Transport economists and planners have long argued that the only way to really solve traffic congestion is through some form of road pricing, or as it is commonly known – congestion charging. The theory behind it is simple: congestion is the result of there being excess demand for road space in comparison to the level of ‘supply’ that exists. In all other parts of the economy, we manage this supply/demand issue through pricing – there’s a big demand for diamonds compared to their limited supply so the price is high. So why not do the same for roadspace?
These are reasonably good arguments, and congestion charging can also achieve other benefits like reducing road-use thereby reducing vehicle emissions, oil consumption and so forth. Reducing road-use can also free up space for public transport, particularly ‘on-road’ PT like buses. There’s also the argument that it replaces a non-renewable resource – being time – with something that is renewable: money. By pricing roadspace, you give people a choice: you can pay to avoid the congestion and travel when/how you want, or you can travel at a different time (or in a different way) to avoid the charge.
While congestion charging is great in theory, relatively few cities around the world have actually implemented it. Generally politicians have shied away from the idea because they think it will be too unpopular. This conundrum, that there’s a cheap solution out there for congestion but we just can’t implement it, is an issue raised in an interesting recent academic paper by Jonas Eliasson and Lina Jonsson, entitled: “The Unexpected “Yes!”: explanatory factors behind the positive attitudes to congestion charges in Stockholm”. The paper also explores the interesting way in which Stockholm in Sweden was ‘won over’ by congestion charging post-implementation.
The basic issue: that congestion pricing is a good thing but hard to implement is outlined at the beginning of the article:
The paper argues that there’s a potential case for ‘just getting on with it’ in terms of implementing congestion charging – as acceptance tends to come with familiarity. However, it also outlines that Stockholm took some clever steps to ensure greater public acceptance: such as calling the congestion charge an “environmental charge”.
The obvious question to ask is “could the same thing happen in Auckland?” There has long been discussion of congestion charging or road pricing in Auckland, with the Ministry of Transport undertaking an extensive study of the idea a few years back.
I have discussed congestion charging a number of times previously, and my general thoughts are that at the current time I don’t really see it being that feasible to introduce in Auckland in the way that congestion charging is typically done. This is not simply because I don’t think it would be politically viable, but also because I’m not sure whether Auckland is – at the current time – the most appropriate city in which to implement traditional corridor based congestion charging. We have a relatively weak and fragile CBD and a relatively under-developed public transport system. Other ideas, like charging a toll at each motorway onramp, could have perverse effects like encouraging traffic off the motorway and onto local roads.
In short, I think having a system which charged some trips and not others would be pretty risky – and potentially undermine many of our other urban goals (like supporting the CBD and reducing traffic on local roads). So whatever system we introduce, I think it should be all encompassing: it should cover all trips on all parts of the transport network – at least within the urbanised area (how you’d do things in rural areas is a more difficult question).
In terms of political acceptability, I think the reason why all congestion charging schemes in the past have been so unsuccessful and difficult to implement is because it has always been proposed as an additional charge to what we already pay to support the transport network: that is, petrol taxes. The current “fuel excise duty” (FED) is 48.524 cents per litre, on top of which we pay for transport’s contribution to the emissions trading scheme and then obviously GST. If, for example, we were to halve petrol tax and replace it with a variable ‘congestion charge’, which you paid a different per kilometre rate depending on the time of day, your political acceptability completely changes.
I envy the politician who could propose a reduction in petrol prices of around 25 cents a litre, with the money being made back in a way that can be largely avoided – if you simply don’t drive at peak times. I’m sure a system where it costs maybe 50c a kilometre at peak times, half that at other fairly busy times (inter-peak and weekend) and perhaps nothing during late evenings could generate a similar amount of money – but in a way that encourages people to avoid driving at peak times and therefore drastically cuts congestion. The exact figures, how to deal with inter-city trips, whether you want to distinguish between the rates for some roads and others and how you’d technologically make it happen are obviously things that would require further work.
