Here’s a prediction in the light of Ken Henry’s call last week for congestion pricing to be considered in Australia: it won’t happen in your lifetime, Dr Henry.
Urban road transport is a vast public policy failure by governments that costs us billions of dollars a year, but it will go on being tolerated, chiefly because voters won’t accept the solution.
The Bureau of Transport and Regional Economics, which has been estimating congestion costs for years, most recently had a stab at costs in 2007 based on 2005 data, and concluded the cost of congestion that year was $9.4 billion. The BTRE concluded it was likely to rise, under a medium scenario, to more than $20 billion in 2020. Sydney and Melbourne are where two-thirds of the costs are incurred, and the costs are roughly split about 40% each for lost business and personal time and the remainder split evenly between pollution costs and extra vehicle running costs.
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In Henry’s words, that makes a compelling case for reform. There’s not too many micro-economic reforms that would inject $10 billion a year into the economy pretty much immediately.
For economists, road pricing has been a compelling case for reform for decades. Impose a price signal and road users will start behaving differently, altering their travel arrangements or switching modes. Provide variable pricing and those who value their time the most can pay the most for a shorter transit time. And road pricing in fact is an area where we now do things significantly worse than our ancestors did. In the US and the UK, private provision of roads, and charges for users, were common in the 19th century. In the 20th century, governments pushed aside private operators in providing road infrastructure for the exponential growth in automobiles, and congestion began to become a problem of interest to economists, who had previously primarily been interested in how best to fund the construction and maintenance of roads. By the 1950s, the likes of Milton Friedman were advocating painting radioactive strips down the middle of roads and fitting Geiger counters to cars to measure travel.
But it was only in the 1990s, when the technology for electronic tolling became available, that congestion pricing really took off.
“Take off” is relative, because it only ever took off among economists. Singapore established a highly successful system and some Scandinavian countries experimented with it, but Ken Livingstone’s London system was the first example of a major metropolitan road pricing system.
As policy makers steadfastly failed to see the good sense in congestion pricing, economists began to wonder what they were doing wrong. What could be more sensible than introducing a price signal in a market — the market of travel time — where consumers were subjected to Soviet-style queueing rather than being able to purchase a better product, in the form of reduced travel time?
The problem was motorists, who have consistently indicated strong hostility to the idea of road pricing the world over. Motorists are perhaps the most irrational lobby group of all, as if the act of getting into a car reduces our IQs by 25%. We hold any number of absurd beliefs, such as that fuel excise should only be spent on roads, or is somehow sent into a black hole rather than spent on other areas such as hospitals and schools, that the solution to congestion is more roads, despite constant evidence that congestion simply expands to fill available road space, or that roads should be designed with peak loads in mind, ignoring the wasted investment when road space sits idle the other 20 hours a day.
Most of all they believe roads should be free, despite readily accepting that goods and services have a price everywhere else in the economy.
Australian motorists are no different to American, European or Asian motorists in this regard. Livingstone is now the former lord mayor of London.
One of the persistent arguments against road pricing is that it is regressive, as if current arrangements are not. Car registration is a regressive charge, as is fuel excise — petrol is a greater proportion of the budgets of lower-income people than of higher-income earners. Lower-income families have to live further away from urban centres and, accordingly, have higher transport costs than inner-city residents.
For all these reasons and more, it is unlikely any Australian state government politician will propose a comprehensive road pricing system for their capital city — and we’re really talking about the NSW and Victorian governments. Piecemeal tollways, yes — lumped higglepiggledly into a free transport network — but not a London-style system that charges you for using congested areas. You’d have to get a signed-in-blood bipartisan deal between the major parties before they’d ever commit to it. Or perhaps Nathan Rees might figure that, since he’s going to lose the next election anyway, he could actually achieve something in his brief premiership by giving Sydney a proper road pricing system.
There’s another reason why governments don’t regard congestion as more than a minor political irritant. The primary victims of congestion are families. Although it isn’t reflected in the BTRE’s allocation of costs, if most people had smaller transit times, they’d spend longer with their families, not longer at work. It is families that pay the main cost of congestion, in terms of less time together, of stress in the home-school-work commute, of greater amounts of disposable income spent on fuel. And despite the homage politicians routinely pay to families, no one spends a great deal of time and money advocating on behalf of families spending longer together.
In short, we might hate congestion but we don’t regard it seriously enough.
Really, the only sensible solution for motorists is to make congestion so inordinately costly that governments are compelled to act. Everyone who is not driving a car to work at the moment should start driving and clog up the streets along with everyone else. Maybe that will make things so bad a brave politician will decide it’s time, finally, to act.