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Inquiry into Rural Road Safety and Infrastructure

 

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A Historical Perspective
Current Road Funding Responsibilities

Road Funding Issues

Road Funding Summary

Legal Implications of Failing to Properly Care for Roads

Chapter 3 - Road Funding and Responsibilities

A Historical Perspective

The Committee is of the view that some of today's rural road infrastructure problems are a result of past decisions on road funding and responsibilities.

Submissions received described the historical economic forces influencing the physical development of the country road network and the legislation and funding events of the last century.1 Both Federal and State governments have encouraged a major expansion in road assets, but are now leaving much of the task of funding the renewal of these assets to municipalities.2The Committee considers that the key relevant historical events are:

· The creation of the Country Roads Board in 1913, which had as one of its principal charters the sealing of roads between significant towns.

· Extension of the sealed network during the 1960s and 70s. Many municipalities significantly extended the road network with funding primarily provided by the State and Federal Governments.

· The Transport Act 1983 that established the Road Construction Authority (later Roads Corporation) and officially broadened the role of the State road agency beyond its country origins.3

· A State Government review of rural road funding in the mid-1980s which resulted in not only a more distinct definition between the arterial and local road networks, but more importantly, a withdrawal by the State from any direct financial involvement in local roads.

In its submission Surf Coast Shire stated they believe many of the current road infrastructure challenges can be attributed to the loss of state funding.4

Current Road Funding Responsibilities

While VicRoads and municipalities share the management of Victoria's road network, all three levels of government provide funding. The current funding arrangements were established at a Special Premiers' Conference held in July 1991.5

The source of funds for Victorian roads over the past decade or so is shown in Figure 3.1. Because much expenditure is sourced from grants passed down from one level of government to another, it is difficult to determine from where funds originate.

Figure 3.1 Source of Road Funding in Victoria, 1987-2000

Note: Dollars expressed in 1999 values.
Source: VicRoads submission, Figure 1, p. 6.

Federal Government Road Funding

The Federal Government currently provides road funds for the following:

Until the financial year 1999-2000 the States and Territories also received Federal untied arterial road grants. 6 The term `untied' means the funds do not have to be spent on roads. As part of the tax reform arrangements applying from 1 July 2000 the States are expected to use part of the Goods and Services Tax (GST) revenue for this purpose.

National Highways

National Highways mainly link the State capital cities. The National Highways in Victoria are:

· the Hume Highway from the Western Ring Road to the New South Wales border at Wodonga;

· Western Highway from the Western Ring Road to the South Australian border near Bordertown;

· Goulburn Valley Highway from Seymour to the New South Wales border near Tocumwal;

· Sturt Highway from the NSW border at Mildura to the South Australian border near Renmark; and the

· Western Ring Road between the Hume and Western Highways.7

The Federal Government provides 100 per cent of the funds for construction and maintenance. Construction projects require approval by the Federal Minister for Transport and Regional Services as do annual safety and urgent minor works and maintenance programs.8Roads of National Importance

This funding category commenced in the mid 1990s with agreement between the Federal, New South Wales and Queensland Governments to share the cost of a major ten year upgrade of the Pacific Highway between Sydney and Brisbane. In Victoria the Roads of National Importance are the Calder Highway from Melbourne to Mildura and the Princes Highway between Geelong and Melbourne.9The Federal and State Governments share funding, generally 50 per cent each, for selected construction projects on these roads. Other construction works and all road maintenance on RONIs remain the financial responsibility of the State. There have been cases on the Calder Highway where one government wishes to proceed with a project but it does not suit the project priorities or available cash-flow profiles of the other government.10 This complicates the efficient management of roadworks.

Federal Accident Blackspot Program

A Federal Accident Blackspot Program to address crash sites on arterial and local roads operated from 1990-91 to 1992-93. Another program commenced in 1996-97 and is due to finish in June 2002. The blackspot program is discussed in detail in Chapter 6.

Trend in Federal Road Funding

Figure 3.2 shows the funding for the National Highway, RONI and Federal Accident Blackspot programs received by Victoria in recent years, in 1999-2000 dollar values. The amounts have fluctuated considerably over that period.

Figure 3.2 Trend in Federal Road Funding to Victoria

Source: VicRoads submission, Figure 2, p. 7.

