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Road pricing and rail

The issue of road pricing comes up quite frequently in the comments on this blog and it’s certainly not something we’ve shied away from in the past – though I find myself a bit frustrated by how polarised arguments over road pricing become:

  • Its advocates think it’ll solve all transport issues, tend to ignore its potential negative side effects and think we should do it tomorrow if only the politicians had some guts.
  • Its detractors think it’s the worst thing ever, will price the poor off the road and forces us to pay for roads we’ve already paid for.

Both sides miss the point I think. Let’s start with the arguments in favour of road pricing, which are nicely summarised in this TEDx video from Jonas Eliasson:

I like the points made around how a relatively small change in the number of vehicles along a certain route can make a big difference to its level of congestion and how often we just need to accept that an issue (like transport) is really really complicated and instead of coming up with a grand plan to “solve it” we should rely upon little incentives and nudges that can lead to better outcomes. It’s also very clear that road pricing is very effective at reducing congestion.

What I always find interesting though in road pricing debates is to look at the cities where schemes have been successfully implement, and to think about their existing public transport (especially rail) systems at the time of implementation. Let’s take Stockholm for example, which has the excellent Tunnelbana system:

Source: Wikipedia

Source: Wikipedia

Or the London Underground, providing a part of the PT system that enables around 95% of people entering the “congestion charging zone” to not actually have to pay for it because they’re not driving.

london-underground

The situation in Singapore is similar as well, with excellent public transport alternatives to driving available throughout the city-state.

Maybe it’s just a coincidence that cities which have successfully implemented road pricing schemes also have superb underground rail systems, but I tend to think that’s not the case. I don’t know whether it’s because the population looks more kindly on road pricing schemes when they know there are high quality alternatives, or whether it’s because those adversely affected are a pretty tiny minority or whether the presence of the underground rail system meant – in more of a technical than political sense – the alternatives exist to enable the scheme to be implemented in a way that doesn’t generate a lot of negative consequences.

Because of this, I do tend to think that the chances, or even the merits, of introducing a road pricing scheme to Auckland before the CRL is in place, is a risky business. Particularly a scheme which created some sort of cordon around the city centre like what’s been done in London and Stockholm. So perhaps overall my feeling is that road pricing is a good idea, once we’ve got the good alternatives in place.

38 comments to Road pricing and rail

  • Dan

    One problem with road pricing is that the payment and enforcement system itself is expensive, so a large part of the cost goes towards paying for the system. We see this in the pricing of the northern toll road. This is a major inefficiency and makes a nice clean idea into something a little more messy.

    • Yes and aren’t FEDs and RUCs just a very efficient form of network charging? Although of course roads and driving are still subsidised by ratepayers and other ways that we all cover the externalities caused by our over reliance on the road system.

      • Dan

        RUCs and FEDs not so much as they cost the same at any time of the day or night. Road pricing gives you much finer control (again, in theory…).

      • Other than congestion, there is no extra disincentive to driving at peak times with just RUCs and FEDs.

        • I’ve had a think about this and AT already has infrastructure in place to ‘price roads’ in the CBD as they own a few parking buildings and also on-street parking. If the system could be set up so that pricing reflects usage or even times entered. At the present time, the ‘earlybird’ fares make a mockery of the system by rewarding people who drive to work and park up all day but making it more expensive to just park for a couple of hours mid-day and go shopping. I would imagine that the other parking companies, if they think they can make more money, will follow suit. I understand the roadside meters require updating anyway so now is the time to make it happen.

          • Ash

            @BryceP, perhaps no disincentive for vehicles that don’t require parking at the city end to use the congested roadspace though. It would be a step in the right direction, I agree.

          • Yes Ash, I agree but it would be much easier to implement quickly than other forms of road pricing and even a small reduction in vehicles travelling to the CBD at peak times could have a big impact. As for those driving past the CBD, well, in a few very short years the WRR will be open so that should give more options to bypassing the NW – Southern Link etc.

          • Now I knew some of this was happening and it seems the casual rates are changing for the better but I cannot find any mention of the early bird rates. The early bird times should be 7:30 (or earlier). Note, the early bird rates for Tournament and Wilsons are until 10am. AT’s are until 8:30am. Tell me what disincentive there is to drive to work at peak times?

