World's first free traffic congestion solution

Dr Patrick Carvalho
The NZ Herald
8 November, 2019

Chronic road congestion is taking a toll on the mobility of goods, services and people in New Zealand's major urban centres, costing us more than a billion dollars every year on wasted hours idling in traffic.

In Auckland, for instance, drivers spend an average 40 minutes of extra time delayed in traffic during their daily commute. That amounts annually to hundreds of hours lost by each commuter, increasing costs for businesses, reducing quality time between family members and exacerbating carbon emissions.

Worse, without suitable policy action, road overcrowding at peak times is all but certain to intensify. Government forecasts show that New Zealand's total vehicle kilometres travelled might increase by as much as 66 per cent by 2040.

With these concerns in mind, The New Zealand Initiative this week released a report showing congestion pricing, which charges drivers a user fee at peak times in overcrowded routes, could solve New Zealand's shocking congestion woes.

Further, by ensuring congestion charges are not meant to generate revenue for government coffers, it will be the world's first free congestion-free solution, placing New Zealand once again as an international model for good policy.

The report, titled "The Price is Right: The road to a better transport system", shows congestion pricing is not a new concept, with close to 100 years of academic research and plenty of international case studies validating it.

Variable peak and off-peak rates are already part of our daily lives, from electricity bills and cinema tickets to hotel rates and public transport fares. The same logic should apply to roads.

By letting drivers face the costs of adding a vehicle on clogged roads, congestion charges can encourage commuters to find trip alternatives, such as other travel times, routes and transport modes. That would reduce the overuse of road services at peak times.

The first traffic charging scheme started in Singapore in 1975. Back then, the system relied on paper tickets attached to car screens. Nowadays, modern technology allows congestion charges to be seamlessly collected through electronic tags, automatic number plate recognition cameras, or even through on-board GPS units.

In New Zealand, despite never having introduced congestion pricing, all major parties have been on the record recognising it as a suitable form of managing road use at peak times, with the advantage of incentivising the use of public transport.

The Productivity Commission has also praised congestion pricing as "an efficient means to modify behaviour and improve environmental quality".

Besides, as an island economy with a unitary government, we do not face the regulatory hurdles of other jurisdictions such as in the United States and the European Union.

The question is what is stopping us from banking on international best practice and solid scientific methods to get rid of our congestion woes?

The answer lies with the public's resistance against what can be rightly seen as just "another big money-grabbing tax" disguised as a pretext to fix road congestion – as is the case in other jurisdictions, most notably in London's congestion taxing scheme.

Hence, it is of utmost importance that any proposal to implement congestion pricing in New Zealand be accompanied by a formal commitment towards revenue neutrality, guaranteeing drivers are not paying twice for the roads they use. (Of note, National has already pledged to explore "pricing mechanisms that will more efficiently manage the flow of traffic and are revenue neutral".)

That means every net dollar raised through congestion charges shall be offset by, say, a dollar less through property rate collection or lower fuel taxes, which are the main sources of road funding in New Zealand.

In practice, at the end of every fiscal year, central government could return all congestion pricing revenue by sending lump-sum cheques to ratepayers and motor vehicle owners, which can be rebated in their next annual car licensing or local property rate bill.

The lump-sum amounts should be equal in value and independent of whom contributed to congestion pricing revenue. Such a rebate system fosters the behavioural changes for congestion reduction while preventing the misuse of congestion charges as a political cash cow.

If implemented in those terms, New Zealand shall present the world with the first free congestion-free solution, and once again confirming our long tradition as good policy trailblazers (e.g. central bank inflation targeting and women's suffrage).

That would certainly be priceless.


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