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Motorway tolling is a stupid idea

The Auckland Council’s business advisory group has decided, based on what wisdom I don’t know, that the best way to raise the supposedly necessary additional funding to build Auckland super-expensive motorways like an Additional Harbour Crossing and the East-West Link, is through tolling people who travel on the motorway network. It sounds a lot like an idea that was proposed by the NZ Council for Infrastructure Development last year. With the briefest of analysis, the tolling idea seems like it might have some merit because of the large amount of money that could be raised – with (NZCID estimate) 915,000 vehicles joining the motorway network each day, even a fairly low toll for each vehicle would raise a lot of money that could be spent on transport projects. Compared to other revenue raising systems, the idea is also relatively simple: just toll gate every motorway onramp.

Here’s how it was described in a  NZ Herald article earlier this week:

The council’s business advisory panel believes a toll of about $2 a day would be fairer and more effective than 12 other options raised by Auckland Mayor Len Brown to fill an $11.7 billion transport funding gap.

Councillor Cameron Brewer, who chairs the forum, said yesterday that there could be some variation in the toll according to time of day and location but an average of $2 would raise about $700 million a year.

“That would go a long way to servicing and making inroads into the $11.7 billion funding shortfall,” he told the Herald.

However, the idea has a number of significant flaws – one of which really kills the whole concept. Firstly, the ‘non-fatal’ flaws:

  • The system is likely to disproportionately impact upon lower income Aucklanders by pricing them off the motorways (at least at peak times). While the system seems like it’s designed to raise money as its primary purpose, rather than to reduce congestion, clearly adding a charge to driving on the motorway will dissuade some from doing so, who by definition will be priced off the road (the big question is ‘where do they go). Set against that argument is the reality that this is how markets work, and we live in a market economy for most things – why not roadspace? We can, arguably, achieve social equity in other ways such as a progressive tax system and through the social welfare system.
  • The next flaw, as pointed out by Brian Rudman’s column yesterday, relates to the efficiency of these tolling systems at raising money. As a way of raising money, tolling is far less efficient than – for example – simply whacking up fuel taxes. You need to build a whole pile of infrastructure to capture people getting onto the motorway, you need to set up a very large and complex computer system to process it all, you need to send out a lot of letters reminding people to pay their bills, you need to take a few people to court to ensure they pay their bills. It’s just complicated and costly, particularly when compared to fuel tax which is just done through sending the petrol companies a bill once in a while. Set against this argument is that perhaps, even despite the massive collection costs, the system could raise enough money to still be worthwhile.

These issues aren’t necessarily fatal to the concept as a whole. If Auckland’s population can be convinced that we need to waste billions more on additional motorways, to the extent that we’re willing to pay $2 each and every time we get on the motorway, perhaps with different pricing schemes to reward those travelling outside the peak for shift-work, maybe we can get past the social equity issue. And perhaps, if the operating costs for this system could be minimised – in comparison to the amount of money raised, then the efficiency argument becomes a bit less critical.

However, there remains a flaw that I don’t think has a solution – and that is a little thing called diverted traffic. If motorways are tolled but not adjacent arterial roads (and the system’s complexity would be increased hugely if we included non-motorway roads), then surely a fairly significant chunk of traffic is going to shift away from the tolled routes and onto the free routes. This has a number of rather perverse results:

  • The big, wide and fancy new motorways that we’ve spent billions on will be largely empty, except for rich businessmen to drive along (maybe that’s why they like the idea?)
  • The arterial roads which people actually live in, where we run our buses, where we have pedestrians, cyclists, driveways, where we want to improve the balance between movement and place functions, will become horrendously busier and more congested as people use these roads to avoid having to pay the motorway tolls.
  • In short, we shift traffic away from where we want it (on the motorways) and into places where we don’t really want much through-traffic (the streets and roads where we live, work and play).

The only way to get around this flaw is to also start charging for travel along local roads. In which case we’re really shifting to a GPS-based congestion pricing scheme which, although probably more sensible in terms of avoiding problems like the above, is likely to be much much more complicated and expensive to implement and may well face significantly greater political opposition.

In short, tolling motorways to raise money (in isolation) may sound like a good idea in theory, but when you look at it in reality, it’s pretty damn stupid.

42 comments to Motorway tolling is a stupid idea

  • I completely disagree with your views Peter. I don’t think it is a stupid idea at all.

    Put the tolling points at choke points, without alternative routes, and you don’t get the rat racing. On ramps or off ramps aren’t as clever.
    As for efficiency of collecting revenue, then get the transponder technology right (and the same technology on every tolled road in every part of the country, so motorists only ever need one transponder). Minimise costs and inefficiencies with technology.
    It incentivises people to do things other than drive <= a sign of good policy.
    As for equity the same argument could be made for petrol taxes or the GST, and they're not seen as a problem for society.
    Just use the revenue raised on useful transport projects, not just motorway building (as if Auckland needed any more).

    • Auckland has many choke points in the network, particularly where there aren’t really that many alternatives
      so tolling in Aucland is easier due to the geography. The southern motorway at curlew bay is one, The South-Western Motorway as it passes Mangere Bridge is another, The Auckland-Kumeu motorway as it passes into waterview is another, The Northern Motorway Harbour Bridge is another, and the Upper Harbour Motorway at Greentithe is another one.

      Tolling per se isn’t unfair, but *the pricing system* used for it might be. So this isn’t an argument against tolling, it is an argument against a flat charge. Solution – use a different pricing system!

      Why can’t they charge a differential rate or concession rate the same as public transport does?

      I agree that some broad based tax may be fairer and easier to administer. On the other hand, the argument that collecting tolls is uneconomic isn’t convincing when there are heaps of toll roads running at a profit all over Australasia. A toll operation run by government would be even better because the commercial pressure to be profitable wouldn’t be as strong. You could also re-fund a portion back on rates to everyone in Auckland.

