There are a number of common themes in this analysis, as Table 6 illustrates.
Maintenance risks are more likely in rural and remote areas. In these areas, the providers of infrastructure are often working with a limited revenue base. As a consequence, the providers' capacity to maintain infrastructure, while keeping user charges affordable and meeting service expectations, is also likely to be limited.
However, the challenge of managing costs and revenues is not confined to smaller and remote infrastructure operations. Maintenance of more significant infrastructure assets, e.g. some state/ territory arterial roads and some irrigated water systems, is subject to similar pressures.
On the other hand, in metropolitan areas, and in other cases where networks cater for high demand, e.g. major resource rail projects, infrastructure operators are more likely to be able to fund maintenance costs from the asset's revenue base. As a consequence, the risk of a maintenance shortfall is low.
Audit findings 46. Underinvestment in the maintenance of some parts of Australia's infrastructure networks, notably in regional Australia, could reduce the ability of those networks to provide reasonable levels of service in the future. The most significant risks are in: a. local roads, especially in regional and remote areas, where there are large road networks to be maintained and local councils have limited or declining income bases; b. regional rail infrastructure carrying low volumes of grain and/or general freight, especially those with ageing timber bridges and timber sleepers; and c. regional town water services provided by local councils. 47. All jurisdictions need to direct attention towards improving whole-of-life asset management processes, and to ensuring adequate long-term funding strategies are in place. |
Table 6: Common themes to identify where maintenance issues are more likely
Sector | Strong demand/high customer base | Access to adequate funding | Subject to independent economic regulation | Likelihood of maintenance gap |
Local roads | Demand limited for the most part - customer base limited to ratepayers as no user-pays charging. | Main funding mechanism is through council rates which are sometimes capped (due to rate pegging) or declining (due to demographic changes), which affects the rate base. Other revenue comes in the form of Federal or state funding programs. | N/A | High |
National/state highways/ arterial roads | Strong demand | There is evidence of a maintenance deficit on some state roads and national highways including major freight routes. | N/A | Medium/High |
Heavy haul rail | Strong demand | Yes, through charges levied by service providers to customers. | Yes* | Low |
Regional rail | Declining - demand for regional rail falling due to a range of factors including a shift to road transport. | Ability to charge is limited on non-mining routes due to competition with road transport. Government subsidies declining as the commercial, heavy haul networks become privatised and inter-sectoral cross subsidies are removed. | Yes* | High |
Interstate rail | Low demand | Yes - through access revenue, government grants and bond issues | Yes* | Low |
Urban rail | High demand | Yes - through charges and government funding | Yes* | Low |
Metropolitan water and sewerage | Yes - customer base allows costs to be recovered from a large pool of users. | Yes - water charges generally cover the costs of service provision in most cities. Where this does not occur, service providers often receive a Community Service Obligation. | For the most part yes - allows maintenance planning and processes to be independently reviewed and often allows maintenance expenditure not forecast to be recovered through the next price determination or review. | Low |
Regional (urban) water and sewerage | No | No | No | High |
Rural (bulk) water | Strong demand - variable customer base. | Yes - water charges cover costs in some schemes. Where a shortfall exists, state governments generally provide a Community Service Obligation. | For the most part yes | Low |
National electricity network | Demand under that which has been forecast but a high customer base. | Yes - charges and Community Service Obligations generally cover costs. | Yes | Low |
National gas network | High demand | Yes - through charges recovered from customers. | Yes (transmission and distribution sector) | Low |
Source: GHD (2014), p. xviii
* There is variation across the different categories of rail and across jurisdictions in terms of economic regulation. However, for the most part, the rail network is contestable and there are legislative mechanisms in place for third party access to the rail network.