Is the Lord Mayor’s new parking charge a ‘money grab’?

The Lord Mayor of Melbourne, Robert Doyle, has bought himself a heap of trouble with Council’s decision to impose a flat $4 charge for parking in the CBD from 7.30 pm to midnight (see here, here, here and here).

The new fee will apply to 3,000 on-street metered parking spaces that are currently free at night. It will raise an estimated $1.9 million in revenue to be used for general Council purposes. Council is expecting to earn a similar amount from fines associated with the new policy.

While some people think it will encourage greater use of public transport, others say it will have a severe impact on restaurants, movies and shows and is just a naked grab for money. Another criticism is that public transport is too unsafe at night and finishes too early to provide a satisfactory alternative to driving. Others vow they’ll stop visiting the CBD and go elsewhere.

I find the reaction extraordinary. In my view Council’s action is understandable – any time you have a scarce resource that is under-priced there are bound to be some perverse and inefficient outcomes. Melbourne is a 24/7 city – the streets of the CBD are frequently heavily congested at night, particularly on Friday and Saturday nights. Charging for parking at night makes sense.

The Melbourne Business Council however is concerned that people coming in to the CBD to see Fame or Sir Ian McKellen in Waiting for Godot will now have to pay for parking. VECCI is worried about the impact on restaurants, small bars and theatres. But who shells out $100 plus for tickets to a show or dinner and quibbles over $4 for parking? On the contrary, I expect patrons will feel they’re better off if it loosens up parking options a bit.

Someone’s bound to raise an equity argument here, but really, $4 is one beer in most places in the CBD and, as the Lord Mayor pointed out, considerably less than you’ll pay in a parking station. He says there are 30,000 commercially operated undercover parking spaces in the CBD costing on average $10 for night parking.

The equity argument is not very compelling in this case because the CBD is the one part of Melbourne where public transport really is an excellent alternative to the car, at least up until midnight. And as the charge only applies to the Hoddle grid, those who drive but don’t want to pay for parking can do what many do now if they miss out on a street parking space – park in the near-CBD and walk a little. Hopefully they won’t have drunk too much to drive.

There’s no reason to assume that those who are the first to get to the 10% of parking spots in the city centre that are free are significantly more deserving than those that don’t. It’s just first-in, first-served.

One of the key warrants for charging for a scarce resource is the environmental benefits. The new charge should encourage some drivers to shift to public transport (although I suspect $4 is too low to have a huge impact – its less than the cost of a return rail ticket – although extending the timetable beyond midnight would help). A larger benefit is likely to come from discouraging drivers from the perverse practice of cruising the streets searching for a parking spot.

According to Donald Shoup, a Professor at UCLA and the author of The High Cost of Free Parking, several studies have found that cruising for curb parking generates about 30 percent of the traffic in CBDs in the US. He cites a study he did of a 15 block district in Los Angeles where cruising for on-street parking created 950,000 miles of excess vehicle travel per annum, in the process consuming 47,000 gallons of petrol and producing 730 tons of carbon dioxide.

And I don’t see what the problem is with Council imposing the charge primarily to raise revenue (and let’s face it, raising revenue is much more likely to be Council’s motive than anything to do with economic efficiency or better environmental outcomes). Council has to raise revenue somehow to meet the infrastructure and cleaning costs imposed by 300,000 night time visitors and it’s as legitimate to charge for on-street parking at night as it is during the day.

If people are going to impose a social cost on the wider community by driving when there is a viable alternative, then I’m quite happy to see them make a financial contribution to the City of Melbourne. That payment is ultimately, if indirectly, going to help make the city centre a better place. And let’s not forget that most night time visitors to the CBD are using Council-funded resources but not paying rates.

The real issue here is not that the charge is wrong but that $4 is too low. A national study of downtown parking in the US found that the average price of curb parking is only 20 percent of the cost of a parking station, giving drivers a strong incentive to cruise. While the situation in Melbourne seems to be considerably better, it would be better if the price was much closer to that of commercial parking stations.