      Increasing petrol prices by way of a fuel tax also has advantages – but because it is so broad based and sensitive, there will be a lot of push back for that from the Roads Lobby.

      Finally, Rudman’s argument is flawed because it is built around the idea that public transport reduces congestion – IT DOES NOT. If I expand motorway capacity by two lanes, will that reduce congestion? No it won’t. So what makes people think that expanding motorway capacity by two lanes *using a bus* is not going to have the same effect??

  • Cost of collection is the other killer. The Herald this morning has a study showing ‘toll collection costs would amount to twice the revenue raised’. !?

    Not to mention capture of any revenue by vested interests. Stephen Selwood of the NZCID is the puppeteer pulling Cr Brewer’s strings here, they are getting crazy greedy for more motorway projects to build… the end of the grand motorway building era in Auckland is looming and they are terrified.

    Also this bunch of drys know that petrol tax is the most efficient system but they have an ideological difficulty with that. They’re desperate for the pure fragrance of ‘user pays’ to conceal that they want our money for their benefit.

    • It’s not a killer at all, Deloitte using the first stage London congestion charging admin costs (which any toll industry benchmarking knows were a good hundred times higher than that of similar systems since, and even London now) doesn’t really wash.

      The transaction costs are a function of volume. Melbourne CityLink transaction costs are less than 10c per trip. Auckland road pricing could achieve the same.

      Petrol tax is wasting away, the big argument in the US (and now in Australia) is how to cope with a future with a high number of hybrid and non-petrol powered vehicles in terms of revenue from road users. The UK has been trying to deal with it by raising fuel tax, but ultimately it wont work.

      Of course there is no diesel tax, which is because a significant proportion of diesel isn’t used on the roads, those vehicles DO have user pays of sorts with RUC.

  • Matt L

    I don’t think it would be that hard to counter the diverted traffic issue. If the system is already in place then depending in how out is designed and implemented it might be a simple case of installing some sensors at major intersections. That would have the added benefit of picking up traffic that doesn’t use the motorway anyway.

    If people start rat running then either more sensors can be added to plug gaps or local traffic calming measures can be added to discourage people from using those routes.

    The other thing to point out is that if it does happen then the council needs to be absolutely clear where the money is going. So far they have done nothing to address the perception that this money is needed for PT projects when it is mostly for new roads. This has led to people believing that if we just cut the PT projects we won’t need the tax.

    • I think that the system does not have to be perfect, it just has to be sufficient.
      For example, if a toll is placed on the Aukland-Kumeu Motorway at Rosebank Park,
      some traffic will undoubtedly leak via Te Atatu Road and travel a long way to avoid the charge
      BUT that’s OK, as that route is so slow it will be discouraging to most drivers and most people will
      pay the toll.

      Doesn’t have to be perfect.

      • But still so much less perfect than a few more cents on the petrol tax…. zero collection cost, acts as a encouragement to leave the car at home not just take a crazy much longer and probably suddenly congested route. Can launch it tomorrow and have some money next week. Really this is daft. If the word ‘tax’ is so difficult for everyone’s delicate sensibilities let’s call it something else; I dunno ‘xat’.

        • Ben

          Ironically the blanket fuel tax hurts more than the congestion charge especially the poor.

          Farmers and rural people are asking why should they be paying for a motorway they might use most of the time, and when they do they will pay the individual user charge for the individual use.

          Why should my fuel tax pay for State Highway 18 or the Eastern Highway if I dont use it?

          This is not my personal opinion Patrick – these are the questions that will get battered around.

          Strangley Congestion Charging as form of user pays is one straight out of the ACT book

          Providing money collection is efficient, and the revenue and governance is done properly then what is the problem paying for a road I use if it means I get some savings somewhere down the track whether it be from less fuel use, or paying the debt of faster at Council level.

          Petrol Tax is blunt for the objectives trying to be gained.

          As for people rat racing – lets see shall we – be one heck of a LOL patrick as they will be paying more fuel tax anyway from chewing through more gas from their own daft decision to rat race down a local road to avoid a $2 toll

          Money talks folks lets see how long they rat race for

          • Swan

            “Petrol Tax is blunt for the objectives trying to be gained.”

            If encouraging alternatives to peak-time driving is the objective I would agree. But the objective appears to simply be revenue raising. In which case petrol tax, or an RUC is the most efficient means of collection.

          • Ben you mistake me for someone who agrees with user pays. I don’t. I believe in society instead, which is a more complex thing and something that we are all in together. You are right the ACT loonies are right up behind this and all the more indication that it is designed to only suit a particular section of society.

            Can I also suggest that you think a little broader than what you think might just suit you?

            Oh and also farmers are businesses and will claim the tax back, they are also people who come to town now and then as well as send their products in for us city folk to buy…. see you can’t keep slicing up life into ever smaller costs and benefits. This is the foolish oversimplification of the ACT party miserablism. User pays ignores the economic by only looking at the financial. It comes from the lowest form of math: cost accountancy.

          • bbc

            @Ben – People already get off at places like Waterview and take Gt. North Rd the rest of the way in, having a toll will simply mean even more people do that – that’s rat running and won’t cost more in fuel. It will also put an end to any aspirations the people of Pt. Chev. have of someday having a towncentre rather than a 6 lane motorway with some run down shops on the side. Significant numbers also get on the motorway at this point, a toll will mean they’re more likely to stay on the aterials and clog them up even further.

            Why don’t we simply use a fuel tax? – oh that’s right National banned us from doing it. So much for power to the people, and supercity Auckland being allowed to make choices at a local level.