    • This is widely claimed and grossly exaggerated. The northern toll road is a bad example because a bespoke charging system has been set up by government for one road (with the capacity to do many others), rather than being connected to existing utility billing systems. Electronic free flow tolling systems operated in several countries now get transaction cost down to US$0.10 per vehicle, it’s hardly surprising that the NZ public sector can’t replicate the efficiencies of specialised billing/account management firms.

      The long term solution is to allow motorists to opt into an electronic version of RUC (like ERoads offers today) with a proportionate refund of fuel duty, suddenly motorists will face understanding that it costs x to drive y kms, and so every trip is priced (even if at a flat rate). That in itself will change behaviour. Combine that with making all newly registered vehicles choose some electronic option (two providers now, allow more so there are options as to who one buys access to roads from), and you have a long run programme to shift more and more vehicles to network pricing.

      Shift ratepayer funding of roads towards a property access charge for all offroad property access (largely necessary for rural roads) which varies from 10-50% of road costs, and you’re on the way towards transforming road use patterns.

      • I wonder if the HOP system can’t be integrated with the road toll system? Are they not both operated by NZTA?

        • Hamish O

          HOP is run by AT but the standards for integrated ticketing are set by AT.

          • Well the back end systems are owned and run by the NZTA but the float is owned by AT. I also don’t see how you could swipe your card while flying down the motorway at 100kph.

        • It isn’t done elsewhere, but the essence of tolling is account management and query responses, debt collection and enforcement. None of that is seen in PT ticketing systems. A significant improvement would be achieved by shifting RUC towards a service delivery model with multiple competing service providers.

      • Liberty – interestingly one of the board papers I received back recently was in regard to considering the best way to toll the Tauranga Eastern Link. They looked at outsourcing the tolling operation to Australia but from memory decided it was too much risk and decided to go with extending the northern gateway system.

        • Matt, yes that is curious. The “risk” seems remarkable, when of course it could tender it out and define a performance management framework and price cap that it comes under, with a penalty if it has to come back in house.

          The entire toll system should be privatised along with the TRC, with safeguards for privacy.

          • I can send you the paper if you like

          • Luke C

            All the Australian systems used transponders in cars, rather than number plate recognition. These transponder systems seem to have much cheaper transaction costs, just need to be widespread so most people buy a transponder. Would be interesting to find out how this system was introduced in Australia. Luckily the free market wasn’t left to its own devices and the government introduced national standards to ensure drivers only had to buy one transponder and it would work everywhere in the country.

  • The thing I like about the Stockholm experience is that they did it in a very open and honest way by introducing it and giving it time to settle, then stopping it and having a referendum on the issue. Personally I don’t have an issue with road pricing but I think that in the Auckland context, it would definitely have to be wider than just the CBD as so much of the congestion is through traffic or in random places. I’m also not sure we have to have the worlds best PT system before such a move is implemented. Perhaps implementing road pricing with certain guarantees about how PT will be improved at the same time could be a useful strategy e.g. once we have the new PT network in place we should then have a pretty good framework and it would simply be a case of bumping frequencies on that using funds gained from the road pricing.

    • swan

      “Perhaps implementing road pricing with certain guarantees about how PT will be improved at the same time could be a useful strategy”

      This sounds like a good idea, but I personally dont think it is the right strategy. This exact strategy was tried in Manchester, UK in 2008 and failed miserably in a referendum. I was living there at the time. One of the reasons I think it failed is because the debate was entirely focused around “what we are paying” and “what we are getting in return”. So people would say “it is going to cost us X and for that we are getting 10km of rail track and some bus lanes”. Note also that the Manchester scheme proposed was quite a large scheme with an outer and inner cordon. The outer cordon covered much of the metropolitan area.

      Instead I think the primary benefits of road pricing need to be the selling point, which are: less congestion, efficiency, and user pays (fairness). For the latter point to be valid, the road price needs to be brought in coincident with a reduction in RUC and FED so that the effect is revenue neutral (and given the increase in efficiency there is less need for new capital spending so revenue neutral is fine). So I think for NZ the best option is a whole country road pricing scheme, like the Dutch were on the cusp of bringing in. This is because our RUC/FED system is national. Increased demand for, and investment in, PT will happen naturally not least of all because PT will become a whole lot more profitable once roads are priced.

