Congestion Charging

31 October, 2006

Harry Clarke has an interesting piece on the need for congestion charging, how it might be done equitably and the importance of paying for curbside parking in this. I have an excerpt below but I suggest people read the whole thing for themselves.

For pricing to be politically feasible governments must demonstrate that tolls are not a tax grab. Governments must show that all groups are advantaged with efficient pricing. Economists know that with appropriate compensations they can be but this needs to be spelt out to those affected. Tolling charges can be explicitly linked to tax savings elsewhere or to ear-marked infrastructure improvements, such as improved public transport, that benefit transport consumers.

The net benefit of a revenue-neutral switch to congestion pricing roads in the cities stems from the ‘double dividend’ green tax advantages of such charges. Congestion charges yield a revenue dividend but target a social ‘bad’ congestion rather than other taxes which target work effort or savings.


Turnbull on public transport

4 August, 2006

Interesting piece in the SMH by public transport fan Malcolm Turnbull on public transport infrastructure and the need to invest more in public transport rather than the toll roads which recent NSW state governments have preferred. There is a bit of partisan spruiking as well, but he makes some good points regardless.

An excerpt:

There is more to this congestion than pure economics. The shift in reliance for our transport task onto private automobiles as opposed to public transport works real injustice and those who suffer are the young, the poor, the sick and the old. Lack of access to mobility is a significant contributor to poverty, social division, and isolation. Higher income groups are more likely to be located in well-serviced affluent inner city suburbs, whereas lower income groups are more likely to be located in poorly-serviced areas, often on the fringes of cities with the worst public transport

Will people use more public transport if its available?

31 July, 2006

Many will not according to the survey reported in the SMH today.

It found 74 per cent of people in NSW are “mostly travelling by car”. Almost 60 per cent of all respondents would not travel more on public transport even if services were improved.

The poll of 1010 people, taken last week, found that only 13 per cent of people “mostly travel by public transport”. Another 13 per cent use public transport and car about the same amount. Of that 26 per cent, about 55 per cent said they would not catch public transport more often if services were improved.

…A spokeswoman for the Transport Minister, John Watkins, said the results “defy logic and experience”. Tens of thousands more people were travelling on trains as reliability improved under the new timetable and petrol prices went up, she said.

Of course “tens of thousands” more people is well within the 40+ percent of the population who would use more. Given that for large classes of people public transport may be awkward people with kids, disabled elderly etc 40% is probably a pretty good segment where improvements can be made.

The other point is what does the question about “if services were improved” mean? Is it existing services becoming more reliable or that there are more services? For me I would only use more public transport (I either walk or catch a bus to work) only if there was more routes to different places I want to go the quality of service is sufficient, just not the destinations. For others though the issue is time. If you want to work late there may be no services available.

As I discussed in earlier threads on public transport, the issue holding many people back is the fact that there isn’t the services not just the quality (although that’s an issue also). Most likely I think the survey is badly flawed as it’s not at all clear what it really means.

More about free public transport

18 July, 2006

I have been looking around a bit more about this topic and have uncovered a few interesting things. The first is this article in The Age earlier in the year touting the idea.

Free train, tram and bus rides would boost the number of trips by up to 30 per cent, ease traffic congestion, cut pollution and greenhouse gases, reduce road accidents, transform railway stations into activity and business hubs and generally make Melbourne a happier place to live, experts say.

It would cost the State Government about $400 million a year in lost revenue, but about $60 million would be saved each year by getting rid of ticketing machines. State subsidies already contribute about 60 per cent to the price of a ticket.

So collection costs around 6% of the the total cost, but still it would cost net $340 million dollars, which they are suggesting they can raise by a household levy of $100-200, which varies depending on access of the suburb to public transport. Which is great, except that its not only your starting location that needs be near public transport, but your destination as well. Perhaps a good way of making the people who have good access to public transport for both end of their commute fund public transport would be to actually make them pay a fare.

Another interesting argument on this is by the Public Transport Users Association, which, to my surprise given they are public transport advocates, came out against the idea.

It’s not the cost of public transport that puts people off using it. Just eliminating fares without improving services won’t shift the habits of enough people to justify the cost. But if service improvements can attract more people to public transport, we might as well maintain reasonably cheap fares so as to recover some of the cost.

…once you’ve made public transport free, the money for any additional services has to be found in government budgets. This means that the more well-used the system is, the more it costs the taxpayer – quite the reverse of the world’s best public transport systems, which come close to covering their costs (often despite relatively low fares) because they attract high patronage and hence high fare revenue.

The first point being that the cost is not really a barrier for most people, compared with convenience. To drive into the city costs more than the train so its already competitive if it’s convenient.
Read the rest of this entry »

More on Congestion

12 July, 2006

Sinclair Davidson in the Age writes a criticism of the idea, blaming congestion in Melbourne on, amongst other things, too much public transport.

The inner city, already well served by public transport, has seen the construction of mega tram stops, and the King Street overpass was demolished. Small wonder travel times have increased.

Harry Clarke in return says that it is unsound economics.

People who travel on roads impose congestion costs on others. As has been known for at least half a century, attempts to internalise all such costs makes a community better-off in the sense that the value of the revenues gains exceeds costs to both the ‘tolled-off’ (those ending road use) and the ‘tolled-on’ (those who continue but who must pay the toll).

All I can say is. I agree.

Free public transport

11 July, 2006

In the earlier post on congestion tax it was brought up why shouldn’t we just reduce congestion by making public transport free. While it has some appeal to me in that I would be able to travel free to work everyday, and it would no doubt reduce congestion. I don’t think this is a good idea for a few reasons, not least the cost on the residents of Wagga Wagga paying for the Sydney train service.

I’ve been looking around to find some figures on how much subsidy is typical for the various forms of public transport. This was a little difficult to find but eventually I found the Independent Pricing and Regulatory Tribunal Report for 2006 with regards City Rail.

The Tribunal’s 2006 determination means that in 2006/07, cost recovery is expected to be 26.0 per cent. Fare-box revenue is expected to fund 22 per cent of CityRail’s total costs, while other revenue to fund an additional 4 per cent of costs. Government expenditure is expected to fund the remaining 74 per cent (including concession and free travel funding) (Figure 3.4). This level of government expenditure is equal to around $707 per household in NSW.

So the households of Wagga Wagga pay $707 each to run the Sydney trains service. There is also a comparison of the cost recovery for the other forms of public transport. It is surprising to me that rail is more heavily subsidised than Ferries.


The left hand graphs show the level of subsidy for regular tickets. For buses its around 25%, for ferries about 50% and rail 75% or so. I must say, this surprises me greatly. Certainly I had assumed that at least 50% of costs were recovered by train fares. Its difficult to image the trains being patronised at all with fares four times their current level.

The report suggests that trains are more heavily subsidised because they reduce congestion much more than buses, certainly a good reason. I’