle may provide a substitute for wheat and sheep production in suitable areas.

THE RURAL CONTEXT
Mining will have specific transport requirements

World demand for minerals and energy is forecast to strengthen and prices are expected to increase in both areas
during 1995-96. Significant price increases occurred during 1994-95. Over the period 1989-90 to 1993-94 the
gross volume of production in the sector increased consistently. There was little change in the value of pro-
duction in real terms as a result of world economic conditions and a general decline in world prices. According
to ABARE (1995) volume of mine production is expected to increase by 22 percent over the remainder of the
decade, but crude oil production is expected to decline.
Employment in the mining and energy sector fell in the period from a high of 104,000 to 87,000 in 1992-93,
although there was a slight increase in 1993-94. Increased output has resulted from substantial improvements
in productivity and the continued ability to compete effectively on the international market.
Increasing output from mining and the opening of new mining areas result in specific requirements. An exam-
ination of mining industry activities in Queensland for the Queensland Department of Transport notes that
equipment used in open cut mining is continuing to increase in size in order to contain labour costs. Transport
corridors will need to be maintained to allow for heavy and overdimensional loads (including height clearances)
for movement to and from mining areas. Mining concerns include the standardisation of transport regulations,
particularly relating to B-double and road train operations between adjoining States. Increases in allowable gross
vehicle mass are another specific requirement.
Some regions are experiencing high growth

Population and employment in many regional areas in Australia is growing faster than the capital city areas. Two
studies of regional development prospects (Developing Australia 1994, Lead Local Compete Global 1995) have
been undertaken as part of a Commonwealth Government review of regional needs and opportunities. They
indicate that tourism development based on regional attractions, and export output by regional industries, have
been two elements underpinning growth. The regions most adversely affected by recent structural change and
world price reductions for commodities are those with the lowest population densities.
Increased demand for road transport is likely to result in the more densely settled areas of rural Australia, and
in other locations which have significant tourist attractions.
Changes in services in rural areas

Reductions in government and private sector services have occurred in many rural agricultural areas. They have
been brought about in two ways:
1 decline in population and employment levels;
1 rationalisation of services.
Severely reduced rates of return from farm assets, or negative farm incomes, have resulted in the broadacre agri-
cultural areas, with many farming families being forced to leave the industry. In the period from 1988-89 to
1992-93, employment in agriculture declined from 384,000 to 360,000 - a fall of 5.6%. A small increase
occurred in 1993-94 (ABS 1995). The reduction in agricultural employment, whilst significant, underStates the
economic and social impacts in many rural areas. First, many farming families remain in the industry but with-
out the capital resources or income to continue to sustain viable farm operations. Second, the reduction, or
absence, of farm incomes has affected local business. There has been a reduction in the viability of, and level
of employment in, the business, retail and service sectors in many farming communities.
TOWARDS BETTER. PRACTICE 205

The effects of recession and the need for both government and the private sector to find efficiency gains in the
provision of services has resulted in the rationalisation of service delivery.
The closure or amalgamation of schools, hospitals and social and community service offices in smaller rural
communities and the concentration of these services in larger regional centres has resulted in increased journey
requirements or access difficulties for some rural residents. Similar effects have resulted from the relocation of
private sector banking, medical service and retail facilities.
Implications for local government and road authorities

The increase in the disparityin the patterns of regional economic prosperity in Australia has implications for
both rural local government and road authorities.
It would appear that many rural local governments are faced with increasing demands for general community
services, better road connections to regional centres, and community transport. For some councils the ability
to increase revenue through increases in rateable property value would appear limited. At the same time,
changes in transport use and technology, previously discussed, will increase demands for local road improve-
ments.
In other areas, rapid regional development is causing problems in providing adequate road networks to meet
growth requirements.
6.3 Roads as an Instrument of Regional Development

The general conclusions are that:
Existing transport provision is not a major factor in regional business development. The adequacy of future
road infrastructure, however, is an important concern.
Particular projects in areas such as tourism and mining may depend on road investment for commercial real-
isation.
Road quality may impact on the productivity of specific agricultural sectors.
Transport strategies can facilitate State or regional development strategies, but are only one component.
Awareness of government goals and changing patterns of regional growth are important in developing effec-
tive transport responses.
6.3.1 Findings of recent studies

Two major studies of regional development are referred to in the previous section. They provide different views
of regional needs.
Developing Australia (The Kelty Report)

A principal requirement of the Kelty Report was to examine possible changes in Commonwealth policy or pro-
grams which would assist regional development. A national commitment to the modernisation of Australia's
infrastructure base, particularly in transport, was one of four major recommendations which resulted from the
taskforce review.
Transport recommendations covered a range of issues and included all transport modes. Transport services
were identified as a crucial development issue by virtually every region. The road programs nominated in the
report relate to the eastern seaboard of Australia. They concern the national highway system and the Pacific
Highway, and the improvement of accessibility to capital city areas. The need for better access from regions to
major highways was also supported.

THE RURAL CONTEXT
Lead Local, Compete Global (McKinsey & Company)

The report presents the findings of a study of private sector investment in Australia's regions, covering 1800
companies and 200 business and regional leaders. Some of the significant findings are summarised in Box 6.1.
The essential point to emerge from the McKinsey report is that leadership is critical to the success of Australia's
regions. This leadership must come from business executives and regional leaders. The role of government is
shifting from "doer and director" to that of a change leader. Government can assist by providing a stable com-
petitive environment and acting as a facilitator in encouraging changes in attitudes necessary for economic
growth.
Box 6.1
41% of regions have declining employment but contain only 12% of the non-metropolitan population.
Conversely 24% of regions containing 36% of the population were growing faster than capital cities.
70% of all investment in regional areas comes from existing business in the region. A further 20% of
investment comes from existing businesses expanding into the region.
Transport was not a constraint to further investment and growth (based on an open ended question). Poor
infrastructure ranked 13 in responses.
Costs involved in using current methods of transportation are not "knock out" factors in assessing markets.
On average they represent only 5% of total business costs.
6.3.2 Better practice

It is difficult to see a major Austroads role in relation to regional development in the rural and remote environ-
ment The issues and responses are of a State or regional nature. Better practice in serving regional needs will
require a greater understanding of the changes occurring in regional economies in rural Australia. As indicat-
ed, these changes will vary from region to region and will be affected by the potential for changes in land utili-
sation, product output and production techniques. The necessary responses to social needs, such as transport
access to government and private sector services, will also vary in relation to the present and potential economic
prosperity of the region.
The provision of an effective transport system from farm gate to market requires the use of the most eco-
nomically efficient freight vehicles on all functional components of the road system. The need for a regional
approach to road planning is evident. The requirements of closer cooperation and greater coordination
between local councils and State road authorities are addressed in the following section.

7. INSTITUTIONAL ARRANGEMENTS
-INTEGRATING ROADS
7.1 General Funding Arrangements
Road funding arrangements between the Commonwealth and the States/Territories and local government
changed substantially during the 1990s. The changes over the period have resulted in simplification of the fund-
ing arrangements, clearer definition of the funding and responsibilities for road provision and maintenance in
the various categories of roads, and changes in the distribution of the road funds between the States and
Territories. The changes have also reinforced the three tier approach to road management.
Funding to the States

Prior to January 1994 Commonwealth road funding to State and Territory governments was made through spe-
cial purpose payments in six specific program areas, identified under the Australian Transport Development Act
1988.
Funds provided by special purpose payments were only to be spent in the program area specified. For exam-
ple, national highway funds could not be used for any other road classification or funding program area, such
as road safety, without special exemption. Under these arrangements the Commonwealth retained strategic con-
trol of its road funding to the States and Territories.
In July 1991 Heads of Government agreed that road responsibilities for each level of government would be
revised. From January 1994, Commonwealth government responsibility for roads has been confined to the
National Highway System. Funding to the States and Territories, which excludes the national highway alloca-
tion, changed from specific purpose payments to general revenue assistance in the form of identified road
grants. It is not mandatory to spend general revenue assistance identified road grants on roads. The
State/Territory governments decide how the funds will be spent.
The method of distribution of identified road grants has also changed from that based on historical share, to
the Commonwealth Grants Commission relativities which underlie the distribution of Commonwealth General
Finance Assistance Grants. The change in the distribution process will occur over a three year period com-
mencing 1995-96.
Under the new arrangement funding to Tasmania, South Australia, Northern Territory and the Australian
Capital Territory will increase, Queensland and New South Wales will be maintained, and Victoria and Western
Australia will receive a reduced share.
Funds for local roads

Local road funding by the Commonwealth to the States and Northern Territory was previously changed in July
1991. These funds are now distributed as identified road grants within the Commonwealth General Finance
Assistance Grants to Local Government. They are not identified as Commonwealth transport allocations to the
States. The distribution of the State or Territory share to individual councils is the responsibility of the
State/Territory Local Government Grants Commission.
The classification of identified road grants as general finance assistance means that local government has the
same flexibility as State government in their use.
7.2 Roads Responsibilities and Funding

7.2.1 Commonwealth government
Under the current arrangements the Commonwealth government is responsible for the funding and program-
ming of road construction and maintenance of the National Highway System. The National Highway network
extends for 18500 kilometres. Additional links are planned through Sydney, Melbourne, Brisbane, Adelaide and
Perth to provide continuity of the system through those cities. The budget allocation for National Highways in
1995-96 is $834.7 million.

i'l-lE RURAL CONTEVl`
7.2.2 State and Territory government

The State and Territory governments are responsible for their arterial and main roads systems and for local
roads in those areas where there is no recognised local or community government. In some States there are also
specific purpose roads maintained by the State Road Authority.
Funding for the State road system is derived from two principal sources - the Commonwealth and the
State/Territory
The allocation of funds for roads is a State/Territory budget decision. Some degree of hypothecation may exist
- varying proportions of State fuel franchise fees and other specified revenues are allocated for roads -
although in aggregate terms (Commonwealth plus State funds) considerable flexibility is possible.
Nevertheless the decision to distribute Commonwealth road funding to States/Territories in accordance with
Commonwealth Grants Commission (CGC) relativities appears to have some general implications in relation to
State/Territory road funding effort. The CGC bases its recommendations on the principle of fiscal equalisa-
tion, described as:
"Each State should be given the capacity to provide the same standard of State type public ser-
vices as the other States, if it makes the same effort to raise revenues from its own sources and
conducts its affairs at an average level of operational efficiency". (CGC 1993)
7.2.3 Local government

Local government is responsible for all public roads not defined as Commonwealth or State responsibilities. It
does not include local roads in unincorporated areas which are administered by the relevant State or Territory
road authority. The matter of responsibility for roads in community government areas (that is, aboriginal areas)
is discussed in the following section. There were 809 local authorities in Australia at June 1993 comprising 175
metropolitan councils and 634 rural councils.
Funding for local government roads is drawn from three sources - Commonwealth Identified Road Grants,
State Specific Purpose payments and Local Government Council rate revenues. Allocations to councils within
a State or Territory are determined by the State/Territory Local Government Grants Commission.
As outlined in Section 7.1, Commonwealth funding to local government for roads since 1991-92 has formed a
separately identified item within the general Finance Assistance Grants to local government. Road funding to
local government is estimated at $358.1 million for 1995-96.
Distributional models
The principles applying to the allocation of identified road grants differ from those applying to the distribution
of the general component of Finance Assistance Grants to local councils, and also vary from State to State.
The distributional models used for identified road grants generally use weighting factors related to road length
and population. Some models also include further weighting factors related to road type and to topographical
and rainfall effects on road provision and maintenance. It should be noted that the distributional methods
applying to the general component of Finance Assistance Grants also includes an assessment of roads needs in
the models used.
According to the Australian Urban and Regional Development Review (Financing Local Government)
Commonwealth identified road grants as a percentage of expenditure on roads by local government varies from
State to State. Generally the percentage ranges between 8% to 14% for South Australia, Victoria, Queensland,
New South Wales and in the region of 25% to 30% for Tasmania and Western Australia, up to 1991-92. The
pattern of distribution of roads funds by category of council varies, but generally favours rural agricultural com-
munities with long lengths of roads. Total local government expenditure on roads in 1991-92 was approximately

$2.6 billion, some 26 percent of total expenditure. Some estimates indicate lower figures of around
$1.8 billion.
The Review, in examining the potential effects of inclusion of identified road grants in the general Finance
Assistance Grants and the use of general models used by State Local Government Grants Commission in dis-
tributing funds, found that:
Using the South Australian, Victorian and New South Wales Grants Commission model, a higher proportion
of roads funds would be distributed to fringe and developing councils, with a decline in the share for rural
agricultural councils.
Using the Western Australian and Queensland Grants Commission model results in a significant increase in
funding to remote small, medium and large councils, and reductions to small rural councils.
The Review indicated that whilst the current allocation of local roads funds distorts the achievement of hori-
zontal equalisation, the major disruption which would result favours the continuation of the separate calcula-
tion of local road funding.
7.2.4 Community government

There are 92 community government bodies (aboriginal organisations) eligible under the Local Government
(Financial Assistance) Act 1986 for funding assistance. Of these 58 are in the Northern Territory, 33 in
Queensland and one in South Australia. In addition there are 36 Regional Councils formed through the
Aboriginal and Torres Strait Island Commission (ATSIC) and a further two councils - the Central Land
Council and Northern Land Council - formed in the Northern Territory under the Aboriginal Land Rights
(Northern Territory) Act 1976. These councils are not presently eligible for funding under the Local
Government Act.
According to the Local Government Review report, the untying of Commonwealth roads funding to local gov-
ernment has resulted in principles being agreed between the States and the Northern Territory for the alloca-
tion of road grants to aboriginal areas. All Local Government Grants Commissions except Tasmania and the
Northern Territory operate under principles which require the recognition of needs and allocation of funds for
roads for aboriginal communities. The Northern Territory has established two pools of funds, one of which is
used for grants to aboriginal communities.
The consequences of untying road grants for funding access road to aboriginal communities in the Northern
Territory are serious. Some are receiving such low levels of funds that road construction is not practicable. The
proposal being considered would be the pooling of local road funding, capital equipment and training programs
to ensure roads for aboriginal communities are built and monitored to an adequate level (Financing Local
Government, Voll, p 71-72).
The Review notes that the construction and maintenance of roads within aboriginal communities is still a vexed
issue as roads within communities are not public roads and local governments do not accept responsibility for
them.
7.3 Interaction and Coordination

The three tier arrangement of road funding and road responsibility is a natural outcome of the structure of gov-
ernment which has been adopted in Australia.

TTHl RURAL CONI'l;X'l
It provides a logical hierarchy for road provision in that:
the national highway system can be developed from a national perspective.
State systems can be developed in accordance with State development priorities.
local road provision can be matched to local priorities.
As noted previously, national highways also perform a major role in intraState or inter-regional movement of
people and goods. The priorities ascribed to development of links in the national highway system, therefore,
are of direct State/Territory interest.
The multiple levels of responsibility, however, are not conducive to developing a well integrated road system.
7.3.1 Federal and State coordination

Federal and State roads coordination has developed over a number of years through a consultative process
involving:
bilateral agreements;
Ministerial Councils;
formal and informal roads and transport authority forums.
The process has not necessarily been easy and agreements in some areas have been difficult. Recommendations
of the National Transport Planning Taskforce focuses on the challenges to government in delivering a nation-
ally consistent framework for transport development. Austroads provides a basis for providing a national per-
spective on transport issues.
7.3.2 State to State coordination

Lack of agreement between States on the regulatory requirements of heavy transport have been a major imped-
iment to efficient freight transport movement. Agreement to a national standard has now been achieved.
Transport planning is essentially State based. There are two areas, however, where effective coordination is
required. These are:
agreement to cross border routes for B-double and road train operation
development of a consistent road network strategy in border areas between States.
The latter requirement most affects Queensland, New South Wales and Victorian road authorities because of
the rural/urban development in south east Australia.
7.3.3 State to rural local government coordination

Coordination between State and local government in the roads sector has received little attention. Its difficul-
ties are increased by:
the number of rural local government authorities involved (Victoria had 148 in 1993)
the independence of funding distribution and road funding expenditure;
the range of functions performed by local government. Roads are only one of a number of responsibilities.
On average they result in some 26% of local government expenditure.

7.3.4 Local government to local government
State local government associations and State and national local government forums provide a means of
exchanging information and developing agreements. No evidence has been provided of development of
national or Statewide approaches to strategic, policy or planning issues in road management.
7.4 Key Issues for Better Practice

A central issue in relation to rural roads is expressed by Stanley (1991).
"Local roads in both rural and urban areas have remained something of a mystery. Little is known
about their use or condition in any systematic way. This is surprising - local roads account for
85% of the length of the Australian road system."
The "mystery" of rural local roads leads to:
ineffective advocacy through public perception or national assessment of land transport infrastructure needs.
inefficient service to rural users through the inability to develop a strategic approach to road development
and funding of priority needs.
7.4.1 Advocacy issues

Perception
The need for improved rural roads is a major requirement and a high priority of rural and remote residents in
Australia. Public perception, from available survey, is that city people get a better deal than country people in
the provision of roads.
While there is public sympathy, based, presumably, on perceptions of equity, there would be little understand-
ing based on experience. Travel on local rural and remote roads is variously estimated at 4% to 10% of total
travel. Effective public advocacy at national or State level requires a factual base, which does not exist.
Quantification
National assessments of land transport infrastructure needs are similarly affected. For example, case studies of
rural local roads available for the Allen report (1993) were confined to small samples of roads taken over by
road authorities. The study presumed benefit cost ratios for local roads based on BTE (1984) observations (p
62).
Most commentators maintain that there has been an over-investment in rural roads, based on standard benefit-
cost assessments. User benefits flow from savings in vehicle operating costs, reduced travel time and savings in
accident costs to a lesser extent. They are, therefore, linked directly to traffic volume.
Standard economic evaluation does not include the assessment of product loss from poor roads or estimates of
social weighting in the allocation of available resources. These issues are discussed in Chapter 4.5.2. The devel-
opment of appropriate indices requires more, rather than less data in relation to rural road use.
Cox (Refocusing Road Reform, 1994) highlights road transport pricing problems between city and rural areas
in an analysis which internalises the external costs of transport use. Road users in Australian cities produce
much higher marginal costs for congestion and environmental pollution than in rural areas, whereas their price
for fuel is less. The study indicates appreciable differences between the calculated optimum charges in rural and
city areas and existing charges.
The estimated overcharging in rural areas is of the order of 16 to 26 cents per litre of fuel, compared with an
undercharge of 15 to 28 cents per litre in city areas based on meeting the social costs of travel.

THE RURAL CONTEXT
7.4.2 Strategic issues

Network development, network management and funding practice are the principal strategic issues.
Network development aspects

The functions required of the local road system to meet social and economic needs of the community are:
good connectivity with the rural arterial system for business, commercial and private travel.
provision of inter-regional (across local government boundary) accessibility to regional services
local access to properties for movement of produce and personal travel.
The development of an effective network needs knowledge of present and expected transport demands. It
means determining road needs and priorities in association with the State road authority and with neighbouring
Councils. It requires a relevant data base and a method of assessing the benefits and costs of alternative net-
works and road standards.
Network management
The effectiveness and efficiency of network management is important. Much of rural local government roads
expenditure is related to maintenance of the system rather than its upgrading or extension. The Unsealed Roads
Manual (ARRB 1993), is an example of better practice in road management. The manual, developed on behalf
of local government, provides a valuable guide to design, construction and maintenance of unsealed roads. The
manual outlines requirements in developing performance management, as a means of obtaining greater value
from available maintenance resources. The dissemination of the information has been an ongoing process.
This has included some 30 workshops around Australia and New Zealand. Work on further aspects, including
development of an economic evaluation model has been commenced (correspondence ARRB 1995). There is
potential to build on this initial work.
Funding practice
The allocation procedures for identified road grants through the State Grants Commission to Local
Government are outlined in Section 7.2.3. These allocation models, of necessity, are based on available local
government data. This generally comprises road length and population by local government area. The effect
is to distribute grants on the basis of historic costs of network preservation. No regard can be given to the suit-
ability of the network in relation to current or expected demands. Nor can efficiency of service delivery be
identified or rewarded. The review - Financing Local Government - gives some attention to options to
encourage efficiency measures through variations in grant allocations.
7.4.3 Structural change

Structural change is occurring in local government administration through:
amalgamation of Council areas;
development of regional associations;
legislative change.
The first two processes should provide better resource bases for road management and an enhanced ability to
develop a road network to effectively serve a wider region. In South Australia regional associations can be fund-
ed for roads purposes. This is done through submission of proposals to a local roads advisory committee,
which advises the State Local Government Grants Commission on suitable projects.

All States and the Northern Territory have reviewed local government legislation in recent years. The review
Financing Local Government notes that efficiency, annual reporting, corporate planning, local participation and
accountability are the major outcomes which are sought.
7.5 Better Practice in Rural Roads Management

Better practice in the context of the present structure of government administration and funding procedures
requires:
a regional approach to road planning and management.
adoption of road management systems and tools which produce more effective allocation of resources in
meeting community needs, including improved program and project evaluation.
sufficient standardisation of data bases to provide for interchange and integration of information.
agreements on policies, standards and practices in key areas such as road standards, road safety, the environ-
ment and ecologically sustainable development.
State Road Authorities are in the position to take initiatives in coordination and assistance with technical issues.
7.5.1 Austroads actions

Austroads can provide leadership in association with the Australian Local Government Association, by devel-
oping a road management system package for local government. Some work has already been done by
Austroads and ARRB in particular areas. It is not clear if this forms a coordinated approach to the problem.
Establishment of a conceptual design in a modular format would appear to be an initial requirement. This
would provide a framework to review existing commercial or roads authority systems which could be adopted
and to determine further work priorities.

8. FINDINGS, CONCLUSIONS AND
RECOMMENDATIONS
8.1 Findings
8.1.1 Rural and remote Australia
Some 2.45 million people (14.5% of the Australian population) lived in rural and remote Australia at the 1991
census.
Rural Australia is concentrated in two widely separated regions. One region covers the eastern and south-
eastern coastal area of Australia, including Tasmania. The other region comprises the south-west of the con-
tinent centred on Perth. These regions contain the intensive agricultural areas of Australia.
Remote Australia, which comprises some 79% of the land area, covers the northern tropical and central and
southern and areas of the continent. A vast area is not serviced by public roads and is mainly undeveloped.
Land under use is mainly grazing, but there are significant areas of tourism, and mining development and
potential.
The non-urban component of the road system comprises over 80% of the total road length. Some 450,000
kilometres, 77% of the total length of the rural and remote road system, are unsealed. In the remote regions
nearly 30% of the road length is flat bladed tracks.
8.1.2 Movement of freight and people

The freight transport task is mainly within State borders. Intrastate land transport of freight, outside of
urban centres, is substantially higher than interstate movement. Excluding private railways, regional and
intraState movement accounted for 67% of the non-urban land freight transport task (tonne-kilometres) in
1991.
Bulk and non-bulk freight transported on intraState systems outside urban areas totalled some 77 billion
tonne kilometres in 1991. Road transport accounted for some 33 billion tonne kilometres (45% of the total).
Intrastate rail transport is dominated by the movement of bulk commodities.
Sea and air transport provide vital services in remote areas where roads are absent or land transport is affect-
ed by seasonal climatic conditions.
Road freight costs are within the range of 2 to 3% of output costs for most rural industries (NTPT esti-
mates). Road costs are between 76% and 93% of total freight costs for most industries, excluding petrole-
um production and coal mining, where sea transport costs are significant. Industry estimates of road trans-
port costs are generally higher, and within the range of 5 to 8% of output costs.
Greater use of heavy combination freight vehicles provides the means of reducing freight costs and delay-
ing capacity related road investment on heavily trafficked corridors.
Transport efficiencies need to be sought in the regional and intraState movement of goods, as well as the
lesser interstate requirements. The way in which State and regional transport systems are developed, and the
interfaces between road, rail and ports, therefore, are of primary concern in achieving reductions in trans-
port costs.
Travel by road accounts for over 80% of all non-urban passenger movement. The use of cars for non-urban
travel has declined from 72% of all passenger movement in 1976 to 61% in 1991. In the same period bus
travel has increased fourfold. In 1991, bus movements were nearly 14% of all total passenger kilometres,
similar to air travel. Passenger travel by sea and rail is minimal.

8.1.3 Road user and resident concerns
Safety of rural roads and the need to reduce road accident trauma appear as the universal concerns of rural
road users and rural residents.
The features of the road regarded as most important are closely associated with safe driving conditions.
They relate mainly to effective maintenance of the road-signing, pavement lining and marking, shoulder
maintenance and the general condition of the road surface. These qualities provide a road profile for rural
arterial roads consistent with present design practice and good management practice in their operation.
General road users don't like trucks. A widely held concern among general road users is the volume of truck
traffic on roads. These concerns relate to both the effect of trucks on road safety (overtaking and passing
of heavy vehicles) and on the environment and amenity of towns on major freight routes. Wider roads
(including shoulder sealing), overtaking lanes, and bypasses of towns are commonly indicated needs.
Business and commercial users see extension of duplicated highways, bypasses around towns and better
maintenance and widening of local minor roads, as desirable. Access to, and within, major cities is a key
requirement because of the dominance of capital cities as source of supply for inbound goods and the major
destination for outbound products.
Tourism operators require roads with the capacity to cope with physically large vehicles. Good landscaping
and roadside maintenance, rest areas, and a good road surface are desired qualities.
Accessibility is a major issue, particularly for people in remote areas. Improvements to road surface quality
(whatever the type of surface), improved safety, reduced wear and tear on vehicles, lower transport costs and
reduced losses in product value are major benefits sought. Isolation is seen by nearly one third of rural
women as the single biggest problem. Improved rural roads are important to women in all localities. In New
South Wales, Queensland, South Australia and the Northern Territory women see increased expenditure on
roads as more important than anything else.
8.1.4 Current performance of roads

The available evidence indicates that the quality of the national highway system has improved. There is no
consolidated view of State and Territory arterial road systems which provides a quantitative comparison with
the situation in 1984 (the NAASRA survey). Data available to compare current rural and remote road ser-
vice with the 1984 situation indicates that local road quality may have improved.
Nearly two thirds of fatal accidents occur outside major urban areas. Whilst rural fatal accidents have
declined, this decline has been at a slower rate than in urban areas. The difference in the rate of decline is
significant and not attributable to chance.
The death rate among younger drivers, especially young males, is two to three times higher than their city
counterparts, who have a higher level of risk than the average driver.
Loss of control on the road shoulder is identified as an important factor in rural accidents. The significance
of loss of control accidents on rural roads has resulted in the National Road Trauma Advisory Committee
calling for shoulder sealing treatment in high risk areas.
The provision of low cost safety improvements of the type identified by road users could result in high ben-
efit cost ratios. There is no data base to determine the extent of provision. From general observation their
use on other than national highways and major arterials would be low.

'11-HIE RURAL CONTEXT
Little attention has been given to the development of evaluation models of rural road needs. In particular
the social performance of roads, the effect of poor roads on the product value of particular commodities
carried by road and the effect of dust from unsealed roads on adjacent agricultural areas has not been
assessed.
The rural road network extends for some 600,000 kilometres through a variety of geographical and climatic
regions in Australia. The delivery of better management of the network is a fundamental issue in preserv-
ing biological reserves providing habitat for fauna, and enhancing the environment.
8.1.5 Roads and regional development

There is no history of cooperative planning between authorities responsible for different transport modes.
The movement of bulk commodities appears to provide the principal opportunities for improved transport
integration. These opportunities are widest in the intrastate movement of hulk freight.
Most bulk movement of freight has specific requirements. These requirements cannot be treated in aggre-
gate, but require examination on a commodity by commodity basis.
There has been an increase in the disparity of regional economic prosperity in Australia. Reductions in, or
centralisation of, government and private sector services in declining rural areas, have resulted in increasing
demands for general community services, better road connections to regional centres, and community trans-
port. Changes in transport use and technology will also increase demands for local road improvements.
Roads can facilitate State or regional development strategies, but are only one component. Existing road
infrastructure is not seen as a major constraint to regional investment. The future provision of cost com-
petitive telecommunications and efficient road infrastructure is seen as important by business.
8.1.6 Institutional arrangements
The development of an effective local road network needs knowledge of present and expected transport
demands. It means determining roads needs and priorities in association with the State road authority and
with neighbouring councils. It requires a relevant data base and a method of assessing the benefits and costs
of alternative networks and road standards.
There is no local roads data base. Little is known about the use or condition of local roads in any system-
atic way. There is, therefore, no quantified information which can lead to:
- effective advocacy of needs;
- efficient service delivery to rural users.
8.2 Conclusions and Recommendations

8.2.1 Community reactions to heavy freight transport
Adverse community attitudes to heavy freight vehicles arise from the effects of trucks:
on driving safety (overtaking and passing heavy vehicles)
on the environment and amenity of towns situated on major freight routes
Community attitudes may improve with the following actions:

I On rural roads
(a) increased rate of shoulder sealing and edge lining of rural highways. The National Road Trauma Advisory
Council (NRTAC) identified shoulder sealing as one of its priority safety measures.
(b) priority given to the provision of passing lanes at identified locations on truck freight routes. Some social
weighting factor could be applied in the assessment of funding priorities for passing lanes.
(c) a program which informs the community of the actions being taken, and the need for freight transport effi-
ciency in maintaining our standard of living.
2 In towns and regional centres
(a) increased funding priority for town bypasses on heavily trafficked freight routes.
8.2.2 Safety of rural roads

Safety of rural roads and the need to reduce road accident trauma are universal concerns of rural road users
and residents.
. A recommendation by the NRTAC from its national conference should be adopted by Austroads:
"States and Territories undertake a safety audit of rural roads to prioritise areas with high existing
This will provide information about road deficiencies, traffic flows,
and potential crash rates.
crash history, trauma management locations and causes to enable suitable planning for
counter-measures. Priority should be given to training road safety auditors. The Federal Office
of Road Safety should fund an Austroads project to develop a uniform rural data collection sys-
tem."
The term "rural roads" in the recommendation must be seen to include all rural roads. Local government
should be required to participate in safety audits of its road to prescribed standards. The Austroads Road Safety
Audit provides a relevant base from which to initiate action.
A further recommendation should be added to that put forward by the NRTAC.
"Austroads should undertake a complementary program in association with the Federal Office of
Road Safety to assess the minimum requirements for safety features on rural roads of various cat-
egories. These requirements should be accepted as national standards for existing rural roads. A
practicable funding and implementation program should be developed as a component of the
national approach to rural road accident reduction in Australia."
8.2.3 Environmental practice

Good environmental practice in road reserve management over the 600,000 kilometres of the rural and remote
road network is a fundamental requirement. Management of the system is the responsibility of some 640 local
government and State road authorities.
There is a need to develop a consistent approach to good environmental practice and effective management of
maintenance programs across the range of organisations involved.
8.2.4 Assessing rural roads needs

Rural and remote residents value road access highly. The effects of road quality on product value and crop pro-
duction have not been adequately identified.
There is a need to develop better methods for the social and economic appraisal of rural and remote roads.

THE RURAL CONTEXT
8.2.5 Integration of roads with other transport modes

The main opportunity of delivering better outcomes from modal transport integration in rural and remote
Australia lies with State/Territory instrumentalities. Better practice requires closer interaction with key stake-
holders in the movement of rural commodities across State/Territory transport systems and a better under-
standing of the changes occurring in the regional economies in Australia.
Actions which can be taken to develop a national framework include:
identification of legislative and institutional constraints to more effective integration
the assessment of international policies and practices in multi-modal movement of major commodities
including the evaluation of non-road based options.
8.2.6 Better practice in rural roads management

Better practice in the context of the present structure of government administration and funding procedures
requires:
a regional approach to road planning and management;
adoption of road management systems and tools which produce more effective allocation of resources in
meeting community needs;
sufficient standardisation of data bases to provide for interchange and integration of information;
agreements on policies, standards and practices in key areas such as road standards, road safety, and the envi-
ronment and ecologically sustainable development.
State Road Authorities should take initiatives in coordination and assistance with technical issues.
Austroads actions:
Austroads can provide leadership in association with the Australian Local Government Association, by devel-
oping a road management system package for local government.

REFERENCES
Chapter I
NAASRA Roads Study (1984) Local Roads Report, Study Report R3/
NAASRA (1987) The Australian Roads Outlook Report (TAROR).
Austroads (1994) Road Facts - An overview of Australia's Road System and its Use.
Cosgrove and Gargett 1992 The Australian Domestic Freight Task, Australian Transport Research Forum.
Bureau of Transport and Communications Economics (1994) Adequacy of Transport Infrastructure - Intercity Roads,
Working Paper 14.1 for National Transport Planning Task Force.
Mues, Peterson, Walshaw, Morris (1993) Future Land Use in Australia - An Economic Perspective, Australian Bureau of
Agriculture and Resource Economics.
Australian Bureau of Statistics (1991) Census Population Growth and Distribution in Australia.
Chapter 2
Bureau of Transport and Communications Economics (1995) Building for the Job Commissioned Work Volume 1 for
National Transport Planning Taskforcc.
Cairns Port Authority Personal correspondence.
National Transport Planning Taskforce (1995) Building for the Job - A Strategy for Australia's Transport Network.
Deborah Wilson Consulting Services and Agtrans Research (1993) Study of the Impact of the Agricultural Industry and its
Development on the Road Infrastructure inQueensland for Queensland Transport
Department of Business and Employment and Vicroads (1995) A Research Report on Regional Industry Transport Needs
and Demands.
Allen, Hall, Noble, Sethi, Blyth (1991) Shipping and Port Arrangements for Grain in Eastern Austral -: A Revised Model,
Australian Bureau of Agricultural and Resource Economics.
Vicroads May (1995) Heart' Vehicle Reform Information, Bulletin No 4.
Maddock, J, A History of Road Trains in the Northern Territory 1934-88, Kangaroo Press, ISBNO86417 208 7.
Hall, Allen, Abdalla, Noble (1994) Impact of B-doubles on Grain Transport Costs Australian Bureau of Agriculture and
Resource Economics Research Report 94.15.
Chapter 3
Austroads (1994) The Australian Road System, Role, Outcomes and Performance Measures.
Worthington Di Marzio Research & Marketing (1995) RegionalIndu try Transport Needs and Demands for Department
of Business and Employment and VicRoads.
Worthington Di Marzio Research & Marketing (1994) A Research Report on User Needs; Section 2: InterState and
International Self-Drive Tourists; Section 3:Tour Coach Operators for VicRoads.
Royal Automobile Club of Victoria (1995) linking l ictoria: RACV Member Perspectivesl
Australian Automobile Association (1993) A Tracking Study of Attitudes towards Issues relating to Motoring.
Frank Small & Association (1995) Community Views Corporate Community Attitude Survey for Road "Transport Authority
NSW.

THE RURAL CONTEXT
Statewide Framework Report (1990) VicRoads 2000 Rural Arterial Roads Strategy, VicRoads.
Reark Research Pty Ltd (1994) Executive Summary of the Main Roads, Western Australian Customer Service Research
for Main Roads.
Department of Prime Minister and Cabinet (1988) Life Has Never Been Easy, report on the Survey of Women in Rural
Australia.
John Stanley and National Institute of Economic and Industry Research (1991) The Economic and Social Significance of
Rural Local Roads for Municipal Association of Victoria.
Kinhill (1990) An Assessment of Social and Economic Importance of Roads in Western Australia for Task Force on Road
Funding.
Hadingham, Boyd, Webber (1992) Arterial Roads Asset Management - a Victorian Study, ACPAC.
Chapter 4
Henderson, M (1995) An Overview of Crash Data and Countermeasure Implications. Rural Road Safety: Focus for the Future,
NRTAC Conference, April 1995.
Moller, J (1995) Contrast in Urban Rural and Remote Vehicle Related Deaths. Rural Road Safety: Focus for the Future, NRTAC
Conference, April 1995.
Alford, T (1995) The Role of Local Government on Rural Road Safety. Rural Road Safety: Focus for the Future, NRTAC
Conference, April 1995.
Johnasen, P (1993) Rural Crash Rates - Road Stereotypes, Summary Report Roads and Traffic Authority, NSW.
Conference Recommendations (April 1995) Road Safety: Focus for the Future. National Road Trauma Advisory Council.
Pak Poy & Kneebone Pty Ltd (1988) Road Safety Benefits from Rural Road Improvements. Federal Office of Road Safety,
Department of Transport and Communication.
Geographic Technologies Australia Pty Ltd (1993) Accident Rates on Rural Roads, Road Safety Bureau, NSW
Road Transport Authority, NSW (1992) Road Safety 2000. The Strategic Plan for Road Safety in NSW 1990s and Bryand.
Austroads and Standards Australia AP-30/94, Road Safety Audit.
Austroads AP-201/93, Environmental Impact Assessment of Major Roads in Australia, Environment Report No 1.
Austroads AP-27/94, Environmental Strategy.
Roads and Traffic Authority NSW, The RTAs Environmental Vision.
Vicroads (July 1995) Environment Strategy.
Bureau of Transport and Communications Economics (1994) The Effects on Small Towns of Being Bypassed by a Highway:
A Case Study of Berrima and Mittagong, Working Paper No 11.
Chapter 5
Austroads AP-107/94, Integrated Transport Planning Survey.

Chapter 6
Butler and Mandeville (1981) Regional Economics; An Australian Introduction, University of Queensland Press, ISBN
07022 1594 5.
Economic Planning and Advisory Council (1993) Structural Change and Economic Growth.
Australian Bureau of Agriculture and Resource Economics (March Quarter, 1995) Australian Commodities Forecasts and
Issues.
Minserve Group Pty Ltd (1993) Mining Industry Activities and Prospects in aQueensland - Their Infrastructure, Needs and
Impacts on the States Road Network for Queensland Department of Transport.
Task force on Regional Development (1993) Developing Australia: A Regional Perspective, ISBN 0642 20056 4.
McKinsey & Company (1994) Lead Local Compete Global- Unlocking the Growth Potential of Australianr Regions for Office
of Regional Development, Department of Housing and Regional Development.
Chapter 7
Budget Paper No 3 (1995-96) Commonwealth Financial Relations with other Levels of Government.
Department of Transport & Communications (1992-93) Australian Land Transport Development Program Review of
Operations.
Department of Transport and Communications (1992-93) Annual Report.
"Financing Local Government (Financial Assistance) Act 1986", Australian Urban and Regional Development Review
(1994) ISBN 0642299254.

'THE RURAL CONTEXT
APPENDIX

CONTEX.I..
'11-iE RURAL
ROAD DATA.
1.1 Road Lengths by Road Stereotype
1.1.1 Western Australia
The consolidated State and local government road lengths by road stereotype are compared in Table
1.1 below with 1981 NAASRA data for Western Australia.
Table 1.1: Road length by stereotype (kilometres)
Road lengths (kilometres)

1994 NAASRA 1981
Road stereotype Rural Remot Total Arteria Local Local Total
e I Rural Remote
Unsealed roads
Unformed 2565 11538 14153 423 4415 16510 21348
Formed 10336 24153 34489 3498 15515 24325 43338
Paved 25156 24285 49441 1500 21940 113850 37290
Total 38057 60026 98083 5421 41870 54685 101976
Sealed roads
One lane 4809 2229 7038 3009 5210 930 9149
(up to 4.5m)
Narrow 2 lane 8112 2884 10996 6946 3915 800 10861
(4.6 - 6.4m)
Wide 2 lane 3948 3410 7358 6406 1730 585 8721
(6.5-9.1m)
Three lane 148 160 308 119 130 60 309
(9.2 - 11.6m)
Four lane 141 24 165 153 50 - 203
(over 11.6m)
Total sealed 17158 8707 25865 16633 11035 2375 30043
Total 55215 68733 123948 22054 52905 57060 132019
1.1.2 Road length by surface type in relation to traffic volume

The following tables provide information on the length and percentage of unsealed roads carrying traffic
volumes greater than 100 vehicles per day and sealed roads carrying volumes of less than 100 vehicles per
day.
The figures provide are for the State road systems in New South Wales, Tasmania and South Australia and
the combined State and local government system in Western Australia.
Table 1.2: Unsealed roads carrying traffic volumes in excess of 100 vehicles per day
State NSW State Tasmania State SA Combined WA
km % km % km % km %
Rural 43 22 112 55 205 46 335 0.8
Remote 0 - 0 - n.a - 905 1.5
Table 1.3: Sealed roads carrying traffic volumes less than 100 vehicles per day
State NSW State Tasmania State SA Combined WA'
km % km % km % km %
Rural 1304 12 152 4 117 1.5 8231 47
Remote 174 20 0 - 0 - 3370 38
1 5550 km of these roads are single lane seal.
TOWARDS 13ETFER PRACTICE 225

1.2 Provision of Basic Safety Features
The following tabulation sets out the available information from State Road Authorities on the provision of
basic road safety features. The New South Wales and Tasmanian data is confined to roads which are the
responsibility of the Road Authority. The Western Australian information covers both State and local
government roads.
1.2.1 Western Australia
Table 1.2: Road length by road features -- (%) - rural and remote roads
Road Guide posts Hazard signs Centre line Edge line Sealed
stereotype shoulders
Rural Remote Rural Remote Rural Remote Rural Remote Rura Remote
I
Unsealed roads
Natural surface - - - - na na na na na na
formed and
paved
Sealed roads
One lane
(up to 4.5 m)
Narrow 2 lane 33 49 - - - -
(4.6-6.4m)
Wide 2 lane 80 88 39 47 17 28
(6.5-9.1 m)
Three lane 72 86 57 59 99 100
(9.2-11.6m)
Four lane 93 74 88 66 97 93
(over 11.6m)
° Information not available. Indicated that guide posts and hazard signs would be provided on most sealed roads but not many
unsealed roads.
na Not applicable.
Warrants for centreline marking are:

Highways and Main Roads - minimum 5.5m seal width.
Other roads - minimum 5.5m seal width and 300 vehicles per day.
Warrants for edge lining are:
Highways - minimum 6.8m seal width.
Other roads - minimum 6.8m seal width and 1000 vehicles per day.

I H RURAL CON'FEXI'
1.2.2 Tasmania
Table 1.2.1: Road length by road features -- (%) -- rural state roads
Road stereotype Guide posts Hazard signs Centre lines Edge lines Sealed
shoulders
Unsealed roads
Natural surface na na na
formed
Paved roads 100
Sealed roads
One lane 100
Narrow 2 lane 100 100 0.1 0.1
Wide 2 lane 100 100 31.1 31.1
Three lane 100 100 74.1 74.1
Four lane 100 100 78.5 78.5
* Data not available.

na Not applicable.
1.2.3 New South Wales
Table 1.2.3: Road length by road features -- (%) - rural and remote state roads
Road stereotype Guide posts Hazard signs Centre line/ Sealed shoulders
edge line"
Rural Remot Rural Remot Rural Remot Rural Remote
e e e
Unsealed roads
Natural surface 97 88 76 91 na na na na
formed and paved
Sealed roads
One lane 100 100 100 100 50 50 42 -
Narrow 2 lane 100 100 97 86 67 79 19 9

Wide 2 lane 99 97 97 92 91 91 71 65
Three lane 99 96 98 93 98 93 76 46
Four lane 88 34 96 51 95 57 56 -
" Data base does not distinguish between centreline and edge line.
na Not applicable.