Untied Local Road Grants

The Federal Government also provides grants under the Local Government (Financial Assistance) Act 1995 to assist local government with roads. Since 1991 this money has been `untied', however the amount and its distribution between States is still identified in the Federal Budget papers as funds intended for roads. The grants are adjusted annually for inflation and population changes to retain their value on a real per capita basis.11

Since 1991 Victorian municipalities have received 20.6 per cent annually of the total local road funds in Australia.12 This currently amounts to approximately $87m.13The funds are distributed between municipalities by the Victoria Grants Commission using a formula that takes into account lengths of various types of roads and factors such as traffic volumes, freight, climate, materials availability and whether or not roads are strategic routes.14

Beginning this financial year a new distribution formula is being phased in over three financial years. This will generally favour most, but not all, rural municipalities.15

In addition to the untied local road grants, municipalities also receive untied General Purpose grants under the same Federal legislation and via a separate Victoria Grants Commission distribution formula which includes some road elements. These General Purpose grants total around $220m per annum.

Roads to Recovery Program

In November 2000 the Federal Government announced a Roads to Recovery program, of which $1.2 billion was to be allocated nationally over four years as tied road grants to municipalities for local roads.

The Roads to Recovery Act 2001 legislation specifies the total entitlements of each municipality in Australia. The funds are provided directly to municipalities to spend on their own road priorities. In Victoria the grants are calculated using the superseded Victoria Grants Commission untied local grants formula.16

Total Federal Road Funding

Table 3.1 shows the composition of Federal road funding for the current and two previous financial years.

Table 3.1 Recent Federal Road Funding to Victoria

Location

$ million

1999-2000

2000-2001

2001-2002

 

National Highways

65.1

89.5

121.6

Roads of National Importance

16.2

14.0

102.0

Accident blackspots

8.5

8.8

11.2

Arterial roads (untied)

87.5

- *

- *

Local roads (untied)

80.0

83.8

87.1

`Roads to Recovery'

local roads

-

-

62.6

TOTAL

257.5

196.1

384.3

Note: * Arterial road grants were abolished as part of the New Tax Scheme arrangements introduced on 1 July 2000.
Source: VicRoads submission, and correspondence of 20 August 2001. 

State Government Road Funding

The State Government is financially responsible for all work on the arterial road network, that is, declared state highways, freeways, main roads, forest and tourists' roads. The funds come from its own resources as well as federal grants from the National Highway, RONI and Federal Accident Blackspot programs. The State also provides some special grants for projects on local roads.

State funds are provided through Budget appropriations and the Better Roads Victoria Program.

The annual budget appropriations fund maintenance and operating programs and some special capital works programs.17 In 1999-2000 the allocation to VicRoads was $353.5m and in 2000-2001 it was $507.03m.18 More than half the increase was an allocation of general revenue equivalent to the former untied federal arterial road grants, which were abolished when the GST was introduced.

The VicRoads Annual Report 1999-2000 provided details of the distribution of expenditure among the various VicRoads programs, such as Road System Management; Traffic and Road Use Management, etc. This provided some indication of funding priorities. The Committee noted that the 2000-2001 Annual Report does not provide this information, nor some previously published VicRoads Operating Statement and Balance Sheet details.

Early in 2000 the State Government announced that during the next four years it would devote $240 million to removing accident blackspots across the state. Blackspots are discussed in more detail in Chapter 5.

Better Roads Victoria Program

In 1993, the Better Roads Victoria Trust Fund was established with its funding initially based on a three cents per litre fuel franchise scheme. It provided a substantial boost to State road funding in the mid-1990s as can be seen in Figure 3.1. The program is primarily for the construction and reconstruction of arterial roads and bridges with a focus on projects that will contribute to economic development by reducing transport costs for business and improving the efficiency of roads. As can be seen in Table 3.2 there are a number of categories.

Source: VicRoads Annual Report 1999-2000, p. 71.

The State Impacted Local Road category is for roadworks related to State Government initiatives, such as changes in major grain transport routes due to State railway closures. A limited amount of State funding is available in this category and in some instances municipalities offer to make a financial contribution to a project, usually one half.

