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Road and Rail Freight Infrastructure Pricing


  • Productivity Commission


The Productivity Commission’s inquiry report into the ‘Road and Rail Freight Infrastructure Pricing’, was tabled in Parliament in April 2007. The Commission had been asked to inquiry into the costs of freight transport infrastructure on major road and rail networks and options for transport pricing reform. The inquiry would assist COAG to implement efficient pricing of road and rail freight infrastructure to maximise freight transport efficiency and net benefits for the community. Although the Commission concluded that heavy trucks, in aggregate, had been paying their way under the PAYGO system, and that competitive distortions between road and rail were limited, it also found that pricing and regulatory arrangements hampered the efficient provision and productive use of both road and rail infrastructure. The main efficiency losses with current road charging arrangements derive from the averaging of costs and charges under PAYGO, and the disconnect between road revenue and spending decisions. The Commission proposed a sequential approach to reform to be overseen by COAG, this involves: improvements to the PAYGO system, coupled with regulatory reform and improved investment decision-making processes; then incremental pricing for trucks currently excluded from parts of the network, and institutional reforms, before moving to introduce wider location-based pricing. The Commission stressed that each step should be preceded by detailed examination of costs, benefits and distributional impacts, and identification of appropriate adjustment mechanisms. For rail, the Commission recommended a range of reforms to overcome the legacy of a century of inconsistent state based regulation. It also concluded that there was scope to moderate rail access regulation and that corporatisation principles should be more strictly applied.

Suggested Citation

  • Productivity Commission, 2006. "Road and Rail Freight Infrastructure Pricing," Inquiry Reports, Productivity Commission, Government of Australia, number 41.
  • Handle: RePEc:ris:prodir:41
    Note: 600 pages

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    Cited by:

    1. José A. Gómez-Ibáñez, 2016. "Open Access to Infrastructure Networks: The Experience of Railroads," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 49(2), pages 311-345, September.
    2. Martin, Tim C. & Thoresen, Thorolf R., 2015. "Estimation of the marginal cost of road wear as a basis for charging freight vehicles," Research in Transportation Economics, Elsevier, vol. 49(C), pages 55-64.
    3. Abbott, Malcolm & Cohen, Bruce, 2016. "The privatization and de-privatization of rail industry assets in Australia and New Zealand," Utilities Policy, Elsevier, vol. 41(C), pages 48-56.
    4. Productivity Commission, 2006. "Tasmanian Freight Subsidy Arrangements," Inquiry Reports, Productivity Commission, Government of Australia, number 39.
    5. Nick Wills-Johnson, 2007. "Regulating Railways in Logistics Chains," Agenda - A Journal of Policy Analysis and Reform, Australian National University, College of Business and Economics, School of Economics, vol. 14(1), pages 51-68.
    6. Emily Poole & Carl Toohey & Peter Harris, 2014. "Public Infrastructure: A Framework for Decision-making," RBA Annual Conference Volume (Discontinued), in: Alexandra Heath & Matthew Read (ed.),Financial Flows and Infrastructure Financing, Reserve Bank of Australia.
    7. Nick Wills‐Johnson, 2009. "Assessing the Costs of a Haulage Regime," Australian Economic Review, The University of Melbourne, Melbourne Institute of Applied Economic and Social Research, vol. 42(4), pages 410-421, December.
    8. Dariel De Sousa & Christopher Findlay, 2008. "Relationship between liberalization in the logistics sector and trade facilitation," STUDIES IN TRADE AND INVESTMENT, in: Trade Facilitation Beyond the Multilateral Trade Negotiations: Regional Practices, Customs Valuation and Other Emerging Issues, pages 245-280, United Nations Economic and Social Commission for Asia and the Pacific (ESCAP).
    9. Nicols, Panos & Ahmadi-Esfahani, Fredoun Z., 2009. "Are Australian wholesale vegetable markets LOOPy?," 2009 Conference (53rd), February 11-13, 2009, Cairns, Australia 47618, Australian Agricultural and Resource Economics Society.


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