III
ROADS
IN THE
URB
CONTEXT
PROFESSOR DAVID HENSHER (UNIVERSITY OF SYDNEY)
MRTIMOTHY RAIMOND (UNIVERSITY OF SYDNEY)

EMERITUS PROFESSOR HANS WESTERMAN (WESTERMAN CONSULTANTS)
MS CAROLYN STONE (TRANSPORT CONSULTANT)

OUTLINE
1 INTRODUCTION 233
1.1 Background 233
1.2 Community Attitudes and Consultation 235
2 GLOBAL GOALS FOR URBAN MANAGEMENT 241
3 PLANNING ROADS IN CITIES AND TOWNS 243

3.1 Transport, Land Use and Environment 243
4 OPPORTUNITIES FOR INTEGATING ROADS WITH OTHER 253

MODES OF TRANSPORT AND THE URBAN ENVIRONMENT
4.1 Background 253
4.2 Towns and Cities of the Future: Setting the Scene 253
4.3 Changing Household and Business Profiles 268
4.4 Addressing Six Community Concerns 277
4.5 Placing Roads in a Policy Context 288
5 THE ROLE OF ROADS IN URBAN DESIGN 290

5.1 Cities and Their Roads in Evolution 290
5.2 Corridors and Precincts 291
6 INSTITUTIONAL ARRANGEMENTS 307

6.1 Introduction 307
6.2 Administrative Arrangements 309
6.3 Statutory Processes 322
7 RECOMMENDATIONS 328
7.1 Specific issues related to roads in the urban environment 331
7.2 Specific issues related to planning and urban design strategies 334
7.3 Specific issues related to institutional arrangements 339
REFERENCES 342
END NOTES 349

T1-i URBAN CONTEXT
INTRODUCTION
1.1 Background
Automobiles and trucks have a mixed reputation. They have been the technological means to facilitate
individualised movement of passengers and goods; they are also at the centre of the growing concern about
environmental degradation in the form of air pollution, global warming, noise, and safety. Combined with
traffic congestion in major cities, relatively poor and financially weak public transport, and failing infrastructure,
elements of the community look to the car and the truck as the causes of many of the ills of our urban areas.
Since roads provide the infrastructure for moving cars and trucks, the debate on the role of roads in the
community sees roads as a servant of such technology rather than as one of many tools available to mould the
urban fabric.
As societies become wealthier we observe an increasing desire for individual determination of accessibility to
many activities (commuting, recreation, shopping etc), provided by the automobile. Public transport struggles
to provide the amount of flexibility that the automobile can offer. The community understands this argument
indeed many proponents of public transport and objectors to freeway building use automobiles for many
activities. There is however a time and a place for automobile use.
The road needs of an urban society should be an outcome of a planning and policy process driven by an
assessment of the full set of costs and benefits and an informed debate on the options. Options must include
all means of transport as well as non-transport actions (especially alternative land use plans).
1.1.1 The broader role of roads

Roads provide the mechanistic infrastructure used to facilitate movement; they also have a broader and socially
valuable role in contributing to the economic, social and environmental fabric of the way the community sees
its urban areas evolve and perform. What would a city look like and how would it function in the absence of
streets and roads? Cities today are key elements in the global economic system, components in a society's
amenity infrastructure, and settings of mounting economic, environmental and social challenge. Urban
Australia currently has 11,000 kms of arterial roads, 75,200 kms of local roads, a total of 86,100 kms,
approximately 10.7% of total Australian road kilometres.
Urban areas are being transformed from industrial to information-based and network-based economies with
greater emphasis on flexibility in ways of moving information and people. The corporate image of roads under
this paradigm of information and knowledge flows has more opportunities to be responsive to the global ideals
of sustainable development. The emphasis on outcomes (for example, accessibility, clean air, safety) rather than
means (for example, cars, buses, trains, trucks) is more important today than ever before, since the traditional
transport mode emphasis on cat vs bus vs train and truck vs train fails to accommodate institutionally the
widening set of ways of "moving" information and people's contributions to urban activity. Setting constraints
on private transport to achieve desirable outcomes must be evaluated within the broader set of ways to satisfy
opportunities offered by "high tech" and "high touch" industries (Brotchie 1995) in contrast to a priori beliefs
being imposed that only improvements in particular modes of transport will "solve" the ills of urban society.
This is the central debating point in the community and one that must be addressed herein.
1.1.2 Community concern and trade-offs

At the same time, however, many of the environmental problems of urban areas that are both real and sensitive
community issues, stem from the use of roads by passenger and freight vehicles. Automobiles and trucks are
major sources of local pollutants, such as lead, carbon monoxide and noise. Road congestion exacerbates these
problems, and also imposes direct economic and health costs on road users in the form of time and money
wasted in traffic jams, stress, and slow moving urban traffic flows. Automobiles are responsible for many

fatalities and injuries of urban road users and pedestrians. They also make a significant contribution to global
warming through emissions of carbon dioxide and other greenhouse gases.
As the observed level of wealth in society increases and the demand for automobile and truck use increases,
society faces real and special challenges to contain and reverse the trends in the wide range of negative impacts
of automobiles and trucks. Communities are not expressing blanket concern about roads; rather they are
concerned about specific roads (principally freeways and toll roads) and about the "failure" of government at
various levels (especially the State level) to do something about the harmful outcomes from this specific road
investment and the almost unlimited desire for automobile ownership and use. Governments however have the
difficult trade-off between what they know are appropriate actions to help stem this desire (especially by a range
of pricing instruments); and yet politically do not have the will to execute such policies which, while benefiting
the social desires of opponents to roads, could create personal costs for such opponents. The emphasis on
physical incentives /disincentives to achieve change relative to financial opportunities continues to be a major
constraint on containing the environmental costs of road systems.
This picture reads like doom and gloom. There are however many positive features of roads. The challenge is
to better manage the benefits of roads such that the broad set of environmental impacts are reduced to
acceptable levels while ensuring acceptable outcomes in terms of economic performance and equity. Austroads
has recognised the need to enrich the debate on the role of roads through identifying the concerns that the
community has about particular types of roads and how the strengths of road systems as infrastructure (like rail
track) can be better justified, used and managed than has been the case in recent years. Civic pride embellished
in urban design implications of roads must be given a centre stage in the deliberations.
1.1.3 Emphasis of the report

The central theme of our report is "Roads-are they doing their job and moving to better practice?"
Community opinions and attitudes as enunciated through community-based surveys provide one important
source of information in identifying what the job is. The wider literature on impacts of roads will assist in
putting the case for road performance. Roads must be evaluated within a broad set of urban management
goals-growth, equity and environment (see Section 2), paying attention to the impact of incentive and
disincentive based policy instruments with respect to topical evaluative criteria such as the role of public
transport, air quality, traffic noise, traffic congestion, global warming, and accidents.
This report singles out a number of "top problems" which are seen as the fundamentals of the debate on the
role of roads in the community. These problems are: (1) traffic congestion; (2) failing infrastructure; (3)
environmental impacts; (4) traffic safety; (5) poor and financially weak public transport; and (6) urban design.
The challenge facing us is to document the reasons for the current situation and what opportunities there are
to do something to reduce traffic congestion, to clean up the air we breathe, to reduce traffic accidents, to
improve the efficiency of infrastructure and to improve the health of public transport.
The report emphasises fairness of view, offering comment from authors with very different and complementary
backgrounds in urban design, transport economics and planning. The aim is to not to be all inclusive bur to be
selective in topic areas which are clearly topical and need further discussion. We seek to enrich the debate and
to encourage individual thought and break down the cultural and disciplinary barriers which all too often impede
rational consideration of the role of roads for the urban community.
This report is directed to lay readers, local and other (peak) community groups and transport and other
professionals, all of whom are the community of stakeholders. The distinction between rationality and advocacy
is often cited as a distinguishing attribute of alternative views on the role of roads; however rational debate
needs advocates. A major objective is to articulate the debate through a set of reasoned arguments based on

THE URBAN CONT11AT
better/best practice information, transmitted in a readable form. If readers reconsider their own knowledge
base and interpretations of the debate on the role of roads in the urban context, then the report has achieved
its purpose.
The report emphasises four overlapping themes as specified by Austroads:
1 Background and community attitudes (lead author: Tim Raimond).
2 The role of roads in towns and cities (lead author: Hans Westerman).
3 Present practice and best/better practice opportunities in integrating roads with other modes of transport
(lead author: David Hensher).
4 Present practice and best/better practice in the development and arrangement of institutional structures
related to transport and other decision making in the urban environment.
1.2 Community Attitudes and Consultation

1.2.1 Adapting to growth and change
Roads have different functions and the cumulative effect of growth and change creates conflicts in functions.
The function and use of roads affect and are influenced by land use and the environment. Clearly, it is no longer
possible to consider roads and traffic in isolation. Traffic is the outcome of the way the community functions,
the opportunities cities and towns offer and the choices available. Traffic has become so pervasive and the
effects so pronounced that the answer is not simply to restrict opportunities and influence choices. There is a
need to better understand community needs and values and examine whether they can be modified or aligned
to ensure appropriate responses to the problem of adapting cities and towns.
1.2.2 Everyone is a stakeholder

Roads and street users are people: drivers and passengers in motorised vehicles, public transport like buses and
trams; drivers of freight trucks and delivery vehicles; cyclists; pedestrians of different ages and degrees of
fitness; children at play. They are involved in a myriad of activities: travelling to and from work, travelling to
construction jobs, seeing customers, delivering goods, shopping, seeing the doctor, going to school, meeting
friends, attending a performance of Miss Saigon or going to the beach. All these movements are a necessary
part of the functioning of towns and cities. The entire community is a stakeholder and the roads and streets
play an essential role in the life of that community.
But people are also affected by the resulting traffic and are increasingly concerned about the impact on their
lives. It is this impact which has created much recent community interest, because it highlights the fundamental
conflict between the need of the community to function and the impact which traffic has on the whole social
functioning of that community.
While the benefits of mobility extend to the whole community, the impacts of traffic are not equally distributed.
As a result there are a number of fundamental conflicts. For example:
the regional need to provide for long distance movement of people and goods and the consequences of air
pollution in certain parts of the region - a problem raising its head in some of Australian large cities;
the regional need to provide corridors for movement and the local need for environmental protection and
amenity - a problem associated with any new or upgraded routes for regional traffic, but sharply focused
in inner and intermediate suburbs;
the local need for convenient access to facilities and services, while maintaining the amenity of local streets
- a problem associated with traffic calming plans where some streets have to carry more and others carry
less traffic; and

the local need to preserve amenity and proposals for local redevelopment - a frequently occurring problem
in established suburbs.
These conflicts and many others surface with any proposal for change and require processes to resolve them.
It is important, therefore, to identify the different stakeholders, understand their concerns and needs, and to
develop mechanisms for resolving conflicts.
1.2.3 "Community" attitudes

Roads and traffic issues are ranked highly by Australians in relation to other community issues. In a series of
surveys for the Roads and Traffic Authority of New South Wales (RTA) (Frank Small and Associates 1994 and
1995, RAMIS 1992 and 1993) roads and traffic issues have consistently ranked third as the area where more
government effort needs to be focused. The areas of greatest concern were health and hospitals, and education
and schools (respondents did not know which agency was conducting the survey), while areas of less concern
than roads were law and order, housing, and the environment, to name a few Each of the studies surveyed 1000
residents throughout New South Wales.
A word of interpretative caution is appropriate prior to considering more survey findings. The extent to which
these surveys represent the opinions of the "community at large" is problematic because the community cannot
be said to have a unified attitude towards roads in many respects. It is rarely recognised outside fields such as
political science or sociology that there is not one "community" which can speak meaningfully with relation to
distributional issues, but that there are many communities of interest with greatly varying views. When viewing
the information in this section, while it is interesting to know what most people think, it is probably as useful
to know what the range of attitudes are, how they adhere to particular communities of interest, and the extent
to which they rely either on matters of value or on matters of fact.
The approach taken is this section is that "roads in the community" for the most part relates to different
"communities" having different interests in relation to roads. Although some attitudes expressed may be more
widely supported in some surveys, the less well-supported and possibly contradictory views may be better
informed. Thus, when noting attitudinal survey results in this section, a judgement must be made as to which
are informed views, and which views are based on incorrect or incomplete information.
1.2.4 What are the major concerns of the community?

We now know that roads are important to the community, but where specifically do concerns lie? At a general
level, surveys have indicated a strong desire for greater community consultation across all areas. Section 6.2.4
deals specifically with how the road agencies have responded historically to demands for greater consultation,
and points to possible ways forward.
Road safety has consistently been on top of the community's road agenda according to surveys in various States.
There is a perception that roads are slowly becoming safer, and that the government focuses a lot of attention
on road safety problems and education. Driver quality has overtaken road quality in recent surveys as the largest
perceived factor in continuing road safety problems.
Local Area Traffic Management (also known as traffic calming) is another safety issue of concern to parts of
the community. Over the last 25 years, the majority of councils have adopted some forms of physical devices
to alter the speed or route of local traffic. These can be 40km/hr zones, roundabouts, speed humps, raised
platforms and so on. A study of community attitudes towards LATM schemes and speed control in western
Sydney (Geoplan 1990) revealed that there had in general been too little consultation with the community about
new schemes. Local bus operators, waste disposal services, and emergency vehicles in particular have been
adversely affected due to lack of consultation. The importance of consultation has been highlighted in some
areas where the removal of newly constructed LATM devices has been necessary.

THE URBAN CONTEXT
A survey of 500 Sydney residents in late 1992 (Loveday 1993) revealed that 52% were in favour of LATM
schemes. Geoplan (1990) conducted a survey of elected representatives on Western Sydney Councils. One of
the most telling findings was that only 37% were aware that LATM schemes were directed at improvements in
safety/amenity or environmental improvement in the residential area.
Heavy vehicles on urban roads is another area of community concern. Surveys in New South Wales and
Queensland have indicated that many people desire the interaction between private and heavy vehicles to be
minimised. A popular option is to ban trucks and buses from local roads, restricting them to main arterials.
There was a distinct lack of understanding or appreciation of the role of freight vehicles or road-based public
transport in the urban environment amongst those surveyed.
Road improvement and maintenance was the next most important issue to come out of community surveys.
Opinions seem to vary by state. In New South Wales, there appears to be little demand for new roads except
for safety reasons, and there is some concern that the Olympics will be used as an excuse to construct lots of
unnecessary new road infrastructure in Sydney. Some concern was raised about private enterprise involvement
in road building. The view from Victoria (Frank Small and Associates, 1995b), Queensland (Eppell Olsen and
Partners, 1995) and Western Australia (Australian Bureau of Statistics, 1994) is more positive towards new road
development in the sense that there is a recognition of the necessity to construct some strategic arterial links by
the majority of respondents, though there are still a significant number opposed.
These views may be a function of city sue and experience with arterial road development. Sydney residents have
witnessed the traffic generation effect of new arterials - increasing road supply is equivalent to reducing the
price of travel, so demand naturally increases - while Melbourne and Brisbane may be lagging in their
experience. The observations of Sydney residents is very much in line with the view of the professional
community, which has also recently recognised that adding new road capacity is not a viable long term solution
to traffic problems (Goodwin et al 1991).
On the specific issue of toll roads, respondents in Sydney, Melbourne and Brisbane see the need to have private
sector involvement if no other funding is available, but there is still considerable wariness about the idea, as
demonstrated in Table 1.
Table 1: NSW community attitudes to toll roads

% who chose statements
Statement 1992 1993 1994
Agree that users should pay for roads 17% 20% 19%
Agree that users should pay only if a free alternative is available 37% 45% 41%
Agree that users should pay if there is no other way of funding road 30% 23% 30%
development
Disagree that users should pay 15% 11% 10%
Don't know 1% 1%
What is evident is that the majority of the community are not opposed to toll roads per se, as might have been
judged from publicised events such as protests against the M2 in Sydney and the South East Tollway in
Queensland. These protests may be more a function of lack of consultation, current environmental impact
assessment processes, and heightened environmental consciousness, rather than opposition to the concept of
privately-funded toll roads.

Loveday (1993) found that 56% of respondents supported the concept of electronic road pricing. In general,
surveys have found that most people are comfortable with the concept of "user pays" in the cities which already
have toll roads, though their experience with toll roads may influence their response. It is likely that cities
without toll roads would face greater community concern over the concept. Certainly, Melbourne and Brisbane
residents, who have less experience with tolls than Sydney residents, are not prepared to pay as high a toll as
Sydney residents.
Even though the view of tolls is generally favourable, Cameron (1995) notes that, politically, it is not always the
view of the majority which turns out to be important, but the strength of the view of the minority.
It is difficult to transfer these views to the concept of road pricing since none of us in Australia have actually
experienced such a regime. Its all-pervasive nature, in contrast with the "odd toll road here and there" will no
doubt engender far more negative attitudes than do toll roads.
Air pollution is a significant result of road use, and is confined mostly to urban areas. A recent NRMA survey
as part of their Clean Air 2000 initiative (Gillner 1995) indicated that air pollution was by far the most significant
environmental concern of the 1,000 residents of Sydney, Newcastle and Wollongong surveyed, and that most
air pollution was identified with use of the car.
The exploratory survey by Loveday (1993) tested a series of policy options open to road authorities. In general
it found cautious support for many initiatives aimed at improving the environment and reducing congestion. For
example, ideas greeted positively (over 50% of respondents agreed with policy) were higher fuel levies balanced
by lower registration charges; lower registration charges for environmentally friendly vehicles, electronic road
pricing, and as already mentioned, local area traffic management. A recent survey for Queensland Transport
(Eppell Olsen and Partners, 1995) found that Queensland respondents desired policies which encouraged use
of alternative modes of travel rather than discouraged car use. A rarely researched issue related to congestion
is that of the stress associated with driving. Frank Small and Associates (1994) found this to be one of the worst
aspects associated with using a car for Melbourne residents.
The NRMA environmental survey (Gsllner, 1995) used cluster analysis to break the community into three
segments on the basis on common attitudes and behaviours. The NRMA identified 27% of their sample as
being rejectors, who are not overly concerned about the environment and are not prepared to take personal
action to improve the environment. Members of this group tended to be male, older and of low income. The
largest group was labelled change resistors (40% of the sample) though this may be an unfair title given that
they acknowledged environmental problems and were prepared to take some minimal action to help combat
problems. This group represented all demographic groups. The final segment, labelled the individual action
group (33% of the sample) was concerned about a range of environmental problems, felt responsible for these
problems and had already begun to act to mitigate them. All ages were represented in this group, though there
were more female members, and more representatives from higher income white collar groups. These findings
are a step forward in recognising that there are different communities, and may point the way forward for road
authorities to capture the range of community views in future surveys instead of the majority view
Road traffic noise is another source of community concern, largely confined to urban areas. The Final Report
of the Road Traffic Noise Taskforce (1994) in New South Wales suggested that poor integration of land
use/transport planning coupled with unexpectedly high levels of traffic growth have caused the problem. A
study currently being conducted by the University of Western Sydney on ambient noise in urban areas has
identified traffic noise as the third most significant noise problem in urban areas behind aircraft noise (survey
timing may have affected this) and barking dogs. A longitudinal study on the effects of traffic noise on the M5
corridor in Sydney (Robertson, 1995) has found that noise appears to be most problematic when there are

THE URBAN CONTEXT
emissions of spasmodic or sudden loud noises that can keep people awake or awaken them from sleep, thus
aircraft and dogs are a major problem. The constant background level of road noise is usually not the problem
except on busy arterial roads - it is loud spasmodic noises such as trucks accelerating and braking, motorbikes,
and cars with modified exhausts that cause most disruption to the majority of urban areas.
In general, survey responses from urban and rural residents were very similar, though there were some notable
differences. Urban residents were more critical of government for ad hoc decision-making rather than co-
ordinated planning between the agencies. An unexpected difference was that urban residents are far less tolerant
of bicycle users, giving the reason that cyclists do not pay registration charges or fuel levies, and thus should not
have equal rights on the road. Surveys in other states, including Western Australia (Reark Research, 1994) have
also found this lack of tolerance of bicycle use. The latest Community Views report to the RTA ranks this issue
as the highest priority area for improvement, with over a third of respondents believing cyclists should not have
the same rights as motorists.
There were a number of less significant but relevant findings of the various community surveys discussed to
far. The RTA surveys found one travel demand management measure which is not popular - banning private
cars from the city during the day. Only 24% agreed with the policy in 1994, down from 28% in 1993.The RTA
surveys also found a strong desire for updated road rules to be better communicated to the community, perhaps
via a handout when renewing licences. The community was also overwhelmingly in favour of uniform national
road rules and licensing.
1.2.5 Placing community concerns in context to define an agenda for improved debate
To help place the range of community views noted so far in context, another community of interest is the
professions. The shifts in overall priorities as revealed through an international Delphi exercise (Hensher et al.
1995) involving a set of analytical and application experts tells a revealing story (Table 2). Road maintenance was
felt likely to be over-emphasised in the near future, at the expense of transport pricing, integrated land use and
transport planning and travel demand management. Concern with financing transport is expected to reduce the
attention needed for travel demand management, but the major issue for analysts and planners is the rapid rise
of integrated land use-transport planning towards the top of the list.
Table 2: The transport professions' view of past and future priorities
Priority Observed in the Expected to be for Ought to be for the

last 5 years next 5 years next 5 years
1 Road maintenance Road maintenance Transport pricing
2 Deregulation/privatisation Transport pricing Integrated land use-transport
3 Environmental impacts Integrated land use-transport Travel demand management

4 Public transport infrastructure Deregulation/ privatisation Road maintenance
5 Transport pricing Transport financing Telematics/telecommuting

6 Integrated land use-transport Environmental impacts Deregulation/privatisation
7 Travel demand management Travel demand management Public transport infrastructure
8 Transport financing IVHS Transport safety
Source: Hensher et al 1995
Source: Hensher et al. 1995

Thus, while some communities are concerned about the effect of roads and traffic on their lives, others are
concerned about ways of altering these effects in an affordable and sustainable manner. Some professional
views do not align with those of the wider community, an example being the widespread professional desire for
higher urban densities, while the wider community prefer backyards and a reasonable amount of private space.
With more communication between these groups, greater understanding of the problems and the motives for
particular decisions will facilitate both better planning and a more harmonious relationship between the various
communities.
The Australian Automobile Association's (AAA) recent ANOP survey has revealed a level of ignorance amongst
road users as to how much indirect taxation is associated with car use, and how little is actually spent on roads.
When a community is uninformed, it is difficult for them to express an opinion.
In closing the section on community attitudes, it is relevant to note that almost all the data quoted in this section
has been collected by road agencies or road advocacy groups. As such, the data is largely a product of customer
satisfaction surveys, thus limiting the scope of community response. A more appropriate agency to collect
community views may be the Departments of Planning in each State, which ideally will have control over all
aspects of accessibility (land use and transport), and can thus collect a more holistic view of community
attitudes.
Section 6.2.4 discusses some possible options for more effective community involvement in the planning
process. The next section, Section 2, looks at goals for urban management and how to decide if they are
successfully achieved.

2. GLOBAL GOALS FOR URBAN
MANAGEMENT
To improve the urban environment, it is necessary to have goals and to measure our success in achieving them.
How do we decide if specific policy instruments are "successful" or "unsuccessful"? The link between a specific
instrument (for example, congestion pricing), one or more performance criteria (for example, reduction in air
quality, reduction in traffic congestion), and a set of urban goals (for example, sustainability, equity) provides a
useful framework. The triad of growth, equity and environment represents the broad goals of urban
management (Figure 2.1), promoting responsibility for outcomes rather than means. Communities of interest
coalesce around these three goals, as illustrated in Figure 2.1 by the placement of some peak bodies in Australia
in the goal triangle.
A growth goal represents the most likely development of transport if all policies emphasised economic growth
as the primary objective. Economic efficiency is a major focus. An efficiency objective promotes dynamic
regions and cities, and by coordination with environmental objectives produces better management of the
environment.
An equity goal highlights the impacts of policies that primarily try to reduce inequalities in society in terms of
social and spatial disparities. Where these policies are in conflict with economic growth, considerations of equal
access and equity are given priority. Equity or social justice means the need to provide infrastructure and services
which maintain transport opportunities for all sectors of the community.
An environment goal emphasises quality of life and environmental aspects, under the broad umbrella of
sustainability. Some control of economic activity is likely to be required as a trade-off with sustainability.
Enhancement and preservation of environmental quality means implementing policies to mitigate
environmental degradation and conserve the biology of ecosystems, as well as linking preventative
environmental protection, pollution control mechanisms and the protection of public health.
The institutional context in which transport services and facilities are currently provided is means based, defined
by specific modes and infrastructure, creating significant barriers to the seamless translation of desirable
outcomes into appropriate services and facilities (see Section6). This context has over-emphasised the modal
debate on car vs bus vs train in the passenger market and truck vs rail in the freight market (except in the urban
goods movement setting where rail has a limited role) rather than concentrate on all possible opportunities, both
transport and non-transport driven, for achieving improvement in terms of each goal. The ISTEA legislation
in the United States is one example of a recent effort to try and disentangle good policy and practice from a
modal-dominating means based institutional structure.
Our approach promotes a three-level paradigm in which means are specified as policy instruments or strategies
(for example, congestion pricing, public transport fare reductions) designed to influence the set of urban goals
in a way that is consistent with a successful outcome; using a number of performance criteria to measure this
"success".
A useful set of reference criteria to determine what is better policy and better practice (and hence a suitable
program of active research), all attractive features of the interpretation of the United States ISTEA legislation,
are:
Emphasis on a systems approach;
An holistic approach to planning (See Section 4);
Emphasis on flexibility;
Emphasis on performance;

Figure 2.1 Integrating outcomes, means and measure of success
0T _OM
K
I II
v 14
Emphasis on quality of the urban environment/design (see Section 5);
Emphasis on public involvement;
Emphasis of outcome-based institutional structures (see Section 6).
Challenging ideas to enunciate include: transport systems should be conservative, they should minimise the use
of non-renewable resources, mobility should be viewed as but one of the possible means of achieving the goals
of urban management; transport should be viewed as a strategic economic investment, it should be integrative
with flexibility built into the system and finally the transport system should be informed and aware.
There are many performance criteria available to judge the impact of specific policies. To contain the debate to
topical issues of concern to the broader community, we concentrate on five performance criteria:
air pollution, global warming, energy consumption, traffic congestion, and traffic accidents
and three other items - inadequate infrastructure, declining public transport use and urban freight activity -
which although not performance criteria per se are seen as major concerns in the community and should be
explicitly considered.
We explore the broader implications of foreseeable trends, in conjunction with our best current knowledge of
technologies and costs. It is necessary however to make some normative assumptions about the nature of policy
response for otherwise we can predict nothing whatsoever. Historical and contemporary evidence can assist
provided it has been properly interpreted.
In summary the challenge is to develop transport policy that would ensure that policy and investments help
conserve energy, protect environmental and aesthetic quality, strengthen the economy, promote social equity,
and make communities more livable. This policy must emphasise the movement of people, information and
goods rather than vehicles.

Tl"ll. URBAN CONTEXT
3. PLANNING ROADS IN CITIES AND

TOWNS
3.1 Transport, Land Use and Environment
3.1.1 Interactions
In order to pursue the goals of efficiency, social justice, environmental quality and liveability and respond to the
challenge presented in Section 2, there is a need to understand the relationship between transport, land use and
the environment and formulate broad and integrated strategies for them. Three important interactions can be
identified:
(i) The relationship between development (or 'land use') generating demand for movement (trips) and the
transport system representing the supply.
Land is used for a variety of purposes, such as housing, offices, shops, industries, warehouses, schools and other
activities. Each of these land use activities generates its own demand for movement. This demand for travel has
a specific purpose - such as work, business, shopping, education, recreation and social travel - and takes the
form of trips, characterised by direction (origin and destination), time (peak, off-peak), duration (travel time),
mode choice (private vehicle, public transport, walking, cycling), route choice and cost of travel. The trips are
made on transport networks - road, public transport, cycle and pedestrian - representing the supply (Figure
3-1).
Figure 3.1 Demand and supply
LAND USE Trip generation
Trip distribution
I
NETWORKS Mode assignment
Route assignment
Performance
It is possible to predict how changes in land use affect the demand for travel and how this travel is distributed
over the networks and affects the operation of the transport system. A key element in the development of a
transport policy, therefore, is the disposition of land use: the type of land use, the intensity of development, the
characteristics of the occupants and the nature of their travel needs.

(ii) The relationship between accessibility provided by a transport system and the land use decisions based
upon it.
The transport infrastructure contributes to the degree of access to land in specific locations while land-use
zoning, prescribed in planning instruments, indicates the opportunities for development. Accessibility greatly
influences development decisions within land-use zones (Figure 3-2). Decisions may be made for the location
of land subdivision, the development of offices, shopping centres, business parks, warehouses, entertainment
centres and other land-use activities. Location decisions, arising from changes in accessibility, take time to
eventuate and are more difficult to predict as they depend on market and other factors. However, such location
decisions are often made without full consideration of the cumulative consequences. Investment decisions on
office or retail development in regional centres, for example, can lead to pressures for upgrading access to these
centres which may be costly to meet and cannot be met in the short term. Location decisions on wholesale and
distribution centres can lead to a concentration of heavy truck movement and cause major changes in the
balance between activity and accessibility.
Figure 3,2 Accessibility and location model
LAND USE ZONING LOCATION CHOICE

1
---- ------
DEMAND AND TRAFFIC &
SUPPLY ACCESSIBILITY PASSENGER
MANAGEMENT (VOLUMES
H4 ----------
TRANSPORT SYSTEM TRAVEL BEHAVIOUR
(iii) The relationship between use of the transport system and the environment in which it operates.
The modes of transport people and businesses choose, the routes they take and the amount of traffic they
produce have a bearing on the resources used (for example, energy) and on the regional, local and adjacent
environment (for example, air pollution, noise, through traffic in local streets, severance of communities).
Conversely, the need to protect the environment may restrain the location of urban development (for example,
Sydney Metropolitan Air Quality Study, 1995), the location of transport routes (for example, endangered
species), the use of roads at some or at all times (for example, heavy vehicles in residential streets) and the design
of urban areas (Figure 3.3).
These three interactions lead to three performance areas where strategies are necessary:
I strategies related to land use and transport;
2 strategies related to accessibility and activity;
3 strategies related to roads and the environment.

THE URBAN CONTEXT
3.1.2 Strategies related to land use and transport

In order to create a better fit between land use and roads, strategies could be directed towards:
Promoting sustainable traffic growth
Sustainable traffic growth involves focusing on efficient car use, higher occupancy of cars, improved utilisation
of existing public transport and shorter average journeys. This may be achieved by a range of measures, such
as locating service and facilities close to where people live, giving priority to high occupancy vehicles, planning
transport for the 24 hour needs of people and freight rather than the peak demand for cars, promoting
alternatives such as telecommuting, road pricing and legislative means designed to encourage efficient use of
each transport mode.
More compact cities
Strategies are now being pursued in many urban communities to increase residential densities, such as small lot
development, infill development, dual occupancy and multi-unit development. They extend the choice set
beyond the traditional 'quarter acre' block for a changing population (see Section 4) and provide opportunities
for people as they age and their needs change to remain in the area where they have their roots. Whilst such
strategies can arrest decline in the population of established suburbs, they do not necessarily lead to increased
population as household sizes have shrunk.
The relationship between jobs, housing and services can be improved by locating activities closer together,
providing better transport links, and promoting equity in access opportunities. That is, promoting compact
cities. More compact cities does not mean high-rise, nor does the strategy imply a high level of concentrated
development in and around the Central Business District. It simply means making better use of urban land and
the services and facilities provided.
Selective concentration of housing and employment as cities grow

More compact urban forms can be created, if supported, through a variety of planning provisions in which land
use, density and accessibility are related elements. Mixed-use zoning and multiple-use sites provide
opportunities for a closer fit between land use and transport. Gross residential densities do not affect
accessibility by car for those with access to a vehicle (except in some overseas cities with very high densities),
but they are particularly relevant in the provision of public transport. Opportunities to provide cost-effective
public transport are increased when gross residential densities are at least 20 dwellings per HA (Pushkarev and
Zupan 1977, Newman et al. 1992). With housing provided at these densities, new routes and more frequent
services can be provided to service housing areas away from existing public transport routes. Selective
concentration of employment is equally important.
nvironment

Figure 3.4 Selective concentration of housing and employment
The concentration of employment in major regional centres, served by regional and local public transport
routes, increases accessibility to jobs (for example, 'key centres' in the South East Queensland urban region,
primary and secondary regional centres in the Sydney region; see also Brotchie et al, 1992). A strategy of sub-
centralisation of housing and employment becomes increasingly relevant as cities grow in size (Figure 3-4).
Integrated transit-oriented development
A key strategy in increasing the options for urban environments, is the planning of forms of development where
medium density housing and/or employment is integrated with regional centres and public transport systems.
Such urban nodes can be located near railway stations, tram and bus stops. Medium density housing in such
locations may reduce the dependence on car travel and makes better use of existing transport infrastructure.
A hierarchy of multi-purpose centres
Centres perform important roles in the regional and urban structure, allowing functions of different hierarchical
orders to be performed conveniently and effectively. They will perform efficiently only if local centres are well
located and larger centres are limited in number. The hierarchy of catchments can be related to the mode and
level of accessibility they need. There is a synergy from associating a wide range of activities with them and
multi-purpose centres make better use of the transport infrastructure than single-purpose centres.
c Integrated land-use and transport in growth corridors
By integrating land use and transport in growth corridors, there are opportunities for more efficient public
transport spines, directing economic growth, providing arterial roads for freight and commercial goods
movement, and protecting natural resources at the flanks (for example, Canberra's "Y-plan", Figure 3.5).

THE C. R13AN CONTEXT
Figure 3.5 An example of intergration: Canberra'V Plan'
Orbital routes
The shift of employment and housing towards intermediate and outer areas has changed the radial pattern of
movement towards the centre and highlighted the need for cross routes, particularly for long-distance freight
and business travel. The provision of orbital routes can help relieve the pressure on inner areas and many cities
have developed them or are in the process of doing so (Figure 3.6). However, they are difficult to create and
road authorities are looking at the upgrading of existing roads in preference to the development of new
corridors through established areas.
Multi-modal roads
There is a continuing task for roads in the regional community. There is growth in the number and variety of
non-work trips. In Brisbane, for example, 75% of the total trips in the region are for purposes other than
employment or business. Most trips to schools, recreational and health care facilities, and social activities are
undertaken by car. Rapid expansion of new industries, like tourism, place extra demands on key sections of the
road network.
By providing multi-modal roads, opportunities can be created for some of this demand to be satisfied by road-
based public transport. This is especially important in the case of orbital routes because many existing express
public transport systems are radially oriented and the demand for travel is increasing for cross movements.
Where possible and safe, provision should be made for cyclists. Multi-modal roads are also increasingly
important for the movement of freight. For example, commercial traffic in Brisbane accounts for more than

15% of total regional trips and freight movements are expected to double in the next 20 years (Towards an
Integrated Regional Transport Plan for South East Queensland 1995).
Figure 3.6 Land use changes lead to changes in trip distribution and a need for orbital routes
3.1.3 Strategies related to accessibility and activity

In order to create a better fit between accessibility and activity, strategies could be directed towards:
Locating employment generating development according to accessibility criteria
More intensive employment generating activities should be encouraged where existing road and public transport
accessibility can support them. For example, locations which have the better public transport and slow traffic
connections might be reserved for labour intensive activities (such as offices) and other activities where people
congregate. Locations with a high degree of public transport and arterial road accessibility might be reserved
for companies offering a combination of office space and production units. Locations with better road
connections might be reserved for companies, such as trucking businesses, which depend entirely on road
transport ( for example, the "ABC policy" in the Netherlands, see Kuiper 1993; Figure 3.7).
Linking activity in centres to accessibility
As centres grow, there is a need to ensure that decisions to increase the level of activity can be matched by
increased accessibility. With large regional centres, such as Chatswood and Bondi Junction in Sydney, the
available regional road capacity may be inadequate and very costly to increase. Any new development may need
to be confined to activities which are less dependent on accessibility by car (provided there is spare capacity in
other transport modes). Parking policies should be introduced to ensure that parking is appropriately priced and
rationed. The level of provision for parking in regional centres and the location of commuter parking are
important elements of a regional accessibility policy.
Pricing could be a part of an accessibility policy
248 ROADS IN THE COMMUNCIY

THE URBAN CONTEXT
Figure 3.7 Employment location policy
r
sr
rvJrrnroaaa+o-r+}»fti
k
c< doe
_____
-
::
. .Jll :
I.
f{V!4/JUi
W/
One outcome of any accessibility policy is to make better use of existing infrastructure. This could take the
form of regional parking pricing and, perhaps in the longer term, selective road pricing, provided equity and
technical problems can be resolved.
3.1.4 Strategies related to roads and the environment

To create a better fit between roads and the environment, strategies could be directed towards:
Protecting regional environments
Air pollution is becoming one of the key factors in the quality of regional environments and mobile sources are
a major cause (about 49% of volatile organic compounds and 36% of suspended particles in Sydney - MAQS,
1995). Land-use planning strategies are of potential significance, as there is a connection between urban
development and ozone levels and, depending on air parcel flows in the region, development of certain areas
may cause more pollution than the development of other areas. Air pollution control policies are likely to have
significant consequences for the development of urban regions and should be linked to accessibility policies
(Figure 3.8).
Protecting local environments
Local environments need to be protected from through traffic and the environmental impact of traffic. New
neighbourhoods and commercial precincts should be largely free of through traffic, incorporate traffic calming
measures, provide for easy access to public transport, pedestrian and cycle routes, and include provision for
environmentally friendly local employment and other land-use activities. In established communities, especially
in inner urban areas, integrated redevelopment should be considered in order to reduce progressively the impact
of transport barriers and facilitate the creation of viable communities. More details are provided in Section 5.

Figure 3.8 Typical air flows in Sydney basin
Protecting roads and their environments
Two aspects need to be considered here: the need to protect the function and performance of the road by
controlling the friction which road-side development can cause and by reducing the impact of traffic on
adjoining property and the local community. The need to protect existing roads from development which
reduces their effectiveness is especially important in the case of regional roads. They represent a major public
investment while new regional roads are becoming increasingly difficult to develop in established areas.
Reducing the impact of traffic requires consideration of the kind of development which is appropriate and how
it should be protected.
Policies for urban design and road environments
The relationship between roads and their environments is more than addressing friction to traffic and the impact
from traffic. Roads can greatly contribute to urban design, provided the relationship between the built
environment and roads is understood. Hence, there is a need to consider the relationship between the siting,
scale and design of buildings and the siting, design and use of roads and streets; landscaping, street lighting,
overhead utilities and advertising; the view from the road; and the use of the road space for special functions.
Some of these aspects of urban design will be discussed in Section 5.
3.1.5 Integrated approaches

With such a broad perspective, a transport policy for the planning and management of roads in the community
greatly extends the range of considerations. An integrated approach is needed for different situations. The
following principles are relevant:
Transport strategies should be based on land use, accessibility and environmental criteria

THE URBAN CO vTE.XT
Transport policy has many dimensions: accessibility for whom, where and when, how and at what cost. These
dimensions need to be determined not only on the basis of economic criteria, but also on land-use, social and
environmental criteria. In some areas accessibility by road (including road-based public transport) needs to be
increased, but in others it may need to be decreased. Transport issues may have land-use solutions; land use
policies may create transport problems; environmental policies may constrain transport options. The balance
should be determined on the basis of desired outcomes, integrated plans and development priorities,
determined with stakeholder involvement.
Integrated planning will be enhanced by relating outcomes to levels of responsibility
Integrated approaches are needed for each of the three strategy areas, but responsibilities are divided between
different road, land-use and environmental planning authorities. Outcome-based planning and management are
needed to develop and implement integrated strategies. There are three fundamentally different situations which
require different management approaches: regional issues, local issues and issues related to major routes (Figure
3.9). The distinction between regional and local issues reflects the different objectives, policies and
responsibilities at these levels, while issues related to the planning of major routes and adjoining land use often
has both regional and local dimensions. The stakeholders should contribute to the search for solutions in all
cases, but play different roles. Desired outcomes are different and the planning process has to adapt to them.
Institutional arrangements are addressed in Section 6.
Figure 3.9 Landuse and use and transport planning Interactions
Regional
interactions
Land-use & environmental planning
In general terms, we can describe the regional level as one which transcends the local level. Typically, regional
land-use transport relationships have to do with the overall structure and functioning of an urban or rural
region. Major issues arise about future structure and form, the distribution of population and employment,
moderating transport demand, goods distribution, network development, urban densities and transport modes,
major activity centres and accessibility,and commuter parking.
The local land-use transport relationships are those in a local community or town, centre, neighbourhood or
groups of neighbourhoods. Local accessibility, convenience and amenity tend to be important in them.

Relationships between roads, housing and local centres, mixed-use development, environmental traffic capacity,
traffic calming, pedestrian safety, provision for cyclists and community transport, urban design and spaces for
activity are some of the aspects to be considered.
The routes and adjacent land use section addresses the relationship between roads and the land uses along them.
The current incremental approach towards network improvement frequently leads to conflict with local
communities. There are often strong reactions to proposals to upgrade or provide new roads and the processes
used for stakeholders participation and the techniques for integrated corridor development can be improved by
integrated planning. There are also many secondary traffic routes where there are opportunities for improving
the pedestrian and business environment.
There are no miracles
Much of our urban environment exists and adaptation will be a long-drawn out process. Integrated strategies
can make a difference, but outcomes will be incremental and often slow to take effect, especially at the regional
level. Key issues at the regional level are how to adapt urban regions to provide for growth and change while
moving towards more sustainable and equitable cities. Key issues at the local level are how to create precincts,
particularly in established areas, with a higher degree of environmental protection than they have at present. Key
issues at the traffic route level are how to ensure that corridors for movement are protected while preserving
the needs of adjoining owner and occupiers and adjacent communities. Key issues at the regional level are
addressed in Section 4 and those at the local and corridor level are discussed in Section 5.

4. OPPORTUNITIES FOR. INTEGRATING
ROADS WITH OTHER MODES OF
TRANSPORT, AND THE URBAN
ENVIRONMENT
4.1 Background
The goals of urban management as presented in Section 2 provide a context within which to view the
contribution of roads as a tool in moulding the physical and non-physical character of our towns and cities.
Section 3 introduced broad principles of interactions between transport, land use and the environment. Section
4 considers the road network as a provider of multi-modal and technological opportunities, and reviews the role
of various policy instruments in moulding the road environment and patterns of use. The role of roads is
promoted within a broad set of urban management goals, translated into criteria to measure the performance
of cities. Section 5 discusses the evolution of cities and the role that streets and roads have played as definers
of physical, social and environmental space. Specific consideration is given to the importance of corridors and
precincts as having desirable properties for urban design.
4.2 Towns and Cities of the Future: Setting the Scene

4.2.1 A "fairness of view" picture of the future
We know a great deal about the towns and cities of the next 35 years because they are essentially the towns and
cities of the present. The majority of the people who will live in those places are already born - just as the
towns and cities of 1995 already existed to a great extent in 1960. Much of what we see and are likely to see in
the future is driven by inherited geography, topography, and climate; and by the highly specialised economic and
political functions that they have acquired. Transport facilities are intertwined with the culture and character of
towns and cities - transport planners, managers, engineers etc are coming to realise that their work is embodied
within the creation of an urban culture and history which will have many unique features in each town and city.
In addition however the utilitarian role must be fulfilled. Aesthetically pleasing designs of road systems (as
described in Section 5) are as much of a challenge to a diversifying culture which is also seeking solutions to its
ever-growing desires for better accessibility and lifestyle.
The challenge facing the community of planners of the 21st century is to act as preservers of the special
qualities of our towns and cities as well as creators of the functional cities of the future. Cities have to be
efficient, symbolic, effective and beautiful - transport planning as a profession is being "re-engineered" to take
on board this vision. Cities grow to maturity in different eras, creating often diversity of form and patterns of
activity. The density and street patterns of some inner suburbs of the major cities reflect the maturing of an
environment in an era before the introduction of the mass-produced automobile. The geographical spread of
our larger cities such as Sydney and Melbourne are the spatial product of the rail era which supported low
density decentralised development as well as making it desirable for the majority of residents. The later arrival
of the automobile assisted the process, but it had already started - the road system supported the processes
started by train systems simply because of the commonality of accessibility provided by infrastructure. Unlike
the train systems which created corridors of (relatively) dense activity at all distances from the central area, the
automobile combined with the road system enabled low density infill activity which watered down the relevance
of train corridors. The result is a spatially diversified pattern of low density activity. In contrast, bus systems
contributed in large measure to a containment strategy emphasising accessibility within a local system.

Distance from the CBD and residential density are useful descriptors of the physical nature of urban structure.
The average distance for the journey to work by train is significantly greater than for car and bus in all Australian
cities - the respective distances in 1991 are shown in Figure 2. The Future Directions study undertaken by the
New South Wales Roads and Traffic Authority in 1992 concluded that average trip length in Sydney will reduce
from 13 kilometres to 10 kilometres if a consolidation scenario were effective. Similar findings exist for
Melbourne.
Figure 4.1 Average commute distances for various modes in Australian Cities
Average distance to work travelled (kms)
10
Brisbane Sydney Melbourne Adelaide Perth
Train Car Bus
Distance from the centre however is only one expression of urban structure; density is another. There is
growing evidence that density has a greater impact on changing travel and land use than the mix of land use
(Johnston and Ceerla 1995). This is because density supports the development of transport corridors in which
public transport can provide an efficient and effective alternative to the automobile, as well as justifying
improvements in roads to channel much of the freight traffic away from local streets.
Residential distance from the core of an urban area is embodied in the idea of jobs/housing balance (that is,
land use mix). It has often been claimed that if we can balance jobs and housing spatially that commuting times
can be reduced and automobile kilometres reduced. Vehicle kilometre targets have been suggested as a way of
reducing traffic congestion. Attempts to manage the growth of activities at particular locations has not met with
much success (that is, growth management) in contrast to spontaneous location adjustments due to firms
decentralising to gain access to growing suburban labour pools (that is, jobs follow people). Under current
residential densities, a concentration of jobs in the central area tends to increase energy consumed due to the
longer commuting patterns, even after allowing for the different mixes of modal use for commuting over
various distances to central and non-central urban localities. Johnston and Ceerla (1995) conclude that
jobs/housing balance will not reduce automobile trips and vehicle kilometres much because theoretically one
expects workers to search for jobs within a certain commute radius, and therefore they end up with an average
commute time because the bulk of the jobs are in the outer area of their circular search pattern. Marchetti (1992)

THE URBAN CONTEXT
describes this constant travel time budget effect as an anthropological invariance in travel behaviour. Much of
planning in the last 40 years in Australian cities is based on the idea that decentralised jobs will lead to greater
convenience.
Roy et al. (1995) simulated the relationships between urban residential density, job decentralisation and transport
energy consumption when new housing is added as outward urban expansion or infill (redevelopment) within
an existing urban area. They find for large Australia cities that strong infill can produce energy savings in
commuting of over 17% compared with the best sprawl scenarios, so long as the infill policies are accompanied
by significant improvements to the level of service in public transport. However, the degree of infill required
would take many years to occur, especially given that much of the housing stock has been constructed during
the last 40 years and is generally in good condition. Furthermore, the energy advantage (which is also a
greenhouse advantage given that greenhouse gas emission changes are almost directly proportional to energy
consumed) of infill shrinks to 2-3% when workplace location choice occurs in the nearest subcentre. Roy et al
(1995) conclude that transport demand management policies and matching jobs to disperse subcentres in
residential areas will have a greater impact in the next 10-20 years in reducing greenhouse gases than will infill
policies (which could take anywhere from 40 to 100 years to have a noticeable impact). They also suggest that
if these subcentres contain ancillary services, as well as public transport stops and other public transport nodes
such as stops for circumferential express buses, market forces will automatically increase housing densities in
areas surrounding these subcentres, yielding natural equilibrium levels of infill without the need for intrusive
land-use control. This is the basis of the urban village idea. Studies in Adelaide have shown that urban housing
consolidation and infill only stops or decreases the rate of lowering of population density in the inner suburban
areas; it does not increase population density significantly.
Regeneration of infrastructure-rich declining suburbs in the context of social sustainability (that is, equity) is an
attractive planning option for most of Australia's urban areas. The substantial investment in urban infrastructure
of all types (including local roads) in areas of suburban decline like Sydney's west and Melbourne's north - due
in part to the recession and high levels of unemployment and low skill base will not be broken by encouraging
the unemployed and unskilled to relocate to other areas (as part of a general policy of promoting compact
cities). The Federal Minister for Housing, The Honourable Brian Howe has stated that "The cycle of poverty
would be reinforced, not broken, by such a policy of re-urbanisation, leaving many people worse off" (The
Australian, 25 July 1995). We have to make better use of all of the extensive infrastructure in place -
regenerating existing suburbs, especially outer urban area suburbia (Professor Peter McDonald, ANU, The
Australian, 26 July 1995). The disadvantaged areas in major cities are not urban ghettos with little scope to
reverse the downward slide, in contrast to many developing economy cities. They occupy strategic locations
within our cities and the people who live there have skills which could be used in a more targeted approach to
regeneration at the local and/or regional level. They exist primarily because they have been slow to recover from
industrial restructuring over the past two decades. We need to place more emphasis on social sustainability -
we are in real danger of letting the current "popularity" of environmental sustainability dominate both the need
for economic development and social sustainability.
The opportunity for transit corridor retrofit is also real. Travel densities which support public transport can be
produced from low density residential activity provided we allow for a wider range of more flexible forms of
public transport such as hail-n-ride bus services using both mini-buses (for example, the Nepean Nippers in
Sydney and the explosion in a number of regional centres in Queensland) and conventional sized buses. Limiting
public transport to very rigid traditional forms of transport such as rail and scheduled route bus services is not
helping the rejuvenation potential of public transport as an alternative to the automobile.
Other considerations affecting location choice and thus commuting times such as high job turnover, high
residential relocation costs, and employment heterogeneity in multi-worker households have been suggested by
Small and Song (1992) as reasons why households seek accessibility to an array of possible future jobs rather

than just to their current employment. This explains why people do not move even when their commuter trip
becomes less than "optima". If this is true, when combined with the growing importance of non-work trips,
residential amenity and the location of the better schools, the debate on "excess" commuting (for example,
Small and Song 1992) requires cautious interpretation. Excess commuting is the commuting cost above the
lowest possible average commuting cost consistent with the geographical distributions of work and residential
sites. Given the (inadequate) current pricing regimes, even if jobs and housing appeared to be in balance, there
would be substantial inter-area travel as people take advantage of low priced mobility. This is consistent with
the trend to regular non-local non-peak travel, regardless of residential location. The importance of efficient
pricing is evident.
Wachs et al. (1993) track the differences over 6 years between home and work location among 30,000 employees
of a large health care provider in Southern California. They found that work trip length had in general not
grown over the six years, but the growth of the workforce had contributed more to the growth in local traffic
congestion than had a lengthening of the work trip over time. This implies that the strategies for reducing
vehicle kilometres should reconsider the predominant interest in commuting activity and give more emphasis to
non-commuting travel as vehicle kilometres increase.
Securing higher residential densities regardless of distance from the core of an urban area appears on balance
to reduce automobile kilometres travelled, but only if accompanied by travel pricing policies designed to make
the car less attractive and complementary improvements in public transport (Webster et al 1988). The increase
in density near rail stations and bus routes provided it is combined with road pricing has been recognised for
many years - the constraint is the political will to implement serious road pricing. Increasingly urban and
regional simulation studies are finding that a comparison between dispersed-growth and contained-growth
scenarios finds no clear winning scenario in terms of emissions. Concentration of travel in the centres leaves
the peripheral areas less congested and therefore people travel farther in these areas.
The anthropological invariance view of travel behaviour is very appealing. When combined with the residential
density effect (and pricing of automobile use) we begin to see niche opportunities for public transport - train
and bus - throughout the urban area.
4.2.2 Emerging directions

Out of a heritage evolves current trends and speculations as to which ones are likely to dominate the patterns
of town and city evolution over the next 35 years and beyond. Projecting with insight and wisdom into the far
future is risky business indeed - history has shown all too often the errors of prediction. The suggestions that
some appealing infill policies will require 40 - 100 years to have a noticeable impact may disappoint some and
encourage others to reject the ability of public transport (as a beneficiary of infill) to assist the process of
desirable change - maybe the "solution" is to redefine the period of time in the future that the current
generation should be responsible for and see the next 100 years as a candidate. Questions on the agenda of the
1990s such as global warming, local air pollution, energy consumption levels, "sprawling" cities and loss of
amenity may well be handled best by technologies which many currently criticise and even despise such as
automobiles and roads, in favour of technologies such as railways which have been described by some road
advocates as:
"a technology belonging to the Fifth century [which] are about as efficient when compared to
roads as waterways and canals (home: 18th century) are when compared to railways. But they enjoy
a special place in the affections of many otherwise sensible individuals" (Ross Swan, Editorial in
World Highways, April 1995,7).

