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A different approach to funding transport infrastructure

By Kevin Cox - posted Monday, 4 July 2005

The provision of transport infrastructure continues to move down the path of increased consumption of non-renewal and environmentally destructive energy sources, with few signs of change. The social and economic capital invested in the existing systems means it is difficult for new approaches to break this trend. We need a way to defeat the tyranny of the status quo and give life to new ways of providing transport infrastructure and to bring the marketplace to transport.

This proposal breaks the trend by creating a market for capital expenditure on transport infrastructure. It will inevitably lead to a consumer market for transport services.

Major transport infrastructure, whether it be roads, railways or airports is funded largely by governments who collect money in taxes from existing users of transport facilities. Local infrastructure is paid from the development charges for houses and other buildings. Governments plan, finance and decide priorities and projects.


There has been some attempt at providing funds from private resources with toll roads and airports, but these are only provided if the investors are guaranteed favourable conditions, so the risk associated with the ventures is low and the returns are high. Almost all the funds for transport infrastructure come from taxes levied on usage of existing infrastructure. These taxes are in the form of road taxes, fuel taxes, airport taxes and other transport-related taxes.

This means money for spending on transport infrastructure tends to become a political rather than an economic decision, with heavy biases towards extending existing approaches and towards the allocation of some transport taxes for non-infrastructure purposes.

Rather than letting bureaucrats decide where to spend infrastructure dollars, this proposal recommends giving the community the power to decide where to spend the money by getting infrastructure providers to compete for the available capital. Rather than leaving the investment decision in the hands of a few, the investment decisions are made by millions of individuals investing in transport infrastructure.

The infrastructure funds from transport-related taxes are given to the general population as rewards for appropriate behaviour. The general principle is to reward people who use few undesirable transport resources. The rewards that people are given are only used on approved infrastructure projects. There is no increase in existing taxes. The money to give people rewards comes from some of the existing taxes on fuel, registrations, tolls and other taxes and imposts imposed on transport. The difference is the way the community gets ownership of these assets. Instead of the community getting the ownership through governments, the community will own the infrastructure directly.

Allocation of rewards

In principle, rewards are given to people who consume few transport resources. Where they do consume transport resources, rewards are given in proportion to the energy efficiency of their mode of transport. The allocation of rewards can be achieved in many different ways. The ones used in any situation will depend on the local conditions but the general principles will remain the same. That is, people are rewarded for desirable behaviour and the rewards are used to provide more transport infrastructure or, more important, to make better use of existing infrastructure. Some possible ways of allocating rewards are as follows:

Travel to work transport
People who tele-commute (that is, they do not travel to work but use their residences as their offices) get the maximum benefit as do those who walk or cycle to work. People who use public transport also get some benefit depending on the energy efficiency of their mode of transport. People who share vehicles for work transport get rewards. People who use energy efficient transport get a reward.


Any person who pays income tax from an income derived from personal labour is deemed to be working. To obtain a reward they record all days on which they are entitled to a reward. The reward is a fixed reward and only depends on the method of transport to work.

Education related transport
People who obtain their education in transport efficient ways are given a benefit. The education must be for an approved course and the amount of the reward depends on the time spent on education.

The rewards are the same as work related rewards. Thus, those who obtain their education from their place of residence or work receive the maximum benefit. This reward applies to children as well as adults.

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About the Author

Dr Kevin Cox is an entrepreneur. Previously he has taught Information Systems in Canberra and Hong Kong and worked with computers for various multinationals in Australia, the USA and Indonesia.

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