It’s a truism that development costs are much higher on the urban fringe than in inner areas. But there’s little evidence the claim still holds and good reason to think it’s no longer the case
A study of urban form in the US concludes that increasing the density of population and employment is a slow way to significantly reduce car use compared to directly pricing driving
It would be a pity if the “Sky Rail” brouhaha in Melbourne over removal of level crossings were to damage the potential use of elevated rail for totally new rail lines in all Australian cities
The new draft report by the Productivity Commission on Economic Regulation of Airport Services has sparked outrage among readers of The Age for its finding that parking fees at Tullamarine are “not a ripoff”. Last time I looked there were 110 comments on The Age Online, virtually every one of them dripping with vitriol.
Whether you’re happy with its conclusions or not, the thing about the Commission is that, relative to The Age’s readers, it’s put a lot of effort into this review, its assembled facts and figures, it’s made its assumptions transparent and its set down its line of reasoning. So far as I can see, none of that is true of the angry and furious readers who commented on The Age’s story.
The Commission examined lots more than parking but I’ve only had a chance to look at the chapter dealing with landside transport. It starts by acknowledging airports have the potential to raise parking prices above competitive levels and to control access to the airport by modes that compete with airport parking. It also notes the ACCC expressed concern the operator of Melbourne Airport seems to restrict entry by off-airport parking operators and private bus operators.
The Commission examined three sources of evidence for the possible existence of monopoly practices i.e. the ability of an airport to use its market power to restrict competition.
It looked first at whether there are effective substitutes for on-airport parking. The availability of alternative means of travel puts a ‘natural’ cap on what airport operators can charge. Hence all forms of transport must be taken into account. For example, at Melbourne Airport, travellers can use a private car (pick up and drop off; on-airport or off-airport parking), catch a taxi, take Skybus from the CBD, or use the 901 orbital SmartBus (which connects the Airport with Broadmeadows rail station) at standard Metlink fares (there are some other private bus operators too).
Off-airport parking is a particularly important substitute for those who drive. As the exhibit shows, this has a much larger role at Melbourne than at other airports. There are 14 private parking operators near the airport, providing 10,000 parking spaces in total. This is half the total number available on-airport. (The Airport operator is also examining a proposal for a new parking area where ‘meeters and greeters’ can wait until summoned by phone by the passenger they’re collecting).
The second issue the Commission addressed is the reasonableness of parking prices, noting that they are made up of a number of components. The obvious one is the cost of building and operating parking facilities (surface parking costs $2,000 per bay, multi-level parking stations $20,000 per bay). The total number needed is determined by peak demand (a few days at Christmas), meaning for most of the time some bays aren’t earning revenue.
Other components are the need to use price as a means of rationing demand (e.g. keeping long-term parkers out of scarcer and more valuable short-term spaces) and, finally, there’s the opportunity cost of the land used for parking – its value in an alternative use. The Commission cites a study of Sydney Airport’s international car park which found the parking charges were lower than the land could earn if developed commercially.
The third piece of evidence is more straightforward. Much as I did in this post 18 months ago, the Commission examined the claim that parking comprises a much larger proportion of Melbourne Airport’s total revenue than it does at other airports. This is taken by some as incontrovertible evidence that Melbourne Airport is engaging in monopolistic pricing.
Melbourne Airport has a lot of parking spaces (20,029). This is double the number of the next largest airport in terms of parking (Perth), so it’s not surprising it earns a lot more revenue from this source than other airports. However, Melbourne earns an average of $12.70 per bay, per day. This is the same as Adelaide ($12.20) but considerably lower than Brisbane ($16.60) and Sydney ($21.50). The importance of parking in Melbourne Airport’s revenue stream is also larger because it has the lowest aeronautical charges per passenger of any of the five airports examined. Read the rest of this entry »
Here’s an interesting nugget of information from Melbourne City Council’s new Transport Strategy – there are 4,190 parking spaces in Melbourne’s CBD, of which 3,077 are metered. There are however more than 60,000 off-street parking spaces “in the centre of the city”. That means on-street spaces account for just 6% or so of all city centre parking.
This suggests that in the CBD at least, on-street parking is not that important in the overall scheme of things. It’s currently used solely for short-term parking, but commercial parking stations can also perform that function. Indeed, they’d probably prefer the higher income that comes with rapid turnover. Car storage is a remarkably low value use for such premium land. Even in the case of the metered spaces, the price charged is well below the value the land could theoretically fetch in some alternative use.
According to Greville Pabst, chief executive of valuers WBP Property Group, a “car space in a typical city apartment can add from $40,000 to the purchase price and, in some instances, for upmarket apartments in good locations, it can add more than $100,000 to the price tag”. Even in inner city residential areas, the Mayor of the City of Yarra estimates a parking space adds about $50,000 to the value of an inner-city property. In Sydney’s CBD a garage costs as much as $120,000 to $150,000.
There is an opportunity here to do away with all or most on-street parking in the CBD and instead use the space for something more valuable. It could be used for high capacity vehicular modes like buses, trams and motorcycles; for highly valued sustainable modes like cycling, walking or shared car schemes; or for amenity-enhancing uses that could take advantage of ground level proximity to pedestrian traffic.
