Roads to riches: better transport investment

Governments have spent unprecedented sums on transport infrastructure in the last decade. But mostly, they have not spent wisely. We investigate the portfolio of transport infrastructure investment choices made by Commonwealth and state governments over the period from 2005-06 to 2014-15. Data on transport infrastructure spending is collected from Commonwealth and state budget papers and is classified by state, mode, location, and whether the route is listed on the National Land Transport Network, among other variables. We consider how well investment focuses on key goals of improving the productivity of cities, supporting key freight routes, and responding to major external shocks. We find that both Commonwealth and state governments spent substantially more per capita in Queensland and New South Wales than in other states, and such spending is difficult to justify on the basis of equal provision across the country. Instead, additional Commonwealth spend correlates tightly with swing seats in federal elections, both at a state level and in individual seats. While the Commonwealth only funds about a third of transport infrastructure spending, its grants heavily influence state spending choice since grants are often conditional on matched state funding. The partial quarantining of Commonwealth grants to states for roads and rail on the National Land Transport Network from GST redistribution exacerbates this effect. We identify two reforms to improve the quality of government spending on transport infrastructure project selection in transport infrastructure. First, Commonwealth and state governments should only be able to commit public funding to transport infrastructure projects after a rigorous independent evaluation of the business case for the project has been tabled in the parliament. Second, once governments are only building projects where the community benefit outweighs the cost, they should aim to build all such projects. Third, Commonwealth funding for projects should be disentangled from states’ GST entitlements.


  • English

Media Info

  • Pagination: 69p
  • Monograph Title: 38th Australasian Transport Research Forum (ATRF 2016), Melbourne, 16th - 18th November 2016

Subject/Index Terms

Filing Info

  • Accession Number: 01627487
  • Record Type: Publication
  • Source Agency: ARRB
  • Files: ITRD, ATRI
  • Created Date: Feb 27 2017 10:14AM