In 1997-98 a Rural Local Timber Road projects sub-category was introduced within the State Impacted Local Road category. This was to assist municipalities improve local roads where timber is transported from forests on Crown Land, which does not provide rate revenue for the local municipality. Municipalities are required to contribute one seventh of the project cost.

Originally one third of the annual Better Roads Victoria (BRV) program expenditure was allocated to country roads and the remainder to roads in the Melbourne Statistical Division. This was on the basis that almost one third of travel, and hence fuel franchise receipts, was from travel in country areas. Table 3.2 shows that about 43 per cent of expenditure in 1999-2000 was on rural roads.

The State Government announced that from 2000-01, one third of the available funds would be for projects in country Victoria, one third for outer metropolitan growth suburbs and one third for projects in the metropolitan area.19

Further details of the BRV program categories and arrangements are given in Appendix E.

The Committee noted that information on the distribution between categories of BRV expenditure was not provided in the VicRoads Annual Report 2000-2001. This omission appeared to be part of a general reduction in publicly available information on road funding and expenditure in the most recent VicRoads annual report.

A question which should be asked is the continued relevance of a separate Trust Fund designated for roadworks when its original source, a State fuel franchise scheme, no longer exists. Furthermore the Trust Fund now provides only about one quarter of State Government road funding and the legislative basis is quite obscure. The most recent legislative reference is the State Taxation Acts (Further Amendment) Act 1997 which authorised payment from the Consolidated Fund to the Trust Fund of $185m in 1997-1998 and in respect of each succeeding year:

... an amount equal to 45% of the amount of ad valorum licence fees collected under the Business Franchise Acts in respect of petroleum products during the preceding financial year - in such instalments and at such times as are determined by the Treasurer.20Such an amount can no longer be accurately calculated as the fees no longer exist.

The Committee considers that the continued need for the Trust Fund mechanism should be reviewed. If it is to continue, a more appropriate and transparent legislative mechanism should be developed to specify the annual level of funding provided.

Total State Road Funding and its Distribution

The Committee found determining the State Government contribution to roads difficult, as was obtaining data on the distribution of those funds to the rural and metropolitan areas of Victoria and to the types of works within those areas.

Figure 3.1, on page 20, shows that the State road funding contribution for 1999-2000 was approximately $590m. The graph was provided by VicRoads, but they did not provide a breakdown of funding nor indeed what the road funding was on. To add to the confusion the VicRoads Annual Report states that total State Government road funding was only $479.5m. The Committee notes the additional VicRoads' contribution, from its own direct sources of revenue (fees, etc) was shown as $109.7m.21

In response to a request from the Committee for further information VicRoads provided a table of their annual expenditures reported to the National Road Transport Commission (NRTC), which uses a template of standard categories. An extract is shown in Appendix F and a summary shown in Table 3.3.

Table 3.3 Summary of VicRoads Expenditure, 1999-2000

* Assumes all National Highway expenditure and State local road expenditure is in rural Victoria.
Source: VicRoads correspondence, 20 August 2001.

It is not possible to separate the Federal and State funding in the reported NRTC categories. However, as almost all the National Highways expenditure in 1999-2000 was in rural Victoria and all BRV local road expenditure was on rural roads the Committee estimated that around $382 million of Federal and State funds were spent in rural Victoria.

Unlike federal government road funding the Committee was also unable to gain a clear picture of trends in State road funding over time.

Recent Changes to Road Funding

The inquiry provided the Committee an opportunity to review some of the many changes in road responsibilities and funding which have occurred since the inception of the Transport Act 1983. In that legislation the Government abolished the previous practice requiring a relatively small (10% to 15%) municipal contribution to works on Main Roads, but also effectively withdrew from making contributions to works on local roads.

Since 1983 there have been a number of changes in relation to road responsibilities and funding, but rather than simplify the process, they have resulted in an administrative nightmare that is difficult to untangle. The changes include:

A Need for Simpler Road Funding Methods

In July 2001, the Institution of Engineers Australia 2000 Infrastructure Report Card urged, with regard to the future directions for roads in general:

A national framework for the planning of road funding is required, as is a more sophisticated approach to allocation of priorities.

Taxes and charges should be reformed and be more directly linked to road usage and allocation.23Although the Institution had the national scene in mind when making that statement the Committee considers that it also applies to Victoria.