THE URBAN CONTEXT
Some major Australian (and international) trends related to the performance criteria of interest to the
community need to be set out.
The firs trend is the continuing rise throughout many countries in automobile ownership and use.
For example, between 1970-71 and 1989-90, total passenger vehicle registrations in Australia grew by an average
of 3.5% per annum (a low of 1.25% in 1985-86 and a high of 5.6% in 1972-73), equivalent to 0.39 vehicles per
head in 1970-71 and 0.44 vehicles per head in 1988-89. This trend is likely to continue until automobile
ownership levels off when it approaches 0.6-0.8 personal vehicle per adult, as is occurring in the USA. The
increase in ownership by females is most noticeable. Europe is witnessing a similar trend. Korea has witnessed
a 25% annual increase in car ownership since 1982, growing from 1 million to 8 million vehicles in a population
in 1995 of 70 million people. In the last 10 years, the number of passenger vehicles in China has increased by
an average of 15% per annum (and rising to as high as 30% per annum in developed coastal regions). There are
currently 9.93 million cars and 30 million Chinese licensed to drive a car. As many societies approach a value of
0.8 vehicles per head (assuming 20% non-adults), it is likely that per-capita use will also level off given the
strong evidence that distance travelled per passenger vehicle has shown remarkably little variability over time.
The growth in recent years in the leasing of automobiles in the rental car industry to a growing market of short-
term visitors to cities together with the growing use of taxis adds further automobile traffic to the system.
Since 1971, average annual kilometres per passenger vehicle in Australia have varied between 15,000 and 16,000
with a majority of annual averages lying in the band 15,3001) 15,500 (BTCE Rpt 88, 1995, Table VIII.1). Total
time spent travelling per person has also shown remarkable regularities across countries and time periods
(confirming the presence of a constant travel time budget). As improvements in transport infrastructure and
service levels occur, households and firms relocate to take advantage of other benefits of location while
preserving the mean and variance of travel times throughout the urban area (Marchetti 1992). Any future
improvements in road infrastructure which increase average speeds tend to increase annual distance travelled
without affecting travel times in any noticeable way. Between 1981 and 1991 the mean distance travelled on the
journey to work increased by just less than 1 kilometre, with the rail system a main contributor to this increase,
despite its small share of the total market (CSIRO 1995).
The second trend is the very noticeable reduction in total noxious air-pollutant emissions (Table 3, 4 and Figure
4.2) in countries such as Australia.

Table 3:Selective indicators of performance of the transport system (end use vehicles)
Emissions Australia Australia Australia % Emissions USA USA USA %
(gigagrams 1984 1993 change over short tons pa 1984 1993 change over
pa) 10 yrs ('000s) 10 yrs
C02 27,282 34,289 25.7 CO2 (million 242.3 250 3.2
metric tons of
carbon)
CO 3,520 2,407 -31.6 CO 78,881 59,989 -24.0
HC (VOCs) 487 306 -37.2 HC (VOCs) 9,441 6,094 -35.5
NOx 196 193 .015 NOx 8,387 7,437 -11.3
Lead (Pb) 35.93 1.38 -96.2
PM10 271 197 -27.3
Energy Consumption (petajoules)

urban cars 277.01 370.20 33.6
urban bus 5.93 6.92 16.7
urban rail 3.88 3.73 3.9
urban freight 102.82 125.80 22.3
Fuel Cons 12.19 12.08 0.90 mpg pass 26.9 28.4 5.57
1/100km cars
Total vkm 100.58 128.04 27.3 Total vkm n/a n/a 38.0
billion pa
Note: the relativities for Australia are applicable to the urban context
Stringent new requirements for emissions of hydrocarbons, carbon monoxide, and nitrogen oxides from new
automobiles (and trucks) have been introduced in Australia and many countries. Energy consumption per
vehicle kilometre travelled is declining in Australia although increases in the growth of automobiles and total
vehicle kilometres results in a net increase averaging 3.36% per annum. Thus the absolute reductions in
emissions are even more impressive when we see the growth in vehicle use. The benefit of emission control
legislation is evident. In Australia, the Australian Design Rules (ADR's) are mandatory for vehicle emissions and
have been influential in achieving significant improvements in emission levels, more so for cars than trucks.
Disturbingly, however, Australia's efforts amount to very little internationally when we see the positive trend
world wide for carbon monoxide and hydrocarbon emissions disappearing in about 10 years time due to the
projected growth in countries where emission controls are minimal (Table 4 ----- Walsh 1993).
This contrasts with the continuing increase in greenhouse gas emissions, primarily C02. Greenhouse gases
which comprise no more than 1% of the atmosphere, block infrared radiation to outer space and reradiate the
captured heat to the atmosphere. The capture of the reflected heat raises the earth's temperature. More than
half of the carbon dioxide emitted from all transport sources comes from automobile fuel. Changes in C02
emissions is highly correlated with changes in automobile fuel efficiency and vehicle use, strongly hinting at the
major benefits available from improvements in the fuel efficiency of automobiles and reduction in vehicle use.
Dobes (1995) has compared greenhouse gas emissions in Australia in 1900 and the year 2000 and concludes
that:

TIE URBAN CONTEXT
"Within the limits of long-term historical comparisons and availability of data, it may be
concluded that use of the internal combustion engine itself has not contributed
disproportionately to greenhouse gas emissions in the transport sector. The equally qualified
corollary is that an economy of size similar to that of today would not have generated a
significantly lower quantity of greenhouse gases had the motor car not replaced animals and steam
from 1900" (Dobes 1995, p 19).
Table 4: Global trends in motor vehicle emissions

Carbon Monoxide (tons/year)
Year Car Light Trucks Motorcycles Heavy Trucks
1990 223,357,376 1,260,248 8,168,139 7,793,019
1995 217,043,366 1,410,969 9,209,773 8,301,436
2000 183,131,401 1,623,464 10,464,134 9,374,474
2010 97,559,141 2,077,267 14,166,965 12,214,989
Hydrocarbons (tons/year)
Car Light Trucks Motorcycles Heavy Trucks
1990 30,025,462 506,570 5,568,461 1,818,987
1995 26,309,692 529,987 6,387,750 1,830,407
2000 23,314,293 607,874 7,075,987 2,038,046
2010 22,084,536 798,924 8,227,297 2,637,515
Nitrogen Oxides (tonlyear)

1990 11,049,831 1,995,856 481,970 14,654,156
1995 10,651,242 2,205,343 550,760 13,459,297
2000 8,387,873 2,517,257 619,217 15,054,203
2010 5,996,606 3,113,332 782,274 18,752,930
Carbon Dioxide (tons year)

1990 2,140,563,394 648,810,244 115,235,655 1,095,306,335
1995 2,326,778,635 714,188,146 131,007,340 1,272,857,434

2000 2,287,475,047 764,561,988 147,578,254 1,468,158,497
2010 2,588,738,693 802,074,961 190,301,058 1,934,317,592
Source: Walsh (1993)

Figure 4.2a Truck emissions: nitrous oxides (gmlkWh).
25
20
GM/KWH
15
10
77 79 81 83 85 87 89 91 93
Figure 4.2b Truck fuel efficiency (tonne kms per litre).
40
30
20
10
1976 1979 1982 1985 1988 1991

THE URBAN CONTEXT
Figure 4.2c Improvements in truck productivity

(thousands of tonne kms per yr per vehicle.
1400
1200
800 ,
400
1971 1976 1979 1982 1985 1991 1971
Source: Australasian Transport News (1994), partially drawn from Cox (1994)
A third trend is the increasing difficulty experienced by government bodies in financing transport
infrastructure.
This financial squeeze is often associated with the inability to prevent excessive road congestion in crowded or
growing urban areas, where new construction is very expensive. This has led to an interest in private-public
partnering in private-sector financing and the use of tolls to fund a substantial amount of the investment.
Sydney has two major toll roads, and has commenced construction of a third; Melbourne has one major tolled
road - the City Links project - which has recently been approved and a preferred developer selected, and
Brisbane has recently considered tolled-options. Australia was one of the first countries to introduce extensive
privately-financed tolled roads in urban areas, initially with automatic toll collection and now moving towards
electronic toll collection for the Melbourne orbital and the M2 in Sydney.
A fourth trend is the significant improvement in the efficiency of freight vehicles in Australia in terms of
productivity, energy consumption and noxious air-pollutant emissions (Figure 3 and Table 3). This trend is
not global (Table 3(a)
Despite the high growth in freight vehicle kilometres around the urban area, we are witnessing an overall
reduction in noxious air pollutants. The growth in greenhouse gases (primarily C02) is still occurring since the
improvements in fuel efficiency (tonne kms per litre and litres/100km) are not large enough to compensate for
increased truck kilometres.

A fifth trend is the continuing decline in public transport patronage share in capital cities despite an increasing
amount of patronage due to the growth in bus patronage. (see Appendix 1)
Estimated boardings for trains for all five capital cities with urban passenger services in 1991-92 is 396.9 million
(Hensher et al 1994). Boardings of publicly operated buses in the same year is 407.9 million (Hensher et al 1993).
When we add in private bus operations, estimated at over 300 million in urban areas (out of a total of 940
million throughout Australia -
see Raimond and Hensher 1993), it is clear how important the road system is
as a mover of public transport passengers. In the financial year 1991-92, boardings of buses in all capital cities
in Australia exceeded boardings of trains. The number of passenger trips by cars in all urban areas is over 10
billion per annum (based on passenger kilometres from Cosgrove and Gargett 1992 and average distance
travelled from CSIRO 1995). All forms of public transport (that is, bus, train, tram, ferry) account for 7.9% of
passenger kilometres, which continues to decline through time. These patronage statistics are associated with a
very flat trend in rail passenger trips over the last 20 years, and a noticeable trend upwards in bus patronage
(Cosgrove and Gargett 1992, Table 5). The overall growth rate per annum in patronage is 1.5% for bus, 0.8%
for rail and 4.29% for car.
The message is very strong - although we can identify markets in which rail can have a significant role to play,
noticeably trips to the centre of the larger urban areas, the contribution of rail (and bus) to the overall transport
task is likely to continue to be very small and a declining share of the total urban passenger market. This has
been recognised recently in Sydney where the current rail passenger strategy is to maintain market share, in
contrast to increasing market share. This will still require a sizeable increase in total traffic given the high growth
rates of car traffic. Quoting high modal shares for public transport trips to the central city is encouraging but
also misleading as the basis of generalisation - for example the best situation in Australia is the 76% of
Sydney's CBD commuting trips by public transport; however commuting to the CBD of Sydney represents only
3% to 6% of total urban travel and is declining as jobs "suburbanise". The proportion of people living in
Victoria dependent on the car for the trip to work has risen from 68.8% in 1974 to 78.5% in 1984 and 84.3%
in 1994. The challenge remains to harness an improved future for public transport, but recognising that this is
likely to occur within a context dominated by the automobile. The good news for roads is a recognition that
they are currently the most important form of infrastructure in servicing public transport, moving over 66% of
all public transport passenger trips in urban areas.
A sixth trend is the marked decline in traffic fatalities and serious injuries in total, per vehicle and per capita, in
both passenger and freight vehicles (Figures 4 and 5).
For Australia as a whole, road fatalities declined between 1982 and 1992 from 3,252 to 1,934; fatalities per 10,000
vehicles declined from 3.9 to 1.9 and fatalities per 10,000 individuals declined from 21.4 to 11.2 (Federal Office
of Road Safety 1992). These strong reducing trends also apply to urban areas as illustrated by data from Sydney
(Table 5), except for pedestrians, motorcyclists and bicyclists. Urban design may have a role to play to improve
the security of these minor modes. The statistics can be disaggregated by user category for urban situations
(Figure 5). Of particular interest is the fatality rate of pedestrians whose involvement hints at the (in)adequacy
of urban design in minimising their exposure to risk when interacting with the road environment.

THE URBAN CONTEXT
Figure 4.3 Annual traffic accidents for freight vehicles in urban Australia
3500
3000
2500
2000
1500
1000
500
81 82 83 84 85 86 87 88 89 90 91 92 93 94
Figure 4.4 Annual fatal truck accidents in urban Australia
1600
1200
1200
800
400
81 82 83 84 85 86 87 88 89 90 91 92 93 94

Figure 4.5: Fatalities by user type - urban Australia
Fatalities Per Annum
100 ft ft so mp so a* no 490 a' 00 am

®®sowerwwwWwwwww®w®®am9s®wwwwwww®®
0 9D B041a*A®1 a9 fm i®69 w *0*** ,p1®w1A Ra 9Rwf®01ffi ww®e ®iw
1989 1990 1991 1992 1993 1994
Driver Pedestrian ®®®® ® Pillion Passenger

- - - Passenger 990 a0 seas Morocyclist w 0 m ® 0 Bicyclist
Table 5: Trends in accidents in metropolitan Sydney, 1983-93

Sydney Statistical Division
Year Fatalities Injuries Fatal Accidents All Accidents
1983 447 20060 414 40918
1986 498 22657 456 46412
1987 445 23261 423 47379
1988 481 21680 444 43505
1989 416 20722 383 42012
1990 385 19111 357 40066
1993 224 14921 215 33363
Source: RTA - and former names (1983-->) Road Traffic Accidents in New South Wales
Serious injuries also declined. Over the periods 1988 to 1991 the number of persons hospitalised declined in all
road user categories. The average annual changes are -8.1% for drivers of motor vehicles, -21.3% for motor
vehicle passengers, -6.1% for pedestrians, -7.5% for riders and passengers of motor cycles, and -8.9% for pedal
cyclists (FORS, 27 June 1995 personal communication with Dr Michael McFadden). The overall rate of decline
is 8.1% per annum. This trend downwards which began in the early 1970s has accelerated during the 1980s
(Camkin 1992). There are strong indications that accident rates become asymptotic to a value that reflects
prevailing economic circumstances, infrastructure, technology and perhaps cultural attitudes towards road
trauma. Importantly for urban areas we must recognise that about 50% of fatal accidents occur in urban areas
with speed limits of 70 km/h or less, and about 35% of all casualties occur on urban localroads. Urban crashes
include a higher proportion of the more vulnerable road users (pedestrians, cyclists, young, elderly), typically
one-third, in contrast to 7% in rural contexts. Urban accidents constitute the overwhelmingly majority of non-
injury crashes and make a major contribution to traffic congestion, especially in the larger metropolitan areas.

THE URBAN CONTEXT
The accident rate varies significantly according to the type of road. For example, in Western Australia, accidents
per million vehicle kilometres vary from a low of 0.86 for freeways, through to 1.00 for multi-lane divided roads,
2.20 for two-lane undivided roads to a high of 3.50 for multi-lane undivided roads (cited in John Cox's Part I
report).
A program of "incident management", especially in the larger cities where crashes, breakdowns etc cause
considerable traffic delay, is important if we are to manage the delay due to these accidents or breakdowns. Many
readers can relate to the apparent growing incident of major delay due to a vehicle breaking down or an accident
(the latter often in the traffic in the other direction). This is becoming the major source of travel time
unreliability in built-up areas.
Table 6 summarises the profile of all road casualties in New South Wales in 1993 in terms of exposure to risk.
The last two columns of Table 6 indicate the contemporary record of all casualties relative to the exposure to
the transport system as measured by passenger kilometres. The higher the index, the greater the risk. Motor
cycle riders have the highest risk factor, and bus passengers the lowest risk factor. Car drivers and passengers
have a higher risk factor than bus, but it is only 23% higher for all travellers. This may seem surprising, but it
must be remembered that car users accumulate very large passenger kilometres per annum.
For all passengers, bus passengers contribute 4.84% of total passenger kilometres yet only 2.964% of casualties;
in contrast pedestrians contribute only 1.43% of passenger kilometres yet are the source of 11.914% of
casualties. Motor cycle riders undertake 0.51% of passenger kilometres yet contribute 7.143% to casualties. For
the carriage of school children, buses are overwhelmingly safer than any other road mode (including walking
which is usually along the side of a road). Train is the only safer mode. For school children, bus passengers
contribute 34.7% of all passenger kilometres yet only 5.76% of all school children casualties; in contrast car
passengers contribute 38.08% of pkm's but 45.2% of school children casualties. For bicycle riders they
contribute 0.44% of pkm's but 17.01% of school children casualties.
A seventh trend is the growth in the use of taxis, hire cars and rental cars.
As business locations diversify around the metropolitan area, the flexibility offered by taxis, hire and rental cars
becomes important in facilitating interaction. This sector is often neglected in the debate on modal tasks and
opportunities. A BTCE study (1987) reports that 18% of all public transport passenger kilometres and 24% of
all public transport passenger trips in Sydney in 1985 are by taxi. These levels of use on a trip basis are almost
as high as train and bus; although considerably lower for train when expressed as passenger kilometres, reflecting
the shorter trip lengths (an average of 5.4 km compared to 15.3 km for train), but longer than the 3.5 km for
bus. In Melbourne the modal share for taxi is 8% of passenger trips and 6% of passenger kms, significantly
lower than for Sydney. The BTCE suggest that the tram services in Melbourne accommodate a lot of the shorter
trips which are made in Sydney by taxi, but that longer trips are made by taxi in Melbourne (where the average
trip length is 7.6 km). Whatever the reasoning behind these figures, road-based "public transport" involving an
automobile is an important component of the overall passenger transport task.

Table 6: Casualties by mode and age (percentage of 26,949)
Mode 5-16 year Total pkm's Total (%) all Total pkm's RRFI all RRFI 5-16
old (%) (1) 5-16yrs (%) ages (3) (%) (4) ages yrs (=1/2)
(2) (=3/4)
Bus/coach 5.76 34.7 2.964 4.83 0.61 0.17
Car driver 2.27 0.3 41.124 52.92 0.77 7.6
Car passenger 45.20 38.024 25.654 33.42 0.77 1.19
Other (mainly train) 0.174 21.7 5.151 5.78 0.89 .009
M/cycle rider 1.86 0.16(*) 7.143 0.51 14.00 16.8 (*)
M/cycle passenger 0.827 0.16(*) 0.627 0.30 2.09 16.8 (*)
Bicycle 17.01 0.44 5.385 0.81 6.65 38.7
Pedestrian 26.9 5.18 11.914 1.43 8.33 5.2
Total 100 100 100 100 -
Figures subject to rounding error. RRFI = relative risk factor index. (*) = not able to separate by mode.
Source: average distance travelled for school children obtained from FORS Report CRF69, February 1988.
Under the umbrella of the 7 performance criteria, how are we to either (i) reverse a negative trend, (ii) slow a
negative trend down or (iii) live with a negative trend while resolving the concerns that the community have?
Progress will be most noticeable if we can identify strategies consistent with the desired direction of change
(based on outcomes and performance criteria as measures of success), even if the magnitude and rate of change
is uncertain. Sections 4.3- 4.5 address the possibilities.
4.2.3 Predictions of change

What might be relatively safe predictions of agents moulding the evolution of future cities and towns over the
next 35 years? The set includes advances in telecommunications technology in the ways that the transport
revolution did a century ago. Intelligent transport systems, global positioning systems, remote-access to work,
business, shopping and entertainment will give flexibility in trading-off the use of physical transport with virtual
transport (that is, telecommunications) in achieving outcomes (Ritter and Thompson 1994). Telemedicine,
distance learning and teleshopping become substitutes for the visit to the doctor, the University and the shops,
although in the case of shopping an additional shorter physical trip is created to deliver goods to the
teleshopper.
The continuation of the process of decentralisation, which has been under way for over 100 years, is likely to
continue. "Edge cities" will evolve as regional centres redefining density nodes and providing another point of
reference for growth in employment, residential population and economic activity. These nodes are most likely
to be of medium density with adjacent low density activity. The economic and social necessity for more high
density urban form is unlikely to exist - indeed much of daily work can be achieved with less reliance on face-
to-face contacts, even sizeable urban goods movements (for exmaple, paper-based information delivered by
couriers) can be replaced by transmission over the internet. This is why many trucking companies now have a
major interest in the new information technologies. Reduced travel spread more evenly through the day may
evolve to aid the efficient use of existing infrastructure and slow down the demand for new infrastructure.

THE URBAN CONTEXT
This scenario suggests a trend towards mixed-use medium density regional centres from the edge inward, driven
significantly by a general long-term trend toward low-density communities. The "neotraditional town planning"
view of reconstituted urban space with an emphasis on pedestrian and public transport oriented land use
planning with growth in mixed land uses is likely to evolve into an essentially suburban-like setting depicting the
very noticeable medium density nodes with exponentially decaying densities away from each regional core.
Importantly the debate on density should produce solutions which are the outcomes of economic and social
change and not the objective of change per se.
This scenario accords with technological opportunities to improve systems integration and provides real
opportunities for public transport. Systems integration involves modal interlocking and coordination to facilitate
seamless accessibility. There are many international examples such as the Dutch one-stop automated
information systems that allow a traveller to dial a telephone number from almost anywhere for information on
how best to travel between two specific locations. Smart buses and shuttles as public transport systems provide
users with a much-improved level of information on where approaching vehicles are located, what their costs
and level of seat availability will be and their arrival and departure times. These are exciting new services. The
move away from totally fixed route services in favour of a mix of fixed and flexible demand responsive routing
in low density areas is an appealing prospect to improve public transport accessibility, especially for feeder
services at morning and evening peaks (Glazebrook et al 1995). The move away from modal means to outcomes
will provide opportunities institutionally to emphasise real integration of all forms of transport, devoid of the
archaic regulations that limit the seamless interconnections between buses, taxis, trains and cars (see Section 6).
Aided by intelligent transport systems, smart cars and trucks are likely to evolve together with smart buses, with
a long term prognosis that in congested corridors on key links of a region's highway, the new technologies
perform at their best level. If we can funnel the traffic into fewer high capacity roads, the opportunity to use
computer-controlled automated highway technology is greatly enhanced. There is clear incentive here to reduce
the amount of road traffic on residential and arterial streets, something which is more likely to be achievable
when one is not taking away the benefits of automobile use by taking advantage of the "herd-like" profiles of
cars on highly congested major roads. When moving in synchronisation, the feature of train use "on the road"
becomes an opportunity to exploit. What is still a problem however is the parking of the cars at the destination,
something which is avoided by the use of trains, buses, taxis and rental cars.
Shoup's research into parking and the opportunities to manage parking through cashing-out programs provides
a sensible way of handling the generosity of society in facilitating free and low priced parking. Minimum off-
street parking requirements introduced by local governments are a bad planning tool designed primarily to
encourage car use (Shoup 1995). The pricing of such valuable space must be given more serious attention
(Verhoeff et al. 1995). Parking is an issue with strong links with Section 6 on institutional issues. The continuing
pull-push struggle between the desires of local government (especially in the centre of cities) and State
governments is best illustrated with opposing views on the role of parking availability and pricing in attracting
spatially-specific investment as well as contributing to the overall efficiency of the transport system at the urban
areawide level. Parking policy has been suggested by a number of authors as a proxy strategy for road pricing
(for example, Verhoeff et al 1995). Peak spreading and non-commuting travel need special attention given that
roads must be seen in the broader temporal context.
To conclude this section, it is appropriate to recognise the current level of net subsidy to all passenger transport
users.A number of studies throughout Europe, Canada and the USA have consistently shown that transport
users generally do not pay enough user taxes and charges to cover their external costs. In a review of 5 major
studies, Gomez-Ibanez (1995) concludes that public transport users do not pay their way largely because the
fares they pay are not sufficient to cover the capital and operating costs, not because they generate significant

amounts of pollution and other social costs. For automobile users, by contrast, government capital and
operating expenses constitute only about 20% of total external costs. Among the external costs, parking
accounts for about 20%, air pollution about 20%, accidents about 20% and energy security about 20%. These
figures are approximations, but they do highlight where the externalities exist. Some of the international
evidence is summarised in Tables 7, 8 and 9. It should be interpreted with great caution since our knowledge of
costing many of the items is both immature and often subject to huge variations caused by the context in which
transport services are provided. The higher estimates in the range for the United States are for urban peak trips.
The Australian evidence for the automobile suggest that there is overpayment for automobile use, which might
be queried for urban congestion contexts. The message is simple - there is much scope for correcting the
(under) pricing of externalities via a mix of pricing and technological change to eliminates /reduce such external
impacts. There is also a need for much more research into identifying the variation and sources of variation in
each of the unit cost items in Table 7.
4.3 Changing Household and Business Profiles

4.3.1 The time and place of work
The place and time of work has important links to the place and time of travel, and hence to the transport
infrastructure's performance. Changes in the labour force's size and composition over the last 20 years send a
very important message about the changing set of opportunities for residential and workplace locations, as well
as the timing and frequency of commuting and non-commuting activity (Hensher et al 1994-95). The key
characteristics of the adjusting workforce and work schedules are increased flexibility in working hours, the
greater ability to vary the number of weekly or bi-weekly working days and the actual number of hours worked
(for exmaple, 9-5, 8-4); the redistribution of work opportunities, and the changing take-up rate between the
genders, increasing the incidence of multi-worker households.
The total amount of work travel has not varied greatly for some time, and so the effects of work changes are
essentially redistributive. However, there has been a steady increase in the level of personal business and
shopping travel rates per person. These effects are probably related. The changes in working patterns, tunes and
participation rates are clearly linked. Changes in working patterns appear to be related to increases in non-work
travel. There is parallel evidence that such a rise in trip rates is occurring.

THE URBAN CONTEXT
Table 7:Estirnates of external costs and subsidies for typical trips
cents/passenger km Germany Germany Aust Aust Aust USA USA USA

(cents US, 1994) Car Train Car Bus Train Car Bus Train
Government:
Capital 1.64(-) 10.5(-) 13.9(-) 0.25-1.4 0.18-4.4 8.75
Operating and 0.0-2.2 27-33 19.0
maintenance
Other govt (police, fire 0.18-1.1 0.07-0.16 0.06
etc)
Subtotal 1.64 10.5 13.9 0.4-4.7 27.1-37.2 27.6
Societal:
Congestion 2.8 .01 0.0 0.25-9.7 2.3 0.0
Air pollution 2.4 0.38 2.0 2.4 2.2 0.6-4.7 1-2.8 0.9-3.2
Noise pollution 0.24 0.06 0.9 0.2 1.0 0.06-0.5 0.03-0.3 0.13
Water pollution 0.1 0 0 0.06-7.5 0.06
Solid waste 0..13 0.0
Accidents 1.7 0.18 1.7 0.1 0 .88-2.1 .43-1.4 .38
Energy 0.8 0.1 0 0.44-3.2 0.56-1,8 0.25-.8

Parking 0.5 0 0 0.5-6.8
Other 0.008-5.2 0.25
Subtotal 4.25 .59 8.8 2.81 3.2 2.8-12 4.66-8.88 1.69-4.4
User payments: 16(--) 8M 7(-)

Fares, tolls 0.0 8.8-11.9 8.8
Taxes and charges 2.1 .4 0.0 0.0
Subtotal 2.2 16 8 7 0..44-1.3 8.8-11.9 8.8
Net Subsidy 2.13 -5.56 4.81 10.1 2.8-14.5 23-34.1 41-23
Source: Gomez-Ibanez (1995). Germany and Spain data are from the European Federation for Transport
and the Environment; the USA data are from the World Resources Institute, the National Defence Council
and Todd Litman (an independent Consultant). Australian Data is sourced from Austroads (1994a). (*)
sum of capital, operating and maintenance costs. (**) includes operations, ownership and fares.

Table 8: Transportation system impact ty logy
Ira t i p.- j Paimary Impact oar

Monetary Abstract Dlstrlbut'I Direct Direct
Expense Value Effect User Govt
Private vehicle operation

Transit fares
Parking - cost of provision+use
Accidents -full cost
Time spent in travel -
commercial
Congestion - commercial
New infrastructure - capital

Operating expense - transit
Transp-related Police/Justice/Fire
Regional air pollution
Global air pollution
Vibration damage
Water quality damage
Waste disposal
Energy - security and trade
effects
Time spent in travel - personal
Congestion - personal
Access (travel opportunity)
Accessibility (time proximity)
Flexibility and risk
Noise exposure
Aesthetics
Equity impacts
Property value impacts
Land use effects
Economic development
g : A ? indicates that care must be taken so that costs are not double-counted elsewhere within
other cost categories. Impacts above the thick tine can be considered monetary costs of the
transportation system. Impacts below the thick line can be considered significant, non-monetary impacts
of the transportation system.
Attitudes and opportunities to career, to higher education, and having children are all changing. Women's
participation in the workforce is higher. Initially this was on a part time basis, but increasingly there is a mix of
part-time and full-time work, as the number of children in households diminish, and as career becomes
increasingly important. In 1987, 64% of households in Australia had no children under the age of 15 years.
Average household size has declined steadily over the century from 4.53 persons in 1911 to 2.85 persons in 1987.
By 2011 the average household size will have fallen to 2.64 persons (Ironmonger 1994). This trend is evident in
other countries. For example, in London, the average household size was 2.59 in 1981 dropping to 2.38 in 1991.
The average number of workers per household is increasing. This is partly out of economic necessity and partly
out of choice. It can be attributed to higher rates of divorce, the growing number of non-nuclear family units,
ageing of the population, improved education creating a new career attitude, and changed attitudes of employers
to the commitment and contribution of women and part-time employment for both genders.

THE URBAN CONTEXT
While these changes are not the only influences on travel, they are influential in peak spreading, suburbanisation
of traffic, increased car ownership (linked to both greater financial resources in the household and the need for
increased mobility), multi-purpose chained trips (for example, journey to school/child care en route to work),
suburbanisation of residential locations, decentralisation of workplaces to capture the new composition of the
labour force, and increasing non-commuting travel during the spreading peak and non-peak times.
4.3.2 The labour force in recent times

A common theme in the labour economics literature in the 1980s was a long term decline in the availability of
paid work. The downward trend was attributed in part to the economic recession and structural rigidity, but also
to the impact of technological developments creating reductions in the demand for labour. What was missing
in much of the debate was an appreciation of the role of changing work practices. Increased flexibility in the
number of hours, the number of days and their distribution in the week offered working opportunities to a
larger number of eligible workers. The most dramatic change flowing from greater flexibility is an increase in
the number of women in the workforce.
We are beginning to see a long term trend to shorter standard weekly, annual and lifelong working times
(Dawkins and Barker 1987) with a mix of polarised and redistributed reductions in working time. Polarisation
involves continuation of long work hours for some and no work hours for others; redistribution involves
shorter working hours which are widespread on a sufficient scale to counteract job loss, leading to a society
enriched by the spread of Oliberated time' (Tracy and Lever-Tracy 1991). This move away from a classical work
schedule has produced a significant change in the composition of the workforce with respect to age, gender and
education. A consequence of this development is the increase in the number of multi-worker households,
producing residential location choice behaviour which may be very different from that of traditional single-
worker families. The life-long commitment to a single employer and a limited set of ages for exiting the
workforce are also changing. An increasing number of workers are self employed and on contracts with more
than one organisation. The result is that the traditional journey to work is being replaced by travel to varied and
multiple destinations. With multiple workers and diversified workplaces the residential location choice set is
expanded.
The data in Figure 6 and Table 10 and paint a useful picture of trends in labour force participation and work
schedules over the last 18 years. Despite rising unemployment there are fewer females with no paid work in 1993
than there were 18 years ago. For males, however, polarising trends have predominated in the context of some
overall decline. Early retirement and persons under 20 years old staying at school or enrolled full time in a
tertiary institution through choice or enticement have been major forces at work producing participation rates
which decline from 81% in 1975 to 74% in 1993 (Table 10 (i)). The most noticeable declines occur in the 15-
19 and 55-64 age groups. Some of the decline, especially early retirement, is structural, and is in part linked to
opportunities for organisations to employ people under less expensive work arrangements (part-time, contracts
etc.). However reductions in the standard week is often counteracted by some increase in overtime and by
greater rises in unpaid hours.

Figure 4.6 Hours worked by employed persons (1000)
0 weekley hours worked* 1-29 weekly hours worked

250
1200
200
150
BDO p®
100
ppl
50
400 poger
0
0
1975 1982 1993 1975 1982 1993
30-34 weekly hours worked 35-39 weekly hours worked

800
300
200
100
0 0
1975 1982 1993 1975 1982 1993
40 weekly hours worked 41-48 weekly hours worked

1600
1600
1200
1200
800
® a a®®°°°
800
400 o a S ma W a e two
mono n aae® mmee

0
1975 1982 1993 1975 1982 1993
49 or more weekly hours worked All weekly hours worked

1600
4000
1200
3000
800
2000 noa a a ava®va sop
m aa' m
400 ® m m m aw m m m low
aa> 4" 1000
roses aHMans aa® aam ® &sop n0 W m aW m ans

D
m m m ann as m
aaoonfmi mn n
a -- --
1975 1982 1993 1975 1982 1993
Males Females married

ana® nn® Females total Females not married

THE URBAN CONTE'X'T
Table 9: Australian labour force participation and work schedules
(i) Workforce participation rates by age for males and females (%).
Age Male Female
1975 1990 1993 1975 1990 1993
15-19 59 58 53 56 57 50
20-24 91 89 86 65 79 75
25-34 97 94 94 47 65 66
35-44 97 94 93 52 73 70
45-54 94 90 89 45 61 65
55-59 88 76 70 30 34 37
60-64 71 54 47 16 16 15
65+ 17 9 8 4 2 2
Total 81 75 73 42 52 51
(ii) Average weekly hours worked by employment category, 1975-1992.

Year Full-time workers Part-time workers Total
Males Females Males Females Males Females
1975 42.2 38.2 15.9 16.3 41.2 31.0
1985 41.3 37.7 16.2 15.8 39.8 29.5
1992 43.0 39.2 14.9 15.6 40.0 29.0
Source: ABS Cat.6203
4.3.3 Business activity in recent times

Business activity, as reflected in the nature of employment by industry and occupation is changing in our urban
areas, and is having an impact on transport needs. Tables 11 and 12 show the growth and decline in employment
by industry and occupation over the period 1981-1991. There is an important message - capital cities are
exhibiting strong trends away from manufacturing employment towards service sector employment, especially
in producer and personal services. The service-orientation combined with an increasingly educated workforce
changes the level of control and on-job training required. The interaction between occupation and industry has
been analysed in detail by the CSIRO (1995), using census 81, 86 and 91.
fable 10: Employment growth (%) by industry between 1981 and 1991
Industry Brisbane Sydney Melbourne Adelaide Perth Average
Extractive 0.9 -17.7 -11.3 -17.0 22.7 -6.6
Transformative 6.7 -18.8 -19.9 -12.6 -4.8 -14.8
Distributive 27.7 8.8 13.5 6.0 19.1 13.4

Producer services 58.9 41.2 45.2 50.9 45.7 45.7
Social services 48.4 19.7 20.5 20.7 36.4 25.3
Personal services 72.9 37.0 44.4 45.6 61.5 47.1
Average 34.2 8.7 8.1 14.0 25.8 13.7
Source: Table 4.2 (CSIRO 1995).

Table 11: Employment growth (%) by occupation between 1981 and 1991
Occupation Brisbane Sydney Melbourne Adelaide Perth Average
Managers, admin and 98.2 62.2 58.7 35.8 47.9 60.1
professionals
Para-professionals 80.2 47.9 51.7 40.9 72.9 54.7
Tradespersons -7.0 -19.4 -19.5 -16.8 -8.9 -16.6
Clerks, sales and 28.6 2.4 4.9 13.5 24.8 9.7
personal services
Operators, drivers, 12.0 -17.1 -19.1 -3.7 5.9 -11.1
labourers & related
Average 34.2 8.7 8.1 14.0 25.8 13.7
Source: Table 4.1 (CSIRO 1995).
The trend suggests that low-level jobs have increasingly become part time, temporary rather than casual, and
less vested in social institutions such as the nuclear family or lengthy on-the-job training. Many new low-income
jobs have been designed for married women who are increasingly re-entering the workforce and who prefer
flexible, part-time, local employment, while other new jobs are designed around young people who work part
time while continuing in lengthy education processes which may ultimately give them access to the new jobs at
the top.
This strong trend, consistent with a growing "hi-tech" and "hi-touch" urban society is translated into a greater
variety of working places and times, making more flexible forms of transport more attractive for commuting
activity. It also places less burden on urban goods movement, spreading this activity over a longer working day.
Some businesses are becoming more flexible in the timing of collection and distribution of goods. These trends
are adding to the appeal of the car as less rigidity in working hours and workplace locations supports the
individualistic forms of transport.
4.3.4 Changing work practices -- emerging new opportunities

Two major changes have created a shift from working full-time in a single location to working in multiple
locations. Wherever workers are, new technology has provided small, powerful, and affordable tools with
telecommunications networks to link people together. Changes from industrial age management by surveillance
and time clock to management by results has provided the means to cope effectively with a dispersed workforce.
This has supported a shift in workers away from centralised work sites to remote locations, including homes.
Telecommuting and teleworking - back to the future

If all employees worked at home 1 day per week, the benefits to air quality (but not necessarily global warming)
and congestion and hence road investment needs could be as high as 20% on current levels.
Telecommuting involves working on a part-time basis from a remote location where the worker makes regular
and periodic visits to the central workplace. Teleworking refers to circumstances where the individual works
from a remote location on a full-time basis and thus regular and consistent commuting would not be part of an
employment contract. Telecommuting is a subset of the superset of teleworking possibilities (Wood 1995). The
Australian Bureau of Statistics (ABS 1992) reports some 2.04 million people working some hours from home;
308,000 or 4% of workers spend most of their time working from home. In the future, satellite "telework
centres" near or in residential areas, fully equipped with appropriate telecommunications equipment and
services, can serve employees of single or multiple firms, co-located on the basis of geography rather than
business function. Telecommuring will not be the answer for all workers as not all industries or jobs are suitable
for remote access.

THE URBAN CONTEXT
The automobile will play a greater role as an office - the "road warrior". A recent study investigating the
decline of manufacturing industry in Melbourne highlights the trend to producer services and outsourcing of
technical and coordinating activities, with the high-level "employees" on contract and working from remote
locations (including interstate), using their car as a mobile office (Brotchie 9 June 1995, personal
communication). This increased flexibility to select a residential location independent of where one's "normal"
workplace is, imposes a different set of travel activities on the road network. The "`lexiexecutive" has arrived.
Most noticeably we are witnessing the growth of self-employed and outsourced contractors (as employees or
employers) who require an automobile to move equipment and/or individuals between multiple destinations
throughout the day. The growth of mobile phones makes multiple work locations more viable. In 1994 there
were over 1.6 million mobile phones in Australia. The move of business activity towards services reinforces the
opportunities for more flexibility in the time and place of work. Public transport will face even greater
challenges in being able to serve this growing market.
Handy and Mokhtarian (1995) suggest that 1.41% of workers in California telecommute on any given weekday.
This translates to 6.1% "at some time". The US Department of Transport (1993) predicts a penetration rate of
between 5.2% and 10.4% of the total United States workforce telecommuting in some form or another by 2002,
up from an estimate of 1.6% in 1992. Telecommuting is not purely the elimination of a home-based commuting
trip; it also accounts for a reduction in the amount of commuting travel because work will increasingly be
performed at a telecentre closer to home than the worker's "usual" workplace location.
A teleworking pilot project undertaken in 1993-94 with Roads and Traffic Authority employees in Sydney found
that:
teleworking significantly reduced travel by teleworkers without a significant increase in overall travel by other
household members;
on average, the total number of trips by teleworkers on teleworking days by all modes of transport fell by
53% compared with "normal" work days;
the number of trips to work locations fell by 86%;
the number of trips on work-related business fell by 61%;
the number of shopping trips fell by 37%; and
average daily distances travelled reduced substantially.
The opportunity to telecommute will be determined by both the desire of the potential telecommuter, the policy
of their employer and especially the attitude of immediate bosses. Telecommuting raises important questions
about jobs-family balance and the social and personal benefits of degrees of spatial separation. Estimates of
savings in vehicle kilometres of urban travel range from 5% (Downs 1992) to 15%. Achievement of these take
up rates is possible in the next 20 years. Any release of road capacity is likely to be filled by growth and
substitution, resulting in a slow down of investment in road capacity.
The range is a product of the uncertainty over the substitution between commuting and non-commuting travel
activity and the kilometres incurred if the telework site is not a home. We anticipate that telecommuting I day
a week will increase the productivity of telecommuters and lead to a long term reduction in commuting
kilometres of up to 10%. However it is likely that some of this reduction will be converted to non-commuting
kilometres, with increasing percentages occurring in the peak period, partly negating the gains. The further
possibility of suburbanisation of residential location may add commuter kilometres (Nilles 1991). The best
estimate of the net effect of telecommuting over the next 20 years is a 5% reduction in total vehicle kilometres,

provided the opportunity to telecommute is opened up to a significant number of workers. 5% of current car
travel is very large indeed and will have a noticeable impact on traffic congestion and associated environmental
impacts.
Compressed work weeks - squeezing more out of less

A compressed work week (CWW) is a working week which is compressed into a smaller number of days, thus
reducing the number of commuting trips. Modified working hours in the form of CWW's is likely to reduce
commuting kilometres, although not necessarily total vehicle kilometres. Any saving in commuting kilometres
may result in a growth in non-commuting kilometres which may be greater. The benefit however is a spreading
of a flattened peak as increasingly more non-commuting kilometres occur in the peak period. These increasing
non-commuting kilometres may, if trip data were more meaningfully defined as trip chains, reflect the growing
incidence of multi-purpose trips of which commuting is a component. The increase in trip chaining also means
that the use of relatively inflexible public transport may be limited.
4.3.5 Implications for travel behaviour and road needs

A number of scenarios are likely to emerge for patterns of travel which have implications for roads:
1 Shorter trip times are spreading across both genders for an increasingly higher proportion of commuters.
The growing incidence of part time work has kept average work travel times relatively constant over the
last 20 years. The 1971 Sydney Area Transport Study reports an average commuting time of close to 25
minutes, similar to the mean of 25 minutes from the 1981 Sydney Region Travel Survey. An exposure
survey undertaken on behalf of the Federal Office of Road Safety shows that the average trip length in
1986 of a male worker in Sydney was 28.7 minutes when full-time employed and 25.2 minutes when part-
time employed; for female workers the respective averages are 25.5 and 23.9 minutes. The average travel
time in 1986 was 27 minutes, supporting the stability of mean commuting trip times over time. Similar
stabilities are found in all capital cities.
2 Working hours are spreading for both genders, with a growing proportion of shorter working hours and a
growing incidence of longer working hours. The reduction in travel time associated with shorter working
hours contributes to reducing traffic congestion (at least in one of the peak periods); the extended working
hours have the same effect, notably in the evening peak period. The increased time available for non-
commuting by part-time workers will contribute to an increase in off-peak vehicle use and hence help to
flatten the peak. That is, we are likely to see a flatter profile of vehicle kilometres by time of day throughout
the day. This is a desirable outcome for road investment, contributing to making better use of the
infrastructure, subject to optimal capacity being in place. The program of future investment in roads will
need to take this into account. One of the major ways people respond to congestion is to decentralise their
jobs and residence. The paradoxical finding is that even while congestion on specific facilities has become
worse, the average speed encountered by commuters has not.
3 At the same time that work practices are loosening up, more and more jobs are being suburbanised in part
due to firms (that is jobs) following people. The shorter work trips will also spread over an even longer but
flatter `peak'. The combination of increased flexibility in work schedules, job suburbanisation and peak
spreading are likely to work against the future of some forms of public transport, especially public
transport which requires a relatively dense corridor of movement activity to be economically and
environmentally sustainable.

