Ring Road (M80) – an opportunity for road pricing?Posted: April 8, 2010
The current upgrade of Melbourne’s Ring Road (the M80) provides an unprecedented opportunity to implement a form of peak period congestion charging in Melbourne.
Designation of one lane as a toll lane during congested periods would offer a higher speed for vehicles paying a fee. They would not necessarily enjoy the maximum permitted speed – a time saving of around 15% seems sufficient.
A toll lane would offer clear economic benefits. In particular, it would enable high value trips, which currently suffer the same delays as comparatively low value trips, to be made faster. In the US these sorts of lanes are called High Occupancy Toll (HOT) lanes but I prefer something like High Value Trip (HVT) lanes to emphasise the underlying efficiency rationale. The ‘price’ or toll varies with how many vehicles use the toll lane to ensure it provides an advantage while optimising the level of use.
The Ring Road currently carries 142,000 vehicles per day, of which more than 22,000 are trucks. The upgrade involves providing a minimum of three lanes in both directions along the entire length of the M80, from Laverton North to Greensborough, with some critical sections to have additional lanes. The project is expected to take five years and cost $2.25 billion.
Most criticism of congestion charging focuses on the vertical equity implications. Yet it is little different to the way we charge for other services, such as water, sewage, electricity, gas, car registration and public transport. The more you use, the more you pay. Apart from concessions for those on the lowest incomes, tariffs for water and other ‘essential’ services do not take into account the capacity of the customer to pay.
Whether or not a High Value Trip lane is more regressive is going to depend in part on how the road is currently financed. I’m not aware that any State revenues are hypothecated to roads, but most State-based income sources (plus GST revenues) are regressive. If affluent drivers use the Toll Lane more and accordingly pay more, it might be no more regressive than current arrangements (at least in terms of the State’s share of funding) provided the proceeds from the toll are applied to the cost of upgrading.
The equity of an HVT lane also depends on how users value time. Being ‘in a hurry’ is not confined to the relatively affluent. For example, stressed lower income working parents who have to collect an infant from day care by a deadline may well see an HVT lane as very cost-effective. Tradies and delivery drivers might feel they benefit from having a faster option. A worker whose job range is extended because of the HVT Lane might feel better off if it gives him or her access to a better job.
A political advantage of an HVT lane is that it retains a no-fee alternative, increasing the likelihood of acceptance by motorists and truckies. Acceptance will also be enhanced by applying the proceeds to the cost of upgrading the road and by offering a discounted toll to buses and low income drivers. Politics might also demand that a discount be extended to cars with three or more occupants.
Overall road capacity in terms of the number of vehicles than can be carried would probably reduce, but the volume of high value freight and passengers should be higher.
Melbourne is going to need some way to moderate congestion as its population grows. We can’t keep labouring under the delusion that public transport is the solution and it seems there is little support for more sprawl. A High Value Trip lane on the M80 could be the ‘thin end of the wedge’ to get a broader congestion pricing scheme up and running across Melbourne. There’s an opportunity here for a pilot scheme.