            The Northern Gateway toll system as I understand spends more than half of what it collects on the system to collect the toll, and that’s a very simple system IMO. Imagine the cost and complexity of instituting that in Auckland.

          • Swan

            “Why don’t we simply use a fuel tax? – oh that’s right National banned us from doing it. ”

            National will be even less likely to allow motorway tolling I would say.

          • They won’t be around forever.

        • I agree. But you have to take into account politics too. Petrol prices have sacred cow status, if you touch it, you might lose the next election. That matters, so it is understandable why politicians don’t want to touch it!

  • Peter

    Seems like expert consultants who have previously worked on these ideas for the Ministry of Transport have similar concerns to mine: http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10798177

  • JeffT

    The government decided to abolish Auckland’s regional fuel tax because it was less efficient then general taxation. How does this turkey of motorway tolling look on efficiency grounds!?

    Also, when people pay a toll on, say, a bridge, they understand it’s being levied for the bridge’s construction costs. I would expect that people won’t be happy to pay a toll for an unrelated project such as PT development. A regional fuel tax works way better.

    Anyway I hope Clr Brewer gets plenty of media attention for his idea.

  • Swan

    “The only way to get around this flaw is to also start charging for travel along local roads. In which case we’re really shifting to a GPS-based congestion pricing scheme…”

    Agreed. But I dont think this technology is necessarily that far away. The Netherlands is heading down exactly this route at the moment.

  • Ben

    Sorry Peter have to disagree there on that one.
    Congestion Charging on the motorway network can work if done properly. I also believe your petrol dollars may talk as well.

    BrisUrBane sums up what I was running with in my blog and on Facebook.

    And this is where petrol dollars kicks in as well.

    Long Story short – I hope people do rat race especially as I travel between Papakura and Britomart by car when I cant take the train. If people are going to rat race on the locals, then the Mt Wellington to Grafton Gully portion of the run will have lighter traffic allowing me to sustain a constant 80-95km/h rather than the stop-starting 10km/h crap we get currently. Now unless cars work differently, a sustained cruising speed of 90km/h is more fuel efficient and less wear and tear on a car than stop starting constantly. Less on maintenance, less of fuel means my toll COULD (need to model this) be very well off set from previous fuel/maintenance costs. It might be very well I save money from tolls and those who rat race which means benefit to me. Winner :D

    Also tolls affect the poor people? Really? I thought they used P/T more?

    Look tolling on the motorway can work if done right and the money spent from it goes to where it should be going – strangely enough could be used to off set the maintenance bill of a road :P

    I would go for it – and I wonder if Brewer is going to run scared and backflip

    • Geoff Houtman

      The only thing Brewer is running, is for Mayor.

      Reminder to “the Left” you should be picking your candidate now and start promoting him or her like Brewer is already doing.

      • JeffT

        Not a very good indication of his decision-making then. In the Herald today the AA spokesman called it “a very naive approach” and “expressing its preference ahead of any robust analysis has done a disservice to the whole debate”. I want a bit more than that from my mayor,

  • William Somerville

    Imposing charges on vehicles has two objectives:

    • Raising funds to improve roads and public transport

    • Reducing demand through travelling less, sharing more or using public transport

    This Siamese twin approach raises tricky issues, quite apart from the fact that they shouldn’t necessarily be linked:

    • Demand is best regulated voluntarily through people changing their behaviour to save time.

    • For example public transport should earn support and not be imposed because, If time is valued, two people in a car is as efficient as twenty people in a bus

    • The more accurately you target users the bigger the hole in the collection bucket

    Motorway tolling seems a good balancing act as we all use it some of the time and not many people drive through Orewa to avoid the northern toll so rat running to save $20 a week may not be a big issue.

    Plus, Patrick, if we use number plate recognition technology we can charge Bentleys more than Toyotas

  • Matt L

    One of the big problems I have with fuel tax it is doesn’t do enough to ease congestion. Sure people are paying more if they sit in traffic but they then get charged the same thing if they they decided to drive at an off peak time when there was no one on the road. It is also largely a hidden tax in that people don’t see the impact except for at the time they fill up their car.

    Think of it this way, say you wanted to go to the shops 3k down the road you have a few options, you could drive, catch PT, walk or cycle. Dropping the last two out of the equation you know that if you catch PT you will pay a fare, lets say $1.50 each way but if you considered driving would you think about how much petrol you were using and how much tax that trip would equate to? I very much doubt it. By comparison if you knew that by driving down to the shops you would pass a ‘toll’ point at an intersection and that as a result you would be charged $1 or $2 how would that change your decision.

    Another thing to consider about a petrol tax is that not only cars use petrol, it is used by other things too, things like lawnmowers and boats which don’t have any impact on the transport network.

    A few people have mentioned cordon tolls at pinch points but I think they also have a serious flaw in that it penalises everyone who is travelling from further out while leaving those inside the cordon off free and may encourage more driving from them. As an example say there was a cordon on SH16 along the causeway and that cordon caused a reduction in traffic heading to the city from further out west. That may leave a lot of extra space on the motorway closer to town so it then might become easier for someone living in say Western Springs to drive so effectively you are punishing people who live beyond an arbitrary line while those who live closer to town (and who are probably easier to serve with PT) don’t have any costs. That could serve to push up inner city property prices even more.

    • Excellent thinking Matt. A massive lawnmower tax. That’ll get ‘em into apartments….

      Raising a chunk of revenue is the more important side of the ledger here, so we can get some balance into Aucklanders’ movement options. That’s all.

      Every improvement in PT services and infrastructure has been met with increases in uptake this century. I don’t think there is any need to try to encorage people out of their cars, we just need the alternatives to be there.

      Nothing is much duller than people who are obsessed with absolute equality or totally theoretical purity of revenue raising systems. Key issues: Keep it straightforward; nothing too tricky. Keep profiteers out of it. And show the gain: Build something good with the money. Done. Petrol tax then.

