By Jenny Wiggins, 31 July 2015

Oregon’s Department of Transportation will be invited to Australia to explain how a new road charging system works as the government considers alternatives to fuel taxes to pay for infrastructure.

Deputy Infrastructure Minister Jamie Briggs, who attended the launch of the US road charging program OReGo on July 1 in Salem, said Oregon had come up with “a really interesting model” to fund new transportation projects.

“I want to organise the key official we met with to come over to Australia at some point, hopefully later this year, and explain what they’ve done,” Mr Briggs said.

The OReGO program, which is being piloted with 5000 vehicles, asked drivers who have volunteered to be part of the program to pay a road usage charge based on the distance they drive.

The road usage charge is set at US1.5¢ per mile and volunteers get credits on their fuel bills to offset taxes. Drivers in the OReGO program can choose from different providers of mileage tracking systems, including the Oregon Department of Transportation.

Australia needs to consider road user charges because revenues from fuel taxes, which currently help pay for roads, will fall as vehicles become more fuel efficient, Mr Briggs said.

“The amount we collect is far shorter than the amount that’s required to maintain and improve the existing stock of infrastructure,” he said. “Fuel excise is going to becoming a diminishing source of revenue very quickly.”

Engineering groups that build roads support user-charging systems such as OReGO because they are also worried about the impact of falling fuel tax revenues on infrastructure funding.

David McAlister, global director of WSP Parsons Brinckerhoff’s transportation and infrastructure business, said VMT taxes were finally starting to emerge in the US after more than a decade of discussion.

“The concept [of road usage charging] has been out there for a long time but people hadn’t figured out how to sell it,” Mr McAlister said.

Research by the University of Southern California’s Sol Price School of Public Policy released last year found that taxes on “vehicle miles travelled” (VMT) could raise billions of dollars more than the US’s current gas taxes.

Guy Templeton, president and CEO of WSP Parsons Brinckerhoff’s Asia Pacific business, said Australia also needed to start thinking about technology that could support user-pays systems such as OReGO.

“The ability to measure vehicle distances accurately, to have that data compiled with integrity, to have the right sort of sensors on roads for user pricing – all of this is coming along in leaps and bounds,” Mr Templeton said.

Other innovations in infrastructure funding include legislation passed by Canada’s Quebec province in June allowing pension fund Caisse de dépôt et placement du Quebec to exclusively build, finance and operate projects.

Under the agreement, the Quebec government will jointly plan projects with a subsidiary of Caisse, CDPQ Infra. But Caisse, which manges some C$226 billion in assets, will take on the financial risk of construction and also own the project.

The new funding model was more acceptable to communities than traditional public private partnerships because any profits from the projects would be returned to taxpayers via the pension fund, Mr McAlister said.

“I think it’s more sellable to the public,” he said. “Many governments have a hard time selling their assets because the public sees them as selling to a private entity, whereas a pension fund is considered more of a public entity.”

Extracted in full from the Sydney Morning Herald.