Wednesday, June 22, 2016

Road pricing in Auckland

A simple guide:

1.  The proposal now on the cards is not "road tolls", tolls are when individual roads are subject to an additional fee on top of existing motoring taxes.  

2. The Auckland Mayor's "motorway tolls" proposal has been comprehensively rejected, as it has been before for sound reasons.  Quite simply, the motorways are not Auckland Council's to charge and just charging them diverts traffic onto the local road network which has traditionally been neglected in Auckland.

3. The proposal put forward by the government is to replace fuel tax with what is essentially an updated version of road user charges (which already is provided now by three private companies collected RUC), that varies by vehicle type, location and time of day.  It should be absolutely clear, as are vaguely similar proposals in Oregon and California, that fuel tax must go if roads are to be charged directly. 

4. The Auckland Transport Alignment Project (ATAP) has made it abundantly clear that the current "build lots of rail based public transport" trend beloved of new-urbanist planning enthusiasts (and the Green Party) will have next to no impact on traffic congestion. It's hardly surprising, because the reason traffic congestion exists is because the provision of roads and the pricing of roads is not done under market conditions, but is subject to a political/administrative process that results in demand exceeding supply.  Nowhere in the new world (NZ/Australia/US/Canada) have any cities noticeably eased traffic congestion by building new bespoke passenger rail networks.  Which is why, when questioned, the enthusiasts for highly subsidised (by taxes from road users) urban rail don't talk about addressing the problems of urban transport, but sell how "wonderful" it is for people to have a choice that they pay a fraction of the cost for.

5. There is no need for road pricing to be accompanied by highly subsidised alternatives.  Full market based road pricing has four major effects:

-  Prices go up at peak times, encouraging users to make different choices, such as drive at a different time, use a different (less congested) route if available, use another mode (increasing revenue for that mode), or not take a trip at all (consolidating trips);
- Prices go down at off peak times, encouraging greater use and facilitating more trips at those times;
- Congestion is greatly reduced, providing capacity for more public transport on existing roads at peaks, and making such public transport commercially viable.
- Higher revenues at peak times on busy roads sends a signal to invest in more road capacity when revenue from additional users will pay for the cost of the new capital investment

The primary economic argument for subsidising peak time public transport in cities has always been that roads in cities at peak times are underpriced (and historically the technology did not exist to adequately address this).  Once roads are priced efficiently, the case for subsidising urban public transport is weak indeed.  Notice that intercity bus and airline services are not subsidised, neither are road freight services (in or between cities).  Why should urban public transport be special when roads are subject to market forces?

6.  Market based road pricing inevitably should mean the management of roads is taken away from politicians and bureaucracies and towards a more commercial model.  State highways could be shifted into a state-owned-enterprise that could be privatised by giving away shares to all registered vehicle owners.  Local authority roads could be transferred into similar enterprises, but with shares held by local property owners (as ratepayers currently pay for half of all local road costs).

The price of roads should then be set by these organisations.  They would be owned by those with the greatest interest in their networks being run efficiently and meeting their needs.  

7. The ATAP road pricing proposal can only work nationwide.  It isn't just for Auckland, it's a change in how roads are priced everywhere.

Auckland Council wont like this, because it knows that the only way to address congestion is through road pricing, but it doesn't want to lose control of its large rail vanity projects (now including trams - which are buses on dedicated rights of way for 3-5x the price to taxpayers).  It wants control of the revenue to spend on its politically/central planner driven projects, but it shouldn't get it.

Bearing in mind the government wont do what I say, this is what it could do:

- Move all of the state highways into a new SOE, empower that SOE to charge users but only if it gives them an equivalent refund in fuel tax or RUC

- Tell Auckland Council that if it shifts its roads into a new Council Controlled Organisation, it can be fully funded from fuel tax and RUC (and any road pricing that replaces them), but on condition it gives all Auckland ratepayers an equivalent permanent cut in rates and that it has no political direction at all on its activities.


More background on Auckland road pricing debate in recent years:
Auckland motorway tolls re-emerge as revenue raising option
Auckland transport funding report promotes urban road pricing and tolls
Auckland congestion charging, not happening yet

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