Make road users pay for new roads

Khyaati Acharya
Insights Newsletter
19 July, 2013

Auckland’s population is projected to be well over two million by 2041. This will place enormous pressure on road and transport infrastructure.

So it is timely that the Consensus Building Group (CBG), a transport funding ‘think-tank’ appointed by Mayor Len Brown, has released a new report on the issue.

According to Funding Auckland’s Transport Future, the city is facing a transport budget shortfall of $10 billion to 15 billion over the next 30 years.

Tackling this funding gap is by no means an easy task.

Without new revenue streams, it won’t be long before Auckland’s roads and public transport services reach capacity – resulting in even more frustrating traffic jams and overcrowding.

But how to fund such substantial long-term investments?

Ultimately, Aucklanders have three options: toll roads, higher rates and fuel taxes, or a combination of both.

According to a New Zealand Herald poll, all three are unpopular. However, a toll road is perhaps the least of three evils.

There are currently only two toll roads in New Zealand; one in Tauranga and one north of Auckland. Given Auckland’s well-known congestion problems, it is surprising that there are no toll roads already.

So why is a toll road the best way to pay for big, new roads?

First, toll roads can decrease road congestion and improve efficiency. The additional cost will incentivise some road users to switch to other modes of transport, persuade them against unnecessary trips, or make them consider travelling at different times (if charges are variable). This would likely reduce both the number and concentration of cars on the road.

Second, toll roads send signals to consumers about the full cost of using the road. Tolls provide a mechanism for directly financing the construction and maintenance of new roads. Charges reflect both the capital and marginal costs imposed by each additional driver on the road.

Finally, toll roads are an equitable system: the user pays. Those who use the road the most (and presumably derive the most benefit) will pay the most. In contrast, without tolls, higher fuel taxes or rates would be levied on the whole population, regardless of use.

The Auckland Chamber of Commerce’s Michael Barnett says: “All Aucklanders need to understand that if they are going to continue to use their car in the future, there will be an increased price to pay.”

If Auckland’s road system is to grow as it needs to, toll charges will have to help pay for it.

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