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Transport policy in context

Transport policy in context. Ken Henry Secretary to the Treasury Canberra, 3 October 2002. Drivers of fiscal and economic performance. DRIVERS. ELEMENTS. demography. population size. physical location. age composition. DRIVERS. ELEMENTS. demography. financial. technology. scientific.

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Transport policy in context

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  1. Transport policy in context Ken HenrySecretary to the Treasury Canberra, 3 October 2002

  2. Drivers of fiscal and economic performance

  3. DRIVERS ELEMENTS demography population size physical location age composition

  4. DRIVERS ELEMENTS demography financial technology scientific industrial

  5. DRIVERS ELEMENTS demography technology trade investment international integration people ideas disease

  6. DRIVERS ELEMENTS demography technology international integration physical amenity salinity climate change resource depletion environmental degradation

  7. Population growth rate Per cent Per cent 2.5 2.5 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 60-61 63-64 66-67 69-70 72-73 75-76 78-79 81-82 84-85 87-88 90-91 93-94 96-97 99-00

  8. Fertility rate Total fertility rate Total fertility rate 2.8 2.8 2.6 2.6 2.4 2.4 2.2 2.2 Replacement rate 2.0 2.0 1.8 1.8 1.6 1.6 1972 1976 1980 1984 1988 1992 1996 2000

  9. Net migration Persons ('000) Persons ('000) 200 200 180 180 160 160 140 140 120 120 100 100 80 80 60 60 40 40 20 20 0 0 1954 1959 1964 1969 1974 1979 1984 1989 1994 1999

  10. Population growth rate projections Per cent Per cent 2.5 2.5 IGR projections 2.0 2.0 1.5 1.5 1.0 1.0 0.5 0.5 0.0 0.0 60-61 67-68 74-75 81-82 88-89 95-96 02-03 09-10 16-17 23-24 30-31 37-38

  11. 2002 2022 2042 Population ageing Index value (2002 base=100) Index value (2002 base=100) 450 450 400 400 350 350 300 300 250 250 200 200 150 150 100 100 50 50 0 0 0 to 14 15 to 54 55 to 64 65 to 84 85+ Total

  12. Forecasts Medium Term Projections Average of next 40 years Annual GDP growth(Intergenerational Report projections) Per cent Per cent 6 6 5 5 4 4 3 3 2 2 1 1 0 0 -1 -1 1990/91 1998/99 2006/07 2014/15 2022/23 2030/31 2038/39

  13. Population Employment (hours) GDP Participation Multifactor productivity Components of GDP growth Total population Share of population 15+ Participation rate Unemployment rate Average hours worked Capital deepening Productivity

  14. 2 2 13/4 33/4 7/8 21/4 -1/4 -3/8 Past Future The three ‘Ps’ in Australia - past and future Percentage contribution Percentage contribution 4 4 Productivity Population Participation 3 3 2 2 1 1 0 0 -1 -1

  15. 33/4 11/2 11/2 21/4 21/4 3/4 Past Future Growth rates of GDP per capita - Australia past and future Percentage contribution Percentage contribution GDP growth 4 4 GDP per capita growth Population growth 3 3 2 2 less equals 1 1 0 0 -1 -1 Over 40 years, 3/4 percentage points a year compounds to a third.

  16. 1/4? Health 3/4? Major components of budget cost Drivers Impacts in 40 years Demography +4¼% GDP Average cost of programmes

  17. Major components of budget cost Drivers Impacts in 40 years Health +4¼% GDP Demography Aged care +1% GDP Average cost of programmes

  18. Major components of budget cost Drivers Impacts in 40 years Health +4¼% GDP Demography Aged care +1 GDP Payments to individuals + ½ % GDP Average cost of programmes

  19. Major components of budget cost Drivers Impacts in 40 years Health +4¼% GDP Demography Aged care +1 GDP Payments to Individuals + ½% GDP Average cost of programmes Education etc -½% GDP

  20. Major components of budget cost Drivers Impacts in 40 years Health +4¼% GDP Demography Aged care +1 GDP Payments to individuals + ½% GDP Average cost of programmes Education etc -½% GDP Total +5¼% GDP Fiscal adjustment

  21. Budget balance falls and debt increases 1 Pass the problem to future generations Tax:GDP ratio increases 2 Lower cost budget programmes Policy response 3 Faster GDP growth Policy choices

  22. Tax to GDP ratio required Per cent of GDP Per cent of GDP 6 6 5 5 4 4 3 3 2 2 1 1 0 0 -1 -1 -2 -2 2002-03 2041-42

  23. Immigration policy Fertility policy ? Workforce participation Unemployment Sound macro policy frameworks Further micro reform Policies to grow GDP faster Population Participation Productivity

  24. 1/2 1/2 Productivity growth is crucial Per cent Per cent 3.5 3.5 IGR projections 3 3 2.5 2.5 2 2 1.5 1.5 1 1 0.5 0.5 0 0 1960s 1970s 1980s 1990s 2000s 2010s Multi-factor productivity Capital deepening Labour productivity

  25. Population Participation Productivity GDP Another look at the framework Physicallocation Agecomposition Totalsize

  26. Transport services need(demand) Transport and other policy Transport services delivery Population Participation Productivity GDP A framework for transport policy Physicallocation Agecomposition Totalsize

  27. Roads

  28. GDP Physical location Exponential growth Inter-modal competition Domestic supply Export demand Truck traffic Main Drivers Impact Non-bulk freight Bulk Freight

  29. saturation slowing growth Slowing growth steady Passenger traffic Main Drivers Impact Cars per person Avge distance travelled Persons Population

  30. Truck kms to grow 2.7% pa Implies growth of 50% over 15 years Exponential growth Interstate to grow 75% over 15 years Truck trafficBTRE projections 2000-15 Main Drivers Impact Non-bulk freight GDP 3.25% pa Exponential growth Inter-modal Competition Domestic Supply Bulk Freight Overseas growth

  31. Urban car kms to grow 1.2% pa Implies growth of 20% over 15 years saturation Exponential growth slowing growth 23% including commercial traffic steady Passenger trafficBTRE projections 2000-15 Main Drivers Impact Cars per person Avge distance travelled Slowing growth Persons Population

  32. Urban congestion 1 Pass the problem to future generations ? 2 3 Degraded highways Greenhouse ? Higher VFM budget programmes Policy response 4 Regulatory change Higher productivity Policy choice

  33. Scope for moving user prices closer to social marginal cost? Scope for private provision? Improved performance in inter-governmental provision Better intermodal links Some dimensions of possible regulatory change Modifying price signals confronting users (demand) Congestion pricing in urban areas? Cost recovery regimes for heavy vehicles? Improving systems for funding and managing new transport infrastructure(supply) Income tax: s51AD, Div 16D Part IIIA of the TPA Competition provisions of the TPA Private Financing Principles Transparency and accountability in SPPs AusLink

  34. Transport policy in context Ken HenrySecretary to the Treasury Canberra, 3 October 2002

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