Good morning everyone. Thank you to ITS Australia for inviting me to take part in the inaugural Mobility as a Service (MaaS) conference.
For those of you who aren't familiar with what we do, Infrastructure Australia is the nation's independent infrastructure advisor.
It's our job to provide a longer-term view of our collective needs as a nation—one that enables leaders to look beyond elections and budgetary cycles and pursue evidence-based investments and reforms.
Mobility as a Service: Meeting growth challenges
When it comes to Australia's future cities, we've identified some significant growth challenges.
In the next 30 years, Australia will be home to 36 million people. This is the equivalent to adding a new city, roughly the size of Canberra, each year for the next 30 years.
75% of this growth will be centred in our largest cities: Sydney, Melbourne, Brisbane and Perth.
Here in Sydney, for example, an additional 2.7 million people will call the city home in the next 30 years.
This means we will see around 2.5 million additional daily journeys on Sydney's road network.
Sydney commuters currently spend around 200,000 hours in traffic during the morning peak—by 2046 that will double.
And on top of that, there will be close to one million additional daily journeys on the city's public transport network.
And this is not unique to Sydney, it's a similar story in our four major cities.
With these challenges in mind, this morning I'm going to set the scene for today's presentations by providing some context around the development of MaaS in Australia's cities.
I will highlight the importance of increasing capacity on our public transport networks and making better use of existing infrastructure, and explain how MaaS can complement and benefit from these investments.
Finally, I will explain why it's essential that regulation is outcomes-based with the primary goal of having well-functioning cities that are attractive places to live and work.
Infrastructure Australia's most recent report in our reform series—Future Cities—provides a useful starting point for understanding the challenges we face.
The paper models three 30-year growth scenarios for Sydney and Melbourne—low, medium, and high-density versions of the future.
In each version of the future, we looked at the performance of the transport network, access to jobs, emissions from cars, and access to and demand for schools, hospitals and green spaces.
One of the key findings from our modelling was that under all three growth scenarios, congestion increases significantly.
Congestion reduces access to jobs and skilled labour, and it has a significant impact on the national economy—potentially costing Australia $53 billion by 2031 if no action is taken.
It also reduces access to education, health and social services—not to mention green and public spaces which play an increasingly important role in maintaining a city's liveability.
While not everyone in our cities can expect to—or would want to—live next door to a major train station, school, hospital or park, they should be able to reach them within a reasonable travel time.
It's clear then that as more and more people move into our urban centres, we need to embrace new ways of tackling the old problem of congestion.
Improving the livability of our cities
To improve the livability of our cities, governments will need to make difficult decisions and prioritise the projects that have the most benefits.
Crucially though, it's not just a matter of building new roads.
In fact, our Future Cities research found that construction of new roads alone would not meet projected demand and alleviate congestion at the same time.
That's why, as our cities grow, governments need to focus on increasing the reach, capacity and sustainability of our public transport networks.
Turn up and go metro systems should be a part of this, so it is encouraging that we are now seeing these being developed in Sydney and Melbourne.
In addition, land-use planning and public transport investment should be supported by investment to make better use of existing assets by using ITS, for example, to help manage demand.
For the most part this is already happening in our states and territories, guided by the Infrastructure Priority List which we update regularly to support better infrastructure decision-making and delivery.
These are the strategic investments recommended by the independent Infrastructure Australia board to best meet the connectivity needs of Australia's growing cities and make our infrastructure more resilient.
The 2018 Priority List identifies a $55 billion pipeline of nation-shaping projects, with an additional $25 billion of projects now off the list and under delivery across the country.
This is important to highlight because it shows there is momentum to fund and construct projects which have been identified by Infrastructure Australia as national priorities.
And as a direct result, we are seeing governments—at all levels—prioritise the delivery of historically important rail, road and network infrastructure.
This is the context in which MaaS and the shift from private vehicle ownership towards shared, demand-driven transport services is playing out in Australia.
MaaS as a potential solution
Although MaaS is still in the relatively early stage of development in Australia, it's a model that could potentially revolutionise the way we move around our cities.
In a few short years, we have seen the shared economy grow the range and availability of MaaS through new platforms for ride sharing, encompassing cars, bikes, buses and even peer-to-peer models.
At last count, Australia had 16 car sharing providers generating close to $70 million in annual revenue, with the industry boasting an annual growth rate of close to 30%.
And of course the impacts of MaaS are accelerated when coupled with other emerging technologies, particularly electric and autonomous vehicles.