THE URBAN CONTEXT
In seeking an explanation for why females currently have shorter commutes than males, Kim (1994) reviews the
published evidence and undertakes a comprehensive investigation for Los Angeles. Popular opinion that
children in a household have an influence on limiting commuting distances of females is unambiguously
supported by the evidence. It is a controversial and important issue as household size declines over time. Kim
shows that females in two-worker households commute shorter distances than single-worker female households,
suggesting that household type may be an important influence on commuting distance, in addition to gender.
The evidence also suggests a possibility that female workers place a higher value on avoiding the burden of
commuting for many reasons including the greater share of day-to-day domestic functions still carried out by
the female in the household. What is becoming clear in the literature is that the current gap between commuting
behaviour of males and females is closing faster for single-worker households than multi-worker households.
4.3.6 Implications for road infrastructure needs

Combined with the suburbanisation of workplaces, the changing size of households and the increase in multi-
worker households, one of the most important consequences of the changing patterns of employment and
work schedules, is that the utilisation of the existing road infrastructure will become flatter over the day and by
location.
It is likely that total vehicle kilometres will not decrease, but that there will be a redistribution in favour of non-
commuting or multi-purpose (trip chaining) activity and shorter commuting trips for a higher proportion of the
labour force. Traffic congestion will increasingly be a consequence of non-commuting (or trip chaining) activity
as much as pure commuting activity.
The trend towards the production of services will reinforce the dispersion of locations for work activity and
hence the directions of change highlighted above. The implications for urban goods movement in particular are
challenging, compensated in part by the electronic transmission of large amounts of information. The trend
towards dispersed freight deliveries seems set to continue, raising questions about the appropriate mix of vehicle
types. The incidence of a higher volume of smaller freight delivery vehicles to serve the dispersed market is
likely to be accounted for as an additional source of traffic spread throughout the peak and non-peak periods.
The steady growth already well established in the importance of shopping and personal business travel relative
to work travel will amplify these trends, and suggests that closer attention to non-work travel will be necessary
in planning for the future.
4.4 Addressing Six Community Concerns

4.4.1 Traffic accidents and safety
Any single activity that causes over 2,000 deaths and over 60,000 injuries each year in Australia should be a
problem. The costs to the community (in 1993) are $829m in lost earnings of victims, $588m in family and
community losses, $1868m in vehicle damage, $1463m in pain and suffering, $571m in insurance administration
and $816m in other categories such as medical treatment, crash investigation, travel and legal services. The total
cost in 1993 was $6.1 billion. Road accidents ranks with many other risks of great concern such as smoking,
heart disease, and environmental pollutants in the air, water and food, whose regulation is in some cases very
strict. When contrasting traffic accidents with environmental pollutants, the topic of most concern to many
opposing road investment, no single pollutant or class of pollutants appears to rival traffic accidents as a source
of injury or death (Krupnick and Portney 1991).
Despite the telling story on the road, and the strong community support for action (see Section 1), there is
considerable public support for draconian measures to limit the use of even the most docile of carcinogens,
while little support at all for comparable measures to limit the use of automobiles. Accidents loom large among
the components of the cost of driving. For example, the average cost of a typical urban automobile commuting

trip, excluding parking, is estimated by Small (1992) as $USO.39 per kilometre in 1989 prices. This estimate
includes 7.5 cents in value of travel time savings, 4.4 cents in value of inconvenient work schedules that people
tolerate in order to avoid even worse congestion, and 4.4 cents in running costs. It also includes 11.3 cents for
accidents which incorporates a valuation of $4 million per statistical life based on measured willingness to pay
for occupational safety, but excludes any similar consideration for injuries, valuing them at just medical costs.
The only automobile cost category with as large a magnitude as accidents is the capital cost of the vehicle. By
this calculation, individuals choosing vehicles should mentally double the price in order to account for the risk
to health and safety that it represents. Yet they do not, heavily discounting the cost largely because most of this
average accident cost is external to the individual. Jones-Lee (1990) suggests at least 50% is in the category,
equivalent to about 6 cents per kilometre. This is similar in magnitude, after exchange rate adjustment, to the
average toll cost per kilometre travelled on Sydney's toll roads or more than the perceived operating cost of a
vehicle of 7 (Australian) cents per kilometre.
Given our knowledge

of how sensitive (or lack of sensitivity) automobile users are to price increases of the
order of 7 cents (a doubling of perceived operating costs or the introduction of a toll), it comes as no surprise
to conclude that charging individuals the social cost of accidents would lead to only a very small change in the
overall use of automobiles. Rational approaches to the problem would best emphasise technological or
behavioural changes to reduce accident rates and their severity. Safety regulations imposed on automobile
manufacturers together with more policing, advertising and the introduction of `P' plates has contributed
positively to reducing the rate of traffic fatalities in the last two decades as reported in Section 4.2.2.
Comment on better practice: Regulatory actions in recent years have yielded significant benefits in terms o
improvements in the accident rate. Improvements in vehicle safety, road user education (especially advertising
linked to seat belts, drink-driving and cyclist helmets), black spot and safety audit programs have all been
positive initiatives.
4.4.2 Environmental effects of transport

People care a lot about the air quality, noise, scenic and biological impacts of automobiles and trucks. At the
same time, a very small minority care so much as to be willing to reverse the longstanding and pronounced shift
toward personal mobility represented by automobile ownership. Like accidents, there is little if any economic
analysis that could support draconian measures to reduce the use of automobiles and trucks sufficient in order
to "solve" environmental problems. The desired responses would either have to be a switch to public transport
and/or a reduction in travel. If we observe that only 8% of all urban passenger movements are by public
transport, a very small switch away from the automobile of say I percentage point is a 10% increase in public
transport patronage. This is huge for public transport but is negligible for car use. The implications for public
transport, especially if it is a rail-based investment and it is to avoid a major capacity crisis, is a sizeable cost
outlay in public transport facilities at a level which is unlikely to be affordable and hence supported by any
government in Australia.
There are fortunately plenty of other measures - technological and behavioural - that could greatly reduce
the problems without having much effect on overall mobility. For example, the evidence that a small fraction of
the cars are causing a high disproportionate fraction of air emissions suggests that a greater effort to improve
the inspection and maintenance of the highly sophisticated pollution control devices on cars and trucks would
probably greatly reduce this particular environmental impact. This may not satisfy the proponents of alternative
means of movement such as public transport, yet it is clearly resolving their concern about a major
environmental downside of the automobile. The challenge for reducing greenhouse gas emissions remains
however, although a recent study undertaken by the Institute of Transport Studies (Hensher et al 1995) supports
increasing controls on automobile technology, combined with pricing from the set of possibilities (increased
fuel excise, carbon tax, congestion pricing, and parking pricing) and the promotion of alternative work practices.

THE URBAN CONTEXT
Apogee Research (1994) reviewed the literature on transport control measures (TCM's) to identify their
effectiveness in reducing regional emissions and conclude that pricing has the strongest impact on reducing
emissions of mobile sources, with land use planning, telecommuting and compressed work weeks having high
potential, although the evidence on the latter is currently speculative. TCM's such as high-occupancy vehicle
(HOV) lanes, incident management, employer trip reduction, transit improvements, signal timing, area-wide
ridesharing, park and ride parking facilities, bicycle /pedestrian facilities and buy-back of older cars have a very
weak impact on mobile source emissions. Many of these poorly performing TCM's have been recognised for
some time as being cosmetic in impact and not suitable surrogates for real impacting policies. The recent
increase in off-street quality parking at key suburban rail stations has encouraged switching of modal access
from bus to car, with negligible impact on linehaul modal switching. Buy-back of older vehicles, a policy being
promoted by some governments, forces purchase of younger vehicles. These vehicles are more fuel efficient,
cleaner and have lower operating costs, tending to encourage increases in vehicle kilometres in line with the idea
of a constant expenditure budget of transport (approximately 16% of gross expenditure when automobile
capital is included).
Cambridge Systematics (1994) evaluated the effects of a large number of land use and TDM strategies on
commuting behaviour in the Los Angeles Metropolitan Area. These strategies were classified as financial
incentives (which included transit subsidy, employee parking subsidy, carpool/vanpool subsidy), flexible work
schedules (including flexible work hours, telecommuting program, compressed work week program), and
assistance programs (including employer-based matching programs, guaranteed ride home). They concluded
that if the aim is to reduce the drive-alone modal share then:
"A successful travel demand management strategy should be built around a core of financial
incentives, regardless of the land use and urban design characteristics of a particular site"
(Cambridge Systematics 1994, 4-1).
A recent assessment of the health costs of road vehicle emissions in Australia, prepared for the National Road
Transport Commission suggests that the air quality of Australian cities tends to be relatively unpolluted
compared with cities in the United States and Europe; and that there is currently no evidence that fine particles
are above safe levels. Air quality monitoring data based on sites around Australia demonstrate that
concentrations of most air pollutants are now at àcceptable levels', for which the evidence indicates no health
risk. The pollutants Nox, CO and S02 do not currently, and are not expected within the foreseeable future, to
exceed acceptable levels. Atmospheric lead levels have been excessive, but with the reduction in use of leaded
fuel, future atmospheric lead concentrations for Melbourne are estimated to remain below the existing
acceptable level of 1.5 ug/m3 as well as the proposed tighter level of 1.0 ug/m3. Ozone at levels above the
current one-hour standard of 0.12 ppm which is the threshold for definite health risk, occurred in Sydney and
Melbourne an average of 3 days over the period 1989-93.In Victoria this rose to 17 days when ozone exceeded
the 0.08 ppm one-hour standard (the range of uncertain health risk). Recent evidence in the United States
reported at a Conference on the full social costs and benefits of transport suggest that within 10 km of road,
the nitrogen oxides "eat" the ozone and hence eliminate a major health risk attributable to automobile use. The
chemical with the greatest potential risk is PM10, referred to as "road dust" or "fugitive dust", There is however
great uncertainty as to its real health risk (McCubbin and Deluchi 1995) and the extent to which the contribution
by the automobile is confounded by wind erosion, salt spray, power plants and other sources that produce
particulates (even the common house dust).

Comment on better practice: The major contributing chemicals to local air pollution, while still present, are
being reduced significantly as a result of a mix of improved vehicle technology and inspection procedures.
Concentrations of most air pollutants are now at "acceptable levels", for which the evidence indicates no
health risk. Carbon dioxide, the major source of greenhouse gas emissions is still on the rise, however. Travel
demand management strategies involving financial disincentives are essential if total automobile use is to be
contained to sustainable levels.
4.4.3 Inadequate infrastructure

Public investment in roads contributes to a fundamental part of a nation's total capital stock. Missed
opportunities for sound investment in transport networks, multimodal facilities, and congestion management
mean less opportunity for industry to initiate complementary steps to boost national productivity. Such steps
include improved high-speed communications and information transfer technology, just-in-time inventory
control, networked truck dispatching, and a related family of investments whose introduction requires a
foundation of sound and appropriate public infrastructure and whose effect is to boost competitiveness,
increase real wages and improve overall standards of living.
In line with the goals of urban management, one aspect of determining sound and appropriate infrastructure
is to align this desire with economic growth, rejecting physical criteria as a central influence on decisions. This
has to be tempered with equity and environmental considerations - all of which can be integrated into a social
cost-benefit framework if there is a will to do so. That is, growth for growth's sake is not an objective of pursuit;
rather growth achieved through acceptable means and at acceptable costs - such as environmental costs - is
the only means available to recover and sustain ground in living standards. Infrastructure such as roads, on the
evidence is less effective in promoting economic growth than it is as an instrument of redistribution (Lewis
1995). One must be clear as to what growth actually is. Within the transport sector, appraisal of projects is
typically partial, holding the impacts on the economy as a whole essentially outside of the calculations. Thus
what is claimed as an economic objective linked to overall benefits to the community (for exmaple, growth
outcome) is often distributional in character. For example, employment gains predicted to flow from
inter-regional or inter-sectoral transfers are mistakenly construed as net new jobs. Territorial competition for
economic activity rather than a desire to achieve a reasoned geographic, demographic or sectoral distribution of
economic and social activity over a defined region may well be inconsistent with global goals of urban
management.
Under the umbrella of legislation illustrated by ISTEA, economic growth read as economic rate of return
should be promoted as a decision criteria to encourage multimodal choices and priorities. This has the
implication of placing infrastructure investment within a much longer time horizon for evaluation, since
identifying the productivity and growth benefits is not a short-term decision criterion. Given that major
infrastructure such as roads (and rail track) commits society's resources across at least three generations, and
defines the urban landscape well beyond this time frame, the use of infrastructure as a short-term economic
stimulus is probably misjudged.
Optimising investment strategies and better managing the infrastructure through pricing can create manageable
and very large reductions in the cost of providing any given level of infrastructure service. The effective amount
of useful infrastructure can be increased without necessarily increasing the long-run costs of investment.
The opportunity to attract private partnerships in the provision and operation of transport infrastructure
(primarily tolled roads, tunnels and light tail) is increasing. Through Build, Own, Operate and Transfer (BOOT),
Build, Operate and Transfer (BOT), and Refurbish, Operate and Transfer (ROT) the private sector is
participating in the process of adding infrastructure earlier than is feasible by reliance on government funding.
On balance there are many positive advantages, but there is also a downside driven by complex contracts which

THE URBAN CONTEXT'
historically have tended to place much of the risk back with the government and most of the financial gain in
the hands of the private sector. This should not detract from the potential benefit of such a joint venture
between government and private interests - the learning curve is steep and mistakes are still being made as we
strive for better social judgment in specifying private participation. The selection of specific projects should be
driven by the broader goals of urban management rather than the more narrowly based criteria of mapping
infrastructure needs to opportunities for high commercial rates of return.
Major infrastructure - implications on generated traffic - the "push-pule" paradigm

One of the challenges in evaluating the environmental implications of new freeways (with and without tolls) is
to place these specific road investments in the context of the net impact on overall levels of traffic. Within the
context of a non-greenfields site, we should consider the new throughput in capacity offered by the freeway in
conjunction with travel demand management schemes designed to discourage the use of local residential streets
(LATH) and even sub-arterials (SATM). Increased capacity delivered by a freeway in the presence of LATM and
SATM schemes has the advantage of taking significant amounts of traffic off local and (sub) arterial roads,
making local precincts more environmentally friendly in terms of safety, emissions and amenity, and converting
traffic exposed to significant variability in speed to substantially lesser variability in speed. This reduction in
speed variability is a positive effect on emissions, energy consumed and safety. There will be some generated
traffic in the presence of additional road capacity - the evidence suggesting about a 2% increase although it
may go as high as 5%. Importantly, 95-98% of the traffic on freeways in diverted from other roads.
Tolling such additional capacity, which is attractive in securing the earlier provision of such infrastructure, carries
the penalty of reducing the amount of traffic diverted (and generated). Regardless of whether tolling is seen as
a predominantly financing instrument to secure a commercial return on the investment or an efficient user-pays
policy instrument, there is a very real possibility that tolling parts of a connecting road network tends in practice
to lead to a reduction in the maintenance of "competing" free routes with consequent deterioration in the
quality of service and levels of energy efficiency and emissions. A delicate balance must be assessed in
promoting the benefits of toll roads, seen as major corridor investment within a connected network of a
hierarchy of roads. When viewed as part of a system the net benefits of toll roads are still attractive but to a
lesser extent. For example, the Eastern distributor in Sydney when complete will have a tolled tunnel section
near Taylor Square, providing extra capacity at ground level to be released in part to pedestrian precincts and
dedicated public transport systems (bus priority). Tolling will be attractive in peak periods but in off-peak times
the toll may be too high to attract sufficient traffic which may seek out local residential streets as an alternative
traffic arterial given the loss of the current route to pedestrians and buses. A reconsideration of off-peak tolls
will have to be given serious consideration if this set of circumstances arises.
Comments on better practice: It is now recognised that the evaluation of infrastructure needs must be
undertaken within a framework which emphasises the full set of social costs and benefits in terms of the
primary goals of urban management - economic growth/efficiency, equity/social sustainability and
environmental sustainability. Positioning the financing decision within this setting will encourage a more
balanced assessment of alternative ways of satisfying these broad goals, of which non-infrastructure
solutions must compete alongside of infrastructure projects. Separating the funding authority from the
provider of infrastructure (as articulated in Section 6) is essential if wise investment decisions which accord
with an integrated transport strategy are to win out.
4.4.4 Traffic congestion and pricing -the missing building block

"Traffic congestion is not a new phenomenon. Julius Caesar in 45 BC declared the centre of Rome
off limits between 6 am and 4 pin to all vehicles except those of officials, priests, high-ranking
citizens and visitors (Dobes 1995, 1).

Road traffic congestion, more than any other single item, provides a daily reminder to all of the inefficiencies
in the current transport system. Traffic congestion in Melbourne adds almost $2bn to road travel costs. Calls for
improved public transport are a common response; calls for congestion pricing are rare (although increasingly
being heard), and calls for discouraging road construction as a contribution to reducing traffic congestion
through encouraging the use of public transport and assisting the move towards a more compact urban area are
on the increase. It is true that urban mobility in many cities throughout the world is being "strangled" by the
large amounts of time unnecessarily wasted in traffic jams, draining the urban economy. It has also been said
that "congestion is the sign of a healthy urban economy - what is lacking however is the presence of organised
congestion" (Professor Ken Small, University of California at Irvine at an open forum on Transport
Economics, Seoul, Korea, 27 July 1995). The supply-side response of more roads is not an efficient or sensible
"solution" in the presence of distortionary pricing which is way out of line with the full set of externalities
which arise from the effects of such pricing. This does not preclude the development of strategic road links
built for reasons other than congestion mitigation, such as links to major transport hubs like ports.
We must continue to make the case for appropriate charges (as distinct from taxes) which reflect the real cost
of resources consumed in travel. Congestion pricing is arguably the only policy that will make a noticeable
difference in peak congestion levels in the world's most congested cities. Australia may claim to have only two
cities in this league - Sydney and Melbourne - although they are way down the list. Other policies can create
real and substantial benefits (see below), but cannot do much to reduce the most severe congestion. Given that
congestion in Australia's cities is not too severe by international experience, the sensitivity to higher charges may
not be significant unless the higher charges are substantial (for exmaple, 30c/km). This translates approximately
into a quadrupling of the annual fuel expense of 7 cents/km for a commuter. There is so much latent demand
for car travel at peak periods and during the shoulder periods that whatever capacity we can feasibly expect to
build, or that can be freed up by enticing a few drivers off the road, will quickly become filled by people who
are now being deterred only be congestion itself. This is not just some fuzzy-minded environmentalist's cliche;
it is a well documented empirical reality known as the "fundamental law of traffic congestion" (Downs 1962,
1992).
Max Neutze in Workshop Paper #5 of the Australian Urban and Regional Development Review (1995, p 37) in
commenting on the relationship between roads and urban patterns says:
" I believe that if you correctly price roads, you will increase the extent to which the investment
will cause movement of employment to the outer parts of cities. If you price them correctly, the
areas where the price will be high will be in the inner urbanareas because that is where the road
costs and land costs are high. Land is scarce, therefore it is expensive to provide roads just as to
provide buildings in those areas. That will discourage the use of roads in urban areas and that is
one of the reasons why, even with optimal investment, you will have and should have high levels
of congestion in places where land prices are high".
Implementation of congestion pricing involves recognition of the following issues (National Research Council
1994):
congestion pricing would cause some motorists to change their behaviour;
congestion pricing would result in a net benefit to society;
congestion pricing is technically feasible;
institutional issues are complex but can be resolved;
all income groups can come out ahead given an appropriate distribution of revenues;

THE URBAN CONTEXT
some motorists will lose;
congestion pricing would reduce air pollution and save energy;
the political feasibility of congestion pricing is uncertain;
evaluation of early projects is crucial;
an incremental approach is appropriate.
Efficient pricing however is a necessary but not sufficient condition for a socially desirable outcome. There must
be a role for other policy instruments such as physical planning.
The limits to pricing as a planning tool are vividly illustrated in a UK House of Commons Transport Committee
hearing in which the expert witness, Phil Goodwin said:
"there is the intriguing test of intuitive common sense. It is noticeable that there are some
transport policies that nobody suggests should be determined by 'willingness-to-pay'. An example
is the division of road space between vehicles and pedestrians. It would be possible to say that the
relative width of sidewalk and carriageway should be determined by the amounts that pedestrians
and vehicles are willing to contribute, or even more specifically that pedestrian-actuated traffic
signals should require the insertion of a coin. The logic in one sense is similar to that of road
pricing, but it does not command serous consideration. Nor does there exist (as far as I know) an
underground of hard-line road prices biding their time until the moment is right to implement
pedestrian charging with push-chair supplements and a penalty for elderly slow walker". (Goodwin
1995)
Efficient pricing signals and physical planning ordinances should be viewed as being as much potential
complements as they are potential substitutes. The "dark green" end of the environmental spectrum has tended
to treat physical planning (constraints) as an alternative, at least partially, to "failed" pricing. Pricing however
differs from physical planning in one important aspect - it provides money. Under the new realism banner,
eloquently documented by Goodwin et al (1991), it is argued that the huge revenue sums raised from any change
in road user prices should in part at least be allocated in a way which is consistent with the preferences of both
society and transport users.
Allowing for both economic reasoning and political reality, the "rule of three" is actively promoted in a number
of countries. The road space initially released by congestion pricing can be used as follows: one third reclaimed
for environmental improvement, including pedestrian and non-transport uses, one third used for extra traffic
for which the reduction in congestion would be important. For example, use the revenue to favour buses,
delivery trucks, emergency vehicles and disabled travellers. A final one third would have the effect of reducing
congestion delays for all remaining traffic. To maintain this benefit will require a combination of pricing and
non-pricing instruments to offset the tendency for traffic growth to eliminate the achieved speed increase.
This mix of revenue-apportionment is essential for political acceptance as well as showing the community that
the revenue that is raised is actually put back into the system to benefit the community of users and non-users.
We recognise that there is a need for having some of the raised revenue earmarked, where it can be identified
as the proceeds of a charge. This component of revenue is not a tax, but a price in respect of resources
consumed in the act of travelling. We also acknowledge that it is important that the merits of rechannelling
revenue from efficient pricing back into transport, rather than into consolidated revenue, should be determined
within a social benefit-cost framework which accommodates the wider set of important intangible
considerations. Any distortion of the role of prices at the investment level where revenues are utilised should
however be resisted. However where the success of a pricing program is dependent on political acceptance and

community support, these major constraints must condition any benefit-cost calculus, particularly in these very
earlier days on getting a popular theoretical idea accepted in the market place. In the short term we must
compromise economic correctness.
Comments on better practice: A mix of pricing and non-pricing policy tools provides a realistic way ahead,
with the use of targets as a practical means of securing progress in respect of compliance with the goals of
urban management. Pricing is one of a number of policy instruments which has a role in meeting targets
such as a percentage reduction in greenhouse gases, percentage improvement in corporate average fuel
efficiency, and absolute reduction in local air pollution. It is inherently unlikely that any one tool alone will bel
as effective as complementary tools in combination.
4.4.5 Public transport

Opportunities to make better use of public transport exist in all urban areas. Some of these opportunities
however involve a choice between bus-based and rail-based systems and a recognition that rail systems have the
inherent advantage of a dedicated track, while bus systems offer greater flexibility and lower cost.
Roads are used by public transport; indeed they are arguably the most flexible form of infrastructure in
accommodating mass public transport, and are capable of assisting public transport in adapting to changing
levels of traffic density for relatively low cost. To be specific, buses can be interacted with roads in a low density
mode (that is, buses mixing with all other traffic); as demand for public transport increases buses can be given
dedicated road space (possibly in the interim mixing with high occupancy automobiles and taxis). As traffic
densities increase even more, buses can take on the characteristic of linked vehicles (which are called trains) and
operate over sections of the infrastructure under a single control unit. The provision of opportunities to expand
the role of buses and bus systems (or bus-trains) is greatly enhanced where freeway-level infrastructure is in
place, since it is most likely to provide the required alignment essential for public transport to accommodate
changing traffic densities. A cultural change is slowly occurring within the planning community (especially the
Road Authorities) which is leading to a recognition of the important role of road infrastructure in public
transport provision and promoting such capacity specialisation in the future. Mixing buses and cars however in
high-occupancy vehicle (HOV) lanes is not a marketable strategy no matter how sensible it may be on other
criteria. One would like to imagine in a world of institutional reform centred on outcomes that modal-planning
is replaced with outcome-planning which allows for freeways to become busways and then railways at very high
levels of traffic density.
This ability to efficiently and effectively accommodate flexible densities is not a trait of fixed-track rail systems
simply because the latter cannot be used for other forms of transport (for example, cars and trucks). A common
track as offered by a road is the most efficient form of infrastructure technology for accommodating changing
traffic densities.Combined with efficient pricing it will ensure that it is efficiently utilised and will not succumb
to the indivisibility constraint of rail track.
To illustrate the value of bus systems with dedicated road infrastructure for the linehaul component of service,
the Adelaide O-Bahn should be re-visited. Chapman (1992) undertook a post implementation social cost-benefit
analysis of the economic impact of the O'Bahn system in Adelaide. Chapman concludes by saying that
"Adelaide's O'Bahn Busway ...has been one of the relatively few public transport projects that can be considered
to have in any way contributed to the economic welfare of the community. It has been extremely popular with
commuters, initial ridership projections having been exceeded. Some very large travel time savings have been
provided, and commuters clearly appreciate the combination of limited stops, high capacity, smooth ride and
congestion free travel offered by a dedicated right-of-way, and the high frequency, flexibility and through service
into suburban areas offered by a conventional bus system". Furthermore, Chapman says that "in a city of

THE URBAN CONTEXT
Adelaide's size and urban density it has proven to be a much more effective and economic public transport
service than conventional heavy or light rail systems. It was constructed at approximately half the cost of a
comparable rail-based system and is one of the few public transport systems in this era of automobile
dependency that has been able to attract (and retain) passengers" (p 99). Taking the general transit patronage
decline and population growth in the corridor into account, the net overall impact of the Busway is a patronage
level approximately 53% higher on a daily basis than otherwise would exist.
The dominance of the road infrastructure as the medium for processing 16,960,883,000 passenger trips annually
in Australia, plus virtually all goods movements, leaving railways to handle only 4.3% of all urban passenger
kilometres and an almost negligible amount of urban freight must raise very serious questions about the role of
urban rail and the ability of any sizeable investment in rail to fundamentally alter the modal mix. There must be
some very plausible reasons why this modal mix has occurred and why it is likely to continue. Railways currently
have niche market roles and may contribute in the future in urban Australia in a "boutique" role to service very
specific and relevant markets (for example, the Ultimo-Pyrmont light rail project in Sydney), but it is a major
challenge to see where and how one might justify any major expansion in rail where there is an expectation to
alter the modal mix beyond skirting at the margin. The challenge we face as a society must centre on the role of
roads as the predominant form of transport infrastructure (telecommunications aside) serving private and
public transport and how we can best manage them in line with the broad goals of urban management. Bus
systems can benefit enormously from this perspective.
The imagery of permanence required to attract landside development

With a dedicated alignment provided in the planning of road systems we can ensure that the imagery of
permanence is established in the corridor for all forms of traffic and hence activity required to attract economic
development. This is an argument often claimed for rail systems but not bus or car systems. The issue is simply
one of agglomeration - the density argument; there are plenty of examples associated with each mode of
transport (for example, Curitiba, Ottawa for bus systems, with Brisbane moving in this direction, Washington
DC freeways for automobiles).
Curitiba, in Brazil, introduced a bus priority system at a cost of $US54 million, 300 times less than a subway and
also less expensive than light rail (Herbst 1992). Curitiba's buses transport 1.3 million passengers per day, four
times the number of subway passengers in Rio de Janeiro (a city of 10 million residents, more than six times
the size of Curitiba). Two hundred passengers can alight from a bi-articulated bus in 20 seconds.
When one reviews the evidence on the role of public transport in stimulating particular land uses, the overriding
feature for development-stimulus is the permanence and volume of public transport system increases. This is
the claimed basis for preferring light rail (LRT) over bus systems. Although buses take people to where activities
are and follow the movement of activities over a wide geographic pattern (Paaswell and Berechman 1982), in
contrast, rail systems have a more active land use/transport relationship because of their perceived permanency.
The begging question is: what makes for permanence? One of the arguments frequently propounded by
supporters of LRT is that it cannot be taken away, whereas a bus system can, although we cannot find any cities
where this has actually occurred. The cost of producing flexible service capable of potentially responding to
changing geographic activity patterns is the price of reduced commitment to the facility. There is greater truth
in this statement where dedicated busway infrastructure is not in place, especially infrastructure built specifically
for exclusive bus use. Ottawa's new busway system combined with strong land use regulatory powers illustrates
what can be done for busways to have a significant impact on land use. The system operates just like any other
rail system with vehicles stopping at each "station". Ramp access is provided for express and limited stop routes
so that a direct no-transfer service is provided between the residential and major trip generator locations. High

rise in Ottawa-Carleton is already occurring at some stations and an integrated shopping centre/transitway
station has recently been opened. Over $US700m in new construction is under way around Transitway stations
(Henry 1989).
Ottawa's legislatively mandated land use and transportation plan (and that of Curitiba) gives precedence to
public transit over all forms of road construction or road widening, with planning regulations requiring
developers to concentrate developments near transit, to orient buildings and private access to transit stops, to
provide walkways and transit-only roadways through developments, and to enter into agreements with the
municipality on matters such as staging construction to accommodate transit.
The message is clear: a metropolitan strategy can embed an effective road-based public transport system within
its overall land use/transport plan which can produce the same types of impacts as rail. What is required is
enabling legislation with a mandated land use/transport plan which explicitly prioritises the role of bus-based
systems.
The challenge for urban society is to understand the arguments supporting bus systems relative to rail systems
and to establish circumstance in which it makes more sense to support rail systems. Rail systems for their own
sake (the means paradigm) is not a rational way of determining compatibility with the overall goals of urban
management.
4.4.6 Urban freight: essential but neglected

The movement of goods within cities is a very significant part of the total freight task. Nationally in 1988, 26%
of tonne kilometres of road freight (equivalent to 31.1 billion tonne kilometres in 1993) was moved within
capital cities. The corresponding figure for interstate road freight was 20% (Australian Bureau of Statistics
1990a, Table 28).
Because urban freight has been substantially overlooked as a policy or planning issue, our factual knowledge of
important aspects of it (such as the patterns of goods movements, the daily patterns of truck movements, or
the value of the goods being moved) is very limited. Little is known about the urban trucking fleet, the
movement of trucks, or the generation of commodity flows. This is an unfortunate situation, since the
development of sound policy is dependent upon having a reasonable factual understanding of the nature of the
activity. However there are some things which are known, as summarised in the many writings of Ogden (1993)
including the following:
Freight within cities is almost entirely carried on roads. Pipelines are very important, but as they are commodity
and origin-destination specific, they are not usually considered as part of the urban freight system. For surface
transport, the diverse patterns of origins and destinations, the short distances involved, and the time sensitive
nature of much of the movements mean that the technology most suited to almost all urban freight is a road
vehicle. Other modes, such as rail or barge transport, may have a role in niche markets, and should not be
overlooked, but will never be significant in aggregate terms for intra-urban freight. The most visible freight
situations such as ports and airports as important interfaces between the urban area and the rest of the nation
and the world are less important than the greater amount of deliveries to shops, houses etc.
The commodities carried are mostly bulk products and manufactured goods. In Melbourne in 1988 for example,
28% of tonnes moved was sand, gravel and stone; 23% was metal and manufactured products, 15% was food
and agricultural products, 8% was concrete products and building materials, and 7% was petroleum products
and chemicals (Australian Bureau of Statistics 1990b). On the road system, articulated trucks (semi-trailers)
account for less than 1% of travel overall, and rigid trucks account for about 5%. However, articulated trucks
carry about 44% of the freight (Australian Bureau of Statistics 1990a, Tables 11 and 27).
286 ROADS IN THE, COMMUNITY

THE URBAN CONTEXT
A significant cause of concern about the environmental effect of urban freight is truck noise. Although truck
drivers may be exposed to some risk of loss of hearing ability, the more cogent question is usually one of the
annoyance caused to residents and pedestrians, especially at night-time and on routes which have a high
proportion of trucks (see Section 1). While light trucks, whose noise emissions may not differ appreciably from
automobiles, comprise the majority of trucks on urban roads and streets, medium and heavy trucks produce
much greater noise levels and can cause a high, even excessive, level of traffic noise. These effects are greater in
stop-start traffic, on arterial and sub-arterial routes due to acceleration and braking, than in smooth flowing
traffic on freeways and toll roads. There are urban design opportunities to reduce noise, combined with quieter
trucks and quieter road surfaces.
Noise attenuation barriers alongside freeways are becoming more common; however they may be a second-best
solution to the noise problem. For example, the extension of the Eastern Freeway in the eastern suburbs of
Melbourne has involved an investment of $25m into the construction of noise attenuation barriers over a length
of 10.5 km to treat about 550 dwellings. This is equivalent to $2.4 m per kilometre or $45,000 per dwelling. If
the noise barriers are solely designed to reduce noise impact to the dwellings then providing treatments to each
house may be a more cost effective strategy, approximating $10,000-$15,000. The latter however would require
total "insulation" for the garden and immediate open space in addition to inside each house. The advantage of
noise barriers is in their accommodation of all noise impacts in the residential environment.
Noise problems can therefore be tackled in several ways, each of which imply a particular policy response. For
example, noise can be tackled at its source (for example, production of quieter trucks) which requires an
engineering input, perhaps stimulated by regulation. Noise is lower in freely flowing traffic conditions, implying
a need for better roads or upgraded traffic control systems.
The contribution of trucks to overall vehicle emissions is significant. For example, trucks in total have been
estimated to contribute 16.8% of domestic greenhouse gases emitted by the transport sector in Australia
(Bureau of Transport and Communications Economics 1991). The contribution of urban trucks to total
emissions varies with the type of truck (light vs heavy), its engine type (gasoline vs diesel), the conditions under
which it operates (free flow vs stop-start), the load carried, the mechanical condition of the engine, brakes and
tyres, and the total distance travelled. Attention to these problems primarily focuses upon the source (the
vehicle), but traffic management (to keep vehicles moving freely) and land use planning may also be applicable.
There are costs associated with a poor integration of land use and freight transport facilities. Moreover, once
installed, new urban development and related transport facilities will usually remain in place for many years.
Many of today's freight problems and inefficiencies stem directly from poor location and design decisions made
in years past.
In a dynamic urban area, physical changes continually take place as the structure of the region responds to social,
economic and technological change. Some of these changes which have a direct bearing on freight include the
suburbanisation of residential, commercial and industrial activities; the development of regional shopping
centres; the rapid rise in the economic importance of service industries; the relative use of road transport for
line haul freight (with typically suburban terminals) and sea or rail (located near the historical centre); and the
tendency towards development of integrated "parks" for industry and offices.
Conversely, industrial location decisions affect freight flows. Land use planning policy in most Australian cities
has been to separate different types of activity: residential, retailing, light industry, heavy industry, extractive
industry, and warehousing. While there may have been perceived environmental reasons for doing this, it is
important to realise that the separation of complementary industrial activities which results from this policy has
the effect of building into cities the need for substantial freight flows. Planning which aims to integrate rather
than separate complementary activities may therefore have economic and environmental benefits.

Comments on better practice: Improvements in energy, emissions and noise levels associated with trucks
have largely been delivered through innovation in truck technology. Orbital roads for truck re-routing
integrated with a land use plan for the location of freight facilities, quieter road surfaces and larger vehicles
all reduce the incidence of truck activity and hence increase traffic safety as well as improve the productivity
of freight movements. The contribution of trucks movements in the production of greenhouse gases
however is looming as a more serious problem than the contribution by the automobile.
4.5 Placing Roads in a Policy Context

The community should rightfully raise questions about suitable policy instruments and strategies designed to
produce outcomes reflecting the goals of urban management which have high levels of positive impact in terms
of the performance criteria which define success. There are many policy instruments available; too many to
explicitly identify. What is useful to assist the community of interest is a tabular summary (Table 13) of the
degree of impact of a select set of potential instruments in terms of the performance criteria selected as
measures of success.
These policy instruments are representative of the broad types of actions worthy of consideration. The
directional indication of impact reflects what we believe will be the likely degree of influence of a policy within
a range of application which we believe might be introduced given realistic constraints such as politically
feasibility and widespread community support. There is almost certainly to be disagreement on the impact
because of the complex system-wide interaction, but that is accepted - the primary objective is to encourage
debate.

THE URBAN CONTEXT
Table 12: Summary of potential impact of policy instruments (within likely achievable
range and likely behavioural responses over next 40 years)
Degree of impact on measure of success Air Global Energy Traffic Traffic
blank = no or negligible effect, ? = unsure Pollution warming consumed congestion accidents
Congestion pricing (Mix of charges and taxes) +++ ++ +++ +++ ?
Increase Parking charges (CBD, regional centres) +++ ++ ++ +++ ?
Parking rationing/restrictions in CBD ++ + + ++ ?
Toll road charges (selective major routes) + ? ? + ?
Restrictive automobile access to CBD ++ ++ ++ ++ +
Reduce sales tax on new autos - skew/eliminate +? +? +? +
Increase vehicle registration charges (by age, weight, + + + ?

fuel)
Limits on company car provision and use ? ? ? ? -
Limit maximum age of vehicles + + + ?
Carbon tax (linked to alternative fuels) +++ +++ +++ + ?
Fuel excise by fuel type: increase/exemptions +++ +++ +++ +
Tradeable permits + + +
Fee-based compulsory emissions checks +++ ++ ++

Price rebates/discounts on alt fuelled vehs (end use +++ +++ +++ ? ?
impacts only)
Govt purchase and scrap high emitters ++ + + ?
Alternative fuels - electric vehicles (end use impacts +++ ++ ++ ? ?
only)
Alternative fuels - LPG , CNG, diesohol (end use ++ ++ ++ ? ?
impacts only)
Automobile engine/transmission technology ++++ ++++ ++++ ?
improvements - conventional fuels
Automobile vehicle design (weight, drag) ++++ ++++ ++++ ?
Intelligent transport systems ? ? ? ++ ++
Route guidance ? ? ? ++ ++
Traveller information systems ? ? ? ++ ?
Urban form and density (physical planning,

dwelling mix):
Legislative actions (zoning etc) +? ? ? + ?
Compact cities with regional nodes ? ? ? + ?

Work-related incentive strategies:
Ride sharing and employer incentives + + +
Telecommuting +++ +++ +++ +++ ++

Compressed work week (time use) ++ ++ ++ +++ ++
Non-motorised options - bicycle, walk + + + -
New public transport - light rail +? +? +? ?
New public transport - bus priority systems ++ ++ ++ ?
Public transport - park-n-ride/kiss-n-ride ? ? ? ? ?
Existing public transport - reduce fares

Existing public transport - increase levels of service + + + + +

5. THE ROLE OF ROADS IN URBAN
DESIGN
5.1 Cities and their Roads in Evolution
From earliest times, when people settled in communities, paths, tracks and roads, however rough, have been
essential to provide accessibility, foster social interaction and promote economic activity. As settlements grew,
the function of roads became more diverse. Some roads became more important for movement, with the
transport mode changing over time, while other roads and streets provided access to sites for a wide range of
activities. Roads and streets provided a convenient location for utility services and the parking of carriages.
Streets were used for exchange of goods and social interaction, while roads and other spaces were the venue for
ceremonial and festive occasions and the setting for major public buildings.
These functions of roads are as valid today as they were in the past. Good urban roads make cities and towns
work better in economic and social terms, they give structure and form, a sense of place and direction, they
create opportunities for activity and social interaction, and they provide access to sites and space for the location
of services.
However, cities and towns are not static entities; growth and change put pressure on existing roads and the
communities they serve. Roads which provided access to local communities become through traffic routes. Main
Streets with active retail and community functions and serving as seams in the community fabric become
barriers, as higher speeds, increased traffic volumes, heavy vehicles, traffic lights, parking and loading restrictions
are changing their original function. Roads once distinguished for their urban design quality become channels
for air and noise pollution and advertising avenues for passing traffic. A multiplicity of direction and advertising
signs vie for attention, and overhead services conceal the landmarks and facades which provided enjoyment,
recognition and distinction.
Competition for limited road space has led to congestion, delay, pollution and parking restrictions. Living
standards are being eroded. Pedestrian safety, community severance and loss in property values are of increasing
concern to the community. Efforts have been, and are being made to ameliorate some of these consequences
- such as traffic calming - and noise protection measures, but the fundamental conflict between traffic and
urban amenity has yet to be resolved.
The process of adapting cities and towns to growth and change, in the view of the community, is not working
and has led to questioning of current policies and practices. Local communities are asking whether the weight
being given to satisfy the ever growing demand for vehicular travel should be at the expense of preserving the
quality of their environment. Is providing more roads the aNew South Waleser? Flow can the demand for travel
be reduced? Can better use be made of existing roads without causing environmental damage and severing
communities? In short, how can cities and towns be adapted to accommodate the needs of the urban
community for movement and amenity?
There is another related conflict associated with the growth and change of urban communities. The spread of
low density living areas and dispersal of job opportunities and other activities has locked the community into a
car dependency which places people without access to cars at a considerable disadvantage. Providing better
public transport (rail or road-based) alone cannot solve this problem as densities are too low and the origins and
destinations of trips too diffused to provide a convenient and cost-effective service (except perhaps at peak
hours).
It is clear that roads no longer fit the broader needs for accessibility, choice, equity and amenity for all groups
of the urban community. As shown in the Section 3, the changes taking place in cities and towns require a more
holistic approach and integrated strategies. In this section, the focus is on how these strategies can be applied in
the planning and design of roads in the community.

THE URBAN CO`TEXF
5.2 Corridors and Precincts

5.2.1 The road hierarchy
Urban roads serve many modes, play many roles, and function as a hierarchical network. It is common practice
to use a road hierarchy or classification system to describe the different functions and performance
characteristics of urban roads (Figure 5.1). Although the nomenclature varies between States, a distinction is
usually made between traffic routes and access streets. Traffic routes include freeways or expressways, arterial
roads, sub-arterial roads, while access streets comprise collector streets, access streets and access places.
Figure 5.1 Road hierarchy
Collector streets
Access
streets
Arterial/sub-arterial road
For each category, performance characteristics can be specified: the range of traffic volumes, desired vehicle
speed, type and spacing of junctions, access, building lines, cross sections, gradients, the location of utilities and
other aspects.
In developing areas, the road hierarchy is widely used as the basis for the planning and design of residential areas
(AMCORD 95). There is an opportunity to achieve a high level of amenity by creating precincts or
neighbourhoods designed to discourage through traffic, reduce vehicle speed and traffic volumes to levels where
conflicts with pedestrians and cyclists are minimised. Higher order streets, such as collector streets, are designed
to collect traffic from access streets and accommodate local bus routes.
In established areas the road hierarchy is also used as a means of rationalising traffic movements on existing
roads and streets and reducing the impact of traffic on local communities. Traffic calming schemes have been
used in many cities and towns to curb through traffic, reduce vehicle speeds and increase amenity. Proposals for
new development are assessed on the basis of their impact on the local road and street system and the amenity
of the local community.
While the road hierarchy model is widely used and simple to apply, there often are strong community reactions
to proposals for new development and upgrading of existing roads and streets. There is a strong and widespread
perception that traffic considerations are given greater weight than environmental considerations and that

catering for ever growing traffic and parking of vehicles is given priority over the pedestrian environment and
urban amenity. The road hierarchy model does not clearly address the fundamental interactions between road
function, land use and the quality of the environment. There also are critics who state that the road hierarchy
at the local level does not adequately provide for connectivity between streets and for community interaction.
They prefer more traditional street patterns, such as a grid layout, but with restrictions on through traffic and
vehicle speed (Figure 5.2).
Figure 5.2
I in
F 1(
On
5.2.2 Corridors for roads and precincts for streets

Planning and design objectives are directed towards providing accessibility, safety, convenience, amenity and
cost-effectiveness, but how these objectives are translated in design depends on the function of the road or
street within the urban context. A fundamental distinction is whether the emphasis is placed on movement,
access or a combination of both, because this influences the type of land uses along the road, siting and design
of buildings and the width and design of the road.
With regional and local arterial roads, the movement function is dominant and the road environment must be
adapted to ensure that movement is not impaired and that any adverse impacts of traffic and traffic management
on adjoining land use are minimised.
With local streets, the access function and the amenity of the street environment are dominant and the traffic
function is sub-servient. There are many roads and streets which do not fit this classification and where both
the movement and frontage function are important.
However, in all cases, there is a relationship between road function, traffic, the way traffic is managed, and the
nature of the adjoining development. A primary way to consider this relationship is by treating roads and their
environment as corridors and by treating streets and their environments in areas where traffic should be sub-
servient as precincts (Figure 5.3).

THE URBAN CONTEXT'
Figure S.3 Corridors and precincts
Arterbl condor 4 ROADS

-- - - - ------- ---- -
--------
Precinct or neighbourhood
4f
STREETS
Sub-arterial corridor
5.2.3 Interactions
In order to plan, design and manage these relationships, it is useful to make a distinction between friction,
impact and interdependent associations:
Friction can be defined as the impediment to traffic flow and driver behaviour caused by adjoining land use,
such as movement to and from access drives, on-street parking and associated vehicle manoeuvres, crossing
pedestrians and cyclists, vehicles turning into and from local streets, traffic lights serving cross movements
and obtrusive advertising (Figure 5.4).
Impact can be defined as the effects of roads and traffic on adjoining land use and quality of the
environment, such as air pollution, traffic noise, run-off and water quality. There may also be impacts related
to the safety of crossing pedestrians, cyclists and vehicles entering and exiting driveways, and impacts related
to on-street parking, loading and delivery. Urban arterials may also become barriers to local communities and
as a consequence, severance of these communities may occur.
Interdependent associations are land-use/traffic associations, such as service stations and businesses,
depending on vehicle access to passing traffic and providing a service to such traffic. They also include visual
relationships, such as urban design and landscape elements, which can help to define a road and provide
visual clues about one's location along a route.

