Friday, March 17, 2006

Auckland road pricing report released

Well the government’s study into road pricing in the Auckland region is out, and it raises a number of questions. It is motivated, rightly, by the desire to reduce congestion, but some want it to raise money to pay for trains (wrong) or roads (right as long as you aren't wasting the existing money collected). It is fairly well accepted by liberal free marketers and by environmentalist lefties that road pricing makes sense – after all, it is just people paying for the use of a scarce resource – road space.
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The way you currently pay for roads doesn’t bear any resemblance to demand, just the cost of maintenance. It is right that, like phones, hotels and airlines that if you want to use a road when demand it highest you should pay for it – and as a result, you are guaranteed a certain level of service (uncongested road). The quid pro quo is that when the road is quietest you should pay very little – to encourage people to spread journey times.
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Think about it like airlines. Most business people fly at the beginning and end of the work day, simply because their time is valuable and their plans can change quickly, so they pay expensive fully refundable fares. There are a lot of them flying at the same time, so fares are expensive, rarely will you get cheap fares on those flights. On holiday most people make plans well in advance, and are price sensitive. They will fly in the middle of the day or later in the evening because they are prepared to adjust their trip around flights they can afford – they pay less, but the planes get fairly well filled. The peak time business travellers make airlines a lot of money, but off peak leisure travellers don’t – but they pay enough to make it worthwhile to keep the planes flying and offering a frequent service. With road pricing the same would happen.
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Now I could argue the case for road pricing till I am blue in the face, so what about this report?
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The Greens' reaction is the usual “need more public transport”. This is the same as the ARC which is obsessed with trains. Of course with road pricing, you don’t need to subsidise public transport – the roads are priced according to space taken up by vehicles. As buses take up less space per person than cars, then buses pay less on average. Trains pay nothing (as they should be paying the cost for using the track). Uncongested roads mean buses can travel freely, but cars travelling on those roads are paying for a good level of service – in short, you’ve levelled the playing field, letting private bus and rail operators provide service where and when there is demand. The Greens don’t want money raised from road users spent on roads – which is economic nonsense. As long as motorists are paying for the efficient use of the roading network (which at peak times would be expensive) then it is not their business at all. The Greens advocate the silly and Orwellian parking levy option, that would have every single parking space in central Auckland, on private or public land, taxed for a small period of the day. It wouldn’t work very well, except to encourage more businesses to shift out of the city to places where public transport is even less suitable for commuting to. It is wrong to think good public transport is a pre-requisite to road pricing - road pricing exists now, it's just very blunt (petrol tax) and 20% of the pricing is spent on activities other than transport. It is also wrong to think Aucklanders became "car dependent" because of poor public transport, more like Aucklander's got poor public transport because they chose to use their cars. Auckland's tram and rail systems wound down in the 1950s and 1960s because cars were more convenient and quicker - they still are in many cases. The socialist philosophy that people are forced to use cars is nonsense, as long as you have open entry for commercial public transport services (which has only existed since the early 90s).
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National has fortunately been balanced in its response, wanting to look at the report carefully. Hopefully it wont reject it outright, but consider how road pricing can be used to replace rates for funding local roads – though if that happens then governance of local roads would have to change radically to avoid local authorities gouging consumers like their gouge ratepayers.

Brian "Red"Rudman doesn't think it will happen, although he is wrong about the system for charging being expensive - it would be far cheaper per transaction that the system for the ALPURT B2 toll road being built to bypass Orewa. He is right about ARC's profligacy in seeking a $400 million more expensive version of the Avondale extension to SH20 though.
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The option not being considered in the report is network charging. There already is a form of this with road user charges, which could be extended to all vehicles using new technology – you could have a prepaid smartcard that deducts funds for distance travelled over the network, with premiums for travelling on the busiest roads at peak times, and discounts for off peak travel. However, this requires a sophisticated on board system, and should replace petrol tax altogether.

I don't believe anything will happen on this, for now. Congestion charging is very risky politically, and Labour wont want to do it, although it may encourage more toll roads or new motorway lanes being toll lanes, as exists in some states in the USA. It will be a brave government that introduces it and motorists will want something in return; far less congestion and money dedicated to roads or worthwhile alternatives. Until the SH20 western ring road is built, and of the seven segments that need completing only four have guaranteed funding (and three are actually under construction right now, and to be fair one section Auckland local authorities can't even agree on) so that it probably ten years away.

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There will probably be a populist lobby opposing road pricing, and given the options in the report I wont be surprised. There are better solutions that having a local authority controlled central cordon to raise extra money to pay for pet schemes – road pricing should be about motorists paying to use roads with the money being spent on roads. However, this is when debate should occur - Auckland's congestion wont be fixed by building new roads paid for by people who aren't using them or by building railway networks also paid for by people not using them. The roads are run by Soviet style central planning - that is what needs to change, pricing is one step along the way.

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