Road Funding

The Road Transport Forum has pointed out that of the entire transport spend, only $4.7 billion is set aside over ten years for new roads.

$470 million a year isn’t a huge amount of money when you consider there are $14.4 billion of proposed roads with a benefit:cost ratio of at least 2:1.

Being a believer in user pays, something I’d like to see the Government do is:

1) Dedicate all petrol tax to the road fund. Public transport, where desirable, can be funded out of taxation as a public good.

2) Set a benefit:cost ratio over which you will fund projects. You could argue it should be 1:1 but I would be happy for 2:1

3) Automatically adjust petrol tax to cover the costs of all new roads (amortised over life-time of roads etc) which exceed that ratio. The petrol tax to be set annually based on each year’s approved road building exercise.

This might see petrol go up to over $1.50 a litre but if that is what the cost is of having a roading network which works, then I’m willing to pay for it.

Long-term I see charging being per car per road but until we have, or are willing to have, such technology the petrol tax is the closest thing to user pays. So why not set it at the level needed to get some new roads built?