Opinion Pieces: Talking about road pricing

Opinion Pieces: since 2007, Prof. David Hensher has written an opinion column in the Australasian Bus and Coach magazine, where he monthly discusses a lot of different transport-related hot topics. In this section we are revisiting these columns.
October 2009
The Bureaucrats are at Least Talking about Road Pricing, but can Federal Talk translate to State action UNLESS there is a sting in tail?
It is very pleasing to see the Head of Treasury in Canberra promoting road pricing reform as a headline in his tax reform agenda. Ken Henry said that “There would be few areas in economics [road pricing reform] where such a clear and rational set of policy directions have so consistently lagged in practice.”
It is well known that, most of the time, cars impose minimal costs on other road users. However, in major cities we experience significant congestion during extended peaks, seven days a week, when each vehicle imposes costs on other drivers and does not contribute to the cost of so doing. This results in a… “predictable ‘tragedy of the commons’ estimated to waste around $9 billion a year in avoidable congestion costs, increasing to around $20 billion by 2020. Such costs will only increase with faster population and economic growth.”
Ken Henry makes an admirable stance “In the face of these [congestion] costs, why have we stuck to the traditional ‘fuel tax and rego’ model for roads, when sensible pricing seems to offer such large benefits? The Federal government likes its fuel tax, and the State govt likes its vehicle registration charges.
While it is pleasing to see a senior Bureaucrat talking about Road Pricing, one wonders how Federal Talk is likely to translate into State action UNLESS there is a sting in the tail? The concern that needs addressing is that a congestion charge is very likely to be collected by State governments and not Canberra, and so one wonders what incentives have to be put in place for any suggestions from Canberra to be actually taken seriously by the States.
The Premier of NSW Nathan Rees (Front page Sydney Morning Herald Sat 1 Nov 2008) soon after his appointment said: “…there should be a public debate about whether or not congestion charging should be introduced for the CBD” AND”.. he wants cashless tolls on all of Sydney’s major roads so motorists pay varying fees at different times of the day – an effective congestion tax to cut peak-hour traffic.” This is encouraging. However we have a climate where the NSW government has announced its intention to remove the toll from a major tollroad next February. Hence one wonders about the preparedness to consider much more sensible efficient and fair pricing regimes. It is apparent that at least one State government believes that roads should be ‘free’, and that they are hence committed to paying with time and frustration, rather than with money. Feel free to oppose it, but do not complain about the traffic. Opposing efficient pricing means you are choosing to endure continual congestion problems.
Food for thought
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