But the best congestion charging scheme is the one that can get across the line and enjoy durable political support, so long as it can work.
And what the government proposed this week is eminently workable. It can be improved upon as technology advances. And it can help inform future transport planning.
First, a minor refresher.
Driving at rush hour is not just personally painful. It also imposes a small cost on every other driver by slowing everyone else down, just a little bit. The additional cost on each other driver is small, but the number of other drivers on the road at rush hour is large. And each one of them imposes similar cost on all of the others.
Traditionally, transport planners have tried to deal with congestion by encouraging public transit use, whether through moral suasion or subsidies, and by overbuilding roads.
Road users pay into the National Land Transport Fund when they purchase petrol and when they pay their road user charges. Using some of that money to subsidise public transport is eminently defensible as a way of reducing congestion. It makes the roads work better for other drivers.
Overbuilding is the other traditional solution to congestion. Building a network to be able to handle peak demand means that that network is overbuilt the rest of the time. It would be like deciding to buy a ten-passenger van as sole vehicle for your three-person family because the extended family sometimes visits.
The problem with overbuilding isn’t that the roads eventually fill up again. Being able to handle more trips overall is a good thing. An additional lane, even one that’s filled up, means more completed trips. The problem is that it is incredibly expensive. Each driver is not confronted with the cost they impose on everyone else when they drive at rush-hour. So too many decide to drive at rush hour.
Congestion charging aims to turn the time cost that everyone experiences at rush hour into a monetary charge. The time cost of congestion is pure waste. But a charge that clears congestion can raise revenue that does not have to be wasted.
Last week, the Government called for submissions on legislation enabling congestion charging.
Here’s what’s proposed.
The legislation lets local authorities propose a congestion charging scheme. If a local authority does not propose one within three years, the Minister can direct NZTA to initiate one – if such a scheme is necessary to improve traffic flow.
Proposed schemes must improve traffic flow while contributing “to an effective, efficient, and safe land transport system in the public interest.”
What does that mean?
The point of congestion charges isn’t to raise revenue, or to punish drivers, or to achieve other policy goals. The only point of a congestion charge is to ease congestion to help the land transport system be effective and efficient.
Set properly, a congestion charge ensures that more people are able to complete the trips that they want to make. When roads are congested, the roading system enables fewer trips than when the roads are flowing. Small charges that encourage people to shift their time of travel, or to shift their mode of travel, can have large effects.
Ideally, a charging scheme would set a higher charge at peak times and a lower charge during the ‘shoulder’ times on either side of peak demand. And at times when the road isn’t congested, there’s no need for a charge.
Central government has to approve proposed charging schemes. NZTA will have more experience than local councils in this area and can help ensure that different areas’ schemes are compatible with each other. And one council setting a particularly poorly-designed scheme could skew the pitch against more sensible versions from other councils.
Once approved, the schemes will run in partnership between local authorities and NZTA, with NZTA taking lead on technical aspects, and local councils influencing scheme design and helping decide what to do with revenue collected by the scheme.
I have always liked the idea of rebating collected revenue back to drivers in the form of a congestion dividend. It’s possible to do it in ways that maintain the price incentive provided by congestion charges while addressing potential equity concerns. It is one way to be sure that drivers don’t see congestion charges as something aimed at punishing them or aimed at raising revenue for the government.
The government hasn’t picked up that suggestion.
But what it has proposed also works.
First, the scheme has to cover its own costs, including the cost of monitoring and reviewing the scheme’s performance. This is important for accountability and improvement. Schemes that do not provide benefits, or that start being used as a revenue-grab, can be revoked. And ones that result in traffic building up along the charge-zone’s boundaries should be modified.
Net revenue after those costs must be used to improve land transport in the area covered by the scheme and cannot substitute for other investment. It has to provide additional improvements.
Dedicating net revenue from the congestion charging scheme to improve transport in the places where drivers are paying the charges means drivers will see the benefits not only in improved traffic flow, but also in better roads.
I’ve liked having no exemptions at all, not even for emergency vehicles. The amount they would pay in charges would be small relative to overall budgets, and emergency services would benefit more than just about anyone else in being able to get to where they need to go in a hurry. My main worry has been that it’s hard to stop at just one exception. If a council exempts emergency vehicles, someone will make the case for another worthy-sounding pursuit – and then everything unravels.
The government’s taken a different tack. Emergency vehicles will be exempt automatically, but no other exemptions or discounts will be allowed. That also solves the problem. Prohibiting councils from adding exemptions will make life a lot easier for them.
Once the schemes are running, they can also improve future transport planning.
If only a small congestion charge is needed to clear traffic at choke-points like Wellington’s Mt Vic tunnel, a second tunnel is unlikely to be worthwhile. But if the tunnel remains congested with even a high charge, a second tolled tunnel might be able to pay its own way.
Submissions on the proposal are due in late April. It would be a mistake to make the best the enemy of the good, especially when we all have different views on what best looks like.
The proposed scheme looks very good. I hope it proceeds.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
Traditionally, transport planners have tried to deal with congestion by encouraging public transit use, whether through moral suasion or subsidies, and by overbuilding roads.
Road users pay into the National Land Transport Fund when they purchase petrol and when they pay their road user charges. Using some of that money to subsidise public transport is eminently defensible as a way of reducing congestion. It makes the roads work better for other drivers.
Overbuilding is the other traditional solution to congestion. Building a network to be able to handle peak demand means that that network is overbuilt the rest of the time. It would be like deciding to buy a ten-passenger van as sole vehicle for your three-person family because the extended family sometimes visits.