Parking spaces could be dedicated permanently to new uses – for example a cafe. Given an unrestricted brief, businesses would come up with innovative ways to use these narrow spaces for other purposes. Manhattan’s “pop-up” restaurants provide an interesting take on possible alternative uses.
Of course Council could simply start charging parking fees that reflect the real value of the land, hopefully with a demand-responsive tariff. Prices would presumably be relatively similar to what commercial parking operators charge – somewhat less because they’re not protected from the weather or supervised, but somewhat more for those that are a bit closer to the action. It would need to be examined closely but my view is the social value of alternative uses would still be higher. Read the rest of this entry »
I’m disappointed by the discussion of parking in Melbourne City Council’s draft Transport Strategy Update 2011-2030 (note – it’s a big download). There’s an opportunity to improve the efficiency of parking space allocation through using technology and pricing in combination, but Council seems content to pass on it.
The broad thrust of the discussion in the report is that the number of on-street parking spaces will decline over the next 20 years to enable public transport and amenity improvements to be implemented. Council is mindful of the impact this will have on its own revenues and those of local businesses, but is persuaded by the social and environmental benefits.
A key recommendation in relation to on-street parking is that Council “will implement new parking technology systems that allow payment without requiring parking machines or meters (and) will remotely sense and assess parking occupancy”. Surprisingly, this recommendation is entirely unsupported by any explanation or discussion. As far as it goes, it nevertheless sounds good – it’ll lower costs by eliminating the need for parking inspectors and it’ll give drivers more flexible payment options.
What seems to be missing, though, is the opportunity to provide drivers with real-time information about parking availability. More importantly, it squibs the opportunity to improve efficiency in allocating parking spaces by setting a price that’s responsive to demand.
The current pilot project just introduced in San Francisco, SFpark, gives a sense of what can be done. Like Melbourne City Council’s plan, it involves sensors that automatically sense if a parking space is empty. SFpark however will convey that information to drivers electronically via a smartphone app. That should reduce the time drivers spend cruising for parking. 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.
But the real innovation of SFpark is that prices are adjusted in real time in response to rises and falls in demand. The objective is to ensure that, on average, there is at least one vacant space in each city block:
SFpark will adjust meter prices based on demand to encourage drivers to make trips in off-peak hours and to use parking lots and garages. While high-demand spaces will gradually go up in price, other spaces will decrease in cost……Once a space is found, longer time limits and new meters that accept credit and debit cards will make it easier to avoid parking tickets. Read the rest of this entry »
I’ve noted before that only 30% of commuters who work within the Hoddle Grid – i.e. the area bounded by Spring, Flinders, Spencer and La Trobe streets – drive to work. However only a block or two beyond the city rail loop, the share of work trips taken by car increases steeply to 50-60%, and above.
Peter Parker at Melbourne on Transit offers an explanation. Using Metlink, he found a journey from Laverton station to Melbourne Town Hall in the morning peak takes 33 minutes. However if the Laverton traveller is bound for nearby Docklands (Waterfront City), the trip takes an extraordinary 54 minutes. Anyone travelling from Greensborough station to the same two destinations would have to allow an additional 29 minutes to get to Docklands and if travelling from Cheltenham station an extra 30 minutes.
In other words, once a traveller gets off the rail system in the CBD, further travel to near-CBD destinations is very slow. This is in part because the rail loop was not designed primarily to move people around the CBD and in part because trams are slow. Peter explains:
We have trams but unlike some compact European cities we don’t have a dense metro in the job-dense 2-5km core that allows for fast local travel. Instead for the ‘last mile’ we rely on slow surface modes, notably trams and buses, often without their own right of way.
Public transport’s mode share in the vicinity of Waterfront City is just 22%. This is despite the area having a frequent tram service. Given the huge investment in public transport in the city centre, any mode share below 50% is very disappointing, but the figure for Waterfront City is appalling.
I suspect there are two key reasons for the low mode share of near-CBD areas. The first is simply that the cost of driving and parking in these areas is still reasonably low – so workers drive because they can. Perhaps there’s a high proportion of workers in the CBD fringe whose status attracts a “company car”. Perhaps also there are more institutions like hospitals with shift workers who drive off-peak. The second reason is that movement within the city centre by public transport is too slow. That’s partly because the rail loop is not configured well for intra CBD trips and partly because trams are slowed by cars, particularly at intersections.
The CBD is one of those places where I think it’s very hard to justify commuting by car, given the enormous investment in public transport infrastructure and the extremely high accessibility it provides to the rest of the metropolitan area. It’s such a vital asset to the city as a whole and to the State that its amenity should not be despoiled by the noise, fumes and danger of too many cars.
The Melbourne City Council has proposed some worthwhile improvements, such as a maximum speed limit of 40 km/hr in the CBD (although I’d prefer 30 km/hr) and a plan to eliminate cars, taxis and vans from Swanston Street (although I fear the potential for pedestrian/cyclist conflict has not been fully resolved). Read the rest of this entry »
The ACCC has fingered Melbourne Airport for its monopolistic approach to parking. In its latest Airport Monitoring report, it accuses the operator of imposing excessive levies on private buses and limiting the service offering of off-airport parking establishments:
Excessive access levies could have the effect of shifting demand to on-airport parking and, consequently, allow the airport to increase car parking prices. These factors point to Melbourne Airport earning monopoly profits from its car parking operations.
