Grant aiding rural local roads—an alternative approach

The paper points first to the significance of rural road expenditure in Australia and to the limited success of attempts to place grants for these roads within a framework of economic efficiency. Attention is then drawn to the merit good issue and to the findings of recent research which suggest that spatial equity and changing levels of aspiration are important determinants of road user attitudes. From this the authors conclude that disequilibrium between expected and actual road performance levels will be a salient characteristic and that road grants should be directed to reducing this discordance. A methodology for distributing grants is suggested and illustrated by reference to South Australian data.