The case for congestion charging in Australia

Congestion charging will reduce Australian traffic loads. Burning image/Flickr

As you sit in your usual morning traffic jam, increasingly agitated, blood pressure flying, do you continually wonder “Why can’t they fix this mess?” Widen some roads. Build some new links. Improve the equally congested public transport. Do all these things. Surely there is an answer.

Building new roads or improving existing roads provides only temporary congestion relief. Within a few years the additional road space itself becomes congested, as additional road use is generated by the road improvements. This problem confronts all cities.

In 2007, the Bureau of Transport and Regional Economics estimated congestion was costing Australia almost $10 billion a year rising to $20 billion by 2020. This represents huge economic waste.

A small but growing number of international examples suggest there is a way to tackle this problem, a way that does not generate additional traffic volumes. This better way is not traffic bans, although some cities have resorted to this solution. It is congestion pricing. The idea is simple.

Traffic jams occur mainly because road users are not confronted by the costs their travel choices impose on others, both road users (congestion) and the wider community (pollution, noise). Effectively ‘free’ road access leads to too much travel.

Users pay fuel excise and vehicle registration but, apart from heavy vehicles, these have not been levied as specific charges for road use. If road users were explicitly charged for the costs caused by their travel choices, peak urban road use would decline and so would congestion levels. The cost of using most urban roads in the off-peak would decrease. The cost of using many rural roads would also decrease.

British research has shown that traffic levels only need to fall by 4-5% for a large proportion of congestion costs to disappear. International experience is that congestion pricing can reduce traffic levels by 14-23% in a very short period and that traffic levels stay down. Traffic speeds improve relatively more than volumes fall. The impact on local business is minimal (despite prior expectations of negative outcomes) and emission levels are reduced.

So why isn’t this on the Australian transport policy agenda?

A guaranteed way to see an Australian Federal or State Transport Minister or Treasurer turn red is to suggest implementation of congestion pricing. This is distinctly unpopular to almost all politicians with whom the idea is raised. The current political focus on Great Big New Taxes is an example of the kind of reaction that the prospect of Australian congestion pricing would produce.

Public and political support is obviously vital to successful implementation. Political support has sometimes been identified with a champion, such as London’s (then) Lord Mayor Ken Livingstone, who saw a need and pursued it in single-minded fashion. In other places political leaders have seen the chance to generate a new revenue stream to help tackle infrastructure or transport service backlogs (e.g. Stockholm) and reduce pollution as well as cutting congestion levels.

International experience is that public support is typically evenly divided, or mildly negative, prior to implementation but increasingly supportive afterwards. Gaining sufficient initial public support to encourage a Minister and government requires an extensive community conversation around important issues such as why the scheme is needed, how it might work, who will win and who will lose, how privacy will be protected, how the revenue will be used to deliver benefits and what actions will be taken to avoid losses.

Most importantly, tying revenue raised from the scheme to specific transport or closely related environmental improvements is a key requirement to encourage acceptance. Improvement of alternative transport opportunities prior to scheme implementation is an effective way to smooth the transition and attend to concerns about potential negative impacts on household budgets. London’s extensive investment in additional bus services was an important element in the public acceptance of congestion pricing package in that city.

Stockholm’s experience is helpful for those who are keen to see congestion pricing implemented. That scheme showed that, from an initial level of about 40%, public support post implementation grew to the point where around 2/3 are supportive. Swedish researchers suggest that growing public support is due to road user benefits from congestion charging turning out greater than originally expected, downside impacts (increased travel costs and changes in travel behaviour) being less than expected and some revenue use for clearly designated transport and environmental improvement purposes.

If we were to seriously consider implementing congestion charging in Australia, how might we proceed?

My strong preference is for a broadly based road pricing reform agenda, which includes pricing for congestion and also for other identifiable costs of road use, such as road damage, various emissions and accident costs that are not adequately covered by existing arrangements. This could be done by a GPS-based pricing system that includes a variable road use charge to cover costs such as air pollution and accident costs that are not met by current charging/insurance arrangements and base road damage costs, levied through a vehicle kilometre charge.

In addition such a scheme would include tonne-kilometre (mass-distance-location) charging for additional road damage costs of heavy vehicles and congestion pricing by time and place.

It is assumed that a separate carbon pricing scheme is in place that prices greenhouse gas emissions. As an offset, the reform should include abolition of existing excise and registration charges. Revenue should be hypothecated to a transport trust fund, with transport (road and public transport) and related environmental improvements being eligible for funding from this trust fund.

Reforming road pricing would also provide the opportunity to review public transport fares, many of which are currently artificially low to compensate for inadequate road pricing.

It is time Australia started this conversation. There is no more effective way to tackle traffic congestion and contribute to resolving many of the other major land transport issues we face. The conversation will take two to three years and needs to start before congestion costs more seriously impact on the liveability of our cities.