Why is road pricing a good idea?

What Americans mean by a 'McMansion'. Click for slideshow.

I’m not aware of anyone who disagrees seriously with the contention that car travel is underpriced. The consequence of this inefficiency is we drive more than we otherwise would and more than is socially optimal.

The idea of road pricing is that drivers should pay the real costs they impose on others through traffic congestion, pollution, noise and carbon emissions.

There’s also another force at play here which exacerbates the problem of excessive driving. There are some costs that drivers actually do pay – standing costs like depreciation, insurance and registration – that are “disconnected” from the perceived cost of travel.

A person deciding whether or not to drive somewhere will tend to take account of the cost of their time plus petrol, but they usually don’t perceive the standing costs. This under-estimation promotes more driving.

There have been various experiments with road pricing, such as the well known Singapore and London central city cordons (giving rise to amusing interpretations such as this one by Boris Johnson). However this is a technologically outdated approach – transponders and/or GIS technology mean it is now feasible to charge motorists in relation both to distance and traffic conditions i.e by location and time.

A driver who paid a price for a litre of petrol that included both external and standing costs would have a strong incentive to drive less. A gauge on the dash showing the total cost ticking over with every kilometre would provide an even more powerful nudge to think long and hard about the wisdom of driving.

Road pricing can be thought of in simple terms as a two-part per kilometre tariff that recovers both external costs and those standing costs that can be disaggregated. One part is a charge reflecting the general cost of using the roads. The other is a variable price reflecting specific costs like congestion in peak periods.

There are potentially some important benefits for the wider community from road pricing: Read the rest of this entry »


Is there a case for freeways?

High St Reservoir - where road meets rail!

I’ve concluded before that the most plausible scenario in the forseeable future is that cars will continue to be used for the majority of trips in Australian cities. Increasingly, these cars will tend to be powered by clean energy sources and will be slower and more civilised than today’s vehicles.

I expect growth in public transport and cycling will be much faster but the absolute number of cars will very probably still increase. It is therefore inevitable that there will be continuing pressure for new freeways.

So is there any sort of case for freeways or should all new infrastructure funding be reserved exclusively for public transport, as proposed by the Independent Inquiry into Sydney’s long-term transport needs?

The key criticisms of freeways, most of which are pretty familiar by now, are that they:

  • generate more car travel and higher speeds, which in turn produces more emissions and pollution and consumes more oil
  • promote a sprawled, car-dependent urban form – the higher speeds provided by freeways mean people tend to live further away from activities
  • undermine the viability of public transport where they compete directly
  • impact on neighbouring uses – the amenity of adjoining land uses is diminished by noise and pollution
  • crowd out investment in transit – governments prioritise funding to roads and investment in public transport is neglected
  • sever social linkages and networks when they’re superimposed on existing communities
  • cannot deliver very large numbers of people to concentrated locations, like CBDs, without becoming congested relatively quickly

In fairness, it should be acknowledged that efforts have been made to ameliorate some of these issues. Much of the investment in freeways over the last twenty years has been by the private sector. Governments have built sound barriers along new and existing freeways and the almost mandatory use of tunnels in built up areas means severance is no longer the issue it once was. Read the rest of this entry »


How to charge for the Big Day Out?

World's tallest buildings in 1884

47,000 tickets for the Big Day Out at Flemington race course sold out within minutes of going on sale at 9am on Friday. Tickets for the Sydney and Gold Coast events also sold out in record time. The organisers have arranged an additional event in Sydney (tickets on sale October 11).

The issue of how to deal with excess demand is a common one in cities, whether it’s concerts, road congestion or the (until recently unfamiliar) problem of public transport congestion.

As I went through the stressful process of buying tickets for the Big Day Out for my son (successfully as it turns out), I got wondering if ‘first-in, first served’ is really the ideal way to go about selling tickets for such a high-demand event. The organisers appear to think it isn’t.