The problem with overbuilding isn’t that the roads eventually fill up again. Being able to handle more trips overall is a good thing. An additional lane, even one that’s filled up, means more completed trips. The problem is that it is incredibly expensive. Each driver is not confronted with the cost they impose on everyone else when they drive at rush-hour. So too many decide to drive at rush hour.
Congestion charging aims to turn the time cost that everyone experiences at rush hour into a monetary charge. The time cost of congestion is pure waste. But a charge that clears congestion can raise revenue that does not have to be wasted.
Last week, the Government called for submissions on legislation enabling congestion charging.
Here’s what’s proposed.
The legislation lets local authorities propose a congestion charging scheme. If a local authority does not propose one within three years, the Minister can direct NZTA to initiate one – if such a scheme is necessary to improve traffic flow.
Proposed schemes must improve traffic flow while contributing “to an effective, efficient, and safe land transport system in the public interest.”
What does that mean?
The point of congestion charges isn’t to raise revenue, or to punish drivers, or to achieve other policy goals. The only point of a congestion charge is to ease congestion to help the land transport system be effective and efficient.
Set properly, a congestion charge ensures that more people are able to complete the trips that they want to make. When roads are congested, the roading system enables fewer trips than when the roads are flowing. Small charges that encourage people to shift their time of travel, or to shift their mode of travel, can have large effects.
Ideally, a charging scheme would set a higher charge at peak times and a lower charge during the ‘shoulder’ times on either side of peak demand. And at times when the road isn’t congested, there’s no need for a charge.
Central government has to approve proposed charging schemes. NZTA will have more experience than local councils in this area and can help ensure that different areas’ schemes are compatible with each other. And one council setting a particularly poorly-designed scheme could skew the pitch against more sensible versions from other councils.
Once approved, the schemes will run in partnership between local authorities and NZTA, with NZTA taking lead on technical aspects, and local councils influencing scheme design and helping decide what to do with revenue collected by the scheme.
I have always liked the idea of rebating collected revenue back to drivers in the form of a congestion dividend. It’s possible to do it in ways that maintain the price incentive provided by congestion charges while addressing potential equity concerns. It is one way to be sure that drivers don’t see congestion charges as something aimed at punishing them or aimed at raising revenue for the government.
The government hasn’t picked up that suggestion.
But what it has proposed also works.
First, the scheme has to cover its own costs, including the cost of monitoring and reviewing the scheme’s performance. This is important for accountability and improvement. Schemes that do not provide benefits, or that start being used as a revenue-grab, can be revoked. And ones that result in traffic building up along the charge-zone’s boundaries should be modified.
Net revenue after those costs must be used to improve land transport in the area covered by the scheme and cannot substitute for other investment. It has to provide additional improvements.
Dedicating net revenue from the congestion charging scheme to improve transport in the places where drivers are paying the charges means drivers will see the benefits not only in improved traffic flow, but also in better roads.
I’ve liked having no exemptions at all, not even for emergency vehicles. The amount they would pay in charges would be small relative to overall budgets, and emergency services would benefit more than just about anyone else in being able to get to where they need to go in a hurry. My main worry has been that it’s hard to stop at just one exception. If a council exempts emergency vehicles, someone will make the case for another worthy-sounding pursuit – and then everything unravels.
The government’s taken a different tack. Emergency vehicles will be exempt automatically, but no other exemptions or discounts will be allowed. That also solves the problem. Prohibiting councils from adding exemptions will make life a lot easier for them.
Once the schemes are running, they can also improve future transport planning.
If only a small congestion charge is needed to clear traffic at choke-points like Wellington’s Mt Vic tunnel, a second tunnel is unlikely to be worthwhile. But if the tunnel remains congested with even a high charge, a second tolled tunnel might be able to pay its own way.
Submissions on the proposal are due in late April. It would be a mistake to make the best the enemy of the good, especially when we all have different views on what best looks like.
The proposed scheme looks very good. I hope it proceeds.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
2 comments:
Congestion charging is good?
Sorry, but is this the same government that wants to force public sector workers (many of whom are able to work effectively remotely and from home) back into the office?
And supposedly congestion charging is not to punish the commuters?
Am I the only one who can see the absolute hypocrisy and pig-headed refusal of a1950s mindset that does not to embrace technology for reducing these exact problems?
Congestion charging might have a place somewhere, but it would literally just add another nail in the coffin to Wellington. The retailers in the city already suffer from a lack of foot traffic, and one of those causes is the removal of affordable short stop car parking (clearly also combined other issues).
Once it becomes too hard and too expensive for people to enter a city they stop going. While you might argue "that's the point" it is the people that bring positive energy and life to a city.
Places like Wellington don't have enough else going for them anymore to draw in the crowds and which has become a vicious downward spiral.
Queensgate in lower hutt and North City in Porirua on the other hand are thriving - free parking, no congestion charges - despite there being too many cars and people everywhere.
Then there are the drive throughs - you can't get to Wellington's airport, for example, without passing through Wellington city....and you can't realistically get to Wellington Airport without a car in under 3 hours. (Lets not even factor in the insane cost of the Wellington regions public transport...if you want people to catch it make it genuinely affordable. Affordable public transport would result in people ditching their cars.)
All these people pushing for less cars on the road seem to be the same people who live alone and don't have multiple small kids, or prams, or wheel chairs, or other mobility issues. They're certainly not people who run businesses or employ people....are they taxpayers or paid with our taxes?
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