Governments must adopt a user-pays approach to fund future transport needs and consider privatising public transport, the head of Australia's peak infrastructure body says.
Infrastructure Australia chief executive Philip Davies has warned that relying on taxpayer funds to pay for infrastructure projects is unsustainable, particularly with an ageing population that will put greater pressure on government budgets.
Mr Davies, speaking at a Committee for Economic Development of Australia event on Friday, said the problem for Australia is not financing infrastructure projects but funding them - the difference being that finance is meeting up-front costs of construction with debt and equity, while funding is how those debts must eventually be paid off.
"Ultimately, there are only two sources of funding for infrastructure, either taxpayers through government spending or directly by users and beneficiaries through, for example, electricity charges or road tolls," Mr Davies said.
"Australia's ageing and growing population sees governments under pressure to fund health and welfare services, in turn placing pressure on funding of other infrastructure needs - even more important that we get the right projects.
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"This means we need to look seriously at how our infrastructure is paid for, and that begins with achieving the right balance of what comes from users and what comes from taxpayers."
Public transport users in Australia pay around 20 to 25 per cent of the total cost of public transport, with the bulk funded by taxpayers, Mr Davies said, and Australia lags behind cities such as London, Hong Kong and Barcelona.
Mr Davies said governments should also consider privatising public transport, citing "a significant opportunity" to cut costs and improve service, although it was unclear if it would lead to higher ticket prices.
"Experience has shown that franchising public transport can cut operating costs by between 20 and 30 per cent and as much as 50 per cent in some circumstances, mostly due to the incentives for franchised operators to deliver services more efficiently," Mr Davies said.
Mr Davies call for a user-pays model and the privatisation of public transport were among recommendations in IA's 15-year infrastructure blueprint, released in February 2016.
Congestion in Australia's capital cities could cost the economy $53 billion annually by 2031 if Australia does not take action to increase capacity and better manage demand on transport networks, Mr Davies said, citing a figure from the 2015 Australian Infrastructure Audit.