The funding of roads in Victoria is now a maze of programs, partnerships and administrative categories. There is a need for simpler, easier to understand road funding methods. This would improve public accountability and transparency.

Recommendation

2. That the Government review all the methods currently used to fund roads in Victoria and develop more appropriate methods.

The five legal arterial road classifications contained in the Transport Act 1983 are now effectively irrelevant for funding purposes as spending is now focused on `programs'. Their legislative relevance should be reviewed.

Recommendation

3. That the sections of the Transport Act 1983 relating to State legal classifications be reviewed.

Local Government Road Funding

Municipalities maintain and upgrade local roads using Federal and State Government grants as well as revenue from property rates and other charges. Table 3.4 shows expenditure on Victorian local roads for 1999-2000.

Table 3.4 Expenditure on Victorian Local Roads, 1999-2000

Source: ABS, Local Government Finance Victoria 1999-2000, Cat. No. 5501.2, Table 2, pp. 6-7.

The Committee found that it was not possible to readily determine the municipal funding of roads from their own rates and charges, as the above figures regard Federal untied local road grants and general purpose grants as being sources of municipal revenue.

The Committee noted the considerable diversity in the degree of road spending by municipalities. The ABS compared the figures for Yarriambiack, a large shire with a small population centred on Warracknabeal in the Wimmera area, with the City of Monash, a well-populated municipality in the middle south eastern suburbs of Melbourne:

The Shire of Yarriambiack spent the most for local road maintenance per capita ($370.60) and had the highest proportion of local road expenditure to total expenditure (31%) while the City of Monash spent the least ($5.50 per capita).

On average, local road expenditure as a proportion of total expenditure for those councils defined as rural (19.5%) was more than twice that of councils defined as metropolitan (9.2%).24

Facing the Renewal Challenge Report

The Victoria Local Government Infrastructure Study Report Facing the Renewal Challenge was prepared in 1998 by consultants for the Department of Infrastructure. The objectives were to:

1. Determine the ability of councils to meet long term investment needs in the renewal and acquisition of infrastructure assets;

2. Develop a model for examining the challenges of the task; and

3. Make recommendations to improve the management of Victorian local government infrastructure assets.25The key recommendations were for the councils to recognise that asset management is a corporate, not a technical responsibility, and the need for:

South Australia has recently completed an infrastructure study entitled Wealth of Opportunities which the Australian Local Government Association (ALGA) says provides a blueprint for infrastructure asset management.29The Committee supports the undertaking of strategic asset management investigations by municipalities to enable them to better address community needs. A common approach to reporting projections of future road conditions and funding requirements should be adopted throughout Victoria.

Recommendation

4. That the Department of Infrastructure ensure all municipalities report projections of future road conditions and funding requirements using a common reporting format.

Road Funding Issues

Inadequate Funding

Numerous submissions and witnesses at hearings expressed concern about the adequacy of road funding, especially for some category C roads and the more heavily used local roads.30 The City of Greater Shepparton said that the level of funding for road paving is only satisfying 60 per cent of the estimated need. 31

Mr A. Paul, Chief Executive Officer, City of Greater Bendigo, said:

We are trying to allocate one bridge each year out of our capital works program. On the basis of 245 bridges, it is pretty self-evident what the timing of that program will be.32

The Moyne Shire in their submission state that:

... unless there is a very significant injection of additional funds into roadworks or changes to the construction techniques, the system will continue its gradual deterioration and obviously fail to meet community and user expectations.33From the views presented to it the Committee concluded that there was clearly widespread community concern about the adequacy of rural road funding in many parts of the State. However the extent of the problem is less clear.

Quantifying and Addressing the Overall Funding Need

In their submission the RACV state that they:

... believe there is an urgent need for the State Government to assess the adequacy of Australia's and moreover Victoria's road and transport infrastructure, and hence determine the appropriate level and direction of investment which is needed to maintain our international competitiveness and meet social and environmental objectives.34As noted earlier, the last comprehensive assessment of Victorian roads was conducted two decades ago.35 Only two broad assessments of long term road funding needs in Australia have been conducted since, these being the Bureau of Transport Economics Adequacy of Transport Infrastructure working papers in 1994 and their Roads 2020 document in 1997. 3637For this Inquiry VicRoads provided future funding estimates for part of the rural arterial network, obtained from the National Roads in Victoria strategy and the ten highway corridor strategies undertaken so far. The latter projects have an identified cost of $2.2b over a 15 year period.38 However the total funding need for the rural arterial network is not known.