      • Copenhagen is essentially abandoning cordon based road pricing in favour of a wider distance based model.

        Cordons are of the past, but swan is right.

        Road pricing is only a saleable proposition if motorists get existing taxes back, and the dynamic economic benefits of reduced congestion, increased viability of urban public transport and the deferral of the need for much new highway capacity are enormous.

        The benefits of road pricing, particularly over the longer term are so much greater than any road or PT capex projects that it should be the highest priority from a policy perspective, even if politicians are ineptly incapable of understanding how they might sell it .

      • To involve a reduction in FEDs and RUCs it would have to be the whole country or there would be strange barrier effects.

    • Matt, yes please email to my email address (which is on my blog profile). I’d be interested.

    • James H.

      off-topic, but Stockholm’s geography looks pretty similar to Auckland’s, perhaps more severance by water.

  • Luke C

    The Northern toll road is expensive as it has most of the costs of a large nationwide system pushed onto one reasonably lightly trafficked road. Also a road that has a high number of ‘unique’ journeys, i.e. lots of one-off or occasional trips like holiday makers. When the Northern Gateway toll system was introduced it was it would expand nationwide to many roads, however this has not happened. Should get better when the system expands to other roads like the Tauranga Eastern/Te Puke bypass and Transmission Gully.
    However with the CBD (or Auckland Motorways in general) will be different again, and will have a very high level of repeat traffic. Also traffic volumes will be far higher than the 20,000 a day seen on the Orewa bypass.
    Agreed Londons scheme is terribly expensive, but an Auckland scheme will have far less entry and exit points. Thanks to the ‘motorway moat’ there are only about 20 entrances to the CBD. Also Australia has many toll roads now, and they must have a reasonably high recovery with their tag based systems.
    Overall Congestion Charging should seriously be looked into by Auckland Council to fund their half share of the CBDRL. They will still need to come up with $1 billion for their part share, so need $100 million a year to cover this. If it is instituted after CBDRL fully operational and bedded in (with associated bus improvements) I don’t think it will be a big issue if motorway moat used as boundary.

    • David O

      Haven’t they seriously considered congestion charging only to be told by the government that they aren’t allowed?

    • Luke wouldn’t a likely outcome of taxing entry into the Motorway severance of the CBD simply stifle economic activity there? I know from the minister’s recent comments he seems to think that would be a good thing but no serous student of the economic role of cities would agree.

      Unless perhaps there were improved alternative access. How about we borrow to build the CRL and once it is opened then consider pricing car access into the city to help fund it?

      • Luke C

        Yeh thats what I was suggesting Patrick, CBD toll after CBDRL is open to pay off borrowing. Would start off a couple off dollars, then slowly ramped up over time. Should only be done if there is spare peak capacity across the network too. Also would only be something like 7am to 7pm weekdays.
        I don’t think it is fair to do motorway network tolling yet as no decent PT alternative for many cross town trips. Although should note this is largely due to land-use driven by free motorways.
        Even though government says not allowed Council should keep investigating options, and come up with serious proposals, as a future government may be more willing.

  • Stu Donovan

    I don’t believe rail is a necessary prerequisite for implementing time-of-use road pricing.

    That’s equivalent to suggesting that airlines should not put their fares up at busy times unless there’s an alternative available! In fact it’s the lack of alternatives that creates the conditions under which prices should rise.

    On a strategic level the simple presence of road congestion justifies time-of-use road pricing. As to whether it should be ring-fence for PT I’d agree with Swan: Absolutely not necessary. Make it revenue neutral overall (in terms of the NLTF) through reducing fuel taxes. Then simply allocate transport investment as per existing processes.

    Although of course time-of-use road pricing would naturally 1) undermine the importance of the so-called congestion reduction benefits attributed to most major highway capacity expansions and 2) increase the benefits of transport projects that provide an alternative to driving at peak times.