  • chris

    “We can, arguably, achieve social equity in other ways such as a progressive tax system and through the social welfare system.”

    Arguably, yes, but this government has clearly shown – and continues to do so – that social equity is the least of its concerns.

  • It has long been quipped that New Zealand is 20 years behind the rest of the world. What this post sadly demonstrates is how true that is in the heads of some environmentalist/left wing/public transport lobbyists. Whilst the Green Party in England and environmentalists in New York are both pushing expanded road pricing for cities at present, the equivalent lobbyists for Auckland have their heads back in the 1970s. I don’t know if it is just starry eyed faith that rail will deliver the um track to Damascus, or just naivete, for this idea, in principle, will do more to save the viability of rail in Auckland than anything else.

    Let’s just set aside arguments for now, about what to do with surplus revenue, because we’d disagree. If it is assumed it is used to support public transport, it is quite peculiar that you’d oppose this so quickly.

    One of the reasons the Auckland Road Pricing Evaluation Study was commissioned by the last government was because the work done on Auckland rail, by both ARC and central government, indicated that meaningful mode shift would NOT occur in Auckland without road pricing (and there would be a funding gap if rail was to grow). In short, after rail electrification it made sense to introduce some form of road pricing to coax people from car to rail. Nowhere in the world has a significant mode shift in a relatively short timeframe happened in the absence of that.

    So in principle, you ought to embrace it as it would deliver on reduced congestion, more rail patronage, less emissions, more road space for buses, more cycling and walking, and money available for more transport projects.

    Why oppose it? Let’s go through your arguments:

    – Disproportionate impact on people with low incomes. Yet surely a regional fuel tax does that now, as it means those with the oldest vehicles pay the most. The very poorest of course are using public transport, and if the money transfers to public transport, this significantly offsets this (unless you accept that most Auckland public transport users are relatively average income, because public transport doesn’t meet the needs of Aucklanders commuting to low income jobs which largely are outside the CBD). Do you advocate discounts for low income people on public transport? Fuel subsidies (or fuel tax rebates) for them? If you support this argument you would have to back it up with such measures, the fact that you don’t suggests otherwise.

    – The costs of collection are overblown, especially since the last government effectively paid for an elaborate in-house toll collection system now grossly underutilised because it was overspecked under the Labour government days when it was meant to be scalable for the Tauranga Harbour Link project and (yes) Auckland road pricing. Utility companies do billing extensively today, and this is a function of volume. Rudman doesn’t know enough for you to reliably rely on him. The sheer volume of Auckland motorway traffic would mean these costs could easily be halved, although the first three years are an expensive teething period of enforcement.

    – The motorways wont be empty. The idea that $2 would put most users off is utterly ludicrous. Road pricing in Oslo reduced traffic by 5%, the figures for Stockholm and Singapore indicate 10-20% reduction at the beginning. The “rich will use the roads” argument has long been proven fatuous by the demographic of HOT lanes in the US, which is quite average and often involves many people for whom time is valuable for that specific trip.

    – Diversion. This is the biggest flaw and is a function of price. If it was done on a distance factor on motorways alone, you’d have a point, because there would be incentives to exit early. However, a single access charge on most on ramps that isn’t higher than $2 is unlikely to have such a significant effect. It will stop people ratrunning to shorten motorway trips, but what it will do is stop people using motorways for very short trips – which is a good thing, as it is a scarce resource built for longer distance trips, not for the quick hop from Greenlane to Newmarket. I believe this can be addressed with some detailed design work, but it shouldn’t be a deal breaker in itself.

    Finally, you do hit the nail when you mention GPS based distance charging. Complex? Well it exists now. A North Shore company called ERoads charges RUC by distance using GPS, and could easily have charging varying by time of day and location. With RUC, New Zealand has a platform to introduce proper full network road pricing in a way most other countries don’t have.

    Yes it would take some time, yes it would start with heavy vehicles and not involve much price differentiation, but the long run benefits are enormous. It’s about time the argument shifted towards this, then the debate about what to do with the money, and other motoring taxes, can be had.

    • “Nowhere in the world has a significant mode shift in a relatively short timeframe happened in the absence of that.”
      Just flat untrue: Perth, Vancouver; big uptake in rail PT with no road pricing; caused by actually building it.

      “One of the reasons the Auckland Road Pricing Evaluation Study was commissioned by the last government was because the work done on Auckland rail, by both ARC and central government, indicated that meaningful mode shift would NOT occur in Auckland without road pricing (and there would be a funding gap if rail was to grow).”
      More abject nonsense from MoT ideologues: They can’t see things even after they have happened if they don’t fit their preconceptions. Rail is booming in AK now despite clapped out old kit running irregularly on a halfpie network. State Highway volumes have been flat for seven years yet MoT BCRs project 4% growth in order to inch them towards the positive. No matter who commissioned the study if those MoT clowns or their local ilk with their heads still in last century carried it out it will merely express their dated preconceptions.

      “In short, after rail electrification it made sense to introduce some form of road pricing to coax people from car to rail.”

      No my lovely Liberty; what is needed to ‘coax’ people from car to rail is simply the provision a real, modern, frequent, well run, and fully integrated system. The uptake since the baby steps of building Britomart has proven that, it ain’t the 1960s any more. No coaxing required. Fact.

      The problem after electrification will not be insufficient passengers but demand will being unable to be met because of the bottleneck at Britomart: the failure to fund CRL.

      All these examples are way more relevant than London or Singapore, the situations are so different. I have no objections to road pricing in principle, just don’t see it helping the issue in Auckland effectively. Which is simply a lack of will by the current government to fund desperately needed PT infrastructure.

