The chair of Infrastructure Australia, Sir Rod Eddington, called for a “mature and dispassionate” discussion about road pricing on Friday. I wholeheartedly agree. This should be the No.1 issue for discussion nationally in planning the future of our cities.

Right now, governments around Australia are poised to spend billions constructing new urban freeways in an attempt to overcome traffic congestion. Although they don’t have to.

If they started charging motorists to use road space they could immediately reduce demand, especially in the peak periods that drive the need for increased road capacity. They could instead spend a lot of those billions in other pressing areas, such as public transport or education.

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The problem with unpriced road space is it gets clogged in the peaks with too many low-value trips that contribute little to improving our economic and social well-being. Cheap road space also means travellers who have realistic alternative ways of getting to their destinations choose to drive instead.

Faced with a higher price, some travellers could shift to other modes such as public transport and walking. Some could shift their time of travel from peak to non-peak periods.

Some could “chain” multiple single trips into one journey and many could shorten their travel distance by using closer destinations. Some trips could be replaced with electronic transactions and some very low value trips could be foregone entirely.

The consequences of under-pricing scarce resources are well known. In the Murray, for example, farmers were offered water so cheap it was common to flood-irrigate pasture for relatively low-value uses such as grazing, ultimately causing immense environmental and economic damage.

According to an investigation by Ellen Fanning for The Global Mail, the real cost of running a 2kw split-system air-conditioner for four hours on a very hot day can be as high as $200. The customer, however, only pays about $2. She quotes Energy Minister Martin Ferguson:

“Every time someone in Australia installs a $1500 air-conditioning system, it costs $7000 to upgrade the electricity network to make sure there’s enough capacity to run that system on the hottest summer day.”

Pricing road space has other advantages besides obviating or delaying the need for new freeways. Depending on how it’s implemented, it can potentially reduce the economic burden of congestion by removing enough vehicles to keep traffic moving (albeit still below the maximum permitted speed).

It can also raise additional revenue for the construction of new infrastructure, especially if variable peak period (i.e. congestion) charging is supplemented by distance-based charges.

One of the most important potential benefits of road pricing is driving higher demand for public transport. As I’ve discussed, it’s not enough to provide good public transport.

A significant shift towards more sustainable modes will only happen if car travel is simultaneously made more expensive. Congestion increases the cost of driving too, but charging is a more efficient and sustainable solution.

There are several ways to implement road pricing. Existing point-based methods of tolling freeways via gantries and in-car transponders could simply be extended to non-priced freeways. Or a cordon might be run around a congested part of the city and vehicles charged as they cross the line, as happens in London. More ambitiously, every kilometre travelled by vehicles on the entire road system could be tracked by GPS technology and charged by distance and time of day.

The main criticism of road pricing is the claim it’s inequitable. Yes, higher income travellers will be better placed to deal with road pricing, just as they are with all other motoring-related costs. But that has to be balanced against the economic and environmental damage done by excessive car use. There’s also an incorrect and somewhat patronising assumption that lower income travellers don’t make high-value or important trips.

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Peter Fray
Peter Fray
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