Figure 5.4 Friction
5.2.4 Road-environment classification

A simple classification of roads and streets and their environments consists of
Type I road environment: major traffic routes, where the land-use environment must be or must be made to
be compatible with the transport function of the road. Arterial roads are part of this category.
Type II road environments: traffic routes, such as sub-arterial roads and major collector streets, where the
land-use environment may require adaptation of both the traffic performance and the environment,
especially in shopping strings.
Type III road environments: local streets where the environment is dominant and the traffic subservient.
Type I and II road environments should be treated as corridors (Figure 5.5). Effective friction and impact
management cannot be achieved if the transport function of arterial and sub-arterial roads and the
conditions of the road environment are considered separately. A corridor approach permits friction, impact
and interdependent associations to be planned, developed and managed in an integrated manner.
5.2.5 Road environments and urban design

An integrated view on roads and their environments provide an opportunity to study the relationship between
the character and function of a road and the type and scale of buildings along it and at the end of it. We
associate the great cities of the world with their roads, streets, avenues, boulevards and public places, and the
buildings associated with them. For example, Edinburgh's centre is defined by its main street, the Royal Mile.
Here the impregnable castle is the focus of the upper town, along with the Parade, the Grassmarket, St Giles
Cathedral and Parliament whilst the lower town is focused on he royal palace of Holyrood and its nearby town
hall. The complete length of the street embraces every aspect of the community's life (Figure 5.6).

THE URBAN CONTEXT
Figure S-S Road environment categories
Movement Frontage access

function function
uWi
Most Australian cities have distinguished examples of roads and their environments as major elements in urban
design: Macquarie Street in Sydney, Collins Street in Melbourne, Queen Street in Brisbane, North Terrace in
Adelaide, Georges Terrace in Perth, Anzac Parade in Canberra (Figure 5.7), and Davey Street in Hobart.
However, the importance of the urban design potential of roads and their environments is often overlooked
today. Roads are upgraded or their function may change, but there are no corresponding policies to change the
type, scale and design of development adjoining them when sites are redeveloped.
Each road environment has its own urban design relationship. Type I road environments not only form the
backbone of the transport system, but are also important elements in our mental maps. They should provide
information where we are and give us clues about decisions we need to make, such as where to turn or get off
the bus. The notion of the view from the road as we travel along it, with its images of paths, edges, nodes and
landmarks, is as valid today as it was in 1960 when it was first proposed (Lynch, 1960). In Type II road
environments, especially in active centres along the road, the scale and design of buildings and design of the
road space should be related more to pedestrians and lower vehicle speeds. Building line set-backs, continuity in
weather protection, pedestrian lighting, pavement cafe's and street furniture are all part of the street scene. In
Type III road environments, the streetscape is an important factor. Better practice requires that the design of
the road space and the siting and design of buildings in all situations should be considered as one and not
separate elements.
5.2.6 Type I corridors

Type I corridors are important in order to preserve and enhance economic performance of the region and
therefore, priority must be given to facilitating regional movement. Before considering their design, there is need
to be clear about the function of the road, the use of the road reservation and the relationship to adjoining
development. The function of the road and expected traffic volumes are derived from regional strategies and
analyses. The road reservation may be used for a range of purposes: for example, goods movement, bus lanes,
high occupancy lanes, cycle lanes, utility services and land required for drainage, noise protection, landscaping,

exit and entry lanes and turning movements. In greenfield situations, the road reservation width can range from
60 - 200 metres, but in established. areas the existing road reservation is often severely constrained and may not
be more than 30 metres. The use of the road space then becomes a matter of giving priority to particular road
users.
Figure S.6 Edinburgh, Scotland

0 4,
I
I krn
0 46 HF-Al OT
w. ETA Tfi
Chartott
-Vt
,A
y
F- r7l
.;
" WAMAwd
YEW!
TowN
St.Andrews
` _ Hill
.. GaraLe ras' f ;:mascot

Aim; -I
I
IT --
VV C
C tle'
,.J
rIlna?
Figure 5.7 Anzac Parade, Canberra
N/!lIlilill.

THE URBAN CONTEXT
The relationship with adjoining development can vary greatly. Where urban development does not or not yet
exist, there is an opportunity to prevent development with direct access (other than associated land uses), to
create a road reservation of sufficient width to accommodate noise protection measures, such as earth mounds
or acoustic screens, and to ensure that any new development is protected from traffic noise and local air
pollution. Corridor of this type should provide for pedestrian links across them, but not along them as the
vehicle-oriented environment is incompatible with pedestrian safety and amenity. Cross sections can be designed
to provide an attractive visual relationship with adjoining development when it occurs, for instance, by cut
embankments, building height and set-back and landscaping.
However, where development already exists, the situation is very different. The road reservation is usually
severely constrained, pedestrian and vehicle generating land-uses straddle the road, pedestrians cross the road,
there are numerous driveways and many intersections with local streets and on-street parking (Figure 5-8). The
road may be used for a mixture of traffic - local, district and regional. Existing traffic is likely to have a serious
impact on adjoining development and adjacent communities.
Figure 5-8 Land use and access policies determine friction and impact
Changes in the performance of the traffic function and the relationship with the road environment require
policies and guidelines, and the preparation of integrated plans and implementation measures. Policies and
guidelines exist for some aspects, such as protection from traffic noise (Roads and Traffic Authority of New
South Wales 1994; ANICORD 95), building design (Waverley Council, Vic, 1993), land use (Guidelines for the
Routing of Hazardous Goods, Department of Urban Affairs and Planning, New South Wales 1993) while
others are in the course of preparation (for example, Towards Access Management Guidelines, Austroads).
Comprehensive guidelines including matters such as land use, access, service roads, set-backs, building design,
advertising, and provision for pedestrian and cyclist crossings, are yet to be developed.
As the application of policies and guidelines will depend on local conditions, integrated development plans
should be prepared which can provide the basis for implementation. Some the important issues to be addressed
in such plans are:

Community participation
As there are wide variations in local conditions and local communities are concerned about protection of their
environment, community participation is essential in the preparation of corridor development plans.
Appropriate land use for the type of traffic using the road
Schools and hospitals should not be located where routes are used for dangerous goods. Land uses sensitive to
traffic noise should not be located along routes used for trucks, particularly at night. Pedestrian-generating uses,
including local bus stops, are inappropriate along major traffic routes and should not be permitted.
Redevelopment of shopping centres to create arcades and servicing from the rear should be encouraged.
Direct frontage access should be limited
Protection against traffic noise will be difficult to achieve if adjoining sites have direct access (such as detached
housing). Frontage driveways also reduce the efficiency and safety of the kerb lane while traffic flows may
impede exiting from sites. Where frontage access is allowed, sites should be large enough to permit movement
to and from the site in a forward direction so that no vehicles back onto traffic flows. Only land-use activities
which have an interdependent association with the road, such as service stations, should be permitted subject
to safe entry and egress.
On-street parking should be eliminated
Land uses along major traffic routes should have adequate provision for on-site parking, delivery of goods and
for couriers, and dependence on on-street parking should be eliminated progressively.
Connections with the local street system should be considered in the context of a local traffic calming plan
Local circulation should be maintained if side streets are closed, turning movements are restricted and the
spacing of intersections is changed. Changes in the local traffic and bus routes should be assessed and a local
traffic calming plan is an appropriate vehicles for such an assessment. Pedestrian, cyclist and vehicular
connectivity between communities on each side of the corridor should be maintained, so that there will be as
little community severance as possible.
The siting, scale, form and design of building development should be determined
The design guidelines for the Waverly Council cover building setbacks, building heights, selected landmark and
corner buildings, building form, mass and bulk, building exteriors, car park set-backs, signage, fencing,
landscape enhancement, utilities and traffic control devices, and street furniture and accessories. By
incorporating such guidelines into development plans, proposals for new development or redevelopment can be
prepared and assessed within an urban design context (Figure 5.9).

THE URBAN CONTEXT
Figure 5-9 Road Environments and built form related to type I roads
r;.
ixunimmnunuxxmreuannnnuu
Planning and implementation cannot be divorced. The formulation of planning and implementation solutions
should proceed in parallel. Measures to reduce friction, such as restricting or banning of on-street parking or
turning restrictions, have an immediate effect on business frontages and local circulation. and should be
discussed with the stakeholders affected before being implemented.
Measures to reduce impact are more difficult to introduce and can take years to become effective. Major benefits
can be obtained if road upgrading is linked with integrated redevelopment of adjoining land, so that measures
to reduce friction and impact and improve urban design can all be considered at the same time. There are
options: private sector redevelopmentwith or without incentives, such as bonuses, in order to accelerate
redevelopment and assist property amalgamation; public-sector redevelopment to assemble land and offer
consolidated sites for development; joint venture redevelopment where existing property owners and public
authorities contribute their land, powers, expertise and resources in order to redevelop the frontage and the
road, and share in the costs and benefits. Property owners may obtain not only a new dwelling in an improved
environment, but also could have cash in hand (Westerman, 1995).
5.2.7 Type II corridors

Type II corridors mainly comprise lower order traffic routes, such as sub-arterial roads and collector streets. As
the regional traffic function is generally not dominant (except perhaps at peak periods), there are opportunities
for managing friction and impact to create a balance between pedestrians and vehicles which is more favourable
for pedestrians. Measures can be introduced to reduce vehicle speed, provide for safe crossing, modify parking
layout, narrow the carriageway and increase the width of footpath. This is especially relevant for strip shopping
centres and the main street in country towns.
Key variables in the relationship between land use and road planning are pedestrian safety, convenience, amenity,
business activity, site access, parking and land use. Land-use policies designed to concentrate pedestrian activity
are integrated with traffic policies to reduce vehicle speed. Policies and guidelines have been developed for
commercial shopping strings (Sharing the Main Street) and these are now being applied in many cities and towns.

The principles on which the guidelines are based are:
Creating a core zone
In the core zone pedestrian activities are not exposed to high vehicle speeds and pedestrian-oriented frontage
activities are concentrated in this zone.
Creating a transition zone
Vehicle speeds are progressively reduced in the transition zone and low pedestrian-generating and vehicle-
oriented frontage activities are located in this zone.
Establishing target speed limits
Speed limits appropriate for the type of zone are established and achieved through design and control measures
which influence driver behaviour. Measures are designed to create appropriate friction and include: entry
"portals", parking layout and duration, horizontal and vertical deflection measures and pedestrian crossings.
a Encouraging appropriate pedestrian behaviour
Measures are introduced to encourage appropriate pedestrian behaviour. They may include: medians,
carriageway narrowings and barriers where pedestrian crossing would be unsafe.
Enhancing the quality of the pedestrian and business environment
The quality of the pedestrian and business environment can be enhanced by widening and improving footpaths;
continuous weather protection; designing the footpaths for a range of uses; creating attractive places for social
interaction and events; carefully selecting and locating street furniture; pedestrian lighting as well as vehicle
lighting; locating on-street and off-street parking close to the core activities; using street trees and landscaping,
set-backs, building height and advertising sign controls to reinforce the desired character of the Main Street or
sub-arterial road.
Plans based on these principles have been implemented in Australian cities and towns and the results show that
the conflict between pedestrians and vehicles is reduced, the pedestrian environment can be greatly improved
and business activity is maintained, if not enhanced. The trade-off is that vehicles will experience a slight delay
because of the changes in vehicle speed (Figure 5-10).
Figure S.10

THE. URBAN CONTEXT
There are limitations to the scope for environmental adaptation, such as the presence of large traffic volumes,
fluctuations during the seasons and day and the presence of a large number of heavy vehicles. In most
situations, the role of roads and streets as places for people can be enhanced, but flexible responses may be
needed where vehicle and pedestrian activity vary greatly during the day, with different arrangements for peak
and off-peak conditions.
5.2.8 Precincts
Streets in precincts are considered as Type III road environments in which the quality of the environment is
dominant and traffic sub-servient. Some streets must carry more traffic than others as they provide links to the
major road network or may carry buses, but the majority of streets should have as little traffic as possible.
Precincts should be created for all residential areas, activity centres, campuses and other areas where traffic is
sub-servient to the quality of the environment.
Residential precincts
The design of residential precincts and neighbourhoods must satisfy the needs of residents for a safe and
comfortable environment, ahead of the desire for traffic efficiency. A balance has to be established between
safety, convenience, accessibility, urban design, amenity, environmental protection, the ability to develop energy-
efficient housing, and cost-effectiveness. Principles based on AMCORD 95 include:
C
Providing safety, access and convenience
Pedestrian safety is a major influence on design. At speeds of less than 24km/h, there are only slight injuries to
pedestrians in the case of an accident. Injuries are moderate where speeds are between 24km/h and 39km/h,
and serious between 39km/h and 52km/h. Fatalities start to occur with speeds in excess of 52km/h
(AMCORD, 1990). The ability to avoid an accident involving a pedestrian depends on driver attention, response
time and condition of the vehicle. Vehicle speed is important here for two reasons. at a low speed (i) the driver's
peripheral vision is increased and the driver can take in much more of what happens in the street space; and (ii)
the vehicle can be stopped in a much shorter distance at lower than at higher speeds. For this reason vehicle
speeds should be kept low
Access to property frontage also becomes a safety issue when traffic volumes exceed about 5,000 veh/d and
vehicle speed exceeds about 60km/h. Concern about traffic noise becomes an issue at even lower traffic
volumes (about 3,000 veh/d). Frontage land uses, with their associated parking on the carriageway, vehicular
access to individual sites, and pedestrian activity on the verge can contribute to a higher accident rate in such
situations than that which occurs in lower volume/speed streets.
These factors indicate a need for particular care in the design of housing along streets with traffic volumes
exceeding 3,000 veh/d and a need to develop new networks and adapt existing ones (through traffic calming)
that avoid residential streets with high traffic volumes and vehicle speeds.
Good street design can greatly enhance the living environment as well as restrain traffic speeds and volumes to
acceptable levels. Driver behaviour is reflected by the geometry of a street: long, straight and wide streets are
conducive to driving at higher speeds than short streets, narrower pavements and streets with tight bends,
roundabouts and other devices. Care must be taken in the selection of devices as some have an impact on
adjoining dwellings and on other street users and stop-start conditions increase noise and vehicle emissions.
However, the needs for a low speed and volume environment must be balanced with the need for driver
convenience. The driving distance from any dwelling and the number of turning movements at intersections or
junctions to reach the most convenient collector street or higher order road should not be excessive.

Provide for choice in transport mode
The street network should provide for bus routes which give an acceptable level of accessibility to the bus
service by residents and visitors, and a reasonably direct route for bus operators without excessive turning
movements. There should be links with adjoining areas and activity centres without attracting traffic through
them. Bus operations are adversely affected by speed restrictions and require a relatively wide carriageway.
Residents should have the opportunity to safely walk or cycle to the nearest community facilities, such as shops
and schools, and should be provided with a safe, comfortable and pleasant link to similar destinations external
to their immediate residential neighbourhood. The route to the nearest station, tram or bus stop should be given
particular attention and be safe and direct.
Importance of urban design
Urban design of the streetscape is an important element for quality of life in an urban environment and is valued
strongly by local communities. Street networks should be designed to take account of the topography and
vegetation, respect existing or potential site assets, and takes advantage of opportunities for views and vistas.
Consideration should also be given to the streetscape. Urban design should be used so that streets of different
classification look different and drivers learn to recognise the type of street they are travelling in. Some quiet
streets may be designed as urban streets or courts with no set-backs, while others may have conventional
building lines. Variety in urban design adds to the legibility of the street network, reduces confusion, enhances
amenity and safety and facilitates marketing of land and housing.
An important factor in the design of a street network is the creation of allotments where there is potential for
energy efficient design of dwellings. Solar access affects street orientation and is especially important for small
lots in temperate climates. The preferred orientation in these situations ranges from 20 degrees of the true north
and 30 degrees.
Classification of residential streets
AMCORD 95 makes a functional distinction between two levels of streets: access street and collector street.
Within these levels, there may be further distinctions, depending on traffic volume, vehicle speed and urban
design considerations.
Table 13: Classification of residential streets

Residential street level type and function Target Maximum Speed Indicative Traffic Volume
(kph) (vpd)
Access Street
Access Place 15 300
Local Street 40 <2,000

Collector Streets
Minor Collector 50 <3,000
Major Collector 60 <6,000

THE URBAN CONTEXT
Precinct design
There are different ways in which these principles can be applied in the design of residential precincts or
neighbourhoods. During the 1970s and 1980s, the conventional design consisted of generally low-density
housing on individual, large allotments, a curvilinear street layout with culs-de-sac leading off local and collector
streets and limited land use mix and employment opportunities. Little regard was given to the energy or
greenhouse implications or the long term social implications of living in what are now referred to as "dormitory
suburbs"`
Neighbourhoods should be attractive living environments that will promote social interaction, participation and
a sense of social identity for all residents. They should consist of more than housing and streets and should
include a mix of compatible and complementary activities and uses for living, working and recreation. Streets
are necessary for access and movement, but can also provide opportunity for children play (for example, Can I
Play in the Street, Mum? Brown et al 1993). mixed use and social activity (for example, activity streets in local
centres; Figure 5.11).
Figure 5-I I Activity street and mixed use
--- - -- - --------- - -------- - - - - - -------
Some current design approaches attempt to reduce the number of vehicle trips or trip distances that are
generated within suburbs and thereby reduce the consumption of fossil fuels and the impact of cars on
neighbourhood amenity. Principles being used include a greater mix in land use, an urban form that is more
pedestrian friendly and less dominated by the needs of cars, more direct pedestrian and cycle connections
between any two points within a community, an increase in net residential densities, and a focus on direct and
convenient routes to a transit stop. Recent urban development projects at Regent Gardens, Adelaide,
Williamstown and Kynch's Bridge, Melbourne, incorporate such design features.
Innovative opportunities for integrated design exist when there is a site with sufficient potential and a single
developer. In the MFP pilot project in Northhaven, Adelaide, land use, access streets, buildings, walls open space
and sustainable development were designed as an integrated development. The housing and street pattern
consists of a series of interlinked village squares and dwellings without building line set-backs around them.

A real challenge are established suburbs, where redevelopment at higher densities may occur while the impact
of traffic should be reduced. Development should ensure that the environmental capacity of the street system
is not exceeded. The number of vehicle trips generated by a development must be related to the type and size
of development, but redevelopment can still occur if higher densities are accompanied with improved access to
public transport and an increase in the proportion of non-motorised trips.
Activity precincts
Activity precincts are commercial and community centres with a range of facilities and services. They need to
be accessible, but the quality of the pedestrian environment should be given the highest priority. In large centres,
the balance between accessibility and the amount of development is often lacking. Approach roads may be
congested yet further development is often permitted. A stage has been reached in some centres, where any
further development can occur only if the proportion of trips by public transport is increased.
Within centres the balance between accessibility and the quality of the street environment is also often lacking.
Parking is frequently inadequate and searching for a parking space adds to congestion and frustration. The
pedestrian environment suffers from the dominance of cars and the priority given to them. Efforts have been
made in some centres to reduce this impact by the conversion of roads into pedestrian malls where vehicles are
excluded except for service vehicles at prescribed times. Some of the notable examples are Rundle Street,
Adelaide; Hay Street, Perth, Pitt Street; Sydney; Queen Street, Brisbane; Bourke Street, Melbourne where trams
operate in the mall, and Elizabeth Street, Hobart. However, less successful malls are often deserted after
shopping hours and invite vandalism. Some malls in the United States have been converted back to access streets
as result.
Principles in current planning of centres include:
Setting priorities for road users
In order to find a better balance between pedestrians, parking, public transport and other vehicles, priorities
must be set for different users of the road and street space. The priority may be: (1) pedestrians, (2) public
transport, (3) delivery vehicles, (4) off-street visitor car parking (5) off-street and limited parking for workers, (6)
on-street short-term parking. There will always be a need for streets providing service access to sites and off-
street parking spaces, but through traffic should be avoided.
Creating a more friendly and attractive pedestrian environment
Creating a more friendly and attractive pedestrian environment can be achieved by:
a pedestrian dominant core with streets as spaces for activity, leisure and enjoyment;
exclusion of vehicle traffic and on-street parking in the core at times of pedestrian activity or they should
play a subservient role, using the principles of "Sharing the Main Street". Vehicle speeds should be low (less
than 35 km/h) so that the conflict between pedestrians and vehicles is minimised;
bus routes immediately surrounding the core with bus priority at intersections and bus stops near points of
high pedestrian activity;
circulation routes surrounding the core, providing service access to business sites and vehicular access to off
street and on-street parking spaces;
speed management in the area immediately surrounding the core; and
alternative routes for through traffic (Figure 5.12).

THE URBAN CONTEXT
Figure S.12 Strategic exploration
PedeMonmd
8M Cotdc
onde ct
awww"
Adaptation of existing centres should lead to a change in the use of the available road space with a progressive
increase of pedestrian and shared street space and a reduction in exclusive vehicle space and on-street parking
space. Hence the focus is on reclaiming the road space from cars for people (Figure 5.13).
Figure 5-l3 pedestrian-friendly road use policy in care
Exclusive public
transport space
Exclusive vehicle
circulation space
Shared road space
On-street
parking space
Exclusive
pedestrian space
1995 2020

5.2.9 Advantages and disadvantages
The approaches in this Section represent directions for better practice. Some are already being applied in varying
degrees, while others are no more than pointers for research, development and application in the future. But all
are consistent with the goals set out in Section 1 and the strategies in Section 2.
The corridor-precinct approach creates opportunities for a better balance between roads and streets and the
community. Instead of giving priority to the demands for vehicular mobility and to other transport modes and
the environment thereafter, an integrated approach can lead to better outcomes for all road users and those
affected by the impact of traffic. The main outcome is (i) the rediscovery of the role of streets for living and
human interaction serving local communities in protected precincts, and (ii) the recognition that major roads
needed to serve the regional community should be treated as corridors where the needs for efficient movement,
urban design and local environmental protection are considered together.
The disadvantage of the approach is that it requires a degree of integration in planning, development and
management which often does not exist. The roles of road authorities are generally limited to plan, develop and
manage roads, not corridors. The responsibility for planning and controlling adjoining development in corridors
lies with local authorities, while development and redevelopment are carried out by the private sector which
responds to market conditions. Local authorities can plan and manage their environments as precincts, and some
do, but often there are conflicts between the creation of protected environments and the preservation of routes
for through movement. This conflict frequently occurs in inner urban areas. Integrated approaches also redefine
the partnership between the public and private sectors. The institutional implications are discussed in the next
section.

6. INSTITUTIONAL ARRANGEMENTS
6.1 introduction
6.1.1 Scope
This section of the report considers the way in which existing institutional arrangements affect decision making
about roads and how these may be improved to better satisfy community objectives for the urban environment.
The arguments presented are intended to stimulate debate about the relevance of institutional arrangements in
transport rather than provide definitive aNew South Walesers about the way in which governments should
organise themselves to achieve their objectives. A particular perspective on institutional arrangements is put
forward, but it is recognised that there are other views that would need to be considered in a fuller discussion
of the topic.
In any discussion of the factors affecting outcomes in transport, "institutional arrangements" is usually given
less attention than other topics. In the water industry, by contrast, the debate about appropriate institutional
arrangements has been underway for some time. There are many reasons for the relative lack of attention to
this issue in transport and land use planning (and in other areas), including that institutional arrangements have
conventionally not been seen as something with which urban planners should be centrally concerned if they
want to achieve change. Further, institutional change is difficult to achieve, bound up as it is with existing
structures of power and influence and with the historical cultures and modus operandi of road organisations.
This section of the report aims to identify some of the institutional changes that need to be made and the ways
in which change might be pursued. Current administrative structures and statutory procedures and practices are
considered with a view to identifying "better possible practice". Although the discussion is necessarily at a
general level, examples are provided to illustrate general propositions and some reference is made to instances
where better institutional arrangements for transport have already been adopted.
The discussion is "academic" in the sense that it is intended to raise fundamental conceptual issues to do with
institutional arrangements that affect the way in which decisions about urban affairs are made in government.
It is intended to be "practical" in the sense that addressing some of the fundamental institutional issues in
government could have practical consequences for the way in which government is organised to pursue its
objectives and for the legislative and other means by which it does this. Recommendations arising from this
section are outlined in Section ...
The relationship between organisations responsible for roads at the local, State and Federal levels is not
considered in any detail here. While this is an important institutional problem, requiring consideration, among
other things, of the arrangements made for the classification of roads and of the legal consequences of such
arrangements, it is not one recognised by the public as central to the debate about roads. As such, it has been
outside the scope of this consideration of institutional issues.
It is noted, however, that "the split in roles and responsibili ties" of the three levels of government is one of the
main factors that "actively work against the development and implementation of integrated and appropriate
outcomes":
" Not only is there a hierarchy of players but the boundaries of responsibility are blurred and
poorly coordinated. Thus one often sees actions at one level of government negated by
inconsistent policy decisions at another. This policy boundary problem is particularly apparent
with respect to land use planning at the State/Local Government level".
Q West 1995 personal communication)

6.1.2 Outcomes rather than outputs
Central to the discussion below is the notion that the pursuit of outcomes rather than outputs is essential to
better planning practice. This is a fundamental point which informs the remainder of this section.
A clear distinction is made between means (outputs) and ends (outcomes). It is argued that, as difficult as it is,
we need to seek agreement about the ends (or "goals" or "results" or "outcomes") to be aimed for and debate
the various possible means (or "outputs" or "instruments") which may contribute towards achieving these
outcomes.
The means may be classified according to whether they are positive means (principally spending money),
financial means (using financial instruments to achieve an intended result) or regulatory means (legislation and
other controls). It is emphasised that there are various means of achieving change that may be preferable to the
ones with which we are most familiar, but that the fundamental question is what governments and "the
community" are trying to achieve (the outcomes) with the application of various means.
Further, it is suggested, if governments are not encouraged to more clearly articulate intended outcomes (for
example, "we want to promote better access" rather than "we want to build a light rail line"), it is difficult to
measure performance and, more particularly, to measure and compare the performance of those who are
competing to provide government services. A more open and competitive economy relies on an outcome
orientation. The General Manager Policy of New Zealand's Ministry of Transport has remarked on the
centrality of defining outcomes in this respect:
" The key to structural reform is accountability. Each organisation has been developed to have
clear and non-conflicting goals and targets to achieve; to clearly understand the available resources
opportunities and risks involved in those tasks; and to be publicly judged against its performance"
(Toleman 1995 p 13).
At the same time, it is recognised that the outcomes to be pursued by government are not self-evident. There
is much debate to be had about what it is that governments actually want to achieve. A key task for government
is, in fact, defining the results it wishes to aim for. Part of the argument presented is that governments should
more consciously and explicitly define what they want to achieve (the outcomes), since this allows clearer
definition of strategies (the ways in which it is intended to achieve these outcomes) and actions (the means by
which the strategies will be implemented), as well as raising the question of whether they are organised in an
appropriate way to pursue these outcomes.
It is recognised too that there may be a hierarchy of outcomes defined (the difference between "goals" and
"objectives") to more precisely direct strategies and actions. The schema developed in Timetabling for
tomorrow: An agenda for public transport in Australia (1995) is an indication of this:

THE URBAN C:ONTE` T
Table 14: Goals and objectives of policy

Ultimate goals Specific objectives
Environmental and urban amenity a Increase air quality and reduce emissions
quality
b Reduce traffic noise and impact
c Improve safety and reduce accidents, injuries and deaths
d Reduce transport energy consumption
e Reduce CO2 emissions
f Improve visual, aesthetic and other aspects of
urban amenity
g Reduce air pollution costs associated with congestion
Accessibility a Improve accessibility to work (people with cars)
b Improve accessibility to work (people without cars)
c Improve accessibility to other activities (people with cars)
Improve accessibility to other activities (people without cars)
Economic efficiency a Reduce costs of urban freight and commercial traffic, including
costs of congestion
b Reduce travelling times and costs for work trips
c Reduce travelling times for non-work trips
d Reduce capital and other subsidies for providing transport except
where these form part of a wider pricing policy
e Increase opportunities for economic interaction
Source: Australian Urban and Regional Development Review (1995) 92.
6.2 Administrative Arrangements

6.2.1 Governancel
The structure of government
In urban affairs in Australia (and virtually all other areas of government as well) governments at all levels are,
almost without exception, structured around responsibilities for specific outputs (means to achieve outcomes),
rather than around responsibilities for the outcomes themselves. In the transport arena at the State level, for
example, we generally have organisations concerned with trains or buses or roads rather than with, for example,
economic efficiency, accessibility or safety. In land use planning we generally have agencies concerned with the
administration of "their" legislation rather than the quality of the places for which they should be responsible.
There is generally no one agency responsible for outcomes whose performance can be measured in terms of
whether the outcomes have been achieved.2
Sometimes, as with the Passenger Transport Board in South Australia, which controls all passenger services, and
the proposed arrangements (as at July 1995) for bringing together the State Transit Authority and State Rail in
New South Wales, these provider organisations are brought together, but with their individual structures
essentially intact.
The consequence of this emphasis on means rather than ends is that agencies in transport (as in almost any area
of government) tend to perceive solutions to given problems in terms of increasing the supply of the means of
transport for which they are responsible. The tendency of public sector organisations to focus on the supply
of facilities rather than on the problem is a widely recognised problem in public policy making:

"Analytic activities have tended to overwhelmingly focus on the appraisal, advocacy, and/or
incremental adaptation of ... technologies and services - which we term preselected solutions -
rather than on laying bare the character of the problems generating demands for public action or
searching with a fresh eye for effective remedial strategies". (Altshuler cited in Richmond 1995)
At local government level, the structuring of organisations according to outputs (or according to the specialists
to be employed) rather than outcomes has been equally evident. Typically, all divisions or departments within
a local government organisation have some responsibility for local problems, but no person or group bears
responsibility for all planning and investment undertaken to address a given problem. There is also rarely clear
responsibility for the quality of particular places - the same issue as at State government level. Those parts of
local government organisations responsible for roads approach their task in much the same way as their
counterparts at the State level, addressing the supply and condition of local roads (and traffic management) as
their primary, if not exclusive responsibilities.
Implications for road organisations

Despite significant changes in the last decade, the dominant approach to planning in road organisations has been
to infer that increasing the supply of roads is the principal (if not the only) means to achieve the objectives of
a plan. The barriers inherent in the organisational structures - the output-based structure of government
organisations - have inhibited a more multi-dimensional approach.
Road organisations are not wholly responsible for their traditionally inward looking approach, as there have been
other organisations, with equally specialist functions, including financial and regulatory functions, that have
restricted their scope of operation.
One of the strengths of road organisations is that they generally have more resources than other government
agencies. To some extent, this has allowed them to begin to reform themselves, as they have been able to
purchase additional expertise in areas outside their primary field that they can then offer to organisations bearing
primary responsibility for these functions. For example, road organisations have, in recent years, employed town
planners, urban designers, environmental and social planners and economists, many of whom have developed
higher levels of expertise than their professional collegues in specialist organisations.
In a number of Australian cities the activities of road authorities have had a greater effect on urban structure
than practically any other agency. The ability of land use agencies to influence outcomes through the statutory
land use system has been overwhelmed by the influence of the road authorities (and the water and sewerage
authorities) on the shape of the urban environment through the provision of major infrastructure. The
provision of major infrastructure by these agencies has, moreover, been affected by the drive to reduce short
term market costs, which has had a major effect on the kind of influence these organisations have had.
In more local matters, however, the influence of road authorities has been limited, except in local traffic
management (after development has occurred). Road authorities have been particularly constrained in respect
of land development, including development adjacent to major roadways.
Integrated planning: coordination versus integration

Recently, efforts have been made by numerous road and other authorities to achieve "integrated transport
planning" as a means of overcoming the tendency of provider organisations to focus on the "preselected
solutions". The results of these exercises have been mixed, but many efforts at integrated planning have tended
(at least in the short term) to promote "coordination" rather than "integration". Coordination may be a worthy
objective in itself, but it does not address the more basic issue of whether the activities being coordinated are
the best mix of means or instruments to be employed to achieve the intended outcomes. It can be argued that

THE URBAN CONTEXT
having to "coordinate" is an admission of failure - an admission that the right kinds of organisational
arrangements are not in place and that responsibility has not been properly allocated to achieve intended
outcomes.
Integrated transport studies run the risk of producing "lowest common denominator" results - what is least
unacceptable to the agencies involved, rather than what is most desirable for the area under consideration. The
emphasis is often on the document to be produced (or, at best, the outputs) rather than the outcomes to be
achieved, with each agency having primary regard to its particular area of responsibility.
Further, the Interdepartmental Committees (IDCs) typically at the centre of these exercises often do not include
agencies whose involvement would be essential if financial and legislative measures were to be given at least as
much attention as supply measures. Even when they do, the terms of reference for such exercises and the
cultural orientation of participants often inhibits a focus on strategic outcomes. As a result, while financial and
legislative measures may get some attention, they are rarely seen as essential to the "kit of tools" potentially
available to achieve outcomes. In circumstances where pricing measures3, in particular, are likely to have much
greater effect in achieving change than, say, environmental planning instruments, this seems a poor basis on
which to construct "integrated planning".
Austroads has already recognised that "opportunities for integrated corridor planning ... have been pursued to
a limited extent. Evaluation could be extended to include improving both road and rail facilities to overcome
problems for one mode" (Austroads 1994 p 15). To achieve this, there need to be fundamental changes to the
organisations involved and to their relationships with one another.
The argument is sometimes put forward that involvement of road authorities at the highest level of
coordination of planning activities is a satisfactory alternative to having outcome oriented organisations.
Examples include the Urban Development Committees in various States or the inclusion of the CEO of Main
Roads Western Australia in the Western Australian Planning Commission.
This model is sometimes extended to planning processes involving various output oriented agencies in collective
discussion of issues to be addressed and policy and strategy development. Examples of this include the
development of regional or local integrated transport strategies such as those the Lower Hunter region (1995)
or for Central Melbourne or Sydney.
It is suggested that there is a significant difference between bringing together various output agencies, usually in
a committee format, and bringing them together in an outcome oriented planning process to refine the
outcomes, and to develop proposed strategies and actions that may cut across institutional boundaries. The
latter process begins to approximate a situation where agencies are primarily concerned about the outcomes
rather than the "products" which they might supply individually. However, even the collective planning
processes ultimately beg the question of whether government is appropriately organised to pursue stated
objectives.
An overseas example of the collective planning process is the Transportation Policy Plan for Washington State
(1995) where, it is understood, various agencies were brought together to develop policies and strategies. It
states that:
"coordination and cooperation between all government agencies, private sector, and Washington
citizens are imperative to meeting the challenges of providing a statewide multimodal
transportation network. When the actions of one jurisdiction impact another or the public, there
must be a process for coordination, planning and decision-making" (Transportation Policy Plan
for Washington State 1995 p 6).

It goes on to say, however, that in order to do this it will be necessary to "develop an institutional framework
for transportation that .., facilitates interjurisdictional and regional coordination ... integrates land use planning
and transportation planning ... (etc)". The question of whether the best institutional arrangements are in place
to pursue the objectives which different agencies might agree are desirable seems unavoidable.
Perceived organisational problems in transport at the State level have often been addressed by "restructuring"
the transport (and land use) agencies involved. This has generally meant rearranging the output-oriented
functions of government in a different way, in the expectation that better "coordination" or "integration" will
be achieved. Generally, however there continues to be an emphasis on a narrow range of outputs rather than
outcomes, and neglect of other possible means to achieve outcomes, specifically financial means.
Better possible practice

The kind of restructuring of transport agencies that has been evident in Australia in recent years has essentially
been a matter of rearranging, in different ways, existing functions of government in relation to the provision of
the means of transport, to pursue greater efficiencies and better coordination of activities. In some cases this
has had positive results, but more fundamental structural changes are called for if the appropriate organisation
structure and right skills in the organisation are to be central to achieving intended outcomes.
Governments might have more success in achieving complex outcomes (such as "accessibility"or "safety" or
"environmental quality") if they were to reform existing administrations in such a way that there were "client"
organisations funded by (and responsible for) achieving complex outcomes agreed by governments. The `client`
organisations would undertake strategic planning and purchase appropriate capital works and services from
organisations responsible for planning and managing the delivery of services, for example, public transport
organisations, road and traffic authorities, private sector road owners and operators, and private sector public
transport operators, as well as organisations providing non-transport "products". With the focus of client
organisations on the outcomes to be achieved and with a wide range of means at their disposal, complex
outcomes would be more easily achieved.
Transit New Zealand has taken steps in this direction with its National Land Transport Programme which has
been an integrated funding programme since 1989. Transit New Zealand has had an organisationally integrated
approach to policy on land transport since this time. Associated with this, regional land transport strategies
(RLTS) have been required by statute to contain statements relating to outcomes. (There has not until recently
been a similar requirement at the national level which has resulted in certain anomalies in practice - the
recently passed Land Transport Law Reform Bill introduces a binding National Land Transport Strategy (NLTS)
concept.) Transit New Zealand also requires all outputs (projects and road/public transport operations) to be
consistent with the appropriate RLTS, by statute. (R van Barneveld 1995: personal communication.)
The point has also been made that:
"integrated agencies are of no use if the integrated outcome direction is not in place. (New
Zealand) now (has) the opportunity to do this ("establish a robust outcome statement") with
government having agreed the concept and government being free from the administration of
funding and service provision.
The arrangement is for the NLTS to be binding on RLTSs and for all funding decisions (and therefore planning
initiatives) to be able to demonstrably contribute to the outcomes in both" (R van Barneveld 1995: personal
communication).
Restructuring transport agencies in Australia in terms of outcomes would help ensure that the focus of their
activity was what they wanted to achieve rather than any particular means of achieving their goals. It would

THE URBAN CONTEXT
provide governments with greater certainty that they were doing what they wanted to do and not simply what
they were organised to do: "the structure ... (should be) designed to achieve the objectives rather than the
objectives being designed to justify the structure" (Mant, 1995: 215).
To the extent that some road and traffic authorities have been incorporated into wider transport authorities and,
within these organisations, there is greater separation between policy and provider arms, some change in this
direction has already been achieved. However, the focus of these changes has generally been on achieving
greater efficiency and contestability in the delivery of traditional "outputs", consistent with national competition
policy, rather on identifying and achieving the best outcomes from a wide range of alternatives. The
restructuring of State government according to outcomes rather than outputs implies more radical change and
raises complex issues of public administration. Not the least of these is that at present, most State government
departments are responsible under an Act of Parliament to a Minister who usually bears the same title as that
given to the department and who is directed, via the legislation, to have primary regard to the outputs of the
department rather than what might be the stated objectives of the government.
The reform of legislation and restructuring of the executive level of government in terms of outcomes rather
than outputs are as much an issue for governments as the restructuring of administrative arrangements in this
form. This would mean clearer responsibility at the executive level for the outcomes pursued by any particular
government (that is, a more strategic approach to managing government), consistent with the clearer
responsibility for outcomes at the administrative level.
Even if no or little reform/restructuring of government is likely, the argument about roads organisations (and
others) being oriented to outputs rather than outcomes, and the effect of this on our cities and towns, still needs
to be made. Understanding the fundamental nature of the problem is a benefit in itself.
There is a further reason for considering the implications of the lack of focus of government organisations on
outcomes, viz that, increasingly, the contestability process inherent in Australia's national competition policy
(Report by the Independent Committee of Inquiry 1993) will be facilitated by a separation of those who
establish the outcomes to be achieved from those (in the public or private sectors) who contract to provide some
means of assistance in achieving those outcomes. As long as government organisations continue to be more
focused on the means rather than the ends, they will encounter difficulties in putting into effect the directions
established by the national competition policy.
In respect of normal maintenance and road improvement programs the trend has been for road and traffic
authorities to separate policy and programming from construction and maintenance functions. This has allowed
greater choice in the purchase of services, consistent with national competition policy.
However, road and traffic authorities could be even more businesslike and customer focused and could be
extending these principles to ensure a separation between organisations responsible for achieving transport
related outcomes (the "clients") and those providing the means to achieve these outcomes (the "outputs"). This
would help ensure that provision of the means of transport was not distorted by the organisation being able to
provide only one means of transport.
The notion of a separation between organisations responsible for outcomes and those responsible for outputs
(the "client/provider split") is consistent with road and traffic authorities becoming even more businesslike and
customer focused. Under this model there may be a range of potential providers, providing their services on a
competitive basis. Existing provider organisations would have to become more businesslike to compete.

New Zealand provides a relevant case study:
"New Zealand has moved a very long way from the local and central government situation we had
a decade ago. Transit New Zealand, as a State highway provider, has a staff of only 130 and
contracts out all delivery of highway, professional and contracting services. Local government is
moving generally in the same direction. This is not the end however. The outcome statements ...
are still needed and will not be delivered by contracting out. Consultatively developed outcome
statements are essential at national and regional and territorial level in New Zealand". (R van
Barneveld, 1995: personal communication, p ).
The restructuring of government according to outcomes is a model of government administration. Like all
models, it provides an organising framework to work towards, whether this is done incrementally or "in one hit".
The size and complexity of the problem probably means that incremental change would be necessary over a
long period to create governments that are better attuned to outcomes, legislatively and at the executive and
administrative levels. There are indications, such as with the putting into place of a national competition policy,
that this is beginning to occur.
Fundamental structural change of government organisations would require legislative change in many instances.
An example of where this has already occurred is at local government level in New South Wales. Under the
previous Local Government Act in New South Wales councils were obliged to employ a specified range of
professionals (engineer, town planner, health and building inspector etc) in certified positions (separate chapters
of the Act dealt with the activities of each professional group). Under the Local Government Act 1993 New
South Wales local councils are free to organise themselves as they see fit and employ whomever they deem
necessary within this structure. They are able to make strategic choices and organise themselves as they consider
appropriate to focus on attaining specified outcomes.
This is a far cry from a situation where local councils in New South Wales were required, by law, to have a
certified engineer running an engineering division, a certified town planner running a town planning division
and so on.
The same principles of restructuring need to be applied to State government to take the focus away from the
means to an end and put it fairly and squarely on the ends to be achieved themselves.
6.2.2 Organisational culture

The culture of specialist organisations
The prevailing arrangement of government functions is partly a result of the way in which the professions have
classified themselves and distinguished themselves from one another. Accordingly, government agencies with
one-dimensional functional responsibilities have conventionally employed a narrow band of specialists to
perform their tasks. In roads this has meant that organisations have been dominated, professionally, by
specialists with expertise in public works, particularly engineers. In other areas the prevalence of expertise in
one specialty is equally evident, vide the professional composition of most planning departments.
The professional structure of road organisations has affected the organisational cultures and philosophies
informing their ideas and actions. This is to be expected and is not undesirable in itself. It may become
undesirable when the values and "world view" of a limited "community" come to prevail in an environment
where there is a much greater diversity of interests and opinions.
While road authorities now employ many more non-engineers than previously, they are still essentially
organisations in which engineers and other public works specialist congregate and where the primary
performance measures, viz those concerning "vehicle throughput", reflect the interests and capacities of these
professional groups.

