A comparison of Institutional Arrangements for Road Provision

As part of the Productivity Commissior's wider research on issues into microeconomic reform, a Staff Research Paper, A Comparison of Institutional Arrangements for Road Provision, was released today.

The paper evaluates four institutional approaches to road provision: traditional 'departmental' arrangements, output-based management, an effective road fund and a public utility model.

Road provision in Australia is characterised by the traditional 'departmental' and output-based management approaches, which allow Ministerial discretion over the provision of road networks.

The effective road fund approach, partly adopted by the New Zealand government and several other countries, involves the devolution of responsibility for decision-making to a management board.

Under a public utility model, which has been proposed by several organisations in Australia and overseas, including the Australian Automobile Association, a road utility would charge directly for road use and provide road services on the basis of being able to earn a reasonable rate of return on its investments.

The report argues that there is value in exploring the merits and scope for gradually incorporating the relative strengths of alternative approaches to the way road networks are provided in Australia.