Soon these technologies will be a common sight on our roads. In fact, several of the major car manufacturers are expected to release completely autonomous vehicles into the market in the next five years.
Autonomous vehicle technology will make MaaS significantly cheaper because of the absence of a driver, which currently accounts for roughly three quarters of the cost of an Uber ride.
What we're dealing with then is rapidly changing technology and consumer behaviour—the impact of which can be difficult to predict.
While as a transport model it is still evolving, MaaS clearly has the potential to improve the liveability of our cities. But how should governments respond?
One thing that is clear, is that MaaS complements and benefits from long-term, integrated infrastructure and land use planning—something which Infrastructure Australia is working very hard to support across all levels of government.
However, it is still vital that we have a supportive regulatory framework in place to encourage innovation in infrastructure service delivery.
Supportive regulatory frameworks
Where emerging technologies and delivery models disrupt infrastructure markets, governments should ensure regulatory settings support productivity growth and prioritise the long-term interests of customers.
Government's focus should be on enabling beneficial technology by creating well-regulated, competitive markets, which welcome private sector participation.
To get these settings right, governments need to get on the front foot in anticipating the impacts of emerging technologies.
This is not always easy, particularly when it comes to understanding the interlinkages between the transport and electricity sectors where the technology is constantly evolving.
Increasingly, we are seeing a convergence between the two sectors as technologies such as electric vehicles and digital market places impact how people travel, and how and when they use electricity.
Being caught asleep behind the wheel and a failure to anticipate these impacts will mean we are caught playing catch-up, resulting in flow-on effects across multiple sectors.
The increase in electrical vehicle uptake is one such case in point.
Currently funding to build and maintain our road infrastructure is sourced from a mix of fuel excise and vehicle registration charges.
Fuel excise, which only applies to petroleum products, will not apply to the use of electric vehicles, in coming years the increased uptake of electric vehicles will see a substantial reduction in revenue.
In other words, we will be collecting less from users, using roads more, and limiting our ability to collect the revenue required to build and maintain our roads.
When it comes to realising the benefits of MaaS in Australia's cities, this should be cause for concern.
There is another key flaw in our current road funding system which has relevance for the development of MaaS, and this is that the link between usage and charging is very weak.
What we pay is only loosely related to what we use and how our use of vehicles impacts other users, and this is particularly true of heavy vehicles.
This means that we don't use price signals to manage demand on our networks—something which will be increasingly important as our cities continue to grow.
In addition, as Maas services get cheaper, demand for road use will increase.
Realising benefits of MaaS
To realise the benefits of MaaS, and effectively manage demand, we need a clear price signal on road use.
Point-of-use pricing for road users, combined with network monitoring of all transport options, could potentially revolutionise how users plan and select their travel—which is of course a vital component of the MaaS model.
By putting this information, combined with price signals, at users' fingertips, operators could greatly improve the efficiency of entire transport networks.
In addition, on the supply side, we could reform how we manage networks, using data and analytics capabilities to allow users to receive a good level of service more affordably.
For these reasons, we need to transition to a fairer user-pays approach that would allow charging to be linked to funding and supply to be linked to demand.
We have a national opportunity in front of us to improve the way Australian governments fund infrastructure investment in our roads and address significant constraints on the economic growth and productivity of our urban centres.
The Federal Government has committed to an independent study to examine the potential benefits and impacts of road market reform.
This was a key recommendation from the Australian Infrastructure Plan and it is important that it gets underway soon.
Otherwise we run the risk of a serious road funding shortfall, meaning our future cities will be characterised by congestion and constraint.
While the pathway to reform is likely to stretch over the next decade, it's vital that we continue to build consensus within government, industry and the community on the need for this important reform.
Today's event will no doubt showcase the breadth of innovation in MaaS and its potential to revolutionise how we move around our cities.
The emergence of this new model of infrastructure service delivery is occurring against a backdrop of significant population growth across Australia, and rapid changes in technology and consumer behaviour.
Clearly, our governments must be active in anticipating and responding to challenges—particularly when it comes to cross-sector impacts across the transport and energy sectors.
Growth and change across these sectors can bring substantial rewards for Australians through more sustainable and efficient infrastructure networks and consumer behaviours.
In coming months, Infrastructure Australia will release new research that examines the convergence between transport and energy in greater detail.
We look forward to making further contributions on this vital area of infrastructure reform.