The Committee noted that the quality of rural local roads varied significantly across the State and there appeared to be many municipalities that were struggling with the demands for road upkeep and other community desires for municipal expenditure.

The report Economic and Financial Challenges for Small Rural Councils prepared for the Municipal Association of Victoria found that:

One response provided by Moyne Shire, in the context of projections of a gradual deterioration of their local road system, was:

A more realistic combination, which could be pursued, is to

- obtain/raise some additional funding,

- set lower standards (and community expectations) on minor roads, and

- identify more cost effective and efficient treatment methods.40The Committee considers a range of approaches should be investigated to address the strategic issue of the management of rural local roads in the long term.

The Committee also considers that there is a definite need to put together a comprehensive quantitative picture of the overall road funding needs for both Victorian rural arterial and rural local roads, as a basis for determining the appropriate level and direction of future investment by the three levels of government. In terms of timing, the Committee notes that the Federal Roads to Recovery Program finishes at the end of 2004 so the information would need to be available much earlier in order to effectively influence Federal road funding decisions.

Recommendation

5. That the Government investigate, quantify and publish the overall road funding needs for rural arterial and rural local roads. The results should be used to influence the level and direction of future Federal road funding.

Lack of Main Road Upgrades

Several councils were concerned about a perceived imbalance in the development of the rural arterial road network due to their inability to obtain funding for road widening projects on category C roads. For these roads the width and road edge standards are designed to:

Generally maintain existing widths and standards unless upgrading (is) warranted by accident records.41

The Golden Plains Shire submission stated that the issue of road improvements on Main Roads has a very low priority for funding from VicRoads.42 Works Manager Mr B. Hollioake told the Committee:

We understand VicRoads wants to get all its A-class and B-class roads up to scratch before it funds improvements on C-class roads. However, we think that policy may be a bit strict when it can be argued that significant volumes of traffic are using those narrow roads.43

The submission from Colac-Otway Shire also noted:

Indications are that C category roads are not likely to be upgraded until A, and B type roads have been upgraded. The reality of this is that it is most likely it will never happen.44The VicRoads approach to category C roads fails to take into account the adequacy of the existing width, volume of truck and car traffic, terrain, alignment and adjacent land use conditions.

The Committee considers that VicRoads may be placing too much emphasis on the width, alignment and riding quality of M, A and B roads to the detriment of the safety concerns of travellers on narrow, heavily used C roads.

Recommendation

6. That the road management guidelines for category C roads be reviewed to give a greater emphasis to road safety concerns.

Main Road Management

Historically the operational management of Main Roads was undertaken by municipalities. In those times almost all works on Main Roads were undertaken by `in-house' municipal workforces. In the more remote areas municipalities would do works on Highways for VicRoads.

Mr P. Holloway, an infrastructure manager of the City of Ballarat, told the Committee:

I have noticed in the past few years that the main road network is the responsibility of VicRoads until a road starts showing signs of disrepair. The argument comes back that council is maintaining it and is responsible for it.45The Transport Act 1983 provides the capability for municipalities, with the approval of the Minister for Transport, to transfer the operational management to VicRoads. In recent years a growing number of municipalities are doing so. Almost 20 per cent of both rural and metropolitan municipalities now have their Main Roads managed by VicRoads. Large individual road improvement projects, particularly those over $3 million total cost, are now also usually directly managed by VicRoads.

There are practical and financial advantages for both VicRoads and municipalities in these arrangements. VicRoads can include additional roads in `area wide' maintenance contracts with the private sector, thereby achieving economies of scale. Municipalities can focus on the local roads for which they are directly responsible.

At present the transfer of operational management from municipalities has been on an individual and ad-hoc basis. The Committee considers that the extent to which this transfer of management has occurred has now reached the stage where consideration should be given to whether all Main Roads should be managed by VicRoads.

