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Corporate model would resolve transport network funding

Corporate model would resolve transport network funding

Press release 19.01.2017 15.28 fi sv en

The Ministry of Transport and Communications proposes that a state company be established in Finland that would be responsible for the proper condition and long-term development of the transport network. “The operations of the company would not be dependent on the economy of the state, but rather the needs and satisfaction of citizens and business life,” states Minister of Transport and Communications Anne Berner in the report concerning the transport network company in the report publication event arranged for 19 January 2017.

“Financing the transport network requires reform, because state reserves are insufficient to maintain – let alone develop – a state transport network. Due to the lack of funding, we have a considerably large repair debt, so the situation is hardly favourable in anyone’s opinion. What is being offered is a proposal for improvement which we should relate to in an open-minded manner in an attempt to find solutions,” says Minister Berner, and points out that the company’s investments should mainly be directed towards the sparsely populated areas outside the population centres, and not to urban street networks.

“The transport network must be capable of responding to the requirements of citizens, business enterprises and the community both now and especially in the future. We cannot know today which sorts of services may be offered tomorrow, but we can already create the prerequisites for the creation of these services,” Minister of Transport and Communications Anne Berner emphasises.

“We are not increasing transport costs, nor are we limiting or monitoring the mobility of citizens. The starting point of our proposal is that the overall costs of transport will not rise, and transport users would have the freedom to choose the services they wish to – whether it is only road use or a transport service package.

“In the background of the development of the transport network are also the energy and climate strategy as well as the emission reduction goals set for transport. In the transport sector this goal will not be realised by individual actions – all means must be deployed instead. There is also a need for system-level changes of a kind which the creation of the company's transport network would require, based on customer payments for its use,” Minister Berner explains.

A regulated entity for the safety of citizens

The company would generate necessary services for the community, and for this reason it must be under social supervision. The Finnish Parliament would steer the company over several periods of office by preparing a transport network report which would be updated during each period. The company would also be regulated by legislation as well as by state owner supervision and incentives which would guide the company’s operations in the direction of that desired by the community. This way sufficient maintenance of the road network administered by the company, for example, would be ensured throughout the entire nation. The Ministry of Transport and Communications would be responsible for corporate governance.

By means of legislation and official regulations, the service level and moderate pricing of the transport network would be determined. In addition, the public character of the company’s operations would be regulated in law so that, for example, public access to documents would be broader than in state companies in general. The Finnish Transport Safety Agency (Trafi) would supervise its implementation, which would not require large investments for new official supervision.

Fixed fees throughout the country – no compulsory supervision of vehicles

The transport network company would collect payment for road use, by which the maintenance and development of state transport network administered by the company would be funded.

The company would offer consumers nationally fixed fees based on specific periods (for example, a monthly or annual fee) which would not require localisation.

The purpose is that as time goes on, the service operators would offer their own transport services. If competition is sufficient, the operators could also offer packages whose pricing is kilometre-based alongside fixed fees. Kilometre-based fees would be optional to consumers and would require vehicle localisation so that information exists on whether the vehicle is travelling on a transport network company road or on a municipal or private road. Customer payments shall be collected without risking privacy protection.

The payments would be scaled in accordance with vehicle emissions: the fees for a large-emission vehicle would be higher than for a low-emission vehicle.

For consumers, the fees would bring clarity to their own travelling expenses, and consumers could exert an effect on the costs incurred by their own traffic behaviour.

Better routes, smoother traffic

The Ministry of Transport and Communications under the direction of Minister Anne Berner clarified the possible establishment of a transport network company. The government decided to launch an enquiry into the development of a transport network in April 2016 in connection with the approval of a public budgetary plan.

On the basis of the report, the Ministry proposes that the state road network administered by the Finnish Transport Agency would be transferred to a state specific-function company as of the start of 2018. With respect to the rail and waterway network, separate clarification would be continued, with the goal of transferring it to the company at the beginning of 2019.

The corporate owners would be the Finnish state (65%) and regions (35%). The preservation of the company in the ownership of the state would be ensured by legislation so that the company’s shares could be transferred to others only with the permission of the Finnish Parliament.

The initial function of the company would be the maintenance, repairs and development of the state road network. The company would fund its operations through its own internal financing: i.e. by means of fees collected for the use of the transport network in addition to moderate loan acquisition. The purpose would be that the overall burden borne by transport users would not increase, because at the same time current transport taxes (for instance, motorcar tax, vehicle tax) would be reduced.

Open discussion and feedback are valuable

The Ministry’s proposal to clarify the feasibility of a transport network company will still continue in a comprehensive round of consultation. On Monday, 23 January, civil dialogue will commence in the Take a position (Ota kantaa) service. Feedback can also be given by email to live@lvm.fi .

Better routes – smoother traffic. Report on the development of a transport network on a professional business basis: The transport network company (Live)-based (Reports and clarifications 1/2017) and background clarifications connected with the report can be read on the Ministry’s online service at www.lvm.fi (case number LVM/810/01/2016).

The event’s slide presentation, Factsheets linked with the proposal and FAQs (Frequently Asked Questions) can also be found on the Ministry’s online service.

For more information:

Juhapekka Ristola, Director-General, tel. +358 (0)295 342348, +358 (0)40 078 8530

Olli-Pekka Rantala, Director-General, tel. +358 (0)295 342585, +358 (0)50 344 3400

Mikael Nyberg, Director-General, tel. +358 (0)295 342474, +358 (0)40 8378794