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INDUSTRY & RESEARCH
In most cities across Australia, congestion is predicted to double, both in terms of the amount of congestion and the economic impact of congestion, over the next 10 – 15 years.
The next horizon is around declining fuel tax revenues, which is the primary way road networks are funded. That involves a tax on fuel, petrol or diesel, going into cars.
Of course, that ' s firstly around technology disruption of the increasing fuel efficiency of internal combustion engines. As they consume less and less fuel, the fuel tax revenues that come from that are under decline.
That leads to the third horizon, the massive technology disruption coming in the form of alternative fuel vehicles. Electric vehicles( EVs) or biofuels or whatever else. People today, buying a $ 100,000 Tesla, are effectively opting out of that fuel tax system, so those revenues go. As the uptake increases, that is a significant fiscal challenge for government.
But an even bigger one, is the advent of autonomous vehicles. The potential for autonomous vehicles is significant as far as social benefits. Enabling people who might not be able to drive or get around, there ' s a lot of benefits there.
It also has the potential to increase congestion through more trips being taken, perhaps by people who wouldn ' t be able to drive, or wouldn ' t drive at the moment.
So there are three major shifts: the here and now; the sometime soon, as far as fuel tax revenue decline; and that major technology disruption through EVs and autonomous vehicles.
So you and Russell have mooted the idea of the‘ pay as you drive’ scheme where, effectively, people will opt into a different method of paying for the roads – is that correct? Indeed. The essence of our solution is, firstly, an opt-in system, so that people will have the choice of opting out of fuel tax, which in Australia is 40.1 cents a litre, so about a third of your fuel bill. Opting into a‘ pay as you drive’ road usage plan [ would be ] kind of like a mobile phone plan. The plan you opt into might be different from the one I opt into.
The second key feature is a price guarantee. In opting out of fuel tax and opting into a‘ pay as you drive’ or road usage plan, people would get a price guarantee that they will never pay more than if they had remained paying fuel tax. That ' s an important part of the acceptability of this solution and, in particular, the public and political pathway on this.
The point of your plan is not about increasing government revenue, but reducing the loss of revenue due to changes in vehicle technology and improved fuel efficiencies – is that it? Yes. But it ' s also about incentivising people to make smart choices where they can. So carrot not stick. With that price guarantee, they can ' t lose. They won ' t pay more than if they were paying fuel tax. But if they are able to change some of their driving behaviours, maybe taking more trips outside peak hours, there is potential to make some significant cost savings.
To put that into context, for a typical driver, the average driving kilometres per year on the east coast of Australia is about 15,000km. And in an average four or six-cylinder car, people are spending about $ 2500 a year on fuel, of which somewhere between $ 750 and $ 1100 is fuel tax. In the scenario that somebody can largely drive outside of peak, they could make a saving of $ 200 or $ 300 a year.
I imagine there are going to be some concerns about how the government would manage this data. How would you address those concerns? Firstly, it ' s a voluntary scheme. If someone is concerned about privacy, nobody ' s being forced to opt in.
Secondly, as you alluded to, people ' s privacy trade-offs have evolved over time, with the advent of things like smartphones, Google and Facebook. What we ' re seeing now is large parts of society prepared to make the trade-off around functionality or access to social networks online or whatever else it might be around their privacy.
This is where another part of our solution comes in. Rather than being a government-led scheme, this is a‘ pay as you drive’ product. Our solution is it would be trusted retail brands, your local supermarkets, telco provider, mobile phone provider, or insurance company selling and retailing and supporting this product.
That ' s where there is a difference in terms of people ' s acceptance of privacy, the use of data, between private sector-type organisations and the public sector.
When you say you ' re going to reward safer drivers – people who don ' t break the speed limit, or who don ' t get into accidents – how would that work? The key driver or incentive of behaviour change, driving outside of peak, for instance, is the pricing link – being able to save money. However, what we ' re baking into the solution is also the gamification. That’ s the concept of rewards points, Clearways points, if you will, that can be awarded for good driving behaviour or smart driving choices. Extra points for driving outside of peak around special events would be an example – around footy games or New Year ' s Eve or whatever else. Potentially, also points awarded for safe or efficient driving behaviour: not hard braking or not hard acceleration.
This is something insurance companies, in Australia and around the world, are already starting to look at in terms of‘ pay as you drive’ insurance and rewarding safe driving behaviour. Again, carrot not stick. Something we think is entirely compatible with the‘ pay as you drive’ road usage system we ' re proposing.
Are these dongles that are attached to the onboard diagnostics of your car going to report you to the authorities, for example, if you speed? None of this is about either compliance or fines. That would not be compatible at all with the solution that we ' ve got or the customer promise at all.
I guess, at its heart, [ the dongle is ] like a Fitbit for your car. Just as people have goals around 10,000 steps a day. This is similar information around your driving, giving you that feedback in a real time or a time proximate way. Then you learn what good driving behaviours might be safer or more fuel efficient or more time efficient as far as how you use the roads, in terms of your own needs or schedule.
How would you roll it out? Our proposition is to run a six-month trial, working in collaboration with UNSW as our research partner, and a small collection of retail brands, an insurance company, a telco, and potentially a rewards scheme or supermarket, to get a trial of 50,000 vehicles with real customers, and to demonstrate the behaviour change and customer acceptability of the scheme that we ' re talking about. It ' s about trialling this with a representative sample of the population. ■
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