THE URBAN CONTEXT
Better practice
As long as there is a cultural imperative within road organisations and planning organisations, for example, to
employ engineers and planners respectively, the emphasis in those organisations will be on the means with which
those specialists are familiar. Planning organisations, in particular, are notorious for their lack of regard to
financial measures to achieve their goals and for the lack of a quantitative orientation amongst their professional
staff. The specialists employed by road organisations, on the other hand, are generally highly numerate, but also
lack a financial or investment orientation and have few of the more general skills of planners.
This is not an argument against specialist expertise. It is an argument in favour of aligning professionals with
different specialist qualifications in different configurations.
The question of which specialists an organisation employs and in what combination is obviously closely bound
up with the question of what kind of organisation is being created - one focused on means or ends. But even
if there were to be no major change at the structural level to the organisation of government, the mix of skills
within any one organisation will remain an important question.
In urban management the complex, multi-dimensional nature of the problems to be addressed demands a multi-
disciplinary approach. At the policy or strategic planning level, team-based structures comprising
professionals with qualifications in such disciplines as economics, engineering, sociology, political science,
environmental science, architecture (all of which contribute to "urban design"), and a range of others, would
begin to address urban problems in ways that are quite unfamiliar to urban management in Australia at the
present time. Multi-skilling could be a consequence or a precursor of organisational change, but is essential to
the cultural change necessary for improved management of the urban environment.
In New Zealand all major providers established outside government as privatised bodies, appointed boards or
crown owned corporations are bound to operate in terms of the 1991 Resource Management Act, the statutory
principles of which "make a multiskilled approach to planning a prerequisite for both planner/regulator and
providers". (R van Barneveld 1995: personal communication)
6.2.3 Funding
Current practice
Under the way in which government in Australia is structured, funds for expenditure on a particular means of
transport are usually controlled by the body responsible for providing and operating that infrastructure. (The
Commonwealth's funding of the National Highway System is a variation of this in that the funds are channelled
through State road authorities.)
Moreover, the way in which the budget process works in relation to roads, for example, makes it difficult to bring
about change in the allocation of funds to roads, for example, in the absence of more fundamental change in
the structure and operation of government. More specifically, it is difficult for funds currently allocated to roads
to be allocated to other forms of transport or other items (including deficit reduction). Although a State
Minister for Transport and the government of the day may have the final say on the distribution of funds to
particular projects, the allocation of funds generally to roads is less amenable to change. There are many reasons
for this.
First, the Commonwealth's allocation to the National Highway System usually forms a significant proportion of
the total (capital) allocation to roads. In 1994-95 in New South Wales, for example, the National Highway
Programme accounted for $250m of the total capital programme of $833m.
Second, even with the untying of arterial roads funding from 1 January 1994, and the transfer of $350m of
arterial road funding grants from specific purpose payments to general revenue assistance (Commonwealth

Budget Paper No 3, 1995-96, p 29), these funds have continued to be largely allocated to roads. In New South
Wales in 1994-95, for example, all of the Commonwealth's "untied roads funds" were allocated to the State
Roads Program (New South Wales Budget Paper No 2, 1994-95, p 6-83). The reasons for this are clear. The
nature of capital expenditure on roads generally means that funding for projects is planned some years in
advance - it is not feasible to start a major project without being certain of obtaining the necessary funds to
finish it over the following years. Thus while Treasuries might try to "control" new projects, their influence on
total annual allocations to the road authorities is marginal. Budget submissions on the total annual allocations
to roads, in the words of one senior New South Wales Treasury officer, are "basically a formality", for "rubber
stamping". "The flexibility exists in the distribution of funds amongst projects and this is where the politicians
go through them carefully. It's extremely difficult to do anything except at the margins".
Third, a significant proportion of the road authorities' budgets come from funds hypothecated to roads
through, for example fuel taxes.
Funds for roads are therefore generally either dedicated or hypothecated to roads, with relatively little discretion
for the government of the day as to their allocation, rather than their distribution.
The short term planning horizons of government have also been recognised as "reinforcing (the) institutional
problems and the cultural shortcomings of road agencies":
"The 3-4 year cycle of elections, combined with the annual budget process is not conducive to
rational long term planning. Yet, this is what is required when you are putting in long life
infrastructure which, once in place, effectively constrains a government's ability to ùndo' that
decision, no matter how inappropriate". o West 1995, personal communication)
In essence, the problem is that while there are a number of overarching transport policy bodies in government,
these generally do not have any great degree of influence in decision making about how funds for transport
should be expended. A key part of the problem is that there is generally not a separation between organisations
responsible for transport-related outcomes (sometimes called `client' or `fonder' organisations) and those
responsible for providing a means of achieving an outcome (sometimes called `provider' organisations). This
remains a central issue in transport despite the fact that in government generally the separation of clients from
providers is recognised as a fundamental issue in reforming the way in which governments "do business".
The prevailing relationship between organisations responsible for outcomes and those responsible for providing
means of achieving outcomes is an issue at State and local government level, as well as at the Federal level where
funds for "roads" are separated from other funding. Existing administrative arrangements usually mean that
funds are primarily directed towards providing a particular output, rather than towards achieving a particular
outcome. It should be no surprise that organisations established to provide a particular means of transport
invariably conclude that the best way to solve a transport problem is to provide more of the means for which
they are responsible. Indeed, road organisations are not mandated to spend on means other than those for
which they are primarily responsible, except at the margins, such as with the landscaping of roads or provision
of bicycle paths in association with roads .
New South Wales' Integrated Transport Strategy for the Greater Metropolitan Region makes a similar point:
"Each of the agencies responsible for the provision of transport services in New South Wales
focuses on its individual core business and their charters require them to be responsible and
accountable for the commercial component of their activities. In these circumstances investment
decisions are generally limited to options which are within the agency's ability to control. Modal
alternatives are either not canvassed or not fully considered". (New South Wales Department of
Transport 1995, p 70)

THE URBAN CONTEXT
The difficulties involved in integrating budgets to achieve outcomes are also a major obstacle to integrated
planning. Because of the structural constraints, the idea of integrated budgets for achieving outcomes is often
even avoided at the bureaucratic level, and not even debated at the executive level. Some exceptions have been
provided by the Better Cities Program where a condition of funding from the Commonwealth has been the area
based integration of budgets for places such as City West in Sydney. Generally, however, agencies continue to
pursue their sectoral interests within a framework of coordination rather than integration. Austroads has
recognised this problem in its Integrated Transport Planning Survey:
"There is little evidence of state initiatives to integrate the allocation of funds across agencies in
support of development strategies. Some attempts have been made to co-ordinate agency
initiatives but generally funds are allocated by mode, with projects justified within an agency
budget". (Austroads 1994, p 13)
At the interface of State and local government practice the problem is exacerbated by both levels of
government concentrating on outputs, often without regard to the direction being taken by the other level of
government. A particularly clear example of this is when local government invests (often heavily) in local area
traffic management in circumstances where the problem may have been more effectively addressed by (State)
expenditure on an arterial road. Similarly, local government expenditure on road maintenance can be
significantly affected by State government decisions about the non-local road network. To some extent, this is
a problem of local government being a "sub-optimal economic unit" that reduces costs by having externalities
spill over into other councils' areas. It is also a question of better administrative arrangements being required
at the regional level to help local and State government agencies take better decisions in relation to one another.
This would appear to be the easier part of the problem to solve. The more fundamental problem is that of
achieving agreement amongst all the players as to the most desirable results to be aimed for and setting up the
rights kinds of organisational and financing arrangements, at each level of government, to pursue these
outcomes.

There should be greater separation between organisations responsible for transport-related outcomes and those
responsible for providing a means of achieving an outcome.
The organisations responsible for achieving outcomes should be instrumental in setting policy and influencing
decision making, that is, in "planning". Operational planning, as distinct from strategic planning, should
continue to reside with the providers.
Separating operators from regulators complements the notion of a "client or funder/provider split". In fact,
the idea of separating those responsible for outcomes from those responsible for providing means to achieve
outcomes may more accurately be described in terms of a three way split - a separation of "clients" from
"providers" and, amongst the providers, a separation of the operators from the regulators.
The model of "planning" and "funding" being linked and separated from "implementation" is one of a number
of "simplified models for arranging planning, funding and implementation functions" examined in the
Australian Urban and Regional Development Review's Timetabling for tomorrow: An agenda for public
transport in Australia. It is argued that this model is preferable for a number of reasons, including that:
"It allows the planning agencies to fund new transport providers or seek new approaches to
implementation if the implementing organisations are not performing. In particular, such an
approach allows the planning agencies to be neutral as to which mode should be used and to select
the most appropriate for a particular transport task, rather than leaving effective planning in the
hands of a single-mode agency". (Australian Urban and Regional Development Review 1995, p
141).

The United States Intermodal Surface Transportation Efficiency Act (ISTEA) of 1991 is also relevant in this
respect in that it effects a much greater separation between the clients and providers of transport infrastructure
than was previously the case and in this way is beginning to affect the mix of projects funded.
The broad policy objectives of ISTEA, focusing on outcomes, set the scene for such an approach:
"The National Intermodal Transportation System shall consist of all forms of transportation in
a unified, inter-connected manner ... to reduce energy consumption and air pollution while
promoting economic development ... (It) shall include a National Highway System ... significant
improvements to public transport necessary to achieve national goals for improved air quality,
energy conservation, international competitiveness, and mobility for elderly persons, persons with
disabilities, and economically disadvantaged persons ... " (Intermodal Surface Transportation
Efficiency Act 1991, s 2).'
Under ISTEA funds are still allocated to the Interstate Maintenance Program and the National Highway System
($17 billion and $21 billion respectively in 1993-97), but a new Surface Transportation Program (with $24 billion
in 1993-97) is established under which both roads and transit projects can be funded (Australian Urban and
Regional Development Review, 1995, p 157-158). Section 133(d)2 of ISTEA also sets aside 10% of Surface
Transportation Program funds for "transportation enhancement activities" which means "provision of facilities
for pedestrians and bicycles" as well as a number of other activities relating, for example, to landscaping,
beautification, preservation and environmental mitigation (California Department of Transportation, 1993: A-
2/3).
The Surface Transportation Program is channelled through metropolitan planning organisations (MPOs) which
ISTEA requires to be designated in urban areas with populations of over 50,000. The role of MPOs is, among
other things, to develop long term (20 year) plans determining the mix of transport projects best suited to meet
the region's needs.
The effect of this arrangement is to separate the funders of possible future highway projects from the providers
of highway infrastructure and maintenance services, making it possible for funds that otherwise may have been
spent on highways to be spent on a variety of other possible programs and projects directed towards achieving
the stated outcomes of ISTEA. The Metropolitan Transportation Commission, the MPO for the San Francisco
Bay Area, in its Fifteenth Annual Report to Congress of 1994, reported, for example, that "225 projects have
been approved for funding (under ISTEA's Surface Transportation Program, Congestion Mitigation Program
and Air Quality Improvement Program) including the purchase of CalTrain locomotives; designated freeway
carpool lanes; TransitLink universal fare collection equipment; traffic signal and local arterial improvement
throughout the region; rehabilitation of the BART transbay tube; and the purchase of clean fuel buses".
(Metropolitan Transportation Commission 1994, p 17)
Further, ISTEA requires that these plans be "financially constrained", meaning that they will "include a financial
plan that demonstrates how the long-range plan can be implemented, indicates resources from public and
private sources that are reasonably expected to be made available to carry out the plan, and recommends any
innovative financing techniques as value capture, tolls and congestion pricing". (Metropolitan Transportation
Commission, 1994,p 52) Although the Metropolitan Transportation Commission previously prepared Regional
Transportation Plans, they were "viewed as inconsequential, generating little interest on the part of our
transportation partners, politicians and the general public ... (and) ... as a stand-alone effort, and not part of an
integrated long range plan ..." (Metropolitan Transportation Commission 1994, p 52). With the administration
of federal monies under the Surface Transportation Program (as well as under the Congestion Mitigation and
Air Quality Programs laid out in ISTEA), the Metropolitan Transportation Commission has come to see itself
as having a greatly expanded role, forming partnerships with local, state and federal agencies and having "the

THE URBAN CONTEXT
duty to oversee the efficiency and effectiveness of the region's transportation system" (Metropolitan
Transportation Commission pamphlet).
Moreover, by making a clearer distinction between the clients and the providers of transport services, ISTEA
also highlights (as with the reference to public and private sources above) that the means of transport are able
to be provided by a variety of agencies, public and private. This has significant implications for implementing
competition policy.
By vesting responsibility for decision making about major expenditure with a body that is not responsible for
one output, but for a range of outcomes, ISTEA has led the way in demonstrating the possibilities of this
approach. It is probably not too much to claim that ISTEA "turns the old system of decision-making on its
ear, and presents quite a challenge for institutions dominated by highway engineers". (Dittmar 1995, p 8). It is
conceivable that arrangements similar to those constructed under ISTEA could be made in Australia between
the Federal and State governments and at local government level to focus expenditure on outcomes rather than
outputs and to employ a wide range of mutually compatible measures to achieve these outcomes.
A local government example of a reorientation towards outcomes and a concomitant separation those
responsible for outcomes and the providers has been evident in the restructuring of the Perth City Council into
four smaller authorities:
"Through initiating the Business Redesign the City recognised that to successfully operate in the
current economic and political climate there was a need to implement significant change to its
traditional business processes and organisational structures
Rather than adopting a traditional local government model based on professional disciplines and in-house direct
service provision the City implemented a new way of working based on application of central themes, business
principles and a new culture the City adopted a strategy which:
Separates the role of the client/purchaser from the role of the provider and focuses on the role of the
organisation on specifying service requirements; and
Establishes independent, commercially orientated business units driven by business disciplines which are
progressively exposed to competitive tenders" (City of Perth, Business Redesign)
Similarly, Transit New Zealand has recently adopted a new organisation structure designed to "better serve the
needs of its partners in the land transport sector". A separate Programme and Funding Division, responsible
for "policy work on project evaluation, competitive pricing5 procedures and financial assistance as well as the
preparation of and management of the National Land Transport Programme" is a key feature of the new
structure. The general manager of Transit New Zealand is quoted as saying that these functions have been
separated from Transit New Zealand's state highway policy and management work in order to "better separate
our function as both a funder and provider of services" (Transit New Zealand, Monthly Newsletter, April
1995).6
With respect to the public transport sector in New Zealand, it has recently been said that:
"the central Government's role is now confined to making specific levels of funding available for
public transport, with local agencies focussing on the actual delivery mechanisms. The aim is to
deliver an outcome for the community as a whole, and not support a particular bureaucratic
structure in the style to which is would like to become accustomed". (Toleman 1995, p 14)
As well as better resolving tensions between managerial and technical aims, a "client/provider split" allows the
clients the freedom to choose from a range of means to achieve their outcome, more clearly allocates roles and
'T'OWARDS BETTER PRACTICE 319

responsibilities, clarifies the accountabilities and, potentially, leads to more satisfying work for those responsible
for achieving an outcome and accountable for having employed resources in pursuit of this outcome.
The freedom for public sector providers to choose from amongst a variety of means extends to their being able
to either contract from the private sector a service for which they believe better value is obtained than from the
equivalent public sector provider or, at least, to "benchmark" the public sector performance against private
sector indicators to ensure that resources are being used efficiently and effectively. Of course, there are often
social or other reasons why public sector organisations will choose to contract a service from public sector
providers, but the freedom given by a separation of those responsible for outcomes and the providers allows
them to ensure that they are getting good value for money. For road authorities, there would be a strong
imperative to at least "hive off" the road building part of their operations as separate business entities, while
maintaining policy and (non-operational) planning (those responsible for outcomes or the "purchasers") as a
"government monopoly", consistent with Australia's national competition policy.
As regards the relationship between State and local government in the funding/provision of road infrastructure,
while coordination between State and local government may be a less difficult problem than the issue of
obtaining an outcomes orientation for the organisations involved, it too needs attention. The coordinating
mechanisms that exist, such as the Traffic Committees in every local government in New South Wales
(comprising State and local government representatives), cannot easily take on the role of coordinating regional
planning decisions. In any case, it is likely that the aNew South Waleser to better coordination between State
and local government in this respect does not he in committee structures, where each level of government and
each agency will be inclined to defend its own organisation's "patch", but in planning processes which bring
together the various stakeholders as required to attempt to forge agreement as to the nature of the problem, the
desirable outcome and the range of means necessary to address the issues.
6.2.4Consultation
Consultation in planning generally and in the planning of roads is, unlike a decade ago, extremely widespread.
There is a great deal of good overseas advice on consultation for planners (for example, Creighton 1981;
Dotson, Godshalk and Kaufman 1989; Cogan, 1992) as well as excellent Australian material (for example,
Sarkissian and Perlgut 1994; Sarkissian and Walsh 1994). Most planning authorities now consult as a matter of
course. Many have prepared their own organisational guidelines for consultation (for example, New South
Wales Roads and "Traffic Authority 1993; Dick 1990; Loder and Bayley Planning Group 1991) and there is wide
agreement on best practice at a general level.
Having government organisations consult as a matter of course is an important achievement, but important
questions remain about how they consult and, underlying this, the purposes for which they consult. Some broad
trends and issues in this respect are considered below.
Some early background

In Australia public consultation in planning has been common since the late 1970s. Before then it had been the
exception rather than the rule to consult widely on planning matters. There were many reasons for the change
that occurred. In part, it was a response to public demand. In line with the rise of the environment movement,
there were persistent calls for "public participation in planning" to protect the public interest, sometimes against
the views of planners. This demand was sometimes acceded to in the form of legislative provisions requiring
consultation.
Progressively, consultation began to be a part of various types of planning exercises. To the extent that it
derived from a legislative requirement, it was usually fairly limited. Examples of this would be the "exhibition
and comment" procedures embodied in the preparation of planning instruments and in legislation and for
Environmental Impact Statements (EISs) (see Section 4.3.1 below).

THE URBAN CONTI?XT
Throughout the 1980s there were, however, many examples of consultation that went beyond that required by
legislation. These exercises were often experimental and were developed on a case by case basis. Generally,
although consultation was invariably a requirement, study briefs did not specify the purpose or intended
outcome of the consultation.
The major disadvantage of this approach to consultation was that it occurred on an ad hoc basis and was often
undertaken in an arbitrary fashion. The major advantage was that the consultation task was not separated from
other intellectual tasks, with the result that design professionals were directly involved with issues raised by the
community.
The professionalisation of consultation

The next period in the development of consultation in planning in Australia, mostly in the late 1980s, was
marked by an increasing separation of the consultation process from the planning or design process. Two forces
seemed to have shaped this. First, many organisations began to require a more predictable approach to
consultation in exercises for which they were responsible. They needed to be able to demonstrate that they had
consulted in a properly organised fashion and were accountable for this. Second, as public involvement became
more sophisticated, many professionals began to feel increasingly uncomfortable with the often confrontational
and discomforting public consultation process.7
This new approach to consultation was considered to be more efficient than the previous ad hoc approach.
There were increasingly formal systems and procedures in place to guide the consultation process and to provide
a basis for verifying that proper consultation had taken place.
Public consultation as issues management

Efforts to deal more successfully with the difficult and often contentious content of public consultation in
planning (and particularly the planning of roads) have seen the entry of "issues management" into the arena.
"Issue managers" are becoming increasingly involved in major road projects, specifically the preparation of
EISs, which invariably require some public consultation.
To some extent this has occurred because consultation processes had become large and unwieldy, requiring
more professional management. Many of the professionals involved in issues management have backgrounds
and expertise in large surveys and promotions.
The introduction of issues management into the this area has seen a significant shift in the nature of the process
and the product.
The EIS, by its nature, is a proponent's document, putting forward the proponent's idea in a positive light (see
Section 4.3.1 below). With the introduction of issues management into environmental planning, however,
consultation has tended to become confused with public relations. Ideas are put forward in the best possible
light, with relatively little regard on the part of issue managers to the content and implications of the proposal.
Issues management changes the nature of the planning process in the sense that the opportunity to modify and
refine proposals in the course of an EIS (in response to the consultation process) is diminished. Issues
management has a "freezing" effect on proposals. People skilled at issues management generally have little
expertise in the issues that are the subject of the EIS. Issues management in EISs is about managing the issues
rather than about managing the EIS process.
The debate about issues management in EISs is not a moral argument. It is not about whether issues
management is a "bad" thing and more conventional consultation a "good" thing. It is rather about the nature
of consultation processes in planning. Should the planning process be one which accommodates critical

judgement and a design process, one in which concepts develop progressively in relation to dialogue and debate,
or is it a process of persuasion?
Conflict resolution
One of the implications of taking an issues management approach to consultation, in EISs and other situations,
is that the opportunity to use the consultation process as means of dispute resolution is diminished.
One way of viewing consultation is in terms of its unravelling the conflict created by the "mixed" decisions
involved in planning. Planning decisions are mixed because they require both technical and value judgements,
the latter involving the "soft" reality of the social sciences (DeSario and Stuart 1987). More specifically, conflicts
emerge from differences in what people believe to be important (values); differences in what people would like
to see result from particular decisions (interests); different perceptions about what is likely to happen in the
future; and different views about the correct processes for making policy decisions (Dotson et al 1989).
Effective consultation can be seen as addressing these conflicts in an integrated way. It may involve consensus
building, negotiation and mediation. It is directed towards better decision making. Issues management is about
managing (avoiding) rather than resolving conflict.
An important reason why public consultation in planning has taken the turn it has (towards issues management)
is because debates about consultation are almost invariably about techniques rather than about the purpose of
consultation. Moreover, there is rarely any evaluation undertaken of the effectiveness of consultation programs
(some of which are extremely well resourced). The many debates about consultation techniques have eclipsed
what should be the central debate, that is, "what is the purpose of consultation in planning?". The way in which
consultation should develop will only be clear once the debate shifts from techniques for consultation to the
fundamental reasons for undertaking consultation in the first place.
6.3 Statutory Processes

6.3.1 Environmental impact assessment
Much of the controversy about roads in Australian (and other) cities concerns the provision of major new roads
or the major upgrading of existing roads. The environmental impact assessment (EIA) systems which are
intended to ensure that the provision of roads (and other infrastructure) meets established environmental
criteria have come to be viewed with suspicion. This part of the report considers some of the reasons for this
and possible means whereby environmental impact assessment may be improved in relation to major roads.
Current practice
In all States and Territories and under the Commonwealth Act, environmental protection legislation (or its
equivalent)2 sets up a process which in statutory terms begins with a development proposal such as a road.
There is no legal requirement for, for example, a road proposal to have emerged from a study of alternative
proposals, including other possible road proposals (although there is generally a requirement for the EIS to
consider "alternatives" (see below) and, in practice there is sometimes a proceding strategic assessment). The
starting point for EL4 is a fairly definite proposal. The relevant Queensland legislation (s 29 of the State
Development and Public Works Organisation Act 1971-81), for example, makes it clear that an organisation
responsible for approving development or undertaking works has the duty and power to consider the impacts
of the development, not a duty to consider which is the best development to address the problem identified.
The Environmental Impact Statement (EIS) invariably requires a full description of the proposal, rather than a
full description of the problem that the proposal is intended to address.
At the same time, an EIS for a major road project generally requires the examination of alternatives to that
proposal and the reasons for those alternatives not having been selected (Austroads 1993 p 19). By its nature,

THE URBAN CONTEXT
the EIS is encouraged to justify the original proposal, no matter what a consideration of alternatives may reveal.
Or the alternatives considered are so similar to the original proposal that any modification to the original
proposal in the light of this examination is marginal. Alternatives are often considered to fulfil the legal
requirement for this rather than as a comparison with the proposed development. Serious attempts to consider
fundamentally alternative proposals, including alternative road proposals, are not facilitated by the legislation.
(There are examples of the design of a road having changed significantly during the course of an EIS, such as
with Sydney's Eastern Distributor and M5, but these changes were due to exceptional political circumstances
rather than the nature of the ELA process.)
Also by its nature, the EIA process is essentially about "mitigating measures"- identifying ways in which the
environmental impacts of a proposal that are considered to be significant can be ameliorated. It is for this
reason that governments can make statements about a particular project proceeding before the EIS is
completed, for example, "we will have a third runway at Sydney Airport following an EIS". What is meant by
this kind of statement is that the EIS will determine ways in which the adverse environmental impacts of a
project can be ameliorated, rather than seriously considering alternatives to the project proposed, including
doing nothing.
Despite the rhetoric, EISs are therefore, almost without exception, about how a project will be undertaken, not
whether it will be undertaken. Under the New South Wales Environmental Planning and Assessment Act 1979
the process of "mopping up" adverse environmental effects may continue even after the "determination" of the
proposal, with the "activity" requiring modification to ameliorate "detrimental effects" so that it can proceed.
Under the Victorian Environmental Effects Act 1978 the Minister for Planning and Development provides an
assessment of proposed road projects to the Minister for Roads and Ports "who decides whether or not the
road proposal should proceed in the original or some modified form" (Austroads 1993, p 7).
There is a strong argument that it is not the function of the EIA system to accommodate what is effectively a
process of strategic planning. It can reasonably be argued that the EIA system is nothing more than an approval
system for big developments, similar to the systems that exist for the approval of small developments, for
example, buildings, and that ameliorative measures for EIS proposals are nothing more than the conditions of
consent that might be attached to any application for development. Under the West Australian Environment
Protection Act, for example, the Minister for Environment attaches conditions to the development which
become legal requirements for the project to proceed. When EISs are seen in this light, the requirement in most
EL-\ processes for alternatives to be considered is a diversion from the "main game", that is, the assessment and
approval process (with conditions) of a development proposal. (Also when EISs are seen in this light, the
situation where an authority is both the proponent and determining authority for a proposal remains a particular
problem.)
For the most part, urban road proposals subject to ELF are presented without a strategic context. Sometimes
they are part of a longstanding road plan for a region, but rarely have they been examined from a strategic point
of view, in the sense of having been compared with other proposals or measures, including other road
proposals, to address a given problem. In such cases (exceptions do exist, but they are rare), preparing an EIS
is often considered a substitute for strategic planning and what passes for strategic planning in an EIS is often
a post hoc justification of a plan that is already in place to provide a particular type of road along a particular
alignment. The "justification" of EIS proposals required under the New South Wales system, for example, is
often undertaken in the absence of adequate analysis of the bigger regional picture and, as such, is often
necessarily an attempt to legitimate a conclusion already reached rather than a conclusion reached through
analysis and judgement. Austroads has already appreciated this problem:

"Current evaluation tools available to State road authorities are generally unable to incorporate
network wide issues. This is a major deficiency as road authorities need to understand the
implications of network strategies and their effectiveness in supporting community goals ...
Demands by the community and politicians for individual projects to be evaluated within their
wider strategic context often cannot be aNew South Walesered. " (Austroads 1994, p 15).
The Integrated Transport Strategy for the Greater Metropolitan Region makes the point that, in New South
Wales at least, EISs are not intended to be a substitute for strategic planning:
"the intended role of the ... EIS ... is to examine the environmental impacts of an identified
activity or development and to facilitate mitigation of any identified effects, rather than a full
appraisal of all possible alternatives. Assessment of alternatives is vitally important but is properly
the role of the strategic planning process rather than the EIS". (New South Wales Department of
Transport 1995, p 70).
There are two main reasons why the examination of alternatives in an EIS cannot be an adequate substitute for
strategic planning.
First, as already noted, the ELA process is in essence a development approval process. It embodies a proponent
and a development proposal, both of which are antithetical to the idea of strategic planning as a critical
consideration of various possible approaches to a problem, including, in the case of an accessibility problem,
various possible transport and non-transport solutions in different combinations. The meaning of "proponent"
in the ELA context is more one of the body that "argues in favour of a proposal" than that which merely "puts
forward a proposal" (which means that within the EIS system it is not unreasonable that EISs are prepared by
the proponent). Moreover, the proponent is generally one organisation which, in the case of transport, means
that it is either the organisation responsible for providing roads or that responsible for providing rail. There is
therefore an inbuilt tension between the EIA procedure and attempts at multi-modal planning for transport and
the use of non-transport means to achieve an outcome such as accessibility.
Second, given the structure of government, the proponent is invariably an organisation that is responsible for
providing one of a number of possible means to address an issue. It should not be surprising that road
authorities generally conclude, through "strategic planning" they conduct (as part of an EIA process or not),
that a road-based solution is preferred. Organisations responsible for providing other means could be expected
to find in favour of providing more of the means for which they are responsible. Even where road authorities
incorporate means for which they are not primarily responsible in their proposal (such as with the inclusion of
a busway on part of Sydney's M2), this is viewed with some scepticism. Thoroughly considered multi-modal
proposals are unlikely to emerge from an organisation that has responsibility for only one mode.

The view that EISs are not a substitute for strategic planning and that strategic decision making should precede
the presentation of a proposal for environmental assessment is not new. In Western Australia, for example,
there is currently a Bill before Parliament that allows for assessment of Planning Schemes as distinct from
individual projects. Also the Western Australian Environment Protection Authority is considering legislative
change to introduce Strategic Assessments undertaken in a similar manner to that envisaged in the current Bill
on Planning Schemes. These developments would assist in addressing the problem of EISs being focused on
one proposal. These concerns are echoed in the OECD Scientific Expert Group's recommendation that
strategic environmental impact assessment (SETA) be undertaken at a more strategic level than is currently
usually the case with individual road projects (see Black, 1995). The key question, however, which is "what kind
of strategic planning?" still needs to be addressed.

THE URBAN CONTEXT
Strategic planning in the sense of one output-oriented agency providing a view as to how it would solve a
problem is not very useful. It is to be expected that road authorities doing strategic plans will generally provide
an account of the way in which the provision of additional road capacity will address a set of problems, even
if there is some consideration of other physical and non-physical solutions. The New South Wales State Road
Network Strategy is a case in point. It is an excellent document of its kind, but is essentially about the role of
roads in a future New South Wales. It cannot be expected to achieve a whole-of-government perspective.
A fundamental principle for strategic planning to create a context for the control of major developments (EISs)
is that they should take a whole-of-government approach. In New Zealand a whole-of-government approach
is fundamental to the new National Land Transport Strategy. In Australia, while ever the structure of
government is dominated by organisations which are responsible for one kind of solution, this will be more
difficult to achieve, but without a whole-of-government approach, strategic plans are likely to reflect the
interests and concerns of the organisation preparing the plan. Even where there have been efforts made at a
whole-of-government approach, such as in New South Wales, there is still currently a State Road Network
Strategy, a State Rail Strategic Plan, an Integrated Transport Strategy, as well as a metropolitan strategy (Cities
for the 21st Century), all reflecting the perspective of the agency primarily responsible for their production.
New South Wales has come a long way in strategic planning in urban affairs, but there is some way to go. Work
done on an Integrated Regional Transport Plan for South East Queensland is another example of major
progress in taking a whole-of-government approach in strategic planning, but this exercise is in a relatively early
stage (Queensland Government 1995).
In brief, different kinds of State organisations are going to be required to be making different kinds of
proposals, for assessment in EIS processes, for EIA to develop its proper place in relation to strategic planning.
At local government level, the problem is similar, although not of quite as much importance for providing a
framework for major projects. But as at State government level, strategic plans have tended either to be town
planners' plans, social workers' plans, or engineers' plans, rather than plans for the whole of the local
government area and its council.
A further and related principle for strategic planning of the type that may provide an adequate context for EISs
is that it should address the issue of strategic choice. Too often, strategic planning undertaken by road and other
authorities has not clearly spelled out the options for governments in pursuing one type of future direction or
another and the relative implications, advantages and disadvantages of pursuing one or another course of
action. The question of governments having to make choices from amongst a variety of options, which have
different advantages and disadvantages for different groups, has not often been openly addressed. Too often it
has been implied that everything is possible, that there are no trade-offs to be made and that there are no
winners and losers, only winners.
In transport there are invariably questions of strategic choice relating to different futures and involving different
kinds of values - choices that governments have to address an identified problem, the costs and benefits of
which will be different and differently distributed, and which will produce different kinds of results. Until
strategic choices (and the values informing them) are identified and analysed in strategic planning processes,
strategic plans will continue to suffer a lack of credibility.
A third related principle for strategic planning concerns the relationship between identified objectives and the
solutions specified to meet these objectives. As long as objectives are specified to fit easily available solutions,
claims for strategic planning cannot properly be made. For example, an accessibility problem may be more easily
and more conventionally solved by a supply side solution, without reference to managing demand. However,

unless a full "kit of tools" is potentially available, including financial and management tools, strategic planning
will continue to be supply led and incomplete. The Integrated Transport Strategy for Central Sydney (Accessible
City) is guilty of this in that it avoids the issue of pricing access to Central Sydney. Similarly, although the terms
of reference for the Lower Hunter Integrated Transport Study (essentially a public transport study) referred to
"pricing and financing aspects" and "organisational/institutional aspects or reforms needed ... to support the
preferred transport option(s)", these aspects receive only the most cursory treatment in the final report (New
South Wales Department of Transport 1995). The discussion paper on an Integrated Regional Transport Plan
for South East Queensland refers to "promot(ing) community debate and consideration of congestion pricing
strategies, such as those which have been introduced overseas" (Queensland Government 1995, p 22), but goes
no further than this at this stage.
6.3.2 Transit oriented development

Existing practice
It is often recognised that a key aspect of achieving transport related objectives is control over the way in which
land is developed. In this connection, it is sometimes argued that land use change should be mandated, that is,
that statutory land use controls should be changed to achieve desirable land use outcomes. Little contribution
has been made to this debate by critics of the development control process and, as a result, it has been relatively
poorly informed by the development control perspective. Some of the issues involved in attempting to mandate
land use change in relation to transport developments are discussed below. The example used is the common
one of trying to achieve higher development densities through statutory change although it is recognised that
higher densities are not necessarily a preferred outcome from the point of view of accessibility or environmental
quality.
The principal reason why it is difficult to achieve higher densities through statutory land use control is because
the fundamental purpose of the development control system is to achieve precisely the opposite effect, that is,
to prevent the realisation of market forces in circumstances where there would otherwise be a demand to
achieve a quantum of development in excess of what is considered desirable for the site. Development control
legislation is essentially designed to reduce what the market might otherwise produce.
It is therefore a most difficult task to attempt to use legislated land use controls to achieve higher development
densities than would be achieved under normal market conditions. Another way of putting this is that it is
impossible to use legislation (as against subsidies) to require landowners to invest in development that does not
give the required return. All that might be done is to prevent any development from occurring that does not
produce the desired densities. In such circumstances, the chances of no development occurring are at least as
good (and probably better) as the chances of achieving higher density development.
Other reasons why it is difficult to mandate land use change include the effects on development prospects of
physical conditions such as ownership and title patterns, the size of the site or the existing form of
development.
Sometimes the pre-conditions for achieving higher density development are simply not there, regardless of how
desirable it might be, because the pattern of subdivision and/or ownership of property (with possible
implications for site size) or the titling arrangements make change in anything other than the very long term
almost impossible to achieve. This is evident in many residential areas around rail stations where a prevalence
of strata titles makes it most unlikely that significantly higher densities will be achieved.
Similarly, the existing form of development, while not higher density, might be the "highest and best use" for
the site, as a result, for example, of its scarcity value. The presumption that property owners will always benefit
from the potential to achieve higher densities in accessible locations is not correct.

THE URBAN CONTEXT
The existing form of development might also be one that is subject to restrictive controls because, for example,
of its heritage value. The notion of "heritage value" may be extended to simply reflect the way people feel about
their existing environments - no amount of legislation to encourage higher density development will overcome
"political" constraints of this sort.
The reason for listing these difficulties is not to detract from the worthiness of seeking to increase development
densities in relation to transport facilities, but to point out that in the "kit of tools" it is one of the more limited
means and therefore should not be promoted to the extent that it is, to the exclusion of other, potentially more
powerful means.
Other issues which are relevant in this context are referred to in the recent report of the Prime Minister's Urban
Design Task Force, via that development generally involves "a wide range of controls under different legislation,
... (requiring the applicant) to submit separate applications, seeking separate approvals that are subject to
separate appeal systems ... This regulatory system ... can impose penalties and restrictions on certain types of
development and on good urban design" (specifically the kind of development sought to support public
transport facilities) (Prime Minister's Urban Design Task Force 1994, p 37-38). Lower density environments are
much easier to achieve, which partly explains their prevalence.

Much good work has been done recently on the relationship between the design of urban environments,
specifically new urban environments, and their transport systems, in the sense of removing disincentives (in
what has become conventional design) to the use of public transport and facilitating the use of non-motorised
modes.
This work is, however, closely associated with the idea of achieving land use change through legislative means.
Debate about this aspect of a relatively new field needs to be encouraged to promote a more critical
understanding of the limitations of using legislation in this way and, more importantly, to better locate land use
change in relation to transport amongst the full set of instruments that might be used to achieve agreed
outcomes.
At the same time, there are important improvements to be made to the systems of land use control to allow
better urban design outcomes to be more easily achieved. A better control environment would make it easier,
administratively, to achieve the outcomes sought. Ways of achieving this in Australia are detailed in the Urban
Design Task Force report referred to above and include such actions as redesigning the systems that control
development to provide "a system which permits a single application, ... a single approval, a single appeal and
(controls) published in a single document, not separated into different functional documents, such as planning,
heritage, environment" (Prime Minister's Urban Design Task Force 1994, p 39).
In New Zealand all consent and regulatory matters have been brought into a single framework under the
Resource Management Act. There is a mandatory forum for proposals to be considered by all regulators in
terms of this single statutory framework.
Better development control systems will not help define the outcomes sought, but they will make them easier
to achieve. They are part of the package of institutional arrangements that need to change to help improve the
quality of our urban environments, including the place in them of roads.

7 RECOMMENDATIONS
We have identified many opportunities for achieving the outcomes driving good urban management. In this
section we distil the essential characteristics of the debate as a set of strategies and actions to address the future
of urban transport and the role of roads in this process. Austroads and its constituent organisations are
encouraged to participate in the achievement of the outcomes promoted by the recommendations.
The community of interests should be encouraged to be engaged in a debate about He choices and urban
structure, armed with useful facts to assist in understanding the complex relationships between particular
policy instruments, relevant performance criteria and overall goals of urban management. The linkages
between these elements of good approaches to managing urban areas need to be reinforced constantly, for
fear of the debate returning to a narrow focus centred on specific modal means to the neglect of meaningful
outcomes.
Figure 7.1 Integrating outcomes, means and measures of success
The development of a strategic focus within which decisions are made on outputs to achieve desired
outcomes is much needed, at a level which goes beyond transport decisions as the only or preferred way of
`solving' transport problems. Broad participation with a strategic focus responsive to community needs,
political reality, and a balance of regulations, standards and prices is promoted.
We support the need to develop and implement processes which permit the community of stakeholders to
participate in setting the agenda, exploring options and impacts, and contributing towards finding acceptable
responses to the needs for mobility and amenity.
The community is concerned about safety, traffic congestion, air pollution, global warming, and the use of
fossil fuels. The debates on the roles of various modes of transport should be directed to a consideration of
these issues and not to cries for greater use of particular modes. The preferred modes should evolve from
this debate rather than condition the debate per se. Rational choices should not be suppressed by blind
(modal) commitment. We support the need for an annual benchmark survey of community awareness of and
attitudes to important road facts which is publicised on a national basis.

THE URBAN CONTEXT
The transport debate and the role of roads needs to be opened up much more to all who are interested.
Despite the strong and growing vocal voice of opponents to large infrastructure projects such as toll roads
in urban areas, the last 30 years have seen a major Osea-change' in opportunities for transport user groups,
community-based organisations and interest groups representing environmental concerns to participate in an
ongoing democratisation of transport decision-making. There is still much room for progress, but there is
evidence of a substantial opening up of the process.
Efficient pricing of all transport services, passenger and freight, is necessary if there is to be any noticeable
change in the amount of travel as well as to alter the balance of use in favour of technologies which perform
better on the selected performance criteria. There is a need to identify principles for determining locations
where congestion pricing is appropriate, giving examples as well as guidelines on how pricing might be
initiated. We recognise however that pricing alone cannot secure outcomes which are necessarily compatible
with all the goals of urban management - rather pricing combined with complementary tools such as
physical planning (for example, pedestrian central areas, traffic calming in residential streets and innovative
design standards) is promoted in the interest of civic pride.
We support a program to promote further research into alternative pricing tools, evaluating a mix of two or
more charging methods in order to achieve high efficiency in the road transport sector while attaining a cost
recovery target. A road pricing system worthy of further assessment consists of three parts: (a) a system of
graduated per-kilometre fees for trucks based on axle weight which will improve efficiency in the use of
roads and promote an optimal investment in the durability (thickness) of the road system; (b) congestion tolls
and environmental externality charges which will help to improve the efficiency of the use of road capacity
for urban roads as well as achieve an optimal investment in road capacity (lanes); and (c) a fuel tax licence fee
combination for passenger vehicles on uncongested roads.
There is an urgent need to promote the building of analytical tools and skills through a more focused and
co-ordinated education and research program, giving examples of the tools and skills needed and the
processes and program for implementing this action.
Specifically, we must promote analytical planning and the continuing need to integrate location, travel and
vehicle type choice considerations in predictive tools to ensure that the impact of all sources of externality
(noise, emission, visual impact etc) are accommodated in a framework which recognises the possibility for
investments or policy implementation which are not necessarily more roads or even an adjustment in
transport infrastructure, but rather could include non-transport policy to "solve" a transport problem.
The skills base of most organisations involved in urban affairs is narrow and that part of their developing
more of an outcome orientation depends on their broadening this skills base, so that their decision making
is not dominated by personnel highly familiar with one set of responses to a given problem. Broadening the
skills base can be obtained in two ways: by employing a range of professionals with high level skills in areas
other than those with which the organisation is most familiar or by extending the skills of those professionals
conventionally most closely associated with the organisation. Extending the skill base of road organisations
by employing other specialists has been promoted in this report, as this appears to be the most effective way
in which personnel with high level skills in a range of areas can be incorporated into existing organisations
dominated by infrastructure professionals. The option of improving the skills of existing personnel has
potential benefits and should be encouraged by Austroads by means of providing financial support to
develop the high level of skill that would come from professionals trained exclusively in these areas. We
support the need to promote multi-skilling and a mix of professionals in team-based structures directed
towards achieving specified outcomes. The Institute of Transport Studies: A Commonwealth Key Centre
within the Graduate School of Business at the University of Sydney and the Department of Civil

Engineering at Monash University has recently been recognised by the Federal government as the nation's
centre of excellence in the provision of the mix of programs required to train the new generation of
transport planners and managers.
There exists a major problem in the availability of resources to provide a real opportunity for all communities
of interest to participate in the planning process. When factual information becomes a major weapon in the
debate, the barriers to both accessing such information and indeed creating new information are immense.
Herein lies one of the major irritants in the open-participation process, made worse by having primary
information collected, processed and interpreted by a government agency who is acting as the proponent of
a particular program of change. There is a real opportunity for the road authorities to disentangle themselves
from this interlocking paradigm that guarantees confrontation and wasted resources. The integrity of
information is constantly at risk under the current institutional paradigm. A detailed inquiry into the
appropriate mechanisms for funding, collecting and disseminating information is recommended.
We support a program to promote a need for more transparent information resources which are deep,
powerful and convincing as a description of what is actually happening in the performance of the transport
system with respect to economic and social development and equality of opportunity. The surge of debate
in recent years on cleaner air and greater energy efficiency in transportation has been significantly enhanced
by the availability of more extensive and reliable data to help the debate and to dispel old myths. The strong
support for air quality data must be matched in all areas of impact of transport systems.
The level of awareness of alternative work practices such as teleworking/telecommuting and its beneficial
derivatives for the transport sector, and road investment in particular is required. The potential to switch
from 10 car trips per week to 8 car trips per week for many commuters is greater than switching between 10
car trips per week and using public transport for 2 car trips per week or switching 10 car trips to PT.
We encourage activities in government directed towards specifying the intended outcomes of government
and the making of institutional arrangements consistent with focusing on these outcomes.
We recommend an approach to strategic planning which takes a whole-of-government approach, which

addresses the issue of strategic choice and which emphasises the availability of financial and management
tools, as well as physical measures, to achieve intended outcomes. Setting targets in terms of a set of
performance measures which establish success in promoting the goals of urban management is essential to
practical policy making.
Further work on the relationship between the design of urban environments, including existing urban
environments, and their transport systems to remove disincentives to the use of public transport and
facilitate the use of non-motorised modes should be encouraged.
Wesupport improvements to existing systems of land use control, including improvements to development
control systems to provide for single approvals and the publication of controls in a single document.
We encourage debate about the future of cities and towns and identification of solutions which provide a
better fit between roads, land use and the environment.
We encourage the development of integrated policies for relating activity to accessibility, especially in relation
to regional centres within urban areas and employment.
We encourage the protection of local communities and activity centres by creating precincts in which traffic
is subservient to the safety and amenity needs of the community and visitors, and treating major routes as
corridors in which adjoining communities and development are protected from the impact of traffic.

THE URBAN CONTEXT
We encourage the planning and management of major corridors as integrated, multi-purpose routes for long
distance regional transport needs including public transport, and appropriate adjoining land uses and urban
design.
We encourage initiatives to improve the relationship between roads and the pedestrian environment along
lesser traffic routes, especially along sub-arterial shopping strings and the main streets of country towns.
7.1 Specific issues related to roadsin the urbanenvironment

With much of our urban environment already in place, the challenge is how to manage better the existing roads
and any additions at the margin. Success is not measured in efficient road networks and environmental
protection alone, but also by the effectiveness of processes which involve the community. Better practice
recognises the following issues.
7.1.1 The role of transport systems in the household sector in guiding changes to the urban form is
declining
Today's urban areas are marked by well-developed transport systems. The transport system is likely to have less
effective means for shaping urban form in the future because:
the transport system in most urban areas is highly developed and so the relative impact of even major
infrastructure investment will be small;
the built environment has a very long life; most infrastructure survives 50 years or more;
transport is of declining importance in the location decisions of households in particular and to a lesser
extent firms. Transport costs make up a relatively small proportion of household expenditures, and
increasingly flexible work arrangements are likely to make access to workplaces even less important in the
future.;
Information-based firms are footloose as well as making up an increasingly large share of total economic
activity. Some sectors of industry such as regional shopping centres and major entertainment complexes,
however, remain heavily influenced by major transport investment.
Implication: Transport policy efforts would have to be very extreme to have a significant impact on urban form
- it is a blunt instrument in the ranges contemplated given political and economic reality. The corollary is that
policies directed to land use (investment incentives, pricing) will be the prime means of changing urban form.
However, transport policy cannot afford to ignore the impact of changes in urban form.
7.1.2 The urban area of the future is likely to exhibit a particular pattern of "compactness"
The major cities of Australia are most likely to exhibit physical forms best described as "cities within cities",
with regionalisation occurring throughout the metropolitan area. The most noticeable change is likely to occur
at the urban fringe. "Edge cities" will evolve as regional centres redefining density nodes and providing another
point of reference for growth in employment, residential population and economic activity. These nodes are
most likely to be of medium density with adjacent low density activity. The economic and social necessity for
more high density urban form is unlikely to exist. Studies such as the Victorian externalities study and the work
in CSIRO (for example, Roy et al 1995) provide supporting evidence for this conclusion.
7.1.3 The automobile is becoming "greener": automobile technology has a major role to play in
improving environmental quality
Technological innovation linked to automobiles and trucks alone can make a significant contribution to
containing and reducing local air pollution and greenhouse gas emissions. However there would be a very
significant time lag in bringing the fleet in Australia up to a new standard. Achieving significant improvement in

vehicle technology such as fuel efficiency gains and cleaner fuel necessitates mandated minimum corporate
average fuel economy (CAFE) legislation as well as minimum corporate fuel type mixes in new vehicle sales.
Very large increases in fuel excise may have the same effect, but it is politically more complex and inequitable.
In the United States we now see American cars almost as fuel efficient as cars sold in Japan and Europe, despite
the much lower petrol prices.
7.1.4 Pricing will need to be further promoted to complement technology improvements

To ensure that the level of total vehicle use is sustainable, the introduction of more severe pricing through a
general fuel excise, congestion pricing and parking pricing may be required. An appeal of pricing is that it
generates useful revenue which can be disbursed fairly to (a) improve road space (b) give priority to users of
roads who have economic or other precedence (for example, high occupancy vehicles, freight vehicles); (c) to
improve non-road based public transport; and if less road space is required to satisfy (a) and (b) then an
enhanced environment (for example, more open space). It is also the way towards balancing the supply of road
space with demand, for an economically and financially sensible outcome.
A mix of pricing and non-pricing policy tools provides a realistic way ahead, with the use of targets as a practical
means of securing progress in respect of compliance with the goals of urban management. Pricing is one of a
number of policy instruments which has a role in meeting targets such as a percentage reduction in greenhouse
gases, percentage improvement in corporate average fuel efficiency, and absolute reduction in local air pollution.
It is inherently unlikely that any one tool alone will be as effective as complementary tools in combination.
7.1.5 lexible public transport needs more serious consideration

There are many ways of providing improved public transport - heavy and light rail, bus systems, fixed route
buses, hail-n-ride buses, taxis etc. Greater flexible public transport is required to serve deep into suburbia if we
are to see any noticeable increase in the market share for public transport. Roads are used by public transport;
indeed they are arguably the most flexible form of infrastructure in accommodating mass public transport, and
are capable of assisting public transport in adapting to changing levels of traffic density for relatively low cost.
Furthermore, the road based public transport system can cater best for the many diverse transport needs of the
disabled ranging from scheduled buses designed with low floors and wheelchair access to specialised taxis and
community transport buses. A challenge for urban society is to find appropriate roles for bus systems and rail
systems. Busway or rail systems for their own sake (the means paradigm) is not a rational way of determining
compatibility with the overall goals of urban management. Remember that the road system provides the
infrastructure to carry more public transport users than the rail system.
The challenge for urban society is to understand the arguments supporting bus systems relative to rail systems
and to establish circumstance in which it makes more sense to support rail systems. Rail systems for their own
sake (the means paradigm) is not a rational way of determining compatibility with the overall goals of urban
management.
7.1.6 Work practices can have a significant influence on total travel by time and place
Flexible work practices both in space and time (for example, telecommuting, compressed work weeks) are very
promising ways of reducing the amount of travel associated with work trips, but do increase the possibility of
some people living further away from their jobs and more non-work travel activity. However these instruments
spread the traffic in space and time, improving the utilisation of existing road capacity (in particular) and
reducing or delaying the need for more road and rail capacity.
7.1.7 Social sustainability should not be dominated by environmental sustainability

We need to place more emphasis on social sustainability - we are in real danger of letting the current
"popularity "òf environmental sustainability dominate both the need for economic development and social
sustainability.