The Committee considers there would be advantages in aligning the financial and operational management responsibilities for Main Roads. It would also be expected to lead to more uniform and consistent road management practices on the Main Road network. Such consistency would be expected to have road safety benefits.

Recommendation

7. That the Government review the responsibility for operational management of Main Roads to achieve economies of scale, provide more uniform road management practices and potentially improve road safety.

The Imbalance of Arterial and Local Road Funding

There appears to be a funding imbalance between arterial and local roads in Victoria. VicRoads has been a persuasive and successful advocate for Federal and State funding of the arterial roads which it manages. However, Victorian municipalities have had only limited success in obtaining funds for local roads from the other levels of government.

It is important that the State Government ensure a proper balance in the upkeep and development of the arterial and local road networks. Almost all trips involve travel on both parts of the network and users see the road network as a single entity providing for their travel needs.

The Committee therefore considers that the State Government should ensure a balanced and consistent management of the entire road network. This may require some form of statewide monitoring of physical road conditions and the service provided to all road users, including safety considerations. Change to organisational responsibilities might be needed, as might be some investment in local road improvements by the State.

Recommendation

8. That the Government review the funding of rural roads, including consideration of possible changes to organisational responsibilities and funding arrangements, to ensure a balance in the development and on-going care between the arterial and local road networks.

Bridge Upgrading for Increased Load Limits

In 1996 the NRTC published the results of a Mass Limits Review which studied the feasibility and benefits of increasing mass limits for vehicles fitted with road friendly suspension systems. It concluded that there were substantial net economic benefits.

Vehicles with road friendly suspensions are now able to carry heavier loads on designated roads around Australia.46 This initiative will reduce export costs; means the present road freight task can be performed with fewer vehicles, and encourages a shift to latest technology vehicles with better safety and environmental performance.47However, there were some bridges, particularly on local roads, that would be unable to carry the increased truck loading. The upgrade to bridges in Victoria was estimated at $265m, comprising $115m for arterial roads and $150m for local roads.48 Although a figure for bridges on rural local roads was not available the Committee estimates the figure to be approximately $135m to $140m.

The load limit increase was implemented in Victoria on 1 July 1999. It provides for vehicles with road-friendly suspension to operate at the higher limits on a network of approved arterial roads, based on the load capacity of any bridges on the roads.49 Substantial progress has been made in upgrading bridges on arterial roads in Victoria to cater for the increased loads and more than 89 per cent of the arterial network is now accessible.50The Federal Government has offered $30m nationwide over a four-year period to assist State and local governments to upgrade inadequate bridges.51 The Victorian Government has advised that it will fund the upgrade on the arterial network, and all Federal money will be used for local road bridges.52 It is understood that the Federal Government has so far approved only $2m for Victoria.53As the bridge upgrading needs in Victoria alone are estimated to total $265m, the proposed federal contribution of only $30m nationwide does not demonstrate a realistic commitment to gain the full benefits of increased vehicle load limits.

Recommendation

9. That strong representations be made to the Federal Government for more realistic financial contributions to upgrade bridges on local roads for the new mass limits of vehicles fitted with road friendly suspension systems.

Regionally Significant Local Roads

Over recent years the concept of `regionally significant local roads' has developed. The ALGA Rural Road Congress held at Moree, New South Wales in 2000 and Mildura in early 2001 has helped to advance the concept.

The concept includes not only identifying a set of roads to comprise the new road `category' but also encompasses more co-operative regional decision making arrangements.

The Moree Rural Road Funding Report recommended that the Federal Government establish a framework for road investment based on:

The Institution of Engineers Australia has said, in referring to local roads, that the need for improved planning and an integrated approach is demonstrated by the trend in local government for the establishment of Regional Infrastructure Groups. It also said:

In addition a regional approach to asset management is recommended which would identify the local roads of regional significance, future funding liabilities, appropriate road standards, project priorities and all potential funding sources.56

At the Mildura Rural Road Congress, Dr M. Lay, President of the AAA, in discussing the advisory groups, mentioned the Local Road Advisory Committee in South Australia. Unlike Victoria, in that state 15 per cent of the annual Federal untied local road grants is allocated to special projects. The Advisory Committee is responsible for assessing submissions from regional associations on local road projects of regional significance. Dr Lay also referred to the system of Regional Road Groups in Western Australia. He suggested:

... perhaps this South Australian model - or indeed a variant of the two - is one that could be taken up in other States as a first step towards meeting the Moree Congress (Butcher Report) recommendation of having the Commonwealth establish a framework for investment based on road and transport priorities identified by Regional Infrastructure Groups (RIGs) comprising elected (local, State and Federal) representatives, industry and officers.

