According to an Infrastructure Partnerships Australia report (Urban Transport Challenge: a Discussion Paper on a role for Road Pricing in the Australian Context, undated but apparently 2010), traffic congestion costs $9.4 billion a year nationally, a figure expected to double by 2020 and increase fourfold by 2040. The report estimates that transport infrastructure investment will need to double by 2030, and increase fourfold by 2050, to cope with population growth and economic development. Yet Melbourne and other Australian cities lack a credible plan to deal with transport congestion. Instead, we rely on ‘game changing’ infrastructure projects whose effect, in the long term, is often to exacerbate congestion and disperse urban form.
This article argues that transport policy is hamstrung by the absence of effective demand management of road use, and that road pricing provides the best means of correcting this deficiency. Road pricing provides a mechanism capable of fixing traffic congestion; it has the potential to provide at least some of the funds we need to upgrade our transport infrastructure, for both private and public transport; and it could provide, in one single reform, a way of truly integrating the objectives of land use planning and transport planning.
First, let’s review the way transport policy has been evolving, particularly its effectiveness in tackling congestion.
Roads and Public Transport?
Road projects are needed to service new urban areas and new facilities like ports, and to carry the goods and services on which our economy depends. But planning and transport professionals have known for decades that road building alone is not the solution to urban congestion.
It has taken a while for public opinion to catch up – until a decade or so ago, political popularity resided exclusively in road building as the answer to congestion. Since then, there has been a groundswell of support for investment in public transport, at least in congested urban areas. Bodies such as the RACV now advocate the position: We must invest in roads and public transport. To what extent has this actually occurred?
Victoria has begun to make big investments in public transport, including the Bracks government’s regional fast rail, long overdue capacity upgrades like the Clifton Hill duplication, and the Regional Rail Project. The Smart Bus network and the creation of Public Transport Victoria are further significant initiatives.
Meanwhile big road projects continue to roll onto the political agenda, with or without an election mandate. After East Link we had the CityLink widening and Peninsula Link, then the plan for the East-West Link western section, which mutated after an election into the plan for the East-West Link eastern section. Next there’ll be the link between the Northern Ring Road and the Eastern Freeway; after that … well, Plan Melbourne’s core strategy, the Integrated Economic Triangle that emerged in later versions of the plan, seems to envisage a vast triangle of freeways, construction of which could dominate the transport investment agenda for decades.
Does this leave room for the necessary investment in public transport?
Public Transport Investment
For most of the post WW2 decades, public transport investment was the Cinderella of transport planning, but in the last decade public transport planning has begun to catch up. Public Transport Victoria’s Network Development Plan: Metropolitan Rail, released in December 2012, is a coherent, realistic (if it can be funded) 20 year investment plan to have the rail network catch up with demand growth and urban growth. Importantly, the Plan provides a platform upon which PTV can start to match the road authority’s propensity to have available a steady stream of budget-ready projects.
The Plan’s first ten years would bring us to a point where the suburban rail network could actually start to expand. Until that point is reached, fixed rail infrastructure for growth areas will remain a pipe dream. The key to the Plan’s first ten years is Metro Line 1 – the tunnel under the CBD that provides the necessary capacity to serve Melbourne’s growth in the West.
Metro 1 is an expensive piece of infrastructure, integrated with land use planning objectives, and allocated top priority by Infrastructure Australia. It was deferred by the State in light of the need to fund East-West Link, then replaced by a cheaper concept with different objectives. Subsequently the Commonwealth allocated a large sum to the freeway project, and announced its withdrawal from major public transport infrastructure funding, accompanied by the prime minister’s ‘stick to our knitting’ jibe.
So, despite electoral mandates and plans in place for public transport, road spending continues to trump rail investment. Perhaps one of the reasons for the electoral popularity of road projects is that road space is, on the whole, ‘free’, from the perspective of the users.
The Merri Creek rail bridge at Westgarth (MGS Architects) enabled a short section of the Eltham line to be duplicated – two other single track sections on this line await similar treatment. There is a backlog of works like this awaiting funding before expansion of the metro network can commence. Source: Andrew Lloyd/architectureau.com
Roads in a Market-based Economy
We live in an economic system that is market-based. The market self-regulates to a considerable extent, balancing supply and demand by means of price signals. When demand exceeds supply, the price rises; as a result, either demand is suppressed, or the additional income funds an increase in supply or capacity. This system applies to consumer goods, manufacturing, resource extraction, utility services, travel and tourism, to name a few examples.
A notable exception is road transport. Economists assert that roads are the only piece of infrastructure where the government owns the assets, funds them through taxes and charges, and then hands out the services for nothing. Congestion is effectively the only constraint on demand – there is no price signal, no demand management. When the congestion gets too bad, political pressure will ensure that a road is built.
