Improving infrastructure could lower transport costs

According to the Australian Bureau of Statistics (ABS) Household Expenditure Survey 2015-16, Australian households spent an average of $177.60 per week on owning and operating private vehicles, or $9235 annually. This represents 12.7% of total expenditure on goods and services.

A report from the Bureau of Infrastructure, Transport and Regional Economics notes that expenditure on private vehicles has risen by only 2.2% in real terms since 2009-10. Given rising incomes, this means that the proportion of total expenditure attributable to owning and operating vehicles declined to 12.75% in 2015-16 from 13.35% in 2009-10.

However, households in rural and outer urban areas spend a higher percentage of total expenditure on running a vehicle than the national average. These households could benefit from an improvement in infrastructure. A more efficient road network or improved access to public transport would be likely to assist them.

Inadequate infrastructure also puts a cost burden on the economy. According to the Australian Bureau of Industry, Transport and Resource Economics, the avoidable cost of congestion for the Australian capital cities was estimated to be around $16.5 billion for the 2015 financial year, having grown from about $12.8 billion in 2010.

After a relative backlog of essential infrastructure built up in Australia over decades, the country is now seeing something of a boom for the sector. Australia’s federal government has committed over $75 billion for the next 10 years to transport infrastructure across Australia. This compares with total federal capital expenditure of only $18.4 billion in 2017 and total capital expenditure in 2017 across all levels of government of $86.3 billion.

Efficient infrastructure helps the economy to run smoothly and enables businesses to get product to market, provide essential services such as water and power to run the business, and allows workers to get to their workplace.

Business should be encouraging governments to be continually update and improve infrastructure. Roads, ports and airports are obviously important but so is the “soft infrastructure” to ensure a healthy and educated workforce.

To read more about the benefits of infrastructure see our Smart Infrastructure Report

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