The comments section of The Age’s story about the report is bubbling over with calls from outraged punters calling for a rail line to be built from the CBD in order to bust the monopoly power of the airport operator, Australia Pacific Airports Corporation.
Irrespective of the overall merits of building an airport rail link, I can’t see that it would have any more than a marginal impact on the airport’s parking policies. It might (or might not) be justified on other grounds, but a train is not really a substitute for parking.
Travellers who park at the airport are by definition residents of Melbourne and have access to a car. A rail line from the CBD is not going to be attractive when most trips made by residents – including business trips – either originate or terminate at home (or both). When you’re catching a 7:00 am flight you don’t usually catch the train into the office first. Likewise if your flight gets you back into town at 7:00 pm or later, most travellers go straight home.
Rail is not going to be an attractive alternative for the great bulk of the 99% of residents who live outside the CBD or the 92% who live outside the inner city. Rather than walk to their local station, take a train and then change onto the airport line, they’ll drive.
In many cases their employer (or the taxpayer!) is in any event paying for their airport parking. Read the rest of this entry »
Monash University’s Professor Graham Currie is quoted in The Australian (6 October) as arguing that employer subsidies for staff car parking should be removed:
When buildings go up in cities, the parking component is about 37 per cent of the total cost. Is that cost passed on to the people who use it or borne by society as a whole? I can tell you it’s the latter because most car commuters don’t pay their own parking; their employers do. The costs of this ‘free parking’ flows through into the price of goods and services, so we are all in effect subsidising the car owners who drive into the city. Traffic congestion in Australian cities is unlikely to diminish because so many car commuters don’t pay their own parking bills
The Victorian Employer’s Chamber of Commerce and Industry (VECCI) has hit out at Professor Currie, arguing that many employers offer subsidised parking as a way to woo workers to city jobs where it is otherwise inconvenient or untimely to use another transport method, like the train or bus:
The way to lessen inner city congestion is not to restrict choice but to increase it – making it more attractive to travel on trains, trams, buses or to walk/ride. Ultimately employers should retain the freedom to offer whatever incentive it deems it requires to lure the best calibre of workers to its business.
I don’t buy VECCI’s line about not restricting choice, but I agree entirely that employers and their staff should generally be free to negotiate whatever lawful remuneration packages they want. However I think it’s an entirely different matter if those packages are underwritten by tax payer subsidised car use. Read the rest of this entry »
The biggest threat to Preston Market is cars.
I got thinking about this after I had lunch there last Friday. As always, I was taken in by the mad rush and vitality of the place and the sense that much of it is still essentially the same as it was when it started. I was surprised to learn that it’s a relatively young institution, having only been established in 1970 (although Preston proper is considerably older – it was connected to Flinders Street by rail in the 1920s and experienced a major population boom in the 1950s).
Initially, I was wondering if the Market is vulnerable to the increasing gentrification in the area, but then I realised Victoria Market has withstood demographic changes in the inner city reasonably well. Sure, it’s pretty middle class now but the deli and meat sections at Vic Market are unsurpassed in Melbourne. So while gentrification of Preston Market will undoubtedly diminish its authenticity – and that is the vital ingredient for some customers – it will not necessarily undermine its viability.
Which brings me to the threat to the Market posed by cars – not too many cars, but too few!
I saw a flyer issued by the Market parking manager to stall holders advising of a new parking scheme. I don’t know when it commences, but rather than fine parkers who stay beyond the initial free two hour period (one hour near Aldi), the new arrangement will charge them $1 for each additional hour. How that will work financially for the parking operator is a puzzle (how will they administer it cost-effectively?), but it’s their money. Read the rest of this entry »
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. Read the rest of this entry »
The Age is continuing its campaign for a new rail line to be built from the city centre to Melbourne Airport (I discussed this previously on March 2 – Possible rail link to Melbourne airport). There are also a couple of follow-up letters this morning supporting the idea of a rail link.
In a story yesterday, Airport ‘exploiting’ public on parking fees, The Age reported on a new analysis by the ACCC of airport performance in Australia, noting that parking charges account for 20% of Melbourne Airport’s revenue but just 8% of Sydney Airport’s.
The Age’s reporter, Ari Sharp, said the figures, “could add to calls for a rail link to Melbourne Airport to help overcome the growing problems – and costs – of getting there by car or bus”.
However contrary to The Ages’s apparent inference, the difference in the Sydney and Melbourne figures does not appear to be caused by a rapacious parking operator ripping off travellers who lack an alternative to driving.
What the story didn’t say was that Sydney Airport’s revenue from charges to airlines is $446 million, compared to Melbourne Airport’s comparatively modest $197 million. Parking revenues are much the same ($88m and $95m respectively), hence it’s not at all surprising that parking makes up a much larger proportion of total revenue in Melbourne than Sydney. Read the rest of this entry »