      • Patrick, was the uptake a mode shift in Perth and Vancouver or growth in usage? The justification for such projects is typically about it moving people out of cars into trains, reducing congestion – but if it is NOT what happens, rather people take new trips or shift from buses or shift from being car passengers, then I’d question what the net public welfare gain is, economically or environmentally. Cheap trips for middle class people who live convenient to railway stations isn’t what these schemes are sold on.

        You’re putting two events together and presuming the growth in rail patronage is about mode shift from car drivers, but there haven’t been surveys to verify that. State highway traffic is stagnant nationwide, so how can you attribute it to rail in Auckland? A perfectly feasible alternative thesis (and neither you nor I have survey data to prove it either way if you’re honest) is that the price of fuel has made people think more about their total driving habits, in addition demographic changes and the persistent growth in domestic air travel is reducing medium distance intercity car travel. There are multiple factors, and you’re brave to assume a rail system that isn’t capable of serving even 10% of Auckland commutes is more than a minor contributor.

        Actually the “MoT idealogues” were a PM created sub-committee of political advisors, local and central government officials handpicked by Clark, Cullen and H2 to short-circuit the whole issue about what to do about Auckland transport. I wasn’t a part of that sub-committee, but I worked with someone who was.

        Again you haven’t a single new world city example that has provided sustainable relief to traffic congestion from investment in new rail transit anywhere. Vancouver and Perth still have serious congestion issues (and Perth’s are growing). Congestion is seen by the public and by mainstream central and local body politicians as being Auckland’s biggest transport problem – a problem of excess demand over supply (which is what congestion is) isn’t fixed by simply supplying a grossly underpriced alternative for at best 6% of Auckland’s commutes (if you really believe ALL car commuters to Auckland’s CBD will somehow manage to get on rail, which is absurd).

        Raising the price of road use at peak times will see some people mode shift, some people route shift, some people time shift, some people not travel at all, some people will pay.

        Almost all transport economists, across the spectrum, acknowledge the supply of more subsidised public transport is a second best solution to the problem of urban transport congestion, second best to road pricing. Indeed it is road pricing that can make buses more viable, competitive and ubiquitous, and it is they which can really offer an alternative for the majority of Auckland commuters (they already carry more people to the CBD than cars do).

        • As I say I have no problem with road pricing in principle, but am not very interested in theoretical purity. Petrol tax is a form of car use pricing and for me that will do, as it is efficient and without collection costs. There may be a better system for Auckland but as these plans comes from the ‘user-pays’ sector this means that it will likely be followed by attempts to hypothecate any such funds for road building anyway, as as happened to the Land Transport Fund. As I’ve said before I do not believe that user pays is any kind of way to order a society, it is simply a means for capture of funding streams by vested interests. That all petrol tax should go to road building makes as much sense as if all alcohol excise had be used to build new bars.

          I never claimed any causation between AK PT use and nation wide State Highway use drop off. That has its own drivers, much to do with the increasing costs of car ownership and other cultural factors. Although where there are alternatives, mostly cities, people increasingly using them clearly will reduce the volumes of car traffic. Anyway as bus and train numbers are consistently rising and rising per capita yes these new journeys must come from previous drivers. Ah; Rational Actors, eh?

          But anyway I don’t agree with your assumption that traffic congestion is the all important consideration here. If people choose to sit in traffic all day that’s their business, so long as it is a choice. The problem in Auckland is that we all have very little option to not partake in congestion- very little of the PT as it is now are real effective alternatives after decades of mismanagement [public + private] and underinvestment, as the vast majority of funds went into providing for and promoting car use. There is no place on the planet that has ‘solved’ congestion by road building. Road building is congestion building: they are joined at the hip. And the later is always used to justify the former: perfect perpetual business…..

          Saying that providing effective PT doesn’t ‘solve’ congestion is a straw man argument. Perth as a city is a far better place as a direct result of the huge mode share shift to rail, but if you claim that all cars had to suddenly stop or the rail investment is a waste of money then you are a sillier man than even I thought. While there is affordable fuel the roadspace is likely to fill no matter how much of it you provide. And isn’t this just fine? The real question is how clever, how economically viable, is it to keep providing ever more roadspace. Or how desirable. Ghastly little dull town Auckland became at the height of its auto-dependency, thankfully reversing now, little by little.

          Anyway you remain wrong about how much of the modeshare will shift to all forms of PT as services improve. Doing everything possible to prevent improvement in services is the anti-PT advocates best weapon. That number is bogus but anyway will improve dramatically with service improvements. The trends of the last decade are very clear evidence that trumps your blind prejudice. Furthermore with the necessary investment and subsequent jumps in ridership your great moral panic- that terrified thought that someone somewhere might not be paying exactly for what they’re using- will also be addressed as subsidy levels will fall. Not that I accept user-pays as an important aim, but I do value efficiency and lack of waste. It is the economic and social value that maters not just the financial.

          And we’ll all be better off. A city not made so dreary by the deadening dominance of vehicles. Vehicles will still be there of course but just not the only option. Much more efficient landuse, much less value lost to carparking and the crushing costs of death and injury that result from traffic domination, and so on, but you’ll still not see it…..So it goes.

          • Swan

            “As I’ve said before I do not believe that user pays is any kind of way to order a society, it is simply a means for capture of funding streams by vested interests.”

            So do you think we should move away from market based food and consumer goods distribution?

            Remember there is a difference between user pays without welfare and redistribution, and user pays with those things in place. There is generally a consensus amongst economists that accurate pricing, plus redistribution, is better for EVERYONE than not having accurate pricing.

            When you have accurate pricing, what’s wrong with hypothecation. As commented above, PT (buses) will do very well under this scenario.

            Is it because rail in Auckland won’t stack up under transparent pricing?