But the point holds generally: the reason congestion charging hasn’t happened so far is not simply due to political acceptability, I think it’s because nobody has thought through how we could introduce it in a way that would be popular with the general public: not just in the long-term but also immediately. As fuel efficiency of the vehicle fleet improves, we may have little choice but to implement something like this.
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But if you remove the petrol tax and the new charge just replaces that what have you achieved, especially as the Minister will still only want to use the money as he does now? Also petrol tax is a ‘good’ tax in that it discourages the use of something we want less used of….
I know, how about a regional petrol tax to fund a real public transport network in Ak…?
Patrick you are right that petrol tax is a “good tax” in that it incentivises better fuel efficiency, smaller cars and so forth. The idea is not so much an issue of “how can we raise more money for transport projects?” but more “how can we raise money in a smarter way that also helps reduce congestion?”
Plus I’m thinking long-term – that is, post Steven Joyce.
I think we have a bit of a chicken or egg situation, it will be pretty hard to implement any form of congestion charging without out the PT system being dramatically improved however we can’t do that without the money that charge would bring because the government is holding the purse strings and they don’t like opening that purse. If we actually invested in quality PT infrastructure across the city to help make PT faster and more attractive then we might be able to move enough vehicles off the road that we don’t need congestion charging.
That’s very true Matt, although my question is why would what I’ve proposed above be anything but wildly popular? Sure, you’d need masses more PT capacity at peak time, which could be difficult to fund.
Under such a system I’d almost certainly pay less to use the road system, because I catch peak time PT.
I think that the solution is to focus on developing a sustainable transport infrastructure first, and then channeling demand towards it. As you note, that doesn’t exist now, so any attempt to generate it through demand (rather than supply) is likely to be fraught.
And of course, the system we have now is entirely broken and groaning under the strain of a very moderate load. I was at Otahuhu this morning and an entire trainload of people had to disembark for some reason – apparently a train had broken down somewhere so they’d shut the southern line. Completely unacceptable, entirely typical. (Luckily, I was heading in the opposite direction. I only had to suffer a train running slow because it was following a freight train).
I don’t think it matters where one starts. Capacity or lack thereof is often used as an excuse as to why “we can’t do that”, and that is then tied to “and there is no cash to expand it”. If road user charging is introduced, that will radically change the economics of the CBD rail tunnel’s cost-benefit to be even more favourable and also unlock a large funding source at the same time- utterly annihilating two key arguments used to blockade progress on the construction of this important link.
It depends whether you use the charge to generate more revenue or to simply replace revenue generated elsewhere (ie from fuel taxes). Additional revenue will obviously help fund projects like the CRL, but comes with huge political difficulties. My argument is that we are likely to have more luck implementing a system that doesn’t seek to generate more revenue – but simply generates the same amount in a smarter way.
I disagree with your assessment entirely. Perhaps I’m all doom and gloom, but I think this is creating a rod for your back. It ‘offers’ nothing. Absolutely nothing. It’s a punitive sanction, and absent sufficient carrot the mix is all stick. Not only is that bad politics, I think it’s a pretty poor way of doing things – making people’s lives worse or more expensive is usually a bad thing, even if you have the right intentions.
And, as I said, you’d divert a large stream onto a system that is at breaking point. The commute back from the city at Britomart was chaos. My train cancelled, all Western Line trains cancelled if I understood the conductor correctly, and some kind of poorly organised pre-purchase for tickets in which staff were rude and unhelpful.
Just adjust existing revenues, or increase slightly the fuel tax. Much easier, much simpler, and less harm done.
I disagree with this post.
It is very simple. Collect the money from road usage or congestion and then later simply refund it.
This works because refunding the money at a later time will not affect much their desire to avoid the charge in the first place. A portion of the money could go to relieving low income/welfare measures through increases in welfare payments / pension payments and public transport provision.