5 Comments on “Is the Lord Mayor’s new parking charge a ‘money grab’?”

  1. Paul Barter says:

    I agree with you generally on this and I think you are on the right track by mentioning Shoup here.

    The flat $4 seems arbitrary and hard to justify but an on-street parking fee that is based on an occupancy target (and reviewed once a quarter) should work better and be easier to defend.

    Last year, when looking into parking policies in Australian cities I noticed that Melbourne City Council did consider demand-responsive on-street parking pricing in the “Melbourne CBD and Docklands Parking Plan 2008 – 2013”

    Click to access CBDandDocklandsParkingPlanApproved0812.pdf

    “62. Occupancy rates, currently managed through varying time restrictions, vary across the CBD (see Appendix 3). This does not reflect the comparative value of different spaces within the CBD. The high occupancy rates reinforce a view that there is not enough car parking in the CBD.
    The most effective way of improving on-street car
    parking to meet the needs of short-stay users is to make sure the occupancy rate of on-street car parking never exceeds 85 per cent. At this occupancy rate the average driver can find one in every seven available spaces.

    64. A differential parking schedule would lower occupancy rates to more acceptable levels in areas such as Lonsdale Street and Spring Street making short-term parking easier to find on-street and acknowledging that some parking spaces have a premium value. The fee would be established by precinct (rather than block to block which
    would be confusing) to give motorists an idea in advance of the likely hourly fee.”

    However, the report rejects this for now, and suggests further study.

  2. Michael says:

    Well argued. I wonder if VECCI is significantly more representative than the Pedestrian Council of Australia.

  3. Luke says:

    I have a problem with the premise that the council should raise money whenever it can. The reason the council provides amentities is to inspire people to visit the city and use them, not the other way around. It is the rate-payers who, in the main, want passing trade. The council is supposed to represent the rate payers. It is not there to be an autonomous entity soaking up excesses wherever it can.

    It is not just the $4.00 fee either, it is the subsequent fine when you break yet another rule. Let us not forget the bloke who got fined while getting his money to pay the parking fee out of a bag in the boot!

    We should ask the question ‘does the council need the money?’ There is (or there should be) an onus on council to run efficiently and with restraint. Increasing its revenue because it can should not be part of its MO.

    It is not the people coming in to see Looking for Godot who park on the street. They would more likely park in a car park or get a taxi. I either use public transport or operated parking, because I know I won’t get a spot on the street and I don’t want to waste time cruising around – sometimes you can be lucky and find one. If putting a fee on street parking frees up more spots you will be encouraging people to cruise around as they will have hope.

    What about people who only want to stay an hour?

    It is an issue of principle not finance and unless justified should not happen. Why don’t we slug every visitor to Melbourne a ‘visitors tax’? Make it a dollar, your arguments support it.

    Ultimately it should be what the people want.

    • Alan Davies says:

      Thanks for your comment, Luke.

      I wouldn’t advocate Council raising revenue just because it can, but it’s a fact of life that Council has to recover the costs imposed by visitors somehow. This is a simplification, but at present, Council seeks to recover those costs from visitors by rating businesses who serve them. Those businesses, in turn, pass that cost on to visitors through higher prices for food, drinks, tickets, etc.

      But it makes sense to have diverse sources of revenue because that’s a more robust model. Instead of relying overly on rates, the same revenue could be raised by a combination of rates and night parking charges (yes, including fines too).

      I think charging parkers directly is also more equitable than just relying on rates, as the former targets the people who actually use the on-street parking spaces whereas the latter hits all visitors even if they paid to park at a commercial parking station or travelled by public transport (in which case the cost to Council is much lower or even zero).

      Re encouraging cruising, setting the on-street parking fee at the “right” level (and I doubt that’s a flat $4) should ensure that enough spaces are available on average to minimise cruising – see Paul Barter’s comment above.

      Re the idea of slugging every visitor to Melbourne with a tax, I would argue that what Council is levying here is not a tax but a fee for a specific, defined and immediate service. I don’t tend to hear daytime parking meters being characterised as taxes and that is because people generally accept, I would argue, that it’s a charge for a service.

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