          • What do you mean by ‘stack up’? Doesn’t have its own income? Or isn’t, won’t be, increasingly valuable? As Auckland gets bigger and as we actually build the network rail will be invaluable but not as understood by a user pays atomised understanding. So if this is what is the ‘consensus among economists’ is, all I can say is thank god I went to art school instead of bothering with that nonsense.

          • Matt

            Swan, we don’t have the space in destinations such as the CBD to carry all the demand by road. There is finite capacity to drive buses, and the costs of carrying equivalent volumes of passengers as are carried by rail would be prohibitive. Hypothecation of funding cannot change fundamental physical laws relating to objects occupying the same space at the same time. You can propose all the airy-fairy idiotological dreams you want, but the reality is that without transfer of funding between modes no one system can do it all.

            Also, does your “accurate pricing” include complete capture of externalities for road users, both public and private? Once the new trains are in place, their externalities will be very, very low, but dirty diesel buses will continue to be highly polluting and cars, well, their externalities are so outrageous that full capture would require massive transfers to the residents of places like Mangere and Otara just to keep our economy functioning that it’ll never happen. Which negates your wet-dream “accurate pricing” fantasy entirely.

          • Swan

            I’ve nothing against internalising externalities via taxation, quite the opposite. But let’s be transparent and objective about what price we are putting on each externality.

            Your argument about the CBD is illogical. If there is this inelastic future demand that simply can’t be met by existing infrastructure, well, it will be able to be funded internally by
            definition. Remember debt based financing has been invented! Just because we currently fund infrastructure on a “pay as you go” model doesn’t mean this is the only way. Simply put, if the future demand for rail is expected to be able to fund rail infrastructure, we can borrow to build it, with the future income stream paying for it internally.

          • Swan think you can really total up all the externalities here. I doubt it? How about the aesthetic ones? Is there really any way of costing the loss of quality of place that the decision to build thing thing has caused. I bet you’ll find someone who’ll claim its beautiful, for example. This is why it is the dismal science; because it isn’t certain, yet it attracts quantifiers. Cruel joke.

            No in my experience anything hard to count just gets ignored. Not even the relatively countable burden of carparking is ever costed in Motorway BCRs, presumably because it is somebody’s, everybody’s else’s cost. How about that vast additional cost to every building, domestic and commercial, in mandated parking that the decision to build an almost totally auto-dependent city has led to? Think about it; every car has at least two places to live and how many possible other points to park in between. And because all of these amenities are built to operate at their highest demand even just a little more balance in the ordering of the city would save us millions and millions. Sure we would need to to invest in complimentary movement systems, like a sleek minimal land using rail network, I think it would almost certainly be cheaper, but it is hard to add up isn’t? I could go on: Does NZTA refund the council for the loss of rating income from all those residences and business that might have developed on that now extremely valuable innercity land? I got a flyer in my letterbox today from some landagent bragging that no property in our hood sold for less than a million recently. So in the 60s it was all considered a slum around here, but now?

            So no I still think you miss my point, to insist on a financial measure for all our choices of how to order our city, is in fact to limit those choices spectacularly and to limit the quality and, yes the richness of our lives infinitely.

            Of course this doesn’t mean that we don’t have to carefully weigh the choices in front of us, and spend wisely, but just to build something because you can identify a direct source of funding for it does not make either valueable nor necessarily the most economically worthwhile investment. Especially when that source of funding is simply a matter of policy. I repeat why should petrol tax only be spent on roads? Is tabacco tax spent on facilitating smoking?

            User pays is a sham. A society is a complex thing and making big place making investment decisions only based on how cleanly you can tie the users back to its source of funding is a chimera; a false god, and will led to a poorer society in every sense.

            “There is no wealth but life” -John Ruskin

          • Matt

            OK, Swan, what of the $17 of road-decongestion benefits that accrue from each rail passenger at peak times, according to NZTA? How does your pricing model account for that? You refuse to allow money to be transferred between modes, so do we have to tax drivers for the benefit that they see from the existence and utilisation of rail? Buses also benefit from rail’s decongesting benefits.

            If we’re not allowed to transfer money from one mode to another, rail is always going to be short-changed because you are refusing to allow those who derive the maximum benefit from its existence to provide financial benefit of that benefit. The high capital cost of rail projects means that, without recognition that there are huge benefits to non-rail users, the projects will never happen because there’s no possible way for the internal revenue stream to service the debt. The transfers to rail at present are a way of refunding that value, though given how stupidly high our farebox recovery levels are I consider it unlikely that there’s actually a proper compensation for those benefits.

          • Swan

            I agree the transfers to rail are a way of refunding that value, and I dont disagree with that in a second best world (although I might quibble slightly with the $17 figure – would all of those passengers drive a car if not for the rail service – but thats not point.)

            But the reason that is of value is because we are living in a second best world where we have a tradgedy of the commons on the road, as road-use is not priced. When we price road use to largely eliminate congestion, those benefits will disapear (or will in fact be internalised – the guy in his car benefiting will pay for the decongested road directly).

            But its not at all bad for rail funding – in this scenario, rail (and bus) services will be able to command significantly higher prices than they do now – because the alternative will also be more expensive. So there will be more funding available directly through fares.

            Another reason why this scenario is good for PT and the city centre in general: A higher price for travel (i.e. a price that reflects the true cost of travel) will encourage people to locate closer to their work, friends etc.

            The status quo, where ALL forms of travel are subsidised, or under-priced, encourages sprawl. Perth has been cited as a great bastion of hope for rail use. And indeed it is. But that subsidised rail use (as well as subsidised road use) supports massive sprawl.

            The true urbanist should support the appropriate pricing of travel.

  • Given the significant benefits of the (imperfect) road tolling systems implemented in Oslo, Stockholm, Singapore and London, I’d sure like to see Auckland implement a tolling system that builds on their experience.