It’s difficult to argue that something is bad when you are going to get refunded!
This is similar to a mechanism used to introduce a carbon tax in Australia and also similar to a scheme already proposed by an Auckland professor previously on this blog.
I call the above mechanism “The shopping trolley” method. Some people may be familiar with the problem that shopping trolleys in supermarket car parks go missing because people don’t return them.
To get around this problem, some Australian stores require you to insert $2 into the trolley to unlock it and use it. When you are done, the money is simply refunded.
Applying this concept to traffic, if you drive you should pay a set charge, and then perhaps when you renew your licence or whatever, the amount of road use can be calculated and then a refund issued to you
or you could get it back through the tax or rates system as a credit.
A few points:
Congestion in itself is a huge disincentive already for people traveling.
I think it would only be acceptable to have a charge if viable PT or other alternatives exist.
As petrol prices increase and consumption decreases, I think it inevitable that we move to distance based charging, most likely by extending the RUC regime. This would be the ideal time to consider what you are proposing here.
Yes, you’re right. The only way congestion charging will ever be acceptable is to replace existing taxes, and I’d suggest replacing rates funding is another path.
Odd how far too many commentator on this in NZ fail to note that you already have a platform to build upon for congestion charging in the form of RUC. 20% of Auckland motorists already pay to use the roads by distance. If the technology to do this was updated (ERoads already is a working example of this), then it would de-risk it and both heavy vehicles and light diesel vehicles would be more conscious of distance travelled – or in other words, consuming road space.
Naturally you can’t do much with time of day variations with that, perhaps with the exception of a lower charge during overnight (e.g. 2200-0600). However, it would allow for charging other non-petrol vehicles and hybrids, and enable a system similar to what was demonstrated in Oregon that refunds fuel tax at the pump while paying for RUC. Then you can offer petrol vehicles the option of paying by distance or paying fuel tax. Once you get to a particular threshold (say 50% of vehicles), you can mandate RUC for all new vehicles, effectively accelerating the transition.
At that point you can hike up fuel tax to encourage more existing users to shift, but also start playing with variable charges by location and time of day.
Yes the path is long term, but I believe it is the only politically feasible one you can take. More importantly it will be about developing a system that does the job properly by enabling:
– Heavy vehicle charging to vary by type of road to reflect maintenance costs;
– Congestion charging by time of day in any city/town;
– Congestion charging based on individual routes, but maintaining a price advantage for motorways over local streets (exceot when there is ample spare capacity on the local network), and by penalising short motorway trips over using local roads;
– Enabling road funding to be directly related to future anticipated revenues and usage.
On the other points:
– Regional fuel tax is highly inequitable in New Zealand because regional RUC cannot be implemented using currently mandated technologies, meaning around 40% of diesel tax users (who are offroad users) have to apply for refunds. Typical advocates of regional fuel tax are “fuel blind” and ignorant of the high levels of off-road use of diesel (and LPG which is over 85% non-road use).
– Fuel tax has little relationship to road use, and is only attractive to those who think consumption of fossil fuels is inherently “bad”. It is only bad to the extent that it creates negative externalities, which should be the subject of tax or regulation to control in themselves. As a way of paying for road use it is a poor low admin cost proxy to proper road pricing.
– The biggest myth is some need for alternative modes. Congestion pricing will cause people to do three things:
– Change time of travel (avoiding peak charging times)
– Change mode
– Change destination (particularly retail/discretionary trips)
– Change route
– Cancel trip (often involves consolidating trips)
– Continue to travel (most will do that).
In Auckland, most trips bear next to no relationship to any scheduled public transport, but enough do for it to do well out of it.
Note that once you get efficient road pricing, the economic arguments for subsidising public transport evaporate, as the only credible argument (road use at peak times is underpriced) will have gone. At that point the users of rail and bus services ought to meet the full long run capital and operating costs of their networks.
