More roads not the answer

Building more roads is not the answer to transport congestion, a CEDA forum in Queensland has been told.

The first of CEDA Queensland's three part transport infrastructure series focused on evidence based investment. At the forum it was argued that there needs to be better ways of assessing risk for both the private sector and governments for major transport infrastructure projects.

Department of Treasury, Markets Group Executive Director, Jim Murphy, told attendees that there needed to be more work to examine how the private sector can play a more significant role in investing in and maintaining our transport systems.

Mr Murphy acknowledged there had been an imbalance in the sharing of risk in the past and how risk is assessed needed to be improved.

He said for too long government had expected the private sector to take too much of the risk on some infrastructure projects and in other instances, the private sector expected government to take too much risk.

"What we've got to do is get a better assessment of what's involved in some of these projects, there's a huge amount of money involve and government wants the private sector to make an adequate return on its capital, that's a given, but at the same time government can't afford to be funding these projects, whether it's state or federal government, off its own balance sheet," he said.

In addition to attracting more private sector investment, he said the way forward would also be to better utilise existing infrastructure.

He said population growth, demographic change and an ageing population, greater urbanisation and climate change were all likely to increase pressure on transport and these issues needed to be addressed now or they would only compound in the future.

"Simply building more roads, as we have done in the past, will not be effective or sustainable…part of the solution will need to be better utilising the existing stock of infrastructure," he said.

Mr Murphy said traditionally transport infrastructure had been regarded as a public good. With no direct price signals, this had led to demand for infrastructure being higher than it needs to be and encouraged more people to use our roads.

With forecasts for significant growth in demand for transport infrastructure he said the "expansion and modification of the current system to deal with congestion - including the tradeoffs involved - is a conversation that the whole community needs to be involved in".

He said the government had already started to introduce market signals through 'user pay' charges but more could be done.

On the carbon price, Mr Murphy said it was expected to have a minimal impact on transport infrastructure.

While he said it would impact some inputs, such as asphalt and steel, the impact on the entire construction industry was expected to be under 1 per cent.

Click here to access the event audio.

Mr Murphy's speech at this CEDA event was also reported in the Australian Financial Review on August 30.