    Ironically the next tolled facility in Auckland will probably be the AHB walking & cycling Pathway… http://www.getacross.org.nz

  • Stu Donovan

    I see a consensus beginning to emerge from the comments on this thread:
    1. Time-of-use road pricing is a wonderful idea that should be implemented as soon as possible; but
    2. Strategic network charging (i.e. motorway tolling) is probably a bad option, because it combines high collection costs with incomplete incentives (i.e. local roads not tolled).

    You can thank the NZCID for both putting this on the radar and for creating a problem. What they should have done is advocated for “time-of-use pricing” in principle and let the community (in conjunction with expert analysis) identify the best solution.

    Instead, by jumping the gun and picking winners they have now a) possibly missed better options, e.g. GPS and b) heightened the risk that road pricing gets knocked back again, as it did in 2006 following the ARPES study (mainly because Labour seemed to lose their spine).

  • Greg N

    was the uptake a mode shift in Perth and Vancouver or growth in usage?

    Who cares? If the growth of PT use is there, what does it matter if it comes from modal switch from cars or elsewhere.

    Yes some will switch from bus to train and that doesn’t increase the overall number of PT trips but if PT growth is happening then that means either folks are mode switching onto PT (from non-PT modes) or they are not using a car at all in the first place.

    Either is a win/win for everyone.

    And if the PT growth overall didn’t happen you would have to manage all those “extra” PT trips as car trips – which is going to be more expensive to do so than providing the PT option.

    You’re putting two events together and presuming the growth in rail patronage is about mode shift from car drivers, but there haven’t been surveys to verify that

    Considering that every park and ride facility in Auckland is always full every work day in recent years – I think that a number of those are car drivers who are mode switching to trains, for at least the most congested part of their journeys.

    The most successful of these is the NEX and figures there show that it is causing mode switching by car drivers, to such an extent that it now carries the equivalent of 2 or more lanes of car traffic at peak times. Those “spare” lanes on the Northern motorway are filling up with yet more cars so you don’t see 2 empty lanes on the bridge as a result. But imagine what it would be like on that road and the bridge now if the NEX wasn’t there.

    Technically NEX is not a train (its a bus), but it is operated exactly how a train service would be if it was a rail line there so can be considered to be one even if the wheels on it are rubber not steel.

    State highway traffic is stagnant nationwide, so how can you attribute it to rail in Auckland? A perfectly feasible alternative thesis (and neither you nor I have survey data to prove it either way if you’re honest) is that the price of fuel has made people think more about their total driving habits, in addition demographic changes and the persistent growth in domestic air travel is reducing medium distance intercity car travel. There are multiple factors, and you’re brave to assume a rail system that isn’t capable of serving even 10% of Auckland commutes is more than a minor contributor.

    No one has ever said (until you said it now) that Aucklands growth of rail usage is the reason why road traffic growth is stagnant in Auckland and New Zealand as whole – thats a very, very long bow to draw.

    Rather the trend becoming clearer is that people are driving less, for all sorts of reasons, some of which you identify above as possible reasons.

    Petrol prices in real terms are not likely to be the main or only reason for reduced driving as they are now in real term at levels previously seen well before the GFC.

    In fact traffic figures published by MoT show that traffic volumes in NZ have been static here and other stats from overseas show similar patterns worldwide, and that traffic growth has been static since before the GFC, in some case, stretching back to the late ’90s is where the flat trend emerges. Well before petrol prices reach their current levels in real terms.

    But this does show a folly of relying on fuel taxes to part fund everything – if car usage drops so does the money used for PT and road building.
    A better and more transparent system is needed, but road pricing is not the be all and end all to that issue.

    In Auckland, ATs figures for PT usage as a whole (and trains in particular) are showing stellar growth figures. In just the last 2 years we’ve had more growth in PT usage in Auckland than in the previous 7 or more years combined. Part of that has been the belated investment in improving parts of the rundown rail network and also due to having actually started to rebuild a multi-modal (bus, train and ferry) PT network that works at long last.

    PT usage is now at absolute usage levels not seen since 1958 as per ATs own figures and the growth over the last 2 years shows a trend which is similar to the very strong growth seen during the early 1940’s – which lead up to the peak PT usage which occurred around the late 40s.
    I don’t recall “road pricing” being an issue during WWII, but then petrol was restricted (if not rationed) and wide spread use of PT was the norm as a result.

    This all shows, that as Patrick says, you can induce modal switching if you provide the proper PT environment, whether road pricing is needed to do that is irrelevant right now. The facts show clearly – that it is being built, and they are coming.

    Rails “modal share” is increasing quite markedly – showing that its not just growth in bus usage that is driving overall PT growth.

    Regardless of that no one here says that trains can do it all on their own, the next 3 years will see the roll out of PTOM model for bus routes come in which will force buses (and trains) to play nice and not compete for the same customers (finally) and with integrated ticketing, each mode will get is share of the revenue for doing so. So buses will now deliver PT users to the train station, and will be there at the other end to take them to the destination which is not near a train station. And they won’t be penalised for mode switches either.

    You will see soon, that by rejigging the existing bus service operations for the same $, that rail usage and PT in general can indeed skyrocket, and as a result, PT will at last start to become a practical reality for those who don’t live next to train station – which is most of us.

    Actually the “MoT idealogues” were a PM created sub-committee of political advisors, local and central government officials handpicked by Clark, Cullen and H2 to short-circuit the whole issue about what to do about Auckland transport. I wasn’t a part of that sub-committee, but I worked with someone who was.

    Hmm, that PM created sub-committee must be well over 4 years old now, since Clark hasn’t been PM since 2008, so what exactly has this so-called sub-committee actually done to facilitate sorting the problem out or has it produced another yet another paperweight report gathering dust somewhere or is it becoming part of real policy that is actually going to be implemented?