They made a decision on Friday, apparently on the fly, to hold back 3,000 tickets for the Melbourne event. These will now be made available via a randomly drawn online ballot conducted once a week for ten weeks. Prices will be the same as they were for the original sale.

The organisers quite clearly could charge more than $164 per ticket (including booking fee), so why don’t they? It could be that they’re simply not very good at estimating people’s willingness to pay for a particular set of bands, or perhaps it’s such a black art that they’re not prepared to take too many risks. Or it might be that they’re in it for the long haul and don’t want to alienate concert-goers from returning in future years – they might want to protect the “brand”. Read the rest of this entry »


Should public transport users pay their way?

The peak industry body, Tourism and Transport Forum Australia, got itself into hot water with the media last week. The Forum suggested in a new report, Meeting the funding challenges of public transport, that eligibility for concession fares should be drastically restricted.

The brouhaha was unfortunate because the Forum’s underlying contention – that public transport in Australia should be operated on a full cost-recovery basis – is worthy of closer examination. Closer examination, that is, provided we’re talking about recovering full costs from those who can afford it!

At present, fares only account for approximately 36% of public transport operating costs across Australia’s five largest cities according to the Forum’s consultant’s, LEK. They say the rest comes from Government subsidies and is low compared to an international average of 60%.

The challenge facing governments in Australia is simple enough. Public transport capacity has to increase enormously to deal with expected higher demand driven by issues like peak oil, climate change and unprecedented population growth. For example, patronage has already grown 5% p.a. over the past five years in Brisbane and Melbourne. Read the rest of this entry »


Will providing better transit be enough to cope with city growth?

Policies on Public Transport and Private Transport - you can't have one without the other

It might seem counter-intuitive, but you can’t increase public transport’s share of travel significantly unless you simultaneously do something about cars. Yet this simple relationship is usually ignored by governments and lobbyists alike.

Back on 23 August I looked at the question of how our cities could grow larger but still be liveable. Public transport has a vital role in meeting this challenge, but the task is daunting. Notwithstanding current overcrowding on the train system, public transport’s share of all motorised travel is only around 11% in Melbourne and a little higher in Sydney.

The standard recipe for increasing transit’s share of travel is to offer a better product. This is popularly thought of as more trains and more light rail (only occasionally more buses).

It usually involves providing some combination of greater route coverage, higher frequencies, longer operating hours, faster speeds, better connections, more information and higher levels of comfort and security.

Improving quality seems a self-evident solution. After all, the area of the city with the best public transport offering – the CBD – is also the area where public transport scores best against the car. For example, 43% of all motorised work trips to the inner city in Melbourne are made by public transport and this study suggests the figure for the CBD is probably upwards of 65%.

This strategy works – but only up to a point. Consider, for example, the Melbourne inner city municipality of Yarra. It has a pretty high standard of train and tram services, yet 86% of all motorised weekday travel by residents of Yarra is still made by car (or 74% when walking and cycling are also included). Read the rest of this entry »


How to pay for public transport?

Additional revenue from fare increase, Sydney - three scenarios (Independent Inquiry)

I was pleased to see the call earlier this week by The Age’s city editor, Jason Dowling, for tolling of roads to be introduced in Melbourne (Losing our way on roads).

He sees it as a way to reduce congestion and generate revenue for public transport improvements. Road pricing is something I’ve advocated on a number of occasions (here and here), but what particularly caught my eye in Mr Dowling’s article was his opening line:

“Everyone pays for public transport, first through taxes and then through fares, and it is time everyone had access to it, just as they do to roads”.

Few would disagree that Melbourne would be a more attractive place if it were as easy to access a train, tram or bus as it is a car. Somewhere along the line, however, the issue of cost has to be considered. Transport projects are very expensive. The State Government is spending about $2.5 billion on increasing the capacity of Victoria’s rail and road systems this year.

At that rate it will take many decades to improve the capacity of Melbourne’s public transport system. Just one project, the Regional Rail Link, is costing $4.3 billion in total and is only proceeding because the Federal Government is contributing $3.2 billion. Read the rest of this entry »