If you’ve had to swerve around a gaping pothole recently, or found yourself skidding on a crumbling road edge, you may have wondered: when on earth is someone going to fix this? The answer to that question is, unfortunately, probably not as soon as you’d like – not unless federal and state governments commit to significant changes to the way they fund local road maintenance.

More than 75 per cent of Australia’s roads are managed by councils. These are the sealed and unsealed roads that link homes and businesses to the arterials, corridors, and freeways of the road network.

Metropolitan councils often have the resources to manage their road networks professionally, but many remote and rural councils just can’t afford to maintain their vast stretches of road in a decent condition.

The poor state of our local roads is largely a problem of governance, and the way local government is funded more generally. A gradual erosion of untied federal funding over the past decade has been terrible for local roads, especially in rural areas.

At least an extra $1 billion is needed each year just to keep roads in the same unsatisfactory state they’re in today. But many councils do not have a realistic way of raising this revenue themselves.

And while budgets may be tight, delay is a false economy: when a road is allowed to deteriorate too far, it ends up costing much more to restore.

A $1 billion funding injection would mean an extra 25 per cent on top of what councils are currently spending on road maintenance. But that’s only about 10 per cent of what the federal government spends on roads every year.

Taxpayers would also get better value if the federal government stopped favouring the densely populated states of NSW and Victoria.

Taxpayers would get better bang for their buck if the federal government spent an extra $1 billion on improving our local roads rather than on building new megaprojects in the major cities.

But it’s not only a question of money. Funding for road maintenance needs to be better targeted to the councils that need it the most, and with cleaner lines of accountability from the funding source to the end point of better, safer roads.

Taxpayers would also get better value if the federal government stopped favouring the densely populated states of NSW and Victoria, to the detriment of Tasmania and the NT, and cut back the share of the funding pool that it directs to metropolitan councils that are already self-sufficient.

Even better targeted funding, however, won’t be enough to fix the problem of local roads.

A Grattan Institute survey of councils conducted for our report reveals that an extraordinary number of councils don’t even know what roads they manage.

A quarter of those we surveyed don’t know how many bridges they have; for remote councils, it’s almost half.

The federal government has a role to play here. To help councils better manage their assets, the government should establish a national road hierarchy, minimum service standards, and basic data specifications for councils to follow.

State governments should provide templates to help under-resourced councils create and maintain best-practice asset management and long-term financial plans in a consistent way.

Better-practice road management would help councils cut through the morass of red tape and time-wasting obligations they currently face.

Councils are obliged to spend part of any Roads to Recovery grant on road signs acknowledging the federal government as the funding source, and to get the money out the door within six months; tied state grants often favour new construction over maintaining the roads and bridges we already have.

The federal and state governments also induce councils to divert money away from roads when they unilaterally reduce established funding, charge councils compulsory fees such as the waste and emergency services levies, and require them to administer regulations without sufficient funding to cover costs.

Motorists and truck drivers are not happy. What’s needed to put the road network on a better path is an annual funding increase of $1 billion for local roads, better targeting to make sure the money goes to where it is needed most, and reforms to ensure that councils have the tools and time to fix the potholes and give their communities the roads they need and deserve.

While you’re here…

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Danielle Wood – CEO