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7-9 OPTIONS TO RAISE ADDITIONAL ROAD FUNDS

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					Ordinary Meeting of Council
17 December 1997


7.9     OPTIONS TO RAISE ADDITIONAL ROAD FUNDS (OSD)


PURPOSE

The purpose of this report is to advise Council of a letter from WAMA on the above subject.


BACKGROUND

The Shire President is in receipt of a letter from Cr Ken Peck, President, Western Australian
Municipal Association (WAMA) raising several options to raise additional funds for road
funding.

The letter from Cr Peck states in part:-

        As you may have recently noted through the media, the Minister for Transport, the
        Hon EJ Charlton MLC has recently met with key stakeholders and user groups to
        discuss several options to raise additional road funding. The High Court’s decision
        in August 1997 to invalidate the State’s abilities to raise Fuel Franchise fees stymied
        a previous proposal to increase Fuel Franchise fees across all fuel types by levying a
        further 2½c per litre which would have resulted in an additional $62 million per
        annum for road funding.

        The Hon Eric Charlton MLC, Mr Ross Drabble - Acting Commissioner of Main
        Roads Western Australia (MRWA) and several MRWA Senior Executives recently
        met with WAMA Executive Members, and outlined a program aimed to deliver
        increased improvements to the State and Local Road networks. Projects amount to
        $850 million have been identified and those projects have been selected on their
        ability to meet community and economic demand, to support regional development
        and to provide safety and environmental benefits.

        In order to meet these needs, three possible options are being considered by the
        Minister to provide the identified funding shortfall.

        The three options proposed are:-
        1.      “Do nothing” status quo (forgo investment return of 7:1)
        2.      Raise revenue for $170 million per annum over the next five years
        3.      Borrow funds and raise revenue by $62 million per annum for seventeen (17)
                years

        The Minister proposes to source the additional revenue ($62 million per year)
        through a scheme to increase vehicle licence fees across all vehicle types. The effect
        on typical vehicle types would be:-

                                           Commodore        Light Truck           5 axle
                                             (family                            Articulated
                                           concession)                            Truck
         Current Charges 1997                $217 pa          $273 pa            $5824 pa
         Proposed Charges 1/7/98             $273 pa          $315 pa            $6782 pa
         Additional Cost per week             $1.06            $0.81c             $18.04
7.9     Cont’d 2
Ordinary Meeting of Council
17 December 1997



       The proposed charge on a 5 axle articulated truck takes into account the removal of
       the current intra-state licence concession. If these increases were introduced,
       Western Australia’s State road charges would sit in the middle range of charges
       across Australia.

       Local Government is more than aware of the many outstanding requests to improve
       the Local and State road network. On a daily basis, representatives from WAMA, the
       Grants Commission, Regional Road Groups and others are advised of problems
       associated with poor road infrastructure, and therefore it is obvious that Local
       Government needs to respond in some way.

       The current proposal is seen as an investment in the economy because the improved
       road infrastructure should produce benefits of 7:1, through the development of new
       projects, a reduction in operating costs and other improvements in efficiency. Social
       benefits will include less stressful road usage, reduction in road trauma and an
       increased quality of life for road users and residents. An example of a direct
       financial benefit is that a new road would mean that the proposed reduction of
       tonnages on lime-sand routes would not be necessary.

       Should additional funding not be sourced from Federal or State budgets, Local
       Government will increasingly be called upon by its residents to provide solutions and
       Local Government may have no alternative than to let the road condition deteriorate
       or consider increasing our rates revenue for road needs.

       Given the High Court decision and the continued refusal of the Federal Government
       to address the issue of road funding, there are few options available. To allow the
       further deterioration of our roads would be unacceptable to most people.

       To assist WAMA in responding to the Minister, we need to know what your Council
       thinks of the proposal. If your Council does not wish to support the proposal, it is
       important for us to know what viable and achievable alternative forms of increased
       road funding it would support. A feedback sheet has been attached to enable you to
       provide us with an interim comment. However Council’s formal position on the
       proposal is requested.


REPORT

The attached questionnaire from WAMA requests Council’s comments under the following
headings.

· PROVIDE THE COMMENT ON THE OPTIONS PROPOSED

  The three options proposed by the Minister are:-

  1.   “Do nothing” - status quo
  2.   Raise revenue of $170M per annum over the next 5 years
  3.   Borrow funds and raise revenue by $62M per annum for 17 years

7.9    Cont’d 3
Ordinary Meeting of Council
17 December 1997


      Of the three options proposed, Council staff consider that the third option of raising
      revenue by $62M is the best option. The raising of vehicle licence charges for motor
      vehicles by $56 is, however, considered to be a major impact for low income families,
      particularly those that require a motor vehicle but do not use it that often. The main
      benefit of a fuel levy is that more tax you pay the more fuel you use.

      The other options are not favoured by Council staff.

· SUBMIT ANY ALTERNATIVE MEANS OF RAISING FUNDS FOR ROAD

      Councillors are encouraged to provide any ideas to be included in the reply.


CORPORATE PLAN/POLICY IMPLICATIONS

Nil.


FINANCIAL/BUDGET IMPLICATIONS

Nil.


RECOMMENDATION

That Council resolve to:-

(1)        Note the letter from WAMA.

(2)        That it endorses the comments provided in the report as its submission.

				
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