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Roads Australia Insider - 10 July 2020


New procurement approach unveiled for Melbourne's suburban roads upgrades

The Victorian Government has abandoned the current tender process for the Northern and South Eastern PPP road upgrade packages in favour of a procurement model designed to give local construction companies more opportunities to win contracts.

The new approach is modelled on the Level Crossing Removal Project collaborative model and aims to unlock more work for tier 2, 3 and 4 companies, in turn creating more jobs and capacity across the sector.

Under the approach, construction companies will be pre-qualified according to the scale and complexity of jobs, with work awarded based on past performance and value-for-money.

Minister for Transport Infrastructure Jacinta Allan says 12 priority projects in Melbourne’s North and South East worth $2.2 billion will be progressively awarded to pre-qualified companies.

A Registration of Interest to qualify for the panels will be released next week, with work on the first projects expected to start before the end of the year.

The Minister's announcement this week means the existing tender process for the Northern and South Eastern Public-Private Partnership packages will be terminated and incorporated into the new program approach.

Minister Allan says the change in direction is part of the Government’s economic response to the coronavirus pandemic, and based on consultation with smaller contractors to understand how to best support their involvement in the Big Build program.


Contracts awarded for South Australian road maintenance

Four contracts have been awarded for the maintenance of South Australia’s 23,000-kilometre road network, continuing a 20-year partnership between government and industry.

Currently, around 60 per cent of road maintenance services are outsourced. Under the new model, all road maintenance will be delivered in conjunction with industry.

The contracts have been awarded for four zones:

  • Adelaide Metropolitan: DM Roads
  • Regional South: Fulton Hogan
  • Regional North: DM Roads
  • Outback: Lendlease Boral Joint Venture

“These new contracts will allow us to leverage the expertise and efficiency of industry to deliver better and safer roads for South Australian motorists,” said Minister for Transport, Infrastructure and Local Government Stephan Knoll.

“These companies are experts in road maintenance and employ thousands of South Australians, either under existing contacts or on past projects.

“DM Roads and Fulton Hogan have been awarded contracts to maintain our road network under the former government in 2013 and 2011 respectively.

“The new contracts include key performance indicators that specifically target and monitor local SME use and require demonstration of achievement of IPP targets and compliance with the subcontractor principles, with financial consequences should performance thresholds not be met.

“Through these new contracts we have been able to get a better bargain for taxpayers to drive their dollar further.”


Victorian, NSW stimulus packages announced

The dollars continue to flow from Federal and state coffers to prop up COVID-ravaged economies.

Last week saw announcements of an additional $525 million in Victoria and one billion dollars in NSW to kick-start 'shovel-ready' projects.

Deputy Prime Minister and Minister for Infrastructure, Transport and Regional Development Michael McCormack announced the Commonwealth would provide an additional $320 million for road and rail projects in Victoria, including $178.2 million towards the Regional Rail Revival package and $70.6 million to complete the duplication of the Princes Highway East between Traralgon and Sale.

The Victorian Government also announced extra funding of $179.8 million towards the two key projects, as well as $25.7 million for targeted road safety works.

Meantime, north of the Vic border Prime Minister Scott Morrison joined NSW Premier Gladys Berejiklian to announce details of their jointly funded stimulus package, made up of $451 million from the Commonwealth and $569 million from the State Government.

The funding will be allocated to three key priorities:

  • $240 million to fix 11 congestion hotspots around Sydney, supporting 1,000 direct and indirect jobs;
  • $382 million to help local councils upgrade roads across regional NSW, supporting 3,500 direct and indirect jobs; and
  • $398 million for road safety projects in regional areas, supporting 950 direct and indirect jobs.

Report advocates RUC as part of tax shake-up

A national road user charging scheme for electric and zero-emission vehicles and a trial of a Sydney CBD congestion charge are among the recommendations to emerge from a draft NSW report that aims to chart a roadmap to realign financial relations between the Commonwealth and states.

The Draft Report, Supporting the road to recovery, was released last week by an independent, expert Review panel appointed by NSW Treasurer Dominic Perrottet.

The Report's authors say the catastrophic challenges faced by Australians in the past six months – the summer of bushfires followed by the COVID-19 pandemic – have dramatically increased the urgency to reshape the Federation and the tax system that underpins it.

The Report advocates changing Australia’s tax mix to make taxes as simple as possible and to limit the impact they have on citizens’ lives, such as the decision about when to move house and whether to take out insurance.

This would involve the replacement of inefficient, unfair or shrinking taxes, such as stamp duties on property transfers and insurance taxes, with broad-based or fairer taxes, such as land tax. These would have the effect of making state revenues more stable and sustainable and, along with allowing the states to access a share of personal income tax already paid by citizens, give them more control over revenue raising and spending on essential services such as health and transport.

The Report makes clear that genuine reform cannot be achieved by simply raising the total tax take but “will involve changing the tax mix in a way that is neutral to the overall burden on the taxpayer,while extracting the best value”.

Among the Report’s 15 recommendations are:

  • establish the National Cabinet as the permanent decision-making body to guide the federation. It should be an inter-governmental body of equals with an independent national secretariat;
  • review and reform all Commonwealth-State funding agreements to reduce waste and duplication and shift the basis of funding towards outcomes;
  • for state treasurers, in consultation with the Commonwealth, to assess and agree options for lifting and/or expanding the base of the GST, with some of any revenue gained transferred to lower-income households to maintain fairness;
  • replace stamp duties on property with a broad-based land tax, with an appropriate transition process that recognises the impact on property owners. The Report notes that there were various transition models, each with significant trade-offs that need to be explored further;
  • for NSW to work with the Commonwealth on the development of personal income tax-sharing model, potentially involving a small pilot. This would involve substituting a small set of tied grants for an untied share of the personal income tax currently raised from NSW citizens. There would be no impact on the amount of tax paid by individuals;
  • replace all specific taxes on insurance policies with broad-based taxes, such as a land tax, to improve insurance affordability and uptake;
  • for state treasurers to agree a national approach to payroll tax reform to address the hollowing out of the tax base and the complexity this imposes on taxpayers;
  • for state treasurers to design a national road user charging scheme for electric and other zero-emission vehicles; and
  • for NSW to commence the trial of a ‘congestion cordon’ around the Sydney CBD involving charges for drivers entering the zone.

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