THE URBAN CONTEXT
7.1.8 Do not forget the growing importance of business and non-commuting travel activity in
shaping our cities
Strategies for reducing vehicle kilometres should reconsider the predominant interest in commuting activity and
give more emphasis to business and non-commuting travel as vehicle kilometres in this class of travel increase.
The Australian Road Research Board has calculated the vehicle operating cost resources consumed in the
Australian road transport sector in 1991 and found that out of a total of $37.8bn spent in cities, $12.9bn is spent
in business travel by car, $5.5bn in business travel by light commercial truck. This represents the single largest
category of road travel expenditure, considerably larger than the traditional commuting trip to affixed
destination. With this market being almost totally dependent on the use of the automobile, the gains to the
environment from studying ways of making the automobile more sustainable in this market is a high priority.
7.1.9 The air we breathe in urban australia is not so bad

The air quality of Australian cities tends to be relatively unpolluted compared with cities in the United States
and Europe There is currently no evidence that fine particles are above safe levels. The pollutants Nox, CO and
S02 do not currently, and are not expected within the foreseeable future, to exceed acceptable levels. There is
however always room for improvement and efforts must continue to seek out an even higher quality for the air
that we breathe. The major contributing chemicals to local air pollution, while still present, are being reduced
significantly as a result of a mix of improved vehicle technology and inspection procedures. Concentrations
of most air pollutants are now at "acceptable levels", for which the evidence indicates no health risk, although
there may be localised extreme problems at times. Carbon dioxide, the major source of greenhouse gas
emissions is still on the rise, however. Travel demand management strategies involving financial disincentives are
essential if total automobile use is to be contained to sustainable levels.
7.1.10 Much of our urban environment exists and adaptation will be a long-drawn out process.
Integrated strategies can make a difference, but outcomes will be incremental and often slow to take effect,
especially at the regional level. Key issues at the regional level are how to adapt urban regions to provide for
growth and change while moving towards more sustainable and equitable cities. Key issues at the local level are
how to create precincts, particularly in established areas, with a higher degree of environmental protection than
they have at present. Key issues at the traffic route level are how to ensure that corridors for movement are
protected while preserving the needs of adjoining owner and occupiers and adjacent communities.
7.1.11 Isolating freeways and toll roads to assess their net contribution is very misleading
One of the major reasons for freeways is to eliminate much traffic from local streets and sub-arterial roads in
order to make our road system safer for drivers, passengers, pedestrians and local residents - both households
and firms. The idea of freeways as traffic corridors so that activity precincts can be made safer, quieter and more
pleasant is a very real reason for their existence. Much of the traffic using freeways is diverted from the existing
road network, with a maximum of 2-5% generated by the road investment. The benefits of freeways when
seen in this broader network context more than outweigh the costs of their provision, including social and
environmental costs. Well-defined road corridors open up opportunities for serious busway systems (with
suburban connectors) and truck routes.
It is now well recognised that the evaluation of infrastructure needs must be undertaken within a framework
which emphasises the full set of social costs and benefits in terms of the primary goals of urban management
- economic growth/efficiency, equity/social sustainability and environmental sustainability. Positioning the
financing decision within this setting will encourage a more balanced assessment of alternative ways of
satisfying these broad goals, of which non-infrastructure solutions must compete alongside of infrastructure
projects.

7.1.12 Much progress has been made in making the road environment safer
Regulatory actions in recent years have yielded significant benefits in terms of improvements in the accident
rate. Improvements in vehicle safety, road user education (especially advertising linked to seat belts, drink driving
and cyclist helmets), black spot and safety audit programs have all been positive initiatives.
7.1.13 Much progress has been made in making trucks cleaner and safer but there is still much to
achieve
Improvements in energy, local air pollution and noise levels associated with trucks have largely been delivered
through innovation in truck technology. Orbital roads for truck re-routing integrated with a land use plan for
the location of freight facilities, quieter road surfaces and larger vehicles all reduce the incidence of truck activity
and hence increase traffic safety as well as improve the productivity of freight movements. The contribution of
trucks movements in the production of greenhouse gases however is looming as a more serious problem than
the contribution by the automobile.
7.1,14 Bringing road providers into line with providers of any urban goods and services
We promote reorganisation of the institutional role of a road authority. Such authorities should be allowed to
collect the revenue from internalisation of external costs from vehicle registration and fuel levies etc (or other
pricing mechanisms), and as now, would need to gain approval for roads projects from environmental and other
relevant government agencies, by appropriate provision of financial payments if necessary to meet the costs of
amelioration of impacts etc. Under these circumstances road authorities would be no different from any major
developer, or corporatised government bodies in respect of major projects. Although road authorities would still
lack the profit motive for maximum efficiency, this approach would lead quickly to road authorities developing
and applying the skills promoted in Section 6.
7.1.15 Making road authorities more business-like and customer focused

There should be a separation between the funders of transport related outcomes and the providers of transport
outputs to help ensure that the provision of the means of transport is not distorted by the fenders being able
to provide only one means of transport, but that they focus on the ends or outcomes. How does this relate to
the concept of being businesslike and having a customer focus? To the extent that a customer focus involves
providers becoming more businesslike, it is perfectly compatible. The notion of a funder/provider split involves
the idea that there may be a range of potential providers, providing their services on a competitive basis. A
funder/provider split would require that existing provider organisations are more businesslike. To the extent,
however, that the customer focus may involve "road agencies (being) given financial autonomy through road
tariff revenues and managerial autonomy to operate as a business" (Cox 1994, p. 129), there would seem to be
a conflict with the funder/provider model. Unless control over the funding of outcomes is retained in separate
hands, the problem remains of organisations being responsible for funding the means rather than the ends. This
problem does not seem to be solved by having separate funding of roads regarded as community service
obligations while mainstream funding of roads is controlled by the businesslike roads organisation.
7.2 Specific issues related to planning and urban design strategies

7.2.1 Integrated strategies are needed for three situations
Responsibilities for road, land use and environmental planning are divided between different authorities.
Outcome-based planning approaches are needed to develop and implement integrated strategies. There are
three fundamentally different situations which require different management approaches: regional issues, local
issues and issues related to major routes. The distinction between regional and local issues reflects the different
objectives, policies and responsibilities at these levels, while issues related to the planning of major routes and
adjoining land use often has both regional and local dimensions.

THE URBAN CONTEXT
There are three important relationships which determine the approach to planning, design and implementation
1 The relationship between development (or "land use") generating demand for movement (trips) and the
transport system representing the supply.
2 The relationship between accessibility provided by a transport system and the land use decisions based upon
it.
3 The relationship between use of the transport system and the environment in which it operates.
The application of these interactions is relevant in each of the three situations, but the key issues vary.
7.2.2 There are different key issues for each of the three situations
The planning task at the regional level is how to adapt urban regions to provide for growth and change while
moving towards more sustainable, efficient and equitable cities. Demand and supply planning and integrated
management of accessibility and activity of regional centres are key issues in all cities and towns; while the
protection of the regional environment is becoming especially important in the larger urban regions
Similar issues arise at the local level but at a different scale. A key issue at the local level is how to create
precincts, particularly in established areas, with a higher degree of environmental protection than they have at
present
Key issues at the traffic route level are how to ensure that corridors for movement are protected while
preserving the needs of adjoining owners and occupiers and adjacent communities.
7.2.3 Land use and transport strategies should be directed towards sustainable urban forms
Land use and transport strategies should aim to reduce the number and distance of vehicle trips and make better
use of the different transport modes. For example, services and facilities should be located close to where
people live and labour intensive employment should be concentrated in major regional centres, served by
regional and local public transport routes. Alternatives to the traditional "quarter acre" block should be provided
and encouragement given to selective increases in residential densities such as small lot development, infill
development, dual occupancy and multi-unit development. In large urban areas, the development of multi-
purpose urban nodes reduces the need for single purpose trips and makes better use of the transport
infrastructure. Growth corridors, orbital routes planned as mull-modal roads, "transit-oriented developments",
or "urban villages" near railway stations, tram and bus stops are also part of such a strategy.
7.2.4 Strategies related to a better integration of accessibility and activity

Accessibility is a key tool in integrated planning, but raises the question of accessibility where, for whom, where
and when. In some areas accessibility may need to be increased, but in others decreased (such as through traffic
in residential streets). Accessibility may need to be targeted by area and transport mode so that locations with a
high level of public transport accessibility are available and reserved for high density labour intensive
employment. Conversely, locations with a high level of arterial road accessibility should be reserved for activities
with a dependence on vehicle access (such as trucking businesses).
7.2.5 Zoning using conventional land-use categories may not be appropriate

Instead, zoning should be based on the accessibility provided and the mobility characteristics of the people and
businesses which use a site or area. Land uses and development densities in areas near public transport nodes
should maximise the benefits of such a location. An approach which recognises the important distinction
between public transport accessibility and vehicle accessibility provides a better basis for integrated land-use and
transport planning than conventional land-use zoning.

In all cities and towns, there is a need to protect local environments from through traffic and the environmental
impact of traffic. A key strategy is the identification of precincts for environmental protection and the planning
of traffic routes as corridors in which the traffic function and adjoining community are considered together.
7.2.6 A road environment classification can provide a better basis for roads in the community.
A road hierarchy is often used to describe the different functions and performance characteristics of urban
roads. The model is simple to apply, but there often strong community reactions to proposals for new
development and upgrading of existing roads and streets.
A road environment classification can provide a better basis for roads in the community. A simple classification
of roads and streets and their environments consists of three types of road/environments. The first type (Type
I) are major traffic routes, where the land-use environment must be or must be made to be compatible with the
transport function of the road. Arterial roads are part of this category. The second type (Type II) are traffic
routes, such as sub-arterial roads and major collector streets, where the land-use environment may require
adaptation of both the traffic performance and the environment, especially in shopping strings. The third type
of road environment (Type III) are local streets where the environment is dominant and the traffic subservient.
7.2.7 A shift from road planning to integrated corridor planning

An integrated planning approach for type I road environments can reflect the regional traffic function and
ensure that adjoining land use environment is compatible with it. Some type I corridors should be planned and
developed as regional truck routes. The need for noise protection determines the use and design of the road
environment. Routes for hazardous goods require a similar approach to land-use planning and design.
An integrated approach is also appropriate for type II road environments where both the traffic and frontage
functions are important and greater weight must be given to the needs of pedestrians and cyclists.
Land use and building design should be linked to the type of corridor
Roads as spaces are defined by the buildings along them and roads as activity spaces are defined by the nature
of the land uses along them. Buildings and activities along established roads can constrain their function and
design, while the function, width and design of the road reservation should influence the type of land-use
activity and design of buildings. Notwithstanding the wide range of combinations, there is a relationship in all
of them which should be reflected in urban design. Road environments should be designed as an experience
in motion. Different road environments are associated with different experiences in motion. Type I corridors
will usually have vehicles travelling at higher speed than vehicles in type II corridors and this should be reflected
in the scale, spacing and siting of buildings. Land marks are key design elements as they give a sense of
direction and can help to identify points of decision. The experience in motion along streets in precincts and
the core of centres should be determined not by vehicles but by the speed of pedestrians and cyclists.
Land use and urban design polices for corridors

Land use and design guidelines are needed for different types of corridors. They should address appropriate
land use (and whether they are vehicle or pedestrian-oriented), building setbacks, building heights, selected
landmark and corner buildings, building form, mass and bulk, building exteriors, car park set-backs, singe,
fencing, landscape enhancement, utilities and traffic control devices, and street furniture and accessories. By
incorporating such guidelines into development plans, proposals for new development or redevelopment can be
prepared and assessed within an urban design context.

THE URBAN CONTEXT
Corridor planning should be undertaken in stages

Environmental Impact Statements (EIS) are inappropriate unless preceded by strategic and development
planning. Integrated road and land use planning processes are essential for all types of corridors and should be
related to the level of planning and the interests of stakeholders at a particular level.
Strategic planning: Strategic planning should be used to determine the need for a corridor, its functions and
performance and its broad location. Where a road exists, strategic planning is used to establish desired function
and performance, taking account of environmental constraints.
Development planning: Development planning should be used for investigating route options and constraints
and opportunities, addressing problems of severance and local community impacts. In the case of existing
roads, development planning would focus on the functioning of the existing community and involvement of
local stakeholders is essential here.
Implementation planning: Implementation planning includes the project planning activity of a road
improvement proposal in association with the adaptation of the road environment, including the road design,
traffic management and development control policies necessary to achieve the desired outcome.
7.2.8 New approaches towards integrated development and redevelopment are needed
New corridors and no existing urban development: Where urban development does not or not yet exist and a
type I corridor is planned, there is an opportunity to prevent development with direct access (other than
associated land uses), to create a road reservation of sufficient width to accommodate noise protection
measures, such as earth mounds or acoustic screens, and to ensure that any new development is protected from
traffic noise and local air pollution. Corridors of this type should provide for pedestrian and cycle links across
them so that the risk of community severance is reduced. type II corridors can be planned with a mixture of
land uses and provision for a range of transport modes. In sections with high pedestrian activity, the principles
of Sharing the Main Street, including the redesign of the road, a more pedestrian-friendly environment and
reduction in vehicle speed.
Upgrading major traffic routes in established areas: There is a need for new approaches towards integrated
development and redevelopment of land and property when there are proposals to upgrade major existing
roads. People are concerned about the effect of road proposals on property values and worried by
compensation. Major benefits can be obtained if road proposals are linked with integrated redevelopment of
adjoining land. Property owners may obtain not only a new dwelling in an improved environment, but also
could have cash in hand.
7.2.9 Precincts
In precincts, traffic is sub-servient and roads should be planned and designed as streets. New neighbourhoods
and activity centres such as commercial precincts should be largely free of through traffic, should incorporate
traffic calming measures, provide for easy access to public transport, pedestrian and cycle routes, and include
provision for environmental friendly local employment and other land-use activities. In established communities,
especially in inner urban areas, integrated redevelopment should be considered in order to reduce progressively
the impact of transport barriers and facilitate the creation of viable communities.
In residential precincts, the focus should be on providing safety, amenity, access and convenience
The design of residential precincts and neighbourhoods must satisfy the needs of residents for a safe and
comfortable environment, ahead of the desire for traffic efficiency. A balance has to be established between
safety, convenience, accessibility, urban design, amenity, environmental protection, the ability to develop energy-
efficient housing, and cost-effectiveness.

Safety and convenience: Pedestrian safety is a major influence on design and vehicle speeds should be kept low
Concern about traffic noise can become an issue when traffic volumes exceed about 3,000 veh/d. However,
the needs for a low speed and volume environment must be balanced with the need for driver convenience. The
driving distance from any dwelling and the number of turning movements at intersections or junctions to reach
the most convenient collector street or higher order road should not be excessive. Residents should have the
opportunity to safely walk or cycle to the nearest community facilities, such as shops and schools, and should
be provided with a safe, comfortable and pleasant link to similar destinations external to their immediate
residential neighbourhood. The route to the nearest station, tram or bus stop should be safe and direct.
Importance of the streetscape: People identify with the streetscape. Streets of different classification should
look different and drivers learn to recognise the type of street they are travelling. Some quiet streets may be
designed as urban streets or courts with no set-backs, while others may have conventional building lines. Variety
in urban design adds to the legibility of the street network, reduces confusion, enhances amenity and safety and
facilitates marketing of land and housing.
Opportunities for social interaction: Residential precincts and neighbourhoods should be attractive living
environments that will promote social interaction, participation and a sense of social identity for all residents.
They should consist of more than housing and streets and include a mix of compatible and complementary
activities and uses for living, working and recreation. Streets are necessary for access and movement, but can
also provide opportunity for child play, mixed use and social activity (for example, activity streets in local
centres).
Activity centres should be planned as precincts

Core and frame: A distinction can be made between the core and frame of a centre. The core can be identified
as the area of greatest pedestrian activity. The frame is the area surrounding it where there is a direct association
but greater vehicle orientation (Figure 18). The core/frame concept provides a basis for resolving potential
conflicts between different users and for ensuring that an attractive and safe environment is created in both the
core and frame. In large centres, there may be several cores and frame-like areas with different types and
association of land-uses in them.
A pedestrian friendly environment is a key feature: Activity centres must be places where people want to come
and not just places where they have to come on sufferance because they cannot get what they need elsewhere
(Figure 19). As centres grow and competition for available road space intensifies, priorities for the use of this
space must be re-assessed and pedestrians should be considered first. The same principle applies in the design
of residential precincts.
A central place for public transport: Public transport accessibility is essential in all precincts. Designated priority
routes should be incorporated in any structure plans for major centres.
Priorities for accessibility: For example, the order of priority in the planning of the core of a centre may be:
pedestrians, public transport, delivery vehicles, off-street visitor car parking, roads for access and circulation, and
limited on-street parking. In the frame, these priorities may be different. Setting priorities is a key design
activity as it determines how the available road space is to be used.
Space or time-based exclusion and restrictions of vehicular traffic: There are many options in creating more
pedestrian-friendly environments. These include pedestrian malls, "greenways" (where small public transport
vehicles and taxis are permitted), transit malls, shared roads, exclusion of particular transport modes or on-
street parking at specified times. The absence or presence of vehicles in the core may not be the most
significant issue (and it may well be desirable to have vehicles at times when pedestrian activity is light - such

THE URBAN CONTEXT
as a night). More important is the need to create an environment where the conflict between pedestrians and
vehicles is reduced. Vehicle speeds are of critical element and the street design should ensure that target speeds
are low (a target speed of 25-35 km/h). As there will be business impacts, security, safety and amenity issues,
consultation is essential.
Development plans should reflect pedestrian or vehicle orientation: Centres should be planned and adapted
around different types and forms of accessibility. The land-use plan addresses the location, density and
association of different land-use activities, including below, at ground and above ground levels. Activities such
as offices which do not require the carrying of heavy merchandise should be given greater preference in areas
of high public transport accessibility than supermarkets. Areas of high car accessibility should be zoned for
vehicle-oriented uses. Likewise, development densities should be based on existing and proposed pedestrian or
vehicle accessibility.
The quality of a centre depends on the quality of urban design: The principles described provide an appropriate
land use and transport context for a centre which can function, is safe and convenient. However, by themselves
they do not create a place which is attractive and make people want to be there. This requires attention to urban
and landscape design, a theme which distinguishes the centre from others, a focus, variety and interest at
different times of the day and at night.
7.3 Specific issues related to institutional arrangements

7.3.1 More attention should be paid to institutional arrangements - how to make things happen
Institutional arrangements - how governments and others should organise themselves to achieve their goals
- usually receive little attention, compared with the attention given to what should be done. Institutional
change is admittedly difficult to achieve, but it will be essential to achieving intended outcomes.
7.3.2 We need to focus on outcomes rather than outputs

We need to make a clear distinction between means (outputs) and ends (outcomes) and recognise that
governments are generally structured around responsibilities for specific outputs, rather than around
responsibilities for outcomes. Government organisations therefore tend to perceive solutions to given
problems in terms of increasing the supply of the facilities for which they are responsible.
Governments are likely to have greater success in achieving outcomes if they organise their administrations in
terms of those outcomes. Restructuring transport agencies in Australia in terms of outcomes would provide
governments with greater certainty that they were doing what they wanted to do and not simply what they were
organised to do.
7.3.3 Separating the funders from the providers would help to achieve a focus on outcomes
Existing administrative arrangements in transport usually involve funds being directed towards providing a
particular output, rather than towards achieving a particular outcome. Organisations established to provide a
particular means of transport therefore generally conclude that the best way to solve a given problem is to
provide more of the means for which they are responsible.
Greater separation between the funders of transport-related outcomes and the providers of means to achieve
these outcomes, with the funders responsible for achieving outcomes, would help overcome this problem.
A funder/provider split would also allow fenders the freedom to choose from a range of means to achieve their
outcome and would more clearly allocate roles and responsibilities and clarify accountabilities.

7.3.4 The requirement for coordination may reflect a problem rather than a solution
The widespread need in transport planning to coordinate activities may be an indication that the right kinds of
organisational arrangements are not in place and that responsibility has not been properly allocated to achieve
intended outcomes. Also, the numerous recent efforts at coordination and integration in transport often do not
address the more basic issue of whether the activities being coordinated are the best mix of means to be
employed to achieve the intended outcomes.
Organisational problems in transport have often been addressed by restructuring the transport and land use
agencies involved. Generally, however, there has been a continued emphasis on outputs rather than on
outcomes and, moreover, an emphasis on a narrow range of outputs, with a neglect of financial means in
particular.
7.3.5 The culture of transport organisations will have to change for them to deal more effectively
with multi-dimensional problems
Government agencies with one-dimensional functional responsibilities have conventionally employed a narrow
band of specialists. In transport this has meant that organisations have been dominated by specialists with
expertise in public works and the emphasis has been on the means with which these specialists are familiar.
The complex, multi-dimensional nature of urban management demands a multi-disciplinary approach.

Team-based structures comprising professionals with a variety of primary qualifications would better address
urban problems.
7.3.6 Consultation in transport planning is more about managing contentious issues than addressing
them
Consultation in the planning of roads is extremely widespread, but important questions remain about how
governments consult and the purposes for which they consult.
Difficult issues in transport planning have seen consultation become a process of issues management where the
objective is to contain the debate and limit potential "damage" to the solution being proposed, rather than to
critically analyse propositions and address issues raised. For consultation to remain relevant there needs to be
greater clarity about the fundamental purpose of consultation.
7.3.7 Environmental impact statements are not a substitute for strategic planning.
For the most part, urban road proposals subject to environmental impact assessment are presented without a
strategic context, but EISs should not be seen as a substitute for strategic planning. Two major reasons for this
are, first, that the environmental impact assessment process is in essence a development approval process
embodying a proponent and a development proposal, both of which are antithetical to the idea of strategic
planning as a critical consideration of various possible approaches to a problem; and, second, that the
proponent is invariably an organisation that is responsible for providing only one of a number of possible
means to address an issue.
A key question, however, is still about the kind of strategic planning that needs to be done to provide a suitable
context for environmental assessment of major projects. Three key principles are suggested: that strategic
planning should involve a whole-of-government approach; that strategic planning should address the issue of
strategic choice, clearly spelling out options for governments and the relative implications; and that objectives
should not be specified to fit easily available solutions.

THE URBAN CONTEXT
7.3.8 Transport oriented development should be promoted, but it is not easy to achieve higher
densities through statutory controls
It is often argued that statutory land use controls should be changed to achieve higher densities more consistent
with transit use. This is difficult to achieve, principally because the fundamental purpose of the development
control system is to obtain precisely the opposite effect, that is, to prevent the realisation of market forces in
circumstances where there would otherwise be a demand to achieve a quantum of development in excess of
what is considered desirable for the site.
In the "kit of tools" available to make transit more attractive, attempting to achieve higher land use densities is
therefore one of the more limited means. It should not be promoted, as it sometimes is, to the exclusion of
other, potentially more powerful means.

REFERENCES
AMCORD (1995) The Australian Model Code for Residential Development, Department of Regional Development
and Housing, Canberra.
Amundsen, C (1994) Land use, transport and the environment: a context for light rail, Light Rail Review 5, 30-37.
Apogee Research Inc (1994) Cost and effectiveness of transportation control measures (TCM's): a review and analysis
of the literature, Apogee Research Inc, Bethesda, Maryland.
Australian Bureau of Statistics (1992) Labour force surveys, AGPS, Canberra.
Australian Bureau of Statistics (1994) Survey Report -- Community Survey on Road Projects, for Main Roads WA,
November.
Australian Urban and Regional Development Review (1995) Timetabling for tomorrow: An agenda for public
transport in Australia, Strategy Paper #2, Canberra.
Austroads (1993) Environmental Impact Assessment of Major Roads in Australia, Environmental Report No 1,
Sydney.
Austroads (1994) Integrated Transport Planning Survey, Sydney.
Austroads (1994a) Cost of Personal Travel, Sydney.
Black, J (1995) "Technologies for Assessing Environmental Impacts for Highways: The Role of Strategic
Environmental Impact Assessment", paper presented to the Conference on Highways and the Environment,
University of New South Wales, Munro Centre for Civil and Environmental Engineering, 2-3 August.
Brown, L and Lam, KC (1993) Can I Play in the Street, Mum?, Australian School of Environmental Studies,
Griffith University, Nathan.
Bureau of Transport and Communication Economics (1995) "Adequacy of transport infrastructure - multimodal",
Working Paper 14.6, Department of Transport, Canberra.
Bureau of Transport Economics (1987) "Taxi services in urban public transport", Paper No. 126, BTE, May,
Canberra.
California Department of Transportation (1993) Guidelines: Transportation Enhancement Activities Program,

Sacramento.
Cambridge Systematics Inc (1994) The effects of land use and travel demand management strategies on commuting
behaviour, Report prepared for the Federal Highway Administration, US Department of Transportation,
Washington DC, July.
Cameron, R (1995) Motorists' Attitudes and Priorities, Address to Australian Automobile Association, 23 August,
ANOP Research Services.
Camkin, H (1992) "The Australian road safety situation--a report to PIARC technical committee 13", Road and
Transport Research 1(4), (December), 110-116.
Chapman, P (1992) "The Adelaide O'Bahn: how good in practice?", Papers of the Australasian Transport Research
Forum, Part 1, 83-100.
Cogan, E (1992) Successful Public Meetings: A Practical Guide for Managers in Government, Jossey-Bass, San
Francisco.
Commonwealth of Australia (1995) Budget Paper No. 3: Commonwealth Financial Relations with Other Levels of
Government 1995-96, AGPS, Canberra.
Cosgrove, D and Gargett, D (1992) The Australian domestic transport task, Papers of the Australasian Transport
Research Forum, Part 1, 231-250.
Cox,JB and Meyrick, SJ (1994) Refocusing Road Reform, Business Council of Australia, Melbourne.
Creighton, J L (1981) The Public Involvement Manual, ABT Books, Cambridge, Mass.

THE URBAN CONTEXT
CSIRO, ABS, Monash and ITS (1995) Employment, Housing and the journey to Work, report prepared for the
Department of Health, Housing, Local Government and Community Services, March.
Dawkins, P and Baker, M (1987) Working time in Australia: research evidence, Report to the International Symposium
on Working Time, Brussels, April.
DeSario, J and Langton, S (1987) Citizen Participation in Decision Making, Greenwood Press, Westport, CT.
Dick, B (1990) Processes for Community Consultation, prepared for Queensland the Department of Transport,
Interchange, Brisbane.
Dittmar, H (1995) "A broader context for transportation planning not just an end in itself", Winter Journal of the
American Planning Association 61(1), p 7-13.
Dobes, L (1995) Greenhouse gas emissions in Australian transport in 1900 and 2000, Bureau of Transport and
Communication Economics Occasional Paper 110, Department of Transport, Canberra.
Dotson, AB, D Godshalk, D and Kaufman, J (1989) The Planner as Dispute Resolver: Concepts and Teaching
Materials, National Institute for Dispute Resolution, Washington DC.
Downs, A (1962) The law of peak-hour expressway congestion, Traffic Quarterly 16, 393-409.
Downs, A (1992) Stuck in Traffic: Coping with Peak-Hour Traffic Congestion, The Brookings Institution, Washington
DC.
Eppell Olsen and Partners (1995) IRTP Survey Analysis Report Summary, Queensland Transport, May.
Evil], B (1995) Population, urban density, and fuel use: eliminating spurious correlation, Urban Policy and Research 13
(1), 29-36.
Federal Office of Road Safety (1992) Road Fatality Statistics, Canberra.
Fitzgerald, V (1995) Sustainable growth and infrastructure investment, Australian Urban and Regional Development
Review Working Papers #5, Australian Urban and Regional Development Review, Canberra, 14-40.
Frank Small and Associates (1994) Insights Into Community Attitudes Towards RTA Activities, Roads and Traffic
Authority, Sydney, April.
Frank Small and Associates (1995a) Community Attitudes Towards the RTA and Its Activities, Roads and Traffic
Authority of NSW, February.
Frank Small and Associates (1995b) New Road Developments: Community Attitude Study, A marketing research
report for the RACY, March.
Geoplan Town Planning (1990) Neighbourhood Road Safety and Amenity, Consultants Report CR 98, September,
Western Sydney Regional Organisation of Councils (funded by Federal Office of Road Safety and Roads and
Traffic Authority NSW).
Giulliano, G and Small, KA (1991) Subcenters in the Los Angeles region, Regional Science and Urban Economics 21,
163-182.
Glazebrook, G, McCombie, K and Clausen, A (1995) "Innovative solutions in public transport", paper presented at
the IIR Conference on Urban Transport, 19-20 June, Sydney.
Gsllner, A (1995) Monitor of Public Attitudes: Air Quality and the Car, Clean Air 2000 Initiative, NRMA Public
Affairs, Sydney, June.
Gomez-Ibanez, J (1995) Pitfalls in estimating whether transport users pay their way, paper presented at the conference
on Measuring the Full Social Costs and Benefits of Transportation, sponsored by the Bureau of Transportation
Statistics, and held at the Beckman Center, University of California at Irvine, 6-8 July.
Goodwin, PB (1995) The case for and against urban road pricing, House of Commons Transport Committee, Third
Report, Volume II, Minutes of Evidence, HMSO, London, 49-64.
Goodwin, PB, Hallett, S, Kenny, F and Stokes, G (1991) Transport: The New Realism, report to Rees Jeffrey Road
Fund, Transport Studies Unit, University of Oxford.

Guria, J (1995) "Recent Trends and Future Issues Relating to New Zealand and International Transport Policy
Developments", paper presented to 7th World Conference on Transport Research, 16-21 July, Sydney.
Handy, SL and Mokhtarian, PL (1995) Planning for telecommuting. measurement and policy, (Winter) Journal of the
American Planning Association, 61(1) 99-111.
Harvey, M (1995) Assessing the adequacy of national transport infrastructure: a methodology, Road and Transport
Research, 4(1), 58-67.
Hayashi, Y, Suparat, R, Mackett, R, Doi, K, Tomita, Y, Nakazawa, N, Kato, H and Anurak, K (1994) Urbanization,
motorization and the environment nexus - an international comparative study of London, Tokyo, Nagoya and
Bangkok, Memoirs of the School of Engineering, Nagoya University, (October) 46(1), 55-98.
Henry, L(1989) "Ridership forecasting considerations in comparisons of light rail and motor bus modes", Light Rail
Transit: New System Successes at Affordable Prices, Special Report 221, Transportation Research Board,
Washington, DC 163-189.
Hensher, DA (1993) "Socially and environmentally appropriate urban futures for the motor car", Transportation,
20(1), 1-19.
Hensher, DA and Daniels, R (in press) "Productivity Measurement in the Urban Bus Sector", Transport Policy.
Hensher, DA, Daniels, R and DeMellow,1 (1994) "Revisions and update: productivity of Australian railways 1971 /72
to 1001/92", ITS-WP-94-14, Institute of Transport Studies, University of Sydney.
Hensher, DA, Battellino, H and Mackay, A (1994-95) "On the road to flexible working times", Summer, Policy, 22-
27.
Herbst, K (1992) Brazil's model city: is Curitiba too good to be true? September, Planning, 24-27.
Heywood, P (1994) "Trans-Pacific strategies for managing metropolitan growth", September, Urban Futures, 65-72.
Himanen, V (1993) "Possible transport policies for urban areas during the 1990s", Transportation Planning and
Technology 17, 331-339.
Ingram, G and Kessides, C (1994) "Infrastructure for development, September, Finance and Development, 18-25.
Ironmonger, D (1994) "Household industries", in Sawyer, K and Ross, J (eds) The Changing Structure of Australian
Industry, McGraw-Hill, Melbourne.
Johnston, RA and Ceerla, R (1995) "Land use and transportation alternatives", in Sperling, D and Shaheen, SA (eds)
Transportation and Energy: Strategies for a Sustainable Transportation System, American Council for an Energy-
Efficient Economy, Washington DC, 13-44.
Jones-Lee, MW (1990) "The value of traffic safety", Oxford Review of Economic Policy 6, 39-60.
Kim, S (1994) Gender differences in commuting: an empirical study of the Los Angeles metropolitan area, paper
presented at the 73rd Annual Meeting of the Transportation Research Board, Washington DC, January.
Krupnick, AJ and Portney, PR (1991) "Controlling urban air pollution: a benefit-cost assessment", (26 April) Science,
252 522-528.
Lave, CA (1990) Things won't get a lot worse: the future of US traffic congestion, paper presented at the 1990 Annual
Meeting of the U.S. Transportation Research Board, Washington, D.C.
l ewis, D.(1995) "Objectives and decision criteria for infrastructure investment", Research Results Digest Number 200,
NCHRP, Transportation Research Board, Washington DC.
Loder and Bayley Planning Group (1991) Consultation in Residential Approvals: A Local Approvals Review Program
Study, prepared for the Department of Immigration, Local Government and Ethnic Affairs.
Lockwood, S C (1995) "Public-private partnerships in US highway finance": ISTEA and beyond, Winter,
Transportation Quarterly, 49(1), 5-26.
Loveday, P (1993) Review of Household Telephone Interviews: December 1992, Transport Study Group, Roads and
Traffic Authority, Sydney, June.

THE URBAN CONTEXT
Lynch, K (1960) The Image of the City, Cambridge, Mass: Technology Press New South Wales Environment
Protection Authority (1995) Sydney Metropolitan Air Quality Study.
Mannering, J (1993) Telecommuting in California, MSc thesis (draft), Department of Civil Engineering, University of
California at Davis, California.
Mant, J (1995) Strategic Planning, P/P/M Consultants and Phillips Fox Solicitors, Sydney.
Marchetti, C (1992) Anthropological Invariants in Travel Behaviour, International Institute of Applied Systems
Analysis, Laxenburg, Austria.
Masser, I, Sviden, 0 and Wegener, M (1993) "Transport planning for equity and sustainability", Transportation
Planning and Technology 17, 319-330.
McCubbin, DR and Deluchi, MA (1995) Health effects of motor vehicle air pollution, paper presented at the
conference on Measuring the Full Social Costs and Benefits of Transportation, sponsored by the Bureau of
Transportation Statistics, and held at the Beckman Center, University of California at Irvine, 6-8 July.
McLoughlin, B (1991) "Urban consolidation and urban dispersal: a question of density", Urban Policy and Research
9(3), 148-156.
Mees P (1995) "Urban transport policy paradoxes in Australia", World Transport Policy and Practice,l(1), 20-24.
Metropolitan Transportation Commission (1994) Fifteenth Annual Report to Congress, Oakland.
Metropolitan Transportation Commission (1994) Regional Transportation Plan for the San Francisco Bay Area,
Oakland.
Metropolitan Transportation Commission (nd) About the Metropolitan Transportation Commission, Public
Information Office, Oakland.
Mitchell-Taverner P, Adams K (RAMIS Corporation) (1994) Community Attitudes to Road Safety, Community
Attitudes Survey Wave 7, Federal Office of Road Safety, Department of Transport and Communications, CR 135.
NAASRA Planning Committee Working Group (1988) Implications of Mandatory Road Traffic Noise Levels,
NAASRA Technical Report, January,
National Competition Policy, Report by the Independent Committee of Inquiry (1993), Commonwealth of Australia,
Canberra.
National Research Council (1994) "Curbing gridlock: peak-priced fees to relieve traffic congestion", Transportation
Research Board Special Report 242, National Academy Press, Washington DC.
National Transport Planning Taskforce (1994) Building for the Job: A Strategy for Australia's Transport Network,
Commonwealth of Australia, Canberra.
Neutze, M (1995) "Funding urban infrastructure through private developers", Urban Policy and Research 13(1), 20-
28.
New South Wales Roads and Traffic Authority (1994) Options for Controlling Traffic Noise, Sydney.
New South Wales Department of Planning (1994) Route Selection Guidelines for Land Use and Environmental Safety
Planning for Hazardous Materials ----- Road Transport Considerations, Sydney.
New South Wales Government (1994) Budget Information 1994-95: Budget Paper No 2, Sydney.
Newman, P (1995) "Support for the construction and maintenance of freeways has decreased", World Transport
Policy and Practice 1(1), 12-19.
Nilles, JM (1991) "Telecommuting and urban dispersal: mitigator or inciter"?, Transportation, 18(4), 411-432.
NRMA (1994) A review of "refocussing road reform", National Roads and Motorists Association, Sydney, December.
New South Wales Department of Transport (1995) Integrated Transport Strategy for the Greater Metropolitan
Region, Sydney
New South Wales Department of Transport (1995) Lower Hunter Integrated Transport Study: Report of public
discussion.

New South Wales Roads and Traffic Authority (1993) RTA Interim Guidelines for Community Involvement, Sydney.
New South Wales Roads and Traffic Authority (1994) State Road Network Strategy: Technical Report for public
discussion, Sydney.
Ogden, K (1993) "Policy issues and implementation strategies for urban freight", in TPW Policy Perspectives 693,
edited by R Daniels and M Nyathi, Institute of Transport Studies, The University of Sydney.
P/P/M Consultants Pty Limited (1994) North Sydney Plan Discussion Paper, prepared for North Sydney Council,
Sydney.
Paaswell, RE and Berechman, J (1982) "Light rail and development: constraints and conditions", Light Rail Transit.
Planning, Design, and Implementation, Transportation Research Board Special Report 195, Transportation
Research Board, Washington DC.
Perigut, D and Sarkissian, W (1994) The Community Participation Handbook: Resources for Public Involvement in
the Planning Process.
Prime Minister's Urban Design Task Force (1994) Urban Design in Australia, AGPS, Canberra.
Pucher, J (1995) "Urban passenger transport in the United States and Europe (a comparative analysis of public
policies) - Part 1: travel behaviour, urban development and automobile use", Transport Reviews 15(2), April June,
99-118.
Queensland Government (1995) Towards an Integrated Regional Transport Plan for South East Queensland,
Discussion Paper, Brisbane.
Raimond, T and Hensher, DA (1993) ABCA Fact Sheet 1993, Australian Bus and Coach Association, Sydney.
RAMIS (1992) Community Research - Attitudes to RTA Activities, Programming Strategy Branch, Roads and Traffic
Authority, Sydney, August.
RAMIS (1993) Community Research --- Attitudes to RTA Activities, Corporate Strategy Development Branch, Roads
and Traffic Authority, Sydney, September.
Reark Research (1987) Survey of Community Attitudes: Traffic Laws and Enforcement, Federal Office of Road Safety,
Department of Transport and Communications, CR 61.
Reark Research (1994) Executive Summary of the Main Roads Western Australia Customer Service Research, Main
Roads Western Australia, August.
Reark Research (1989) Community Attitudes to Road Safety: Community Attitudes Survey Wave IV, Federal Office of
Road Safety, Department of Transport and Communications, CR85.
Reark Research and Federal Office of Road Safety (1990) Community Attitudes to Road Safety: Community Attitudes
Survey Wave V, Federal Office of Road Safety, Department of Transport and Communications, CR 93.
Richmond, J (1995) "The impossible balance in Sydney", Working Paper ITS-WP-95-9, Institute of Transport Studies,
University of Sydney.
Ritter, G and Thompson, S (1994) "The rise of telecommuting and virtual transportation", Transportation Quarterly
48(3), Summer, 235-248.
Road Traffic Noise Taskforce (1994) Final Report: Options for Controlling Road Traffic Noise, Environment
Protection Authority and Roads and Traffic Authority of New South Wales, November.
Robertson, D (1994) Perceptions on the Effects of Traffic Noise: The M5 (F5) Motorway, A report to the NRRMA
and M5 (F5) Action Group by the University of Western Sydney, Macarthur, September.
Rooney, A D (1993) Urban transport and urban form planning for the 21st century, paper presented at the IIR
Conference on Urban Transport, Sydney 22 March.
Roy, J, Brotchie, J and Marquez, L (1995) A study on urban residential density vs transport energy consumption, paper
pepared for the EASTS conference, Manila, September.

THE URBAN CONTENT'
Roy Morgan Research Centre and Federal Office of Road Safety (1992) Community Attitudes to Road Safety:
Community Attitudes Survey Wave VI, Federal Office of Road Safety, Department of Transport and
Communications, CR 101.
Sarkissian, W and Walsh K (1994) Community Participation in Practice (Workshop Checklist; Video: Listening to All
the Voices; Community Participation Handbook; Casebook), Professional and Continuing Education Office,
Murdoch University, Western Australia.
Scholl, L, Schipper, L and Kiang, N (1995) CO2 emissions from passenger transport: a comparison on international
trends from 1973-1990, International Energy Studies, Lawrence Berkeley Laboratories (mimeo).
Schoup, DC (1995) "An opportunity to reduce minimum parking requirements", Winter, Journal of the American
Planning Association 61(1), 14-28.
Seagriff, E. (1995) "Southern California air quality plans in the 1990s and the effects on transport policy", April June,
Transport Reviews, 15(2), 141-166.
Small, K A (1992) Urban Transportation Economics, Harwood Academic Publishers, Chur.
Small, K A and Kazimi, C (1995) "On the costs of air pollution from motor vehicles", (January), journal of Transport
Economics and Policy, XXIX (1), 7-32.
Small, K and Song, S (1992) "`Wasteful commuting"': a resolution", journal of Political Economy, 100(4), 888-989.
Small, KA (1991) "Transportation and the environment", in Thord, R (ed) The Future of Transportation and
Communication, Swedish National Road Administration, Borlange, 217-230.
Toleman, R (1995) Refocussing the Role of Government in Transport: The New Zealand Experience, paper presented
to 7th World Conference on Transport Research, 16-21 July, Sydney.
Tracy, N and Lever-Tracy, C (1991) "The longer working week in Australia - working time experiences and
preferences of men", Labour and Industry, 4(1), 71-94.
Transit New Zealand, Monthly Newsletter, (April 1995), 62.
van Barneveld, R (1995), Transit New Zealand Monthly Newsletter, personal communications.
Verhoeff, E, Nijkamp, P and Rietveld, P (1995) "The economics of regulatory parking policies: the (im)possibilities of
parking policies in traffic regulation", Transportation Research 29A(2), 141-156.
Wachs, M (1994) "Will congestion pricing ever be adopted"? (Spring), Access 4, 15-19.
Wachs, M, Taylor, BD, Levine, N and Ong, P (1993) "The changing commute: a case-study of the jobs-housing
relationship over time", Urban Studies 30(10), 1711-1729.
Walsh. M (1993) "Highway vehicle activity trends and their implications for global warming. the United States in an
international context", in Greene, DLand Santini, DJ (eds) (1993) Transportation and Climate Change, American
Council for an Energy-Efficient Economy, Washington DC, 1-50.
Washington State (1995) Transportation Policy Plan for Washington State report to the Legislature.
Webster, FV, Bly, PH and Paulley, NJ (eds) (1988) Urban Land-Use and Transport Interaction: Policies and Models,
Avebury Press, England.
West, J (1995), Department of Transport and Works, Tasmania, personal communications.
Westerman, HL, (1995) Upgrading Urban Arterial Environments, World Transport Research Conference, Sydney.
Wood, J (1995) "Telecommuting. the challenges facing Australian management", TPW Policy Perspectives 94, Institute
of Transport Studies, University of Sydney, 99-124.

Urban travel activity
Year Bus Bus pkm Train/tram Train/tram Car trips Car pkm Truck tonne
passengers (thousand passengers pkm (millions) (thousand kms
(millions) million) (millions) (thousand million) (thousand
million) million)
1971 763 3.5 565 7.32 8,912 66.5 9.14
1972 756 3.51 508 6.61 9,217 69.9 9.69

1973 772 3.66 484 6.23 9,456 71.8 10.27
1974 788 3.8 484 6.30 10,049 76.3 11.05
1975 793 3.89 464 6.02 10,594 80.4 12.75
1976 784 3.91 453 5.96 10,863 82.5 13.64
1977 784 3.97 443 5.85 11,340 87.9 14.43
1978 779 4 430 5.70 11,729 90.9 15.95
1979 777 4.06 427 5.67 11,935 92.5 17.37
1980 791 4.19 447 6.13 12,057 93.1 18.41
1981 791 4.16 457 6.29 12,232 94.5 19.88

1982 800 4.19 465 6.46 12,936 99.9 20.80
1983 810 4.17 454 6.30 12,953 100.1 21.87
1984 821 4.15 455 6.36 13,483 104.2 24.23
1985 851 4.26 463 6.44 14,198 113,9 25.41
1986 873 4.34 493 6.97 14,703 117.8 27.15
1987 896 4.43 505 7.19 15,053 123.3 29.28
1988 926 4.51 524 7.47 15,621 131.3 31.82
1989 963 4.76 537 7.67 16,318 137.2 33.50

1990 966 4.75 519 7.47 16,717 140.5 34.08
1991 993 4.87 523 7.52 16,553 139.1 34.08
Source: Cosgrove and Gargett (1992)

THE URBAN CONTEXT
END NOTES
1 This analysis of the implications of the structure of government for transport planning is indebted to an
analysis of this issue in relation to environmental/land use planning: Mant, J (1995) Strategic Planning ,
P/P/M Consultants Pty Limited and Phillips Fox Solicitors.
2 Recognising the potential importance of (congestion) pricing measures does not mean that they are always
appropriately adopted. New Zealand, for example, has a particular problem with congestion pricing related
to the extremely low density nature of its environment and the consequent reliance on private vehicle travel
(Guria 1995, p 5; R van Barneveld, personal communication).
3 The findings of the National Transport Planning Taskforce (1994) are compatible with this:
"Infrastructure investments need to be prioritised according to their importance within a national

framework covering all modes. ... this will best be achieved by a National Transport Infrastructure Network
consisting of roads, railways, ports and airports ... This will involve moving away from the concept of a
separate network for each mode towards consideration on a corridor-by-corridor basis across all modes,
requiring current funding arrangements to be renegotiated."
4 See footnote 3.
5 Complementing this review is the separation of state highways, under the recently passed 1995 Land
Transport Law Reform Bill, into an organisation "similar to a fully contracted-out State roading authority.
The funding of all roads (full cost of state highways and financial assistance to local roads) and the
provision of financial assistance to public transport will move to Transfund New Zealand, a new crown
agency" (R van Barneveld 1995, personal communication).
6 There was a prior intellectual tradition in planning for this separation. The ideas (and the practice) of
"advocacy" planning, dating back to the 1960s, and even "social planning" provided a model whereby
planning was divided into different realms of responsibility.
7 Legislation under which environmental assessments of major road projects are conducted in Australia
include the New South Wales Environmental Planning and Assessment Act 1979, the Victorian
Environmental Effects Act 1978, the Queensland State Development and Public Works Organisation Act
1971-81, the West Australian Environmental Protection Act 1986, South Australian Development Act 1993,
the Tasmanian Environment Protection Act 1973, the Northern Territory Environment Assessment Act
1982, the ACT Land (Planning and Environment) Act 1991 and the Commonwealth Environment
Protection (Impact of Proposals) Act 1974. Environmental assessment of roads to which the
Commonwealth contributes financially is usually conducted under State or Territory legislation, except
where the project is considered to be of "national significance", where the Commonwealth may become
the proponent itself under the Environment Protection (Impact of Proposals) Act 1974.