Whatever is agreed, the model should be `sold' to the Commonwealth and a national approach promoted.

Funding could then be provided not only in the form of Financial Assistance Grants (FAGs) as at present, but also in the form of a `program' for specific projects that support regional industry development.57Dr Lay said that encouraging local government to think more regionally in identifying road priorities is fundamental to obtaining a successful outcome on these issues.58

Mr R. Dobrzynski, Chief Executive Officer, Delatite Shire, commented favourably on the operation of the advisory groups in other states:

(Those involved) spoke very highly of the co-operative spirit on those committees and the fact that they were actually achieving long-term solutions for local road networks in rural areas.59

In Victoria there has already been some beneficial experience with regional road advisory groups during the Timber Industry Road Evaluation Studies (TIRES). Comprising representatives from State agencies, municipalities and the timber industry these groups have enabled a regional viewpoint to be developed to address the transport issues associated with the timber industry. Mr Dobrzynski spoke favourably of the TIRES approach.60The Committee regards the regionally significant local road issue as one of long term national strategic importance and of particular relevance to influencing the Federal Government on the form of funding assistance which might follow after the Roads to Recovery Program ends in December 2004.

The Committee strongly supports continued development of the concept. While ALGA have been leading the process nationally the State Government should be initiating complementary action in Victoria as a matter of priority.

Recommendation

10. That the concepts of regionally significant local roads and regional decision making to determine priorities be supported by the Government to improve the asset management of the most important rural local roads.

Some Options for Assisting Rural Municipalities

There are a number of ways the State could provide financial assistance to rural municipalities for local roads. These include:

At least two municipalities made suggestions along those lines. For example, Greater Bendigo City proposed a separate local road bridge improvement program, while Moyne Shire proposed a broadening of the BRV funding program to cover all local roads.62The Committee notes that a downside with providing State Government assistance solely for a particular type of facility, such as bridges, or for roads supporting a particular industry group, is that it might not be the best way of assisting the most `needy' municipalities.

There may also be other financial consequences that need consideration. For example, any direct State Government assistance for a local road project in a particular municipality may result in a reduction in the Federal general purpose financial assistance grant received by that municipality via the Victoria Grants Commission in the following year. This is due to the `horizontal equalisation' principle that the Victoria Grants Commission must use in determining the grants to municipalities. `Horizontal equalisation' is achieved if each council in a State is able to provide the average range, level and quality of services by reasonable effort, taking account of differences in their capacities to raise revenue and differences in the expenditure needed to provide average services.63

The Committee considers because of the Victoria Grants Commission processes, careful consideration needs be given to the form of any State Government assistance to rural municipalities.

Forward Programming

Some municipalities expressed dissatisfaction with the lack of notice of funding which leads to inefficient forward planning. This includes the possibility of some projects being prematurely planned for construction, or pre-planning of projects not occurring thereby leading to delays to commence physical works when funding was unexpectedly announced.

With regard to the State Government advising funding of a road project, Mr G. Maguire, Manager, Capital Works, City of Greater Bendigo said:

We find that that comes out at any time, not necessarily at the start of a (financial) year. It could come out at the drop of a hat. I understand it is the Minister's call as to when he will announce funding for that type of program. ... It would be good to have advance warning that funding would be made available.64

Better forward planning and prompt notification of funding availability would lead to more effective use of available State road funds. One method could be the introduction of rolling multi-year work programs.

Recommendation

11. That to enable forward planning and effective use of funds the Government consider the introduction of rolling multi-year roadwork programs.

Road Funding Summary

The Committee found it difficult to get a clear, consolidated picture of the total level and composition of road funding in Victoria, let alone the amount spent annually in rural Victoria.

Based on the figures for the three levels of government shown in Figure 3.1 a total of about $1.15b was spent on roads in Victoria in 1999-2000. The situation has since changed as a result of the new Federal-State taxation arrangements applying from 1 July 2000. The full impact of the new Roads to Recovery and Statewide Blackspot programs also has yet to be reflected in official public sector financial statements.