    And what is the current government doing – has the sub-committee been abandoned by Key? and/or the current government in agreement with the findings of the PM sub-committee or does it oppose them?

    Almost all transport economists, across the spectrum, acknowledge the supply of more subsidised public transport is a second best solution to the problem of urban transport congestion, second best to road pricing. Indeed it is road pricing that can make buses more viable, competitive and ubiquitous, and it is they which can really offer an alternative for the majority of Auckland commuters (they already carry more people to the CBD than cars do).

    The question I ask, is how you or those transport economists believe simply putting a road price will actually reduce congestion longer term?
    Short term a road price will put some off from using the roads (that they paid for previously via fuel taxes, rates, PAYE and GST – I point out). But that reduction will soon be swamped by general population increase unless real PT options are provided to provide alternatives.

    Longer term – unless realistic PT options are there, those drivers won’t have a mode to switch to so all you do is raise revenue and not provide any solutions to the congestion the road price is supposed to enable.

    Hows that equitable or fair?

    On the subject of ARPES – which is the most relevant recent study to the Auckland situation:

    The general response of the Auckland public to the road pricing plans put to them in ARPES was “put the PT in place well before the road pricing or else…”.

    And I know that as I was there – I was involved as a participant in the road pricing study focus groups and I recall that the message my focus group gave the researchers was exactly that – you can only road price if the public agrees it is a fair system and if you have realistic, workable PT alternatives in place beforehand.

    No one believed we had workable PT options for road pricing when ARPES was done. No one believes they are all there now either.

    But they will close to being there in 3 or more years time, when buses run under PTOM, and EMUs are operational – then you can look at road pricing but only then.

    But take heed of Patricks comments on the Britomart situation as next major stumbling block for PT – any form of CRL is 5 or more years away at the very least (and more like 7 or more years), so you will have a situation before that where the PT use is skyhigh, buses can’t cope as the roads even with bus lanes everywhere, all the trains are full even with double EMUs on every one and train service frequencies can’t be improved due to Britomart being a terminus not a through station.

    If you then seek to bring in road pricing at that time – it won’t work – and you will have a revolt against it.

    Lastly, even if road pricing existed today, and it was “ear marked” to fund future PT there is no guarantee that the money raised (whatever that will be after the collection operating costs are deducted) will be used to actually improve PT.

    If the Government runs the scheme (as seems likely), then the money will go NZTA to hand out on more motorway projects as likely as not.
    That won’t improve PT or reduce overall congestion.

    And if AT or another AC CCO runs the scheme, then how is that in essence different or more idealogically pure from the regional fuel tax which was kicked into touch by the current government?

    We’d only be better off it the outcome was having the road pricing money raised ring fenced for PT use only in Auckland.
    And as a corollary if that money which is raised, is done so as fairly and with as little collection costs as possible.

    I don’t see any discussion on that point from you. Or is that considered too market distorting to even consider?

    To me its simple – road pricing is like GST – its easier all round if you put it as a flat rate on everything as it removes the special cases and loopholes. There will be some winners and losers as there are with everything.

    Indeed, GST is the model for how road pricing should be implemented, when it is eventually implemented – so make it universal, impossible to avoid and give folks the carrots before you raise the stick:

    – in the case of GST – the Lange government took the previous 40% sales taxes off months before they put GST on.
    – in the case of road pricing, get the PT sorted and then do the road pricing, and make it solely used to fund PT investment.

    and not the other way round.

    I have no particular interest in which method for road pricing is used as long as it follows the same design principles as GST did.
    And whatever is done needs cross-party support or it will be gon by lunchtime at the next change of government.

    Example of this:
    Despite all the hoo-haa from the National opposition when GST came in about repealing it “before lunchtime” and for which they’ve had plenty of chances to do so as a Government since GST came in – I’ve yet to see any moves to remove or substantially change the GST bought in by Roger Douglas, some 26 years ago this year.

    That alone proves that having a simple and transparent system with few loopholes is the best way to do taxation which by extension is what any form of road pricing is.

    But I believe it will be a very foolish government that brings in road pricing in any form without making sure that PT alternatives are there before doing so.

    Meanwhile: “Please sir, can I have some more? (PT investment)?

    • Yes it’s a real chicken and egg situation. Except it wouldn’t be with a rational government making evidence based decisions in this sector.

      L.A.’s reinvention of itself as a PT city as well as freeway HQ is on the back of a 0.5% additional sales tax. Simple and efficient.

      My real preference is access to the NLTF for all modes. The end of hypothecation. The question should be: ‘How can we best address connectivity and access in region x?’ Currently it is: ‘Where can we build a state highway?’ Dumb.

      In Auckland the answer would often be transit investment, in the regions less so. But anyway this would provide the funds to kickstart the improvement in services that Greg points out is really a prerequisite to applying any kind of direct road pricing in order for it to be accepted by the public.

      • Matt

        The end of hypothecation? You want to go back to the days of yore, when fuel excise went into the Consolidated Fund?

        • No where it just doesn’t have to be spent on roads. Brownlee has stood up in parliament and said that they’re building roads cos the money’s there. And why is the money there? Because they decided it is. And round and round we go.

  • Greg N

    Except it wouldn’t be with a rational government making evidence based decisions in this sector.

    Indeed, nor it seems will it be with a “National government” as its actually acting like the irrational government it accuses the opposition of wanting to be.

    As for

    making evidence based decisions in this sector

    I think the current government approach is based on a mis-quote of the last line from the Back to The Future movie (Part 1):

    evidence? Where we’re going, we don’t need evidence…”

    And Back, To the Future is what sums up current transport policy by the Central Government…

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