IV
THE
IMPACT
EMERGING
TECHNOLOGY
PROFESSOR MIKE TAYLOR (UNIVERSITY OF SOUTH AUSTRALIA)
DR GLEN D'ESTE (UNIVERSITY OF SOUTH AUSTRALIA

OUTLINE
1. INTRODUCTION 355
2. THE TECHNOLOGIES 356
3. THE APPLICATIONS 358
4. INTERACTIONS 361
5. BENEFITS 363
6. DEVELOPMENTS IN AUSTRALIA 364
7. INTERNATIONAL PERSPECTIVE 367
8. COMMUNITY ISSUES 368
9. COMMERCIALISATION 373
10. THE FUTURE 374
REFERENCES 376

1. INTRODUCTION
Introduction
Technology is changing the world around us and having an impact on many aspects of daily life. The Australian
road system is not immune to these changes. Technology is changing the characteristics of the vehicles and
roadways and the way that we use the roads. Some of these emerging technologies include
smart highways that provide feedback to the driver in terms of traffic conditions, route guidance and safe
speeds, implement automatic payment of tolls and other road usage charges, and eventually will enable
"hands free" automated driving;
smart cars, trucks and buses that are installed with vehicle tracking and route guidance devices, and sophis
ticated crash avoidance and related safety features;
information systems that provide real time information about congestion and availability of public transport;
green cars and trucks that have very low levels of emissions and can be manufactured from recycled and recy
clable materials.
The impetus to apply advanced technology to the road system is largely a reaction to competing demands. On
the one hand, there is increasing demand for travel while on the other, there are community demands for
reduced congestion, greater safety and reduced environmental impacts of road traffic. There is also communi-
ty opposition to major road construction and an imperative to make better use of existing infrastructure.
Technology can offer some assistance in balancing these demands. Overall, the aim of using emerging tech-
nologies is to improve the links between the road, the vehicles and users to make individual components and
the road system as a whole work more effectively. The application of technology can deliver a range of poten-
tial benefits, including
better utilisation of infrastructure;
improved traffic flow;
better service from public transport;
enhanced safety;
lower cost freight transport;
reduced environmental impact.
In addition, technology is changing the nature of work and having an impact on the locations of homes and
workplaces, on the pattern of trips made on the road network and ultimately on the need to travel. As travel
habits change, there are direct implications for the role of the road system and the way that it should evolve to
best serve community needs.
This chapter examines the impact of emerging technologies on the Australian road system in terms of the future
characteristics of the road network and the implications for road users and the general community. In particu-
lar, the discussion focuses on technologies that relate to the efficient use and management of the road system
plus vehicle design and non-transport related technologies that indirectly affect the road system through their
impact on society. It also looks beyond the engineering issues to consider community impacts and the many
social, political, legal, regulatory and institutional issues that arise from major technological change.

2. THE TECHNOLOGIES
The road system will be affected by advances in almost any area of technology but there are several technolo-
gies that are strongly influencing current developments in the road system. These core technologies are:
Stored value cards and "smart cards"

These are plastic cards like credit cards but with a small inbuilt computer that allows the card to perform a vari-
ety of financial transactions. In one form the card can be used as an electronic purse that is loaded with money
at an ATM or EFTPOS machine. The card can then be used for small transactions such as bus fares and road
tolls. Each time the card is used, its cash balance is reduced by the value of the transaction. When all the money
has been spent, more money is loaded in the card and the process is repeated. Over time, smart cards are like-
ly to replace the magnetic stripe cards currently being used for public transport ticketing and some toll systems.
Vehicle tracking systems

The movement of vehicles in the traffic stream can be tracked using a satellite-based system such as GPS
(Global Positioning System) or a ground-based system based on electronic sign posts located at strategic points
on the road network, such as RTA-NSW's ANTIS system (Automatic Network Travel Time System). Using
these technologies, the location of vehicles such as buses and emergency vehicles can be continually monitored.
Vehicle identification systems

Vehicles can be fitted with special electronic tags. These tags can then be read by detectors installed in the road
system to register the arrival of the vehicle at a particular location. The tags can be installed in buses and emer-
gency vehicles to trigger traffic lights, or can be used to monitor vehicle fleets, or collect road charges.
Advanced sensors
Sensor technology is being applied in many aspects of the road system. Sensors installed in the road range from
simple vehicle detectors at traffic lights through to sensors that weigh trucks as they drive over the sensor at
normal highway speed. Other sensors are fitted in vehicles to trigger safety devices such as ABS brakes and
airbags.
Variable message signs

We are all accustomed to road signs that display a single fixed message. New technology signs allow messages
that change according to the current traffic conditions and provide up-to-date information and advice to road
users.
Digital video imaging

Digital video cameras can be used to capture images of the traffic stream or of individual number plates. These
images can then be processed by computer to provide automatic monitoring of traffic conditions and incidents,
or to identify particular vehicles.
High speed affordable computers

The power of computers has increased and their price decreased to a point that it is now feasible to collect and
process the vast amounts of data that is generated by the road system. What is more, the data can be processed
in realtime and up to the minute information can be available for road system managers and users. Computers
are increasingly being installed in vehicles to monitor and manage mechanical systems and to control safety
devices such as ABS brakes.

EMERGING TECHNOLOGY
Data and voice communications

The "information superhighway" has already come to the road network. Traffic lights, vehicle detectors, con-
trol centres and variable message signs are already connected using high speed data communications. The fixed
elements of the road system are connected by cables but it is also possible to transfer digital information to and
from vehicles using radio communications. In future, the same technology will be used to connect to your home
and provide information on locations of congestion, road works, accidents, and so on. The internet is already
being used to provide the community with minute by minute updates of traffic conditions on the freeways in
several cities.
The "information superhighway" will also have an impact on the road system through the variety of services
that it offers. Users will be able to shop and work from home and pay television and related entertainment ser-
vices may reduce the need to travel, or at least change the pattern of trips that people make. Mobile phones are
another communications medium that is having an impact on the road system. The phones can be used to
report and receive information about traffic conditions and sometimes can provide an alternative to travel.

3. THE APPLICATIONS
The technologies that were described in the previous section are all proven technologies that are available now.
What is new is not the technologies but the way that they are being applied to the road system. In general, these
technologies are not used individually but are combined to create new applications aimed at solving particular
problems. The applications that involve advanced information and telecommunications technologies applied to
the operation and management of transport infrastructure and services are known collectively as Intelligent
Transport Systems (ITS). A similar group of technologies was previously known by the acronym, IVHS
(Intelligent Vehicle and Highway Systems), but this term suggested a narrow focus and has been superseded by
ITS. ITS is currently the focus of a worldwide research and development effort and will have a major role to
play in the future of the Australian road system.
Several applications of current and emerging technologies have already been mentioned but these are only the
tip of the iceberg. Advances in almost any field of technology can potentially have implications for the road
system and road users. However to make it easier to discuss the impacts of available and emerging technolo-
gies, the applications have been grouped into the following categories.
Advanced Traffic Control (ATC)

Systems designed to control and facilitate the movement of traffic and pedestrians using coordinated traffic sig-
nal technology. An important input is real time information about traffic flows and speeds collected using sen-
sors and vehicle identification systems. This category also includes systems for giving priority at signalised inter-
sections to transit and emergency vehicles. The coordinated traffic light systems installed in most Australian
cities are a type of ATC.
Route Guidance (ROG)

Imagine an electronic street directory that keeps track of the location of the vehicle and can provide route guid-
ance to the driver through an electronic map display or synthesised voice instructions. The category also
includes computerised street maps and similar systems for assisting with route finding and planning. Cars
equipped with route guidance systems are already on sale in Japan and Europe.
Driver Information (DIS)

Provides drivers with information pertinent to their journey, either prior to their departure or during the jour-
ney. Information on delays (due to congestion, fog, flooding, accidents, etc), road works, parking guidance and
alternative routes allow drivers to make informed decisions about their journey. The information can be con-
veyed by radio, television, phone, newspapers or computer networks. It can also be displayed on roadside signs
whose message changes in response to changes in road conditions or can transmitted direct to the vehicle for
display on in-vehicle displays. The aim is to provide timely and accurate information to allow travellers to make
better decisions about their route and time of travel.
Incident Management (INM)

A high proportion of congestion on major roads is caused by incidents such as breakdowns, accidents and road
works. INM systems are designed to assist in the rapid detection of incidents and in rapid response so that the
incident can be cleared as soon as possible.
Electronic Toll Collection (ETC)

Systems designed for automatic payment of tolls on roads and bridges without the need to slow down. Vehicles
are equipped with a "smart card" or are electronically tagged so that as the vehicle passes the toll point, the ton
charge is deducted from the card or account. This category encompasses technologies for a wide range of
charging mechanisms which may be imposed for the use of roads. The Victorian government has recently
announced that the Melbourne City Link project will involve electronic toll collection.

IiNIERGI;N'G TI CHNOLOGY
Automatic Vehicle Control (AVC)

Cruise control currently installed in many cars is a simple example of this type of system. The next step is
"smart" cruise control which uses radar or radio-based technology to detect vehicles ahead and adjusts speed
accordingly. There are proposals to extend the idea to fully automated highways on which steering and speed
are controlled by a combination of computers and sensors installed in the vehicle and roadway.
In Australia, a large number of accidents occur in rural areas as a result of cars running off the road. Research
is needed into AVC systems that can detect and respond to this situation and thus help to save lives.
Vehicle Engine and Suspension Technologies (EST)

Developments in engine and suspension technologies are reducing damage to the environment (reduced noise
and emissions) and the road surface, and making driving safer. In particular, advanced suspensions on heavy
vehicles are making the vehicles safer and by spreading the load are causing less road damage. There is interest
in the use of alternative fuels, such as compressed natural gas (CNG) for vehicles, especially freight vehicles and
public transport. The legislative requirement for "zero emission" vehicles being introduced in North America is
spurring technological developments with both electric vehicles and with "smog eating" add-ons (for example,
chemical coatings for vehicle radiators that absorb air pollutants from the atmosphere).
Public Transport Information (PTI)

Systems designed to provide travellers with information about the availability of public transport. This infor-
mation can be provided before the trip (about timetables and fares, transfers, etc) or during the trip (waiting time
until the next bus, availability of seats, estimated time of arrival at destination, etc). The information can be dis-
played at bus stops or be distributed by phone, or computer network. By linking timetables with vehicle track-
ing systems and information about current traffic conditions, the information can be up to date and accurate.
The aim is to provide timely and accurate information to allow travellers to better plan their trip in terms of
mode and time of travel.
Public Transport Management (PTM)

Includes systems that enhance the efficiency and safety of public transport vehicles, such as computerised
timetabling, dispatch and rostering, fleet monitoring systems and intelligent control system. Technology is
allowing public transport to be not only more cost effective but also more responsive to the needs of travellers.
Computerised vehicle dispatch systems currently installed in taxis is a familiar example of this technology.
Road Safety Enhancement (RSE)

Systems that help the driver avoid an accident and provide better protection if a crash occurs. Australian vehi-
cles are already fitted with a range of safety devices but in future they will be supplemented with systems that
aid the driver and respond more quickly and intelligently to accident situations. Using sensors that respond to
imminent collisions, seat belts can be tightened and airbags deployed in an optimal way to minimise injury.
Other emerging technologies include head-up displays, vision enhancement systems for driving in conditions of
reduced visibility (night, fog), and proximity, speed, and hazard alarms that warn of potential danger ahead.
Systems are also being developed that diagnose the roadworthiness of the vehicle and driver. By storing data
on driving characteristics of the vehicle and driver, an onboard computer can detect when the driver or vehicle
is behaving unusually such as in cases of driver fatigue or impending mechanical failure. The driver can then be
warned of the reduced levels of safety. Similar systems can act like an aircraftOs Oblack box() recorder and
provide information about the circumstances of crashes.

Security and Emergency Services (SES)
The combination of vehicle tracking and two-way communications provides protection for drivers, vehicles and
cargoes by allowing continual monitoring from a central control room. This has obvious implications for move-
ment of valuable cargoes (such as money) but also can be important for taxi and bus drivers where there is the
potential for theft or harassment, and for vehicles travelling in remote areas. For personal security and accident
survival in remote areas of Australia, communications systems can be developed that provide alarms under cer-
tain conditions. The same technology can be used to monitor the movement of hazardous cargoes (such as
chemicals) through urban areas, and to monitor and optimise the deployment of emergency vehicles (such as
police and ambulances)
Freight Management Systems (FMS)

Involves a range of technologies aimed at increasing the reliability, service quality and efficiency of freight trans-
port. The basic idea is to increase the efficiency of freight operations through greater control of fleet opera-
tions by monitoring movements of the vehicles and freight using vehicle tracking and identification systems, and
providing two-way communications between freight vehicles and control centre. New technologies are also
being used to monitor compliance with government regulations. Sensors can be used to identify individual vehi-
cles and measure their weight and dimensions without the need for the vehicle to stop. This category also
includes Electronic Data Interchange (EDI) systems that reduce the amount of paper work involved in freight
movements and facilitate smooth movements of freight through the transport chain,
Environment and Pollution Monitoring (EPM)

Pollution monitoring devices and warning systems are already installed in vulnerable locations such as the
Sydney Harbour Tunnel. It is already possible to continually monitor and process measurements from a large
number of pollution sensors scattered across a region so it is likely that environment and pollution monitoring
systems will become more widespread. Then broadcast warnings and implement traffic control strategies to
reduce the problem.
The `smog eating' vehicle technology introduced under the section on vehicle engine and suspension technolo-
gies offers another dimension to combating the pollution problem.
Telecommunication Applications (TEL)

In addition to the technologies that have a direct influence on the road system, there are technology related
trends in society that are having an indirect impact on the road system. In particular, information and commu-
nications technologies are changing the type of work that we do and the way that we do it. Mobile phones,
faxes, computers and the information superhighway are making telecornmuting and teleworking increasingly
available as alternative modes of working. Technology is also providing alternatives to travel for other purpos-
es, such as shopping, entertainment and education.
This has long term implications for land use and the structure of cities and for the pattern of demand for the
road network. In future it is likely that fewer people will be commuting long distances to work and that the daily
commuter trips are replaced by local trips to schools, shops and other services. This is likely to reduce the length
of trips but possibly to increase their number. It will also change where the trips are made and when they occur.
This can have a big impact on the type of road system that we need to cater for future needs. This issue has
already been discussed in Chapter 4 so there is no need to go over it again beyond recognising that it will have
a major impact on the road system.

4. INTE CTIONS
4.1 Introduction
It is clear that there is a bewildering array of technologies being applied to the road system in many different
ways. But how will it affect the way that we use the road system and the way that the road system is managed
on our behalf. A common feature of many of the emerging technologies is communications and information.
The biggest change will be in the amount of communication and the flow of information between the com-
ponents of the road system. At present the components largely work in isolation but in future there will be
much more interaction between the components.
The road system is a complex entity with many components but to simplify the discussion, they can be reduced
to just three
1 Roads: all the fixed infrastructure and organisations supporting the road network. This includes the road
pavement, road signs and vehicle detectors, and the institutions (road authorities and the like) that build and
manage the road network, and any commercial operators that sell road-related services;
2 Vehicles: all the cars, motorcycles, trucks, buses and bicycles that are driven on the roads.
3 Users: all the people who use the roads.
New interactions and flows of information between these three components will arise from emerging tech-
nologies.
Road-vehicle interactions
Technologies that involve flow of information between the infrastructure and the vehicle with no direct inter-
vention by the users. At present, this flow does not exist for the vast majority of road users. However this is
a basic element of applications such as vehicle tracking and identification systems (PTM, PTI, FMS, SES), auto-
matic toll collection (ATC), and ultimately automated highways (AVC).
Road-user interactions
Technologies that involve communication between the road infrastructure and the user. Current information is
static and directed equally to all road users. In future the information will be dynamic and personalised.
Information about the current status of roadways and traffic (DIS, INM, FMS), public transport (PTI) or envi-
ronmental conditions (EPM) will be collected and synthesised by relevant authorities and passed on to road sys-
tem users.
Vehicle-user interactions
Technologies that involve information provided to the user by the vehicle. Currently the only information we
receive from the vehicle relates to its own performance (speed, engine temperature, etc). Sensors and comput-
er systems can be built into the vehicle to provide route guidance information to driver (ROG) and provide safe-
ty warnings (RSE).
Road-vehicle-user interactions
Technologies that involve communication from the roadway to the vehicle then on to the user. This can include
vehicle navigation system that include real time information (ROG), vehicle dispatch systems (FMS, PTM) and
driver and public transport information systems installed in vehicles, at bus stops or computer kiosks, or avail-
able through computer networks (DIS, PTI).
TOWARDS BLUER PRACTICE 361

Other interactions
As well as involving much greater interchange of information between the three system components, the new
technologies will enable each of the system components to collect and process more and richer information.
By using a wider range of sensors and exploiting high speed communications and computing, road authorities
will have access to much more information about the current state of traffic conditions. This information.can
then be used to react to incidents more quickly (INM) and adjust traffic lights to ease congestion (ATC) and
reduce pollution (EPM). Vehicles will also become "smarter". Sensors and onboard computers will monitor
the condition of the vehicle, the roadway and the driver to optimise vehicle performance (EST, PTM) and help
to protect the driver (RSE).

EMERGING TECHNOLOGY
5.BENEFITS
So far, we have examined the emerging technologies, their applications and the way that the relationships
between the road system components will change. But what will the technologies deliver in terms of benefits?
At the start of this chapter, six types of benefits were identified:
1 better utilisation of infrastructure;
2 improved traffic flow;
3 better service from public transport;
4 enhanced safety;
5 lower cost freight transport;
6 reduced environmental impact.
These benefits will be delivered by combinations of technologies working together towards the overall aim of
making the road system better serve the community. Improved traffic control, better information about traffic
conditions and transport options, better vehicles and improved public transport will work together to make it
easier and more efficient to use the road network. It will also improve the utilisation of existing infrastructure
and reduce the need to provide more roads and road transport services. In addition, reduced environmental
impact will result from more efficient usage of the road network by more environmentally friendly vehicles.
It is difficult to quantify the individual benefits that the emerging technologies will deliver. Many of the bene-
fits are intangible (shorter travel times, reduced environmental impacts, better service quality, etc) and the over-
all benefits will depend on the characteristics of each city or region and the combination of technologies that
are in use. In addition, many of the technologies are complementary and the full benefits will only be delivered
when they are all in place. So rather than attempt to assign a dollar value, each technology has been assessed in
terms of the type of benefits that it will deliver. Table 6.1 summarises the likely benefits from each of the tech-
nology categories.
Table S. I Potential benefits from emerging technologies
Benefit Better Improved Better Enhanced Lower Reduced

Technology Utilisation of Traffic Public Safety Freight Environmental
Infrastructure Flow Transport Costs Impact
ATC X X X X X X
ROG X X X X X X
DIS X X X X X X
INM X X X X X X
ETC X X X X
AVC X X X X
EST X X X X
PTI X X
PTM X X
RSE X
SES X
FMS X
EPM X
TEL X X X

6. DEVELOPMENTS IN AUSTRALIA
Australia has been quick to take advantage of emerging technologies where there is a demonstrable benefit. The
following section lists examples of major applications of emerging technologies in the Australian road system.
The list is not meant to be comprehensive but to give an indication of systems already in operation and devel-
opments currently under way in Australia. A more comprehensive review has been undertaken as part of the
National Transport Policy Framework process (ATC 1995).
New South Wales
Sydney is a leader in coordinated traffic signal technology (ATC). The SCATS system is now in use in
many cities in Australia and overseas. SCATS has been enhanced to include a vehicle tracking system
using automatic vehicle identification technology. This system, known as ANTTS, detects the passage of
specially equipped vehicles (mostly taxis, buses and government vehicles) through more than 200 inter-
sections in Sydney. The information can then be used to estimate travel time and identify congested areas
An incident management system (INM) is currently installed on the Sydney Harbour Bridge and a more
advanced system is planned for the M4 freeway.
The F6 freeway connecting Sydney and Wollongong is subject to severe fog. A system of visibility detec-
tors and variable message signs (DIS) has been installed to increase safety (RSE) on the freeway. The sys-
tem also provides messages to individual vehicles about their current speed.
The NSW government is equipping its truck checking stations with sensors that will check the weight and
dimensions of trucks (FMS) as they drive through the station. In future some stations may become fully
automated.
Victoria
A freeway information system (DIS) has recently been installed on MelbourneOs South Eastern Freeway.
The system provides real time information to motorists on current traffic conditions and estimated trav-
el times on the freeway. The system makes extensive use of variable message signs and also broadcasts
the information using computer, fax, teletext and telephone.
Incident detection systems (INM) have been installed on four Melbourne freeways. The system uses sen-
sors built into the road to measure traffic flow and automatically detect incidents. An incident manage-
ment plan can then be initiated to clear the problem and get the traffic flowing normally.
The Public Transport Corp of Victoria is using radio beacons located at key sites in the network to track
and monitor its tram fleet (PTM). This information is being used to develop a system to predict tram
arrival times (PTT). The system is being trialed at the Elizabeth St Terminal.
The Victorian government recently announced the construction of the Melbourne City Link project.
Vehicles will pay a toll to use the road and all toll collection will occur automatically (ATC) using auto-
matic vehicle identification technology.
Queensland
Variable message signs (DIS) and an incident management system (INM) are installed on BrisbaneOs
South East Freeway, its entry ramps, and on the surrounding surface streets.
Automatic toll collection (ATC) is being trialed on the Gateway Bridge.

EMERGING TECHNOLOGY
An ITS System Architecture has been developed for the TRAC traffic control system, employing modern
international computing standards and protocols to integrate all ITS applications in modular manner. This
permits the transparent sharing of information and communications.
Electronic tagging of buses to establish priority at traffic signals is continuing, and a trial is under way to
tag emergency vehicles.
An "over mass" container authorisation system has been installed on the access road from the Port of
Brisbane. This facility combines electronic tagging and weigh in motion technologies. A tagged truck is
automatically provided with a permit to carry the overmass container for a limited distance, with the
appropriate fee charged as an electronic transaction.
South Australia
Adelaide is a leader in the application of technology to public transport (PTI, PTM), including electron-
ic ticketing, computerised planning (PTIvl), an interactive passenger information system and vehicle tech-
nology such as the guided busway (EST).
Variable message signs (DIS) and an incident management system (INM) have been installed on Mount
Barker Road, on the western slopes of the Adelaide Hills.
In addition to these examples, there are several technologies that have been adopted throughout Australia.
These include coordinated traffic signal control (ATC), priority systems for public transport and emergency
vehicles (PTM, SES), electronic ticketing for public transport (PTM), and weigh-in-motion checking of heavy
vehicles (FMS).
So it appears that Australia has been quick to take up some of the opportunities available from applying emerg-
ing technologies to the road system. But what of the future? In 1994 a survey was undertaken by ARRB (Miller
1994) to gauge the relative importance of various technologies and applications as the basis for developing a
national research strategy. The survey included representatives of manufacturing industry, motoring associa-
tions, road authorities and research agencies. The survey identified seven areas as being of top priority. These
areas are listed in the following box.
Australian Research Priorities for ITS

(Miller 1994)
1 Incident detection and management
2 Market research
3 Collection of real time traffic data
4 Assessment and adaptation of overseas research
5 Establishment of standards and protocols
6 Adaptive traffic control systems

The priorities reflect the fact that despite the examples listed above, the penetration of advanced technologies
into the operation of the Australian road system is still in its early stages. There is concern for setting the scene
for implementation through market research and monitoring overseas developments, plus sorting out standards,
protocols and legal implications. The only applications included in the list are aspects of the core function of
traffic control. This suggests that priorities for the immediate future involve an emphasis on building on
Australia's existing strength in advanced traffic control systems while creating an environment that is conducive
to the implementation of technologies being developed elsewhere in the world.

7. INTERNATIONAL PERSPECTIVE
The European Union, United States and Japan are currently investing huge amounts of money in research pro-
grams aimed at developing and trialing technology applications in transport. The current total budget is some
A$IB per annum. In large measure this is a response to acute traffic congestion coupled with environmental
problems and resistance to building more and more roads. The programs cover the full range of applications
listed above.
It would be possible to site examples of current installations and trial programs in all categories but transport
technology is a dynamic field and a long list of sites would not add to the understanding of the technologies
and issues. Also, a list that purported to reflect the latest developments would be quickly out of date. If you
are interested in keeping up with latest global developments in transport technology, good sources of informa-
tion are
Traffic Technology International; a quarterly review of global developments published by UK and

International Press. An yearbook is also produced.
Proceedings of international conferences, particularly the annual World Congress on Intelligent Transport
Systems.
the internet; there are several email interest groups and World Wide Web sites. ITS Online at
<http://www.io.com/-itsol/> is a good place to start.
ITS Lit; a bi-monthly bulletin funded by ITS Australia and produced by ARRB. As its name suggests, ITS
Lit provides information on new literature on ITS.
Professional and special interest groups; there are several groups specifically devoted to advancing the
application of new technologies in transport. ITS Australia acts as a link to these organisations through-
out the world and as a clearinghouse for information of new technologies.
The strength of overseas R&D programs and rapid implementation in overseas markets has implications for
Australia in two major areas:
1 Standards: The development of uniform standards and protocols is an extremely important issue. There
is a strong push, particularly from Europe, to create and enforce appropriate standards. Common stan-
dards will allow the various technologies to be connected and work together and will allow vehicles to make
use of local facilities as they move from one region to another. Without standards we may end up with
compatibly problems and the need duplicate hardware either on the roadway or in the vehicle or both.
Most work in this area is being undertaken by technical committees of the International Standards
Organisation (ISO). Australian industry and governments are actively participating in these committees.
2. Access to technology: Australia cannot match the R&D budgets available in Europe, US and Japan and the
Australian market is too small to support development in many areas. However Australia is in a position
to adopt and customise technology being developed overseas. It may be possible to legislate in the ADRs
for a suitable "platform" for technology development and the implementation of a wide range of applica-
tions in new vehicles in Australia.
If international standards are adopted throughout Australia then it will be possible for overseas technology to
be quickly adapted to Australian conditions and integrated into existing systems. It also means that it is con-
ceivable that in the future, a traveller will be able to use the same "smart card" to pay for travel by public trans-
port or to pay tolls in any city throughout Australia.

8 COMMUNITY ISSUES
"The introduction of any new technoloyg for any purpose as an effect on society. It may cause
behaviour to change, it may alter to costs associated with different kins of behaviour, it may be
socially redistributive, it may alter the relative balance of power between the State and its citizens.
These effects and people's expectations about them generate arguments about the relative merits
of technology, arguments that may effectively decide whether the technology is introduced."
(Daniel, Webber and Wigan 1990)
The application of advanced information, communications, control and mechanical technologies has the poten-
tial to deliver significant benefits to road users and road system administrators. However the technology and its
benefits cannot be considered in isolation from community context. Inherent in any major technological
change, there are range of social, legal, regulatory and institutional issues. In terms of the impact of emerging
technologies, the major community issues include
privacy;
information ownership;
legal liability;
equity;
uniform standards;
legislation and regulation.
These issues cannot be fully explored or resolved in this report but there is an opportunity to explain the cir-
cumstances under which they arise, to look at how they will affect individuals and the community as a whole,
and to raise some important questions that should be addressed by the community.
Many of the community issues, especially those affecting individuals, will arise because the emerging technolo-
gies allow components of the road system to interact in new ways and information to flow between the com-
ponents. We are moving from a "dumb" and impersonal system involving little communication between the
components to an intelligent and personalised transport system in which communication is an integral factor.
Current road transport technology is largely impersonal and operates on the basis of averages and totals. Each
car, each driver and bus passenger is treated equally and the way that the system is presented and responds is
the same for every user. In future this is likely to change. Emerging technologies will allow roads and vehicles
to recognise individuals and to communicate and respond on a personalised basis. In some circumstances this
interaction will occur automatically. There is also the capability to collect, integrate and disseminate informa-
tion collected over a wider region to provide an overview for strategic decision making. The impact of emerg-
ing technologies as noticed by individual members of the community will be to change their perception of the
system as follows:
(Impersonal, Manual, Local) 1) {Personalised, Automatic, Wide Area}

EMERGING TECHNOLOGY
Most current road system technologies are impersonal as noted above, and manual to the extent that interaction
between the user and the road system is largely under the userOs conscious control. Current technologies also
appear to operate on a small local area (single vehicle or intersection), even if this perception is incorrect. For
example, a red light is perceived to apply to that particular intersection, whether or not it is part of a coordi-
nated traffic control area spanning a large area. Emerging technologies are allowing road, vehicle and user inter-
actions that relate to specific individuals and occur automatically, perhaps without the user being aware that it is
happening. Certain applications will also be more obviously broader in their geographic coverage. For exam-
ple, driver information systems that provide information on traffic conditions at another location and provide
an estimate of the travel time to get there.
Privacy and information issues

The first group of community issues arises because new technologies can personalise the road system to such
an extent that it possible to automatically capture information about the activities of particular road users. In
particular, automatic vehicle identification allows individual vehicles to be identified and tracked as they move
through the road network. If the technology is used on public vehicles (such as buses, ambulances, police) or
commercial vehicles then monitoring can be justified on the basis of control and operational efficiency.
However when private vehicles are identified and their movements traced then there are immediately issues of
privacy and ownership of information. The issues include:
who owns the information?
who has access to the information?
what purposes can the information be used for?
can road users retain their anonymity?
The last question highlights that options exist for using emerging technologies to implement systems that are
specific to individuals yet allow them to remain anonymous. An example is automatic toll collection (ATC).
There are at least two different ways in which the application can be implemented. One system involves iden-
tifying each vehicle as it passes the tolling point and then passing the information to a billing system. An alter-
native is the use of a "smart card'O that can be prepaid and automatically debited. This provides positive iden-
tification for the purposes of charging and is associated with the individual but there is no link between the vehi-
cle and the particular event. In this way the individual remains anonymous. So in some cases there are alter-
native ways of implementing the technology and it will be up to the community to decide if and how the tech-
nology is adopted.
The issue of user rights, particularly those relating to privacy and information, have been the focus of consid-
erable community debate in the United States. The following box contains an example of the sort of guidelines
currently being developed in the United States to ensure that individual's rights are preserved.

DRAFT Fair Information and Privacy Principles
(ITS America, 1995)
I Individual Centred
Recognise and respect the individual's interests in privacy and the use of information.
2 Visible
Systems will be built in a manner "visible" to users.
3 Comply
Comply with laws governing privacy and information use.
4 Secure
Make use of data security technology and audit procedures appropriate to the
sensitivity of the information.
5 Law enforcement
Information identifying individuals will not be disclosed to law enforcement and systems
should not be used as surveillance for enforcing traffic laws.
6 Relevant
Only collect relevant personal information.
7 Secondary use
Information may be used for non-ITS applications if coupled with appropriate individual
privacy protection.
8 Freedom of information
Relevant freedom of information laws and procedures should apply.
Legal issues
The ability to identify individuals can also be used as a mechanism for enforcement of regulations. This inunc-
diately leads to issues of legal liability. Identifying the vehicle and identifying the driver are two entirely differ-
ent processes. Most technology is linked to the vehicle but vehicles can have many different drivers. Under cur-
rent legal regimes in Australia, the vehicle owner is responsible for the vehicle and liable for any offences com-
mitted by the vehicle. The onus is on the owner to identify the driver. This issue of the vehicle versus the dri-
ver will become more important as automatic vehicle identification technologies become more widespread.
Similar issues of responsibility and legal liability also arise from technologies where there is information flow-
ing from the roadway to the driver or between the roadway and vehicle. Driver information systems and auto-
matic vehicle control are examples. What happens when something goes wrong, for instance who is liable for
an accident on an automated highway or for problems that arise if a driver follows directions provided by a dri-
ver information system? Currently, the general principle is that the driver is in control of the vehicle at all times
and cannot transfer any liability. However these principles may need to be re-examined.
These are simply two examples of instances in which technology is moving ahead of the legal system and tak-
ing us into legal grey areas. There is a danger that laws and regulations that have been appropriate under sim-
pler technology will become unwieldy and unenforceable under emerging technologies. There are many legal
aspects of the technologies that need to be clarified before, not after, the technologies are adopted.

EMERGING TECHNOLOGY
Equity
Concerns have also been raised that the effects of emerging technologies will be felt differently across the com-
munity. Not all members of the community have equal access to the technology or to the information and relat-
ed services that it can provide. It is possible that the greatest benefits will accrue to those in the community
with the greatest ability to pay. Similarly, not all members of the community are equally comfortable using infor-
mation-based technologies. As with all new technologies, the rate of acceptance and ability to utilise the tech-
nology will vary within the population. This means that the technologies should be introduced in a way that is
easy to use and accessible for the majority of community members.
It is also likely that emerging technologies will produce changes in accessibility, travel behaviour and the pattern
of traffic flows. For instance, driver information systems (DIS) may encourage drivers to change their routes
and patterns of trips. This has implications for the distribution of economic activity in the city. It will benefit
some areas but equally will disadvantage others. Note that the broader community impacts of road pricing and
changes in urban form have been discussed elsewhere in this report.
There are already many examples of the use of emerging technologies on Australian roads and the pace of
adoption of technological solutions to road system problems is sure to quicken. However most applications of
advanced transport technology are aimed at areas where road system usage is high, in terms of traffic conges-
tion, heavily used public transport and lots of trucks. This means that the technologies will be felt first and most
extensively in the largest cities where road systems problems are most acute. So far, the focus of applying tech-
nology has been in Sydney and Melbourne and is rapidly gaining pace in Brisbane. Systems are being planned
or are under consideration in Adelaide and Perth but are largely restricted to basic traffic control and public
transport management. In smaller cities, including Hobart, Darwin and Canberra, the need for advanced tech-
nology to help alleviate road transport problems is not as urgent. It follows that each State and city is likely to
select those parts of the technology that appropriate to their own problems. This means that the take-up rate
of the technologies is likely to vary considerably across the country.
Standards and institutions

The last two issues, standards and institutional change, relate to the creation of an environment in which the
technologies can deliver maximum benefits with minimal negative impact on the community. The need for stan-
dards has already been established since without them there is a danger of having a hodge-podge of incompat-
ible technologies. This has immediate implications for the community in terms of ease of use and cost. It is
inconvenient and costly to swap between different systems and to have more than one piece of equipment to
do the same job. Consider what would happen if each of the States adopted different technological standards
for automatic toll collection. Any traveller who regularly drives in more than one State would need to buy a dif-
ferent set of equipment for each State. It is vital that appropriate standards are defined and adopted. Likewise
it is important that laws, regulations and institutional structures keep pace with changes in technology.
Summary
The community issues associated with the various technology applications are summarised in the following
Table.

Table 6.2 Potential community Issues from emerging technologies
Issue Privacy Information Legal & Social & Standards Legislative &
Technology Ownership Enforcement Equity Organisational
& Access
ATC X X X
ROG X X X
DIS X X X X X
INM X X X
ETC X X X X X X
AVC X X X X X
EST X X X X
PTI X X X X X
PTM X
RSE X X X X X X
SES X X
FMS X X X X X
EPM X X X X
TEL X X X X X
In addition, there are important issues relating to public acceptance and implementation. Many of the proposed
technologies involve significant changes to the way that road users interact with the road environment. An
extreme example with obvious public acceptance implications is fully automated highways where the road user
hands over complete control of the vehicle. Automated highways are a long way off but roadside variable mes-
sage signs displaying speed and/or route guidance are a current technology and guided busway technology, like
the Adelaide 0-bahn, is already available. The success of these and other technologies largely depends on the
level of public acceptance and willingness to utilise the technology. There is a danger that potentially beneficial
technologies may not be adopted because they become associated with negative issues such as enforcement and
invasion of privacy.
There are also problems associated with managing the implementation of technological solutions. For many
proposed systems, the full benefits will not be realised until a large percentage of the vehicle fleet is fitted with
the required gadgets or a large proportion of the road network is equipped with advanced instrumentation and
signage. As a result, initial benefits may be small and there will be significant challenges associated with man-
aging the transition period until full benefits are realised.
It is clear that emerging technologies have direct implications for the community and community institutions.
However there are choices in terms of whether the technology is introduced and how it is introduced. This
suggests that social impact analysis and community consultation should be integral components of the process
of introducing new technologies into the road system.

9. COMMERCIALISATION
Emerging technologies will open up unprecedented opportunities for private sector participation in the overall
road system and for greater commercialisation. This will include the development of both the fixed infrastruc-
ture by partnerships of government and industry and of the supporting services and facilities. An obvious mar-
ket is the production and sale of all the gadgets that will support the technology. Another is in software and
the sale of information services. The increased availability and use of information about the road system plus
communications will create opportunities for companies to collect and process data and then sell it back to road
users in a value-added form. For instance, one company might sell real time traffic information, while another
sells electronic maps for route guidance systems, while yet another sells advertising space on the back of "smart
cards".
Australia will be well placed to take advantage of some of the commercial opportunities arising from emerging
technologies. As mentioned above, Australia cannot compete with the budgets for transport technology R&D
in Europe, US and Japan, but there are certain areas, such as coordinated traffic signal control, where Australia
is a world leader. The SCATS, the coordinated traffic signal control system developed for Sydney, is currently
installed at some 6,000 intersections in 10 countries. By building on this lead and targeting niche markets there
is considerable potential for Australia to expand its role as an exporter of advanced technology for road trans-
port operations. In particular, Australian industry can play a role in using advanced technologies to alleviate the
traffic problems of Asian cities.
Australia can go quickly to the forefront in some areas of technology areas if it can, through nationally agreed
legislation, embed appropriate technology in vehicles as part of the ADR and registration and licensing process.
Commercial imperatives from the private sector would soon give Australia an edge in developing export mar-
kets.
Technology can also facilitate and simplify the introduction of road user charges. We already pay for petrol and
bus tickets and we must buy our own cars. In addition there are already tolls for the use of roads, bridges and
tunnels in New South Wales and Queensland. The broader issue of road charging has been discussed elsewhere
in this report but it should be noted that emerging technologies provides a mechanism for efficient implemen-
tation of user charges.

I.0. THE FUTURE
Emerging technologies have an important role to play in the future of the Australian transport system. The
need to make better use of existing road transport infrastructure and to improve the efficiency of road trans-
port operations suggests that advanced technologies will be increasingly used in planning, managing and oper-
ating the Australian road system. From the issues covered by previous authors in this report, it is evident that
better practice in Australia may best be served by providing an environment to facilitate the application of
emerging technologies which:
improve the efficiency of business;
increase fuel efficiency and reduce and monitor noise and emissions;
improve road safety;
improve accessibility (demand responsive, shared transport and transport information systems);
improve travel data collection and monitoring systems for road authorities and planning agencies.
This is creating exciting opportunities but as we move to take advantage of these opportunities, we must not
lose sight of the impact on the community and the broader legal and institutional issues. Further, there is a clear
need to adopt a national approach to ensure that uniform standards and regulations are developed and adopt-
ed.
Australia appears to be heading in the right direction with regard to the role of emerging technologies in the
road system. We are keeping a close eye on developments overseas and creating an environment in Australia
which will allow appropriate technologies to be adopted. Important inputs to the process of ensuring that
Australia makes best use of emerging technologies will come from:
. Continued consultation between industry, State and Commonwealth governments towards the establish of
uniform nationwide standards. As far as possible, these standards should also comply with international stan-
dards being developed by International Standards Organisation (ISO).
Collaborative research on hardware and software issues involving State and Commonwealth governments,
private enterprise, consultants and research agencies. Australia has unique driving conditions and unique
problems. Australian cities are different from overseas cities so we cannot expect to be able to buy off the
shelf solutions developed overseas. At the very least, the technologies will need to be adapted to Australian
conditions and requirements. Australia cannot match the vast amounts of money being spent in this area
in Europe, United States and Japan. However there are areas, such as advanced traffic control systems, in
which Australia is a world leader. So as well as adapting overseas technology to our needs, there are impor-
tant niche markets in which Australia may be able to develop exports.
Research and community consultation to ensure that the legal and governmental environment keeps pace
with developments in road system technology. There are many issues that need to be clarified in the con-
text of the Australian community and Australian institutions. In particular, there is an urgent need to:
clarify the legal liability implications of the technologies;
clarify the privacy implications and establish appropriate privacy safeguards;
clarify the ownership and freedom of information implications;
clarify the legislative and regulatory implications of proposed technologies

enact common legislation in all States to facilitate adoption of the technologies and remove any legal
ambiguities while safeguarding the rights of the individual;

EMERGING TECHNOLOGY
Research into the distributional effects and other issues of equity that arise from the technologies. We need
to ensure that technology is introduced in such a way that it benefits the majority of Australians.
Ongoing community consultation to identify priorities and concerns, and to ensure that the technologies
are being introduced in a way that is acceptable to the community.
In closing, it is important to remember that the technologies and applications described in this chapter are not
"science fiction". They are available now and it is up to the community to decide how and where to use them.

REFERENCES
Arup Transportation Planning (1994) "Potential benefits for freight operations from Intelligent Transport Systems",
in Building for the Job: Commissioned Work Volume 3. National Transport Planning Taskforce, AGPS, Canberra.
Australian Transport Council (1995) Intelligent Transport Systems, National Transport Policy Framework ITS Working
Group Report.
Daniel, M, Webber, MJ and Wigan, MR (1990) Social Impacts of New Technologies for Traffic Management, Australian Road
Research Board Report ARR184, ARRB, Melbourne.
ITS America (1995) Draft Fair Information and Privacy Principles ITS America.
Miller, C (1994) "Development of an IVHS research strategy", Road and Transport Research 3(4), 67-77.
Wigan, M (1995) "The influence of public acceptance on what NI-IS can achieve", Institute of Transport Studies Working
Paper ITS-WP-95-1, University of Sydney.

E
POr1O> [N 1 11 E CO1i111!\ Il l'

Pill,[ II
6 ETTER P

Ap-50-97 Road in The Community Part 2 Towards Better Practice PDF

Diunggah oleh

Informasi Dokumen

Judul Asli

Hak Cipta

Format Tersedia

Bagikan dokumen Ini

Bagikan atau Tanam Dokumen

Opsi Berbagi

Apakah menurut Anda dokumen ini bermanfaat?

Apakah konten ini tidak pantas?

Hak Cipta:

Format Tersedia

Ap-50-97 Road in The Community Part 2 Towards Better Practice PDF

Diunggah oleh

Hak Cipta:

Format Tersedia

I

EDITED BY DOUG KNEEBONE

(D Austroads Incorporated 1997

ISBN 0 85588 487 8

Front cover photograph by Ian Wallis (Design Side)

1. ROADS IN THE NATIONAL ECONOMY 9

2. ROADS IN THE RURAL CONTEXT 159

3. ROADS IN THE URBAN CONTEXT 229

4. THE IMPACT EMERGING TECHNOLOGY 351

ARE THEY DOING THEIR JOB? 5

Dr Peter Brain National Institute of Economic

Mr John Cox Transport Consultant

Dr Glen D'Este Transport Systems Centre

Mr Ian Gordon Transport Consultant

Professor David Hensher Institute of Transport Studies

Mr Doug Kneebone Transport Consultant

Dr Glenn Otto School of Economics

Mr Tim Raimond Institute of Transport Studies

Ms Carolyn Stone PPM Consultants

Professor Mike Taylor Transport Systems Centre

Dr Graham Voss School of Economics

Emeritus Professor Hans Westerman Westerman Consultants

Mr Damian Yeo Kinhill Economics

Professor Evan Walker University of Melbourne

Professor Ted Kolsen University of Queensland

Professor John Taplin University of Western Australia

Mr Denis Robertson Road Transport Forum

Mr Robert Lim Business Council of Australia

Mr Lauchlan McIntosh Australian Automobile Association

6 ROADS IN THE COMMUNITY

AAA Australian Automobile Association

ARE THEY DOING THEIR JOB? 7

8 ROADS IN THE COMMUNITY

1.2 Economic efficiency 13

1.3 Relationship between economic objectives for the

1.4 What are the constraints on efficiency? 16

1.5 Conclusion objectives and constraints 18

2.2 How is efficiency normally measured? 19

2.3 Constraints on measuring efficiency in roads 19

2.4 Why is pricing so important? 19

2.5 Doing without price information 20

2.6 How do benefits compare with other performance

3. INSTITUTIONS AND THEIR EFFECTS ON EFFICIENCY 22

3.2 Ownership structures and organisational objectives 22

3.6 National versus state or regional road system objectives 30

3.7 National competition policy 31

4. THE URBAN CONTEXT 23

4.2 The economic efficiency issues 32

4.4 Environmental effects and economic costs 37

5. THE RURAL CONTEXT 40

5.2 What are the influencing issues in rural roads? 40

5.3 Are rural roads doing their job? 44

5.4 Where to from here? 45

TOWARDS BETTER PRACTICE I1

7.2 cost-benefit analysis practice 51

7.3 Road pricing 51

7.4 Institutional structures and objectives 52

8. PROPOSALS TOWARDS BETTER PRACTICE 55

12 ROADS IN THE COMMUNITY

1.2 Economic efficiency

1.2.1 Should we build more or less roads?

TOWARDS BETTER PRACTICE 13

1.3 Relationship between economic objectives for the road system