The Committee was not able to determine the total annual amounts being spent on either rural arterial roads or rural local roads, nor was it possible to determine trends in these over time.

The Committee considers that a more transparent picture of overall road funding in Victoria, and its components, is needed. The Federal funding is complex but because of the level of financial transparency it can at least be reasonably determined at the metropolitan/rural and asset maintenance/preservation levels. However the State Government contribution is more difficult to ascertain, especially trends over time in the distribution of that money to the rural and metropolitan parts of the road network.

Recommendation

12. That the Government make public the information on the State's contribution to roads and the distribution of those funds to rural and metropolitan roads.

Legal Implications of Failing to Properly Care for Roads

There are important legal implications for road agencies and municipalities if they fail to identify and treat road hazards. A significant High Court decision made during the Inquiry has focused attention on this issue.

The City of Ballarat in their submission stated that previously public road authorities were not liable for physical injury or property damage caused by an authority's failure to construct, or maintain, or repair a highway. The courts provided a form of immunity to the authority, due to the impact of financial hardship on the authority and in turn the taxpayer.65

This highway immunity rule meant a road authority could not be found liable for an accident occurring because a road or footpath fell into disrepair, but it would be liable if an accident resulted from the authority's poor construction or shoddy repair.66

At a public hearing with the Committee, Mr C. Jordan, then Chief Executive of VicRoads, was asked whether the organisation had a duty of care to protect drivers from their own mistakes. Specifically, what was VicRoads' potential liability where a vehicle collided with a tree or rock or other off-road objects?

A legal opinion subsequently provided by VicRoads quoted a decision in the recent Brodie and Ghantous case, in which the High Court defined the duty as follows:

(VicRoads) is obliged to take reasonable care that its exercise of or failure to exercise its powers does not create a foreseeable risk of harm to road users. Where the state of a roadway poses a risk, whether from design, construction, works or non repair, then to discharge its duty of care, VicRoads is obliged to take reasonable steps within a reasonable time to address the risk.

If the risk is unknown to (VicRoads), or latent, and only discoverable by inspection, then to discharge its duty of care, VicRoads is obliged to take reasonable steps to ascertain the existence of latent dangers which might reasonably be expected to exist.67

The opinion later included in its conclusions a statement that:

In some cases, where there has been a breach of its duty, and where it was reasonably foreseeable that a vehicle might leave the road as a result, VicRoads may well be held to have contributed to an accident, notwithstanding a high degree of negligence by a driver.68

The High Court decision has significant implications for all levels of government in Australia and the Committee noted that, at its June 2001 meeting, the Council of Australian Governments discussed the High Court decision and agreed to commission the Australian Transport Council to examine the implications of the decision.69

Recommendations

2. That the Government review all the methods currently used to fund roads in Victoria and develop more appropriate methods.

3. That the sections of the Transport Act 1983 relating to State legal classifications be reviewed.

4. That the Department of Infrastructure ensure all municipalities report projections of future road conditions and funding requirements using a common reporting format.

5. That the Government investigate, quantify and publish the overall road funding needs for rural arterial and rural local roads. The results should be used to influence the level and direction of future Federal road funding.

6. That the road management guidelines for category C roads be reviewed to give a greater emphasis to road safety concerns.

7. That the Government review the responsibility for operational management of Main Roads to achieve economies of scale, provide more uniform road management practices and potentially improve road safety.

8. That the Government review the funding of rural roads, including consideration of possible changes to organisational responsibilities and funding arrangements, to ensure a balance in the development and on-going care between the arterial and local road networks.

9. That strong representations be made to the Federal Government for more realistic financial contributions to upgrade bridges on local roads for the new mass limits of vehicles fitted with road friendly suspension systems.

10. That the concepts of regionally significant local roads and regional decision making to determine priorities be supported by the Government to improve the asset management of the most important rural local roads.

11. That to enable forward planning and effective use of funds the Government consider the introduction of rolling multi-year roadwork programs.

12. That the Government make public the information on the State's contribution to roads and the distribution of those funds to rural and metropolitan roads.

 

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