What is Road Pricing?
In its pure, comprehensive and as yet unrealised form, road pricing would replace many or most of the fixed costs attached to car ownership with a charge for distance travelled. This charge could vary by vehicle weight, location and time of day, allowing the rate to be low in car dependent areas like outer suburbs and rural areas, and high on congested inner city roads with rich public transport options.
Road pricing needs to be considered in the context of the full suite of travel demand management tools, which include land use controls, parking controls, regulatory measures, physical works, and the taxation system generally. Roads and facilities already subject to tolls also form part of the mix, though at present these charges are usually contributions to the cost of the infrastructure, rather than a demand management tool.
Road pricing is a negative policy, a ‘stick’ that must be combined with the ‘carrot’ of improved public transport. Indeed, public transport of a certain minimum standard is a prerequisite for areas to be subjected to higher than normal road charges.
Congestion pricing is a limited form of road pricing that only charges for space on congested sections of road. City centre charging schemes, such as London, Singapore and Stockholm, take a variety of forms, including cordon line, area-wide or tolled city access roads.
A Road Pricing Scheme for Australia
The Infrastructure Partnerships report referenced above recommends that a national road pricing scheme should be designed that:
- Replaces all existing road related taxes and charges
- Recovers externalities like air pollution
- Injects $4 billion per year into transport infrastructure, including public transport
Remarkably, such a scheme could be funded from an average road user charge of just 7.9 cents per kilometre. The recommended charging approach would be a base ‘per kilometre charge’, adjusted by vehicle class. Added to this would be an Urban road use charge, plus an additional Urban Peak charge.
The report acknowledges that such a scheme would take time to design, trial and implement, including pilot schemes – they suggest 5-10 years. A Dutch scheme similar in scope and scale has been approved for implementation nationally between 2012 and 2018. Technology no longer appears to be a barrier, according to the IP report, and GPS-based systems are a likely option.
Congestion charges have been criticised for offering favourable access for big business and the wealthy, while increasing travel time for the less well-off. Road pricing, because it would apply throughout the road network, allows equity considerations to be effectively addressed. Modelling by Deloitte for IP found that user charging based on weight of vehicle, distance travelled, location and time of day would yield a cost per kilometre for a rural user half that of an urban motorist.
Land Use Effects
Depending on its pricing structure, road pricing has the potential to achieve such desirable planning goals as:
- Charging the real cost of vehicle pollution
- Levelling the playing field between the cost of driving and the cost of cycling, walking or using public transport
- Getting heavy freight traffic off local streets and onto freeways
- Providing adequate funding for sustainable transport infrastructure
All this, plus an ability to make rational comparisons between investment in different transport modes – for example, allocating exclusive road space to buses in Hoddle Street or Springvale Road.
Is Road Pricing Achievable?
Some transport economists accept the theoretical logic of road pricing, but argue that road pricing is too complex a concept to be capable of practical implementation. A road pricing scheme requires prices to be assigned to things that have previously had no market price, like congestion and pollution. However similar objections were raised and resolved with other externality-charging schemes, like the Emissions Trading Scheme.
International experience is that congestion pricing schemes can be highly controversial. Plebiscites often reject congestion charge schemes, and even successfully introduced schemes are subject to politically-motivated tampering. Such controversy is likely to be reduced if schemes are demonstrably:
- Simple and transparent
- Equitable and fair
- Used to fund transport infrastructure
Premiers and prime ministers of both major parties have already ruled out the possibility of introducing road pricing. Does that mean the idea is dead? I don’t think so. It has the support of authoritative sources such as Ken Henry, the Productivity Commission and the OECD. Remember the introduction of the GST?
Even Los Angeles can do it! The red routes on this excerpt from the LA County transit map offer a grid of fast, frequent Metro Rapid buses, providing the level of accessibility envisaged by Paul Mees in the Squaresville example he describes in A Very Public Solution (MUP 2000). The orange routes are local buses. This kind of ‘no-need-for-a-timetable, go-anywhere-with-one-change’ network is well-suited to Australian cities as a supplement to the radial rail network, and to accompany the introduction of road pricing. Melbourne’s Smart Bus routes are a good start along this path.
Since the dawn of history, urban form, land use patterns and transport networks have been inextricably linked. The motor age has enabled massive change for good in societies and economies, but it has also distorted the fundamentals of good city planning. Road space consumers can’t get enough of what is almost a ‘free good’, once you’ve paid your rego and insurance. Urban policy has for years struggled to mitigate the negative implications of this reality, with varying degrees of success.
Seen in this light, road pricing is the real game changer we have all been waiting for. At the very least, we should immediately require business cases for major road projects to be prepared on the assumption that effective, system-wide demand management (of whatever kind) will be introduced during the lifetime of the project.