What is the future of road ownership?
"The new players sometimes refer to this as disruption. But often it comes down to capturing the value that rightly belongs to someone else."
Throughout the world, most roads are owned by governments. Bureaucrats manage the roads and maintain them. Governments typically run the roads on a “cost recovery” basis, although in practice our roads are heavily subsidised as a community service. And why is all this necessary? Because no-one else is big enough to provide the service.
In developed countries all this may change within the next 15 years. New business models like Uber, Google and Apple envisage a world in which they operate huge fleets of vehicles, replacing the need for private car ownership. This questions our assumptions about government ownership and management.
The new players will have the resources and the scale to own and manage the roads themselves. However, they are much more likely to present their business models within the framework of the existing management regime. They may then benefit from the implicit subsidies of the current system while operating commercial businesses. Perhaps governments may even continue to do the maintenance as before. If so, this would quietly transfer a community benefit into a subsidy for commercial companies.
Disruption or appropriation?
The new players sometimes refer to this as “disruption”. But often it comes down to capturing the value that rightly belongs to someone else.
Most governments around the world are dimly aware of this issue. Most assume that they will continue to own and manage roads as a service to the community even as the goal posts are moving.
Why do governments own the roads?
For the first time in history, governments need to think hard about why they own roads. There may be three main reasons:
Governments have a responsibility to ensure that rural communities, the elderly, the disabled and other members of the community have access to transport. Governments should also ensure, as they do within the health system, that the prices charged by operators within an effective monopoly are fair to the consumer.
2. Safety
Regardless of who owns the transport system, it is appropriate the governments ensure that it is operated safely.
3. Return on public investment
Our road system is the community’s most valuable asset on its balance sheet. When it is no longer necessary for this asset to be provided to the community below its commercial value, it is appropriate that a higher return on investment should be obtained from incoming commercial operators.
The road to / of the future
This foreshadows a world in which roads are owned by governments but operated under concessions managed by private fleet owners. The fleet operators would undertake the maintenance, meet safety standards and provide commercial returns. Road agencies would no longer exist as we know them now.
The transition in thinking will be hard to achieve. There is a natural inclination to continue to seek solutions based on previous experience. In that regard, one must even ask the question as to whether road user charging by governments is a solution for the past or the future?
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