    That said it’s time for dinner …

    • One interesting thing would be to consider the impacts such a move would have. Time of use pricing is only really needed in a handful of cities in the country as most places don’t really get impacted by congestion so rolling it out nationwide would see most people paying the minimum amount. In that regard you would have to question the value of rolling it out to the entire nation but then that raises more issues. Making it revenue neutral means lowering petrol prices but do you just do it in those cities/regions where there is TOU pricing implemented then do you end up with some regions paying less for fuel excise than others. Can you just imagine the howls from other regions if Auckland got lower fuel taxes as our rural cousins would likely ignore the fact we are paying something else to make up for it. It is would also be interesting based on the governments current stance on regional fuel pricing.

      I guess what I am getting at is it would have to be done very carefully as keeping everything revenue neutral nationally could still see Auckland contributing considerably more and therefore subsidising the rest of the nations roads even more.

  • Rob Mayo

    From 4 years living in Singapore, I can tell you that the ERP system is an absolute have. Its cynically referred to by the majority of Singaporeans as ‘Everyday Rob People’ and the governing party who put it there – the People’s Action Party are often referred to as ‘Pay And Pay’. Drive down the East Coast Parkway (ECP) motorway just before 10:00am and the traffic builds up and slows down to a crawl just before the first ERP gantry on the Benjamin Sheares Bridge. This is because from 10:00am onwards, the ERP gantries are all switched off and travel into the city is free. ERP hasnt reduced the numbers of cars in Singapore, nor has it contributed to significantly funding PT projects. The high cost of owning a car in SG (Certificate of Entitlement – COE) hasnt stopped people buying them in ever increasing numbers. Yes, Singapore has an excellent PT network but the govt is flush with cash anyway, SMRT Corp makes enough money from its Thales system-based farebox infrastructure and rail services to pay for new line construction alongside the govt’s’ considerable monetary input. Singapore doesnt need an ERP system…its just another tax on an already overtaxed populace – a tax that doesnt bring any direct benefit to PT but is just one more way that the govt uses to regular fleece its people.

    • Stu Donovan

      So the takeaway message is that Singapore has a very poorly designed time-of-use road pricing scheme? In response I’d suggest that Stockholm has a very good one that has significantly reduced congestion.

      P.s. I’ve never before heard Singapore described as “over-taxed”; in fact I thought it had a low rate of government expenditure?

  • Martin

    The system is a bit of a failure in London, there has been no long term noticeable change to peoples habits, the associated costs with the scheme have just been passed onto consumers (commercial vehicle operators treating it the same way as fuel) or for the rich in central west London (Notthing Hill, Kensington etc) who had it repealed so they could happily drive their Porches, BMW X5s without hassle etc.

    The system was proposed for Manchester where the entire populance voted against it.

    If used in Auckland (and poersonally I’m all for it) there will not be as big a reduction in vehicle numbers as many suggest.

    • London has worked for what little area it covers, but the main “benefit” was to relieve delays enough to allow road space to be reallocated to other modes, effectively creating a zero-sum result for charged vehicles. London needs a far more comprehensive road pricing scheme to make any more meaningful difference. The option Manchester was offered was very different, as it was akin to a peak only cordon at the M25 and another one halfway to the CBD, operating in one direction at each peak. It got rejected because of shockingly poor communication by GMPTE, most of the money raised being directed into a handful of tram projects and a cynical dislike of solutions that appeared to be imposed from London (as the govt was demanding road pricing be introduced in exchange for it funding some major transport projects at the same time as it was nationalising ailing banks).

  • Interesting Data from TfL’s latest report: http://www.tfl.gov.uk/assets/downloads/corporate/travel-in-london-report-5.pdf

    Examples:

    “Alongside this growth in public transport there has been a reduction in the volume of road traffic in London. Ten per cent fewer vehicle kilometres were driven in 2011 than in 2000, partly reflecting increased public transport provision, and partly reflecting reductions in the capacity of the road network and congestion charging in Central London.”

    “London has achieved an unprecedented shift in mode shares for travel away from the private car towards public transport, walking and cycling. There was a 9 percentage point net shift in journey stage based mode share between 2000 and 2011 towards public transport, walking and cycling. In 2011, 43 per cent of journey stages in London were made by public transport, compared with 34 per cent by private transport. Had the mode shares not changed in this way, and all other things remained equal, there would have been more than 1.5 million additional car driver trips a day in 2011 than there actually were.”

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