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A comparison of institutional arrangements for road provision

Staff research paper

This paper by Barry Abrams, Peter Cribbett and Don Gunasekera was released on 30 June 1998. The paper compares four institutional approaches to road provision: the traditional 'departmental' approach, output-based management, an effective road fund and a public utility model. The merits of each approach is compared in terms of some key governance characteristics, including accountability, responsibility, autonomy and transparency.

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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.

Background information

02 6240 3330

Cover, Copyright, Contents, Acknowledgements, Abbreviations, Overview

1 Introduction
1.1 The significance of roads
1.2 Roads – a form of economic infrastructure
1.3 What this paper is about
1.4 Structure of the paper

2 Current Australian institutional arrangements
2.1 Australian road-related objectives
2.2 Legislative arrangements
2.3 The traditional 'departmental' and output-based management approaches
2.4 Funding and pricing of roads

3 Alternative institutional arrangements
3.1 Effective road fund approach
3.2 The public utility model

4 Comparison of institutional arrangements and issues for consideration
4.1 A framework for comparison
4.2 Comparison of institutional arrangements
4.3 Issues for consideration