Liberty, your final paragraph only rings true if congestion relief is the sole reason why you would want a functioning and affordable PT system. I tend to think that’s an extremely narrow point of view.
You then have to ask the question as to why urban public transport (not intercity public transport, or urban or intercity freight transport, or international public transport or international freight transport) is special?
You also presume that you wouldn’t have a functioning and affordable PT system under road pricing, although I suspect it wont be the gold-plated bespoke steel track based system you are an enthusiast for. It could well be a cross-cutting network of express and stopping buses. If the economics for rail still don’t stack up in a city where people move efficiently, then it ought to be questioned. That is if you are interested in delivering results for users, rather than simply building and running trains because you like them. I presume you both like them and want results.
Arguments about education and healthcare being special are well versed and credible. However, subsidising people who choose to move about by motorised means within cities (but not by non-motorised means, or not between cities) isn’t quite up there.
Other urban utilities are not treated as special. Water and sewerage, electricity, gas, telecommunications, freight/delivery services all stand on their own feet, paid for by users. Most essentials consumed by urban dwellers are also not special, food and clothing most specifically, but most also manage to acquire shelter with little intervention.
Some work done some years ago assessed the primary demographic of users of Wellington’s urban rail system, and they were on average people on above average incomes. Once the economic efficiency distortion of poor road pricing is removed, it is difficult to see any equity grounds for propping up the commuting trips of people who travel by one mode over another.
If you are wanting to force taxpayers to subsidise rail, once the congestion reduction argument has gone (and particularly when buses are likely to be fully commercially viable) then I hope you have a good argument for it.
I suspect it wont be the gold-plated bespoke steel track based system you are an enthusiast for
At the very minimum, we need something that works. We don’t even have that yet, as I explain. More patronage without investment is going mean less works, and at every stage it will be a cluster****. I don’t like that as an approach to policy-making, driving ideology over reality.
Liberty – It is all very well stating that once there is effective road pricing then PT shouldn’t be subsidised but that ignores one major thing, we still have an uneven market due to decades of chronic underinvestment in PT services. So while many people would switch modes PT still has an unfair handicap. If we had of invested properly in PT infrastructure and services since the 1950’s then our patronage would be much higher and subsidies would be lower so the introduction of road pricing and removal of those subsidies would not be such an issue.
Matt: Who defines chronic underinvestment? What would have the “right” amount had there been road pricing for decades? The depreciated life of a bus is 15 years, you’re assuming that if road pricing is ramped up over time that bus companies wouldn’t invest in more capacity because, not only would capacity increase by being able to operate buses in conditions of relative free flow, but patronage forecasts would drive forecasts of future revenue and so enable the supply of capacity.
Why should it be different from intercity (or international) public transport? Airlines forecast demand over various peaks and troughs on routes and invest in serious amounts of capital (purchase or leased) to supply capacity to meet that. With the exception of a few dinosaurs (which the EU has largely expunged), the developed world has an airline sector that is commercially oriented and meets the demands of users successfully (albeit most airlines are not investment grade). Centrally planned fares and capacity were a disaster for that sector, mostly the users. Once roads are run like a utility, there is little reason to believe that buses and railways cannot be the same – unless people are unwilling to face up to cases when it simply wont make money.
Bear in mind my vision of road pricing for Auckland (and nationwide) should take around 15 years to implement, during that time it will be abundantly clear as to what public transport in Auckland will be viable. I don’t doubt there would be a vibrant bus, shuttle bus and ferry system under full road pricing, but I doubt that rail would sustain itself beyond the operational life of the equipment about to be installed. At that point, it will be clear whether it is viable to replace the electric rolling stock or not. It will probably be economic to refurbish it enough times to last until the signals and electrics need replacing, at which point technology may well have delivered alternatives in terms of fuels (and modes) that probably render all existing motorised transport redundant.
always i used to read smallerr articles or reviews wich as well clear their motive, and that is also happening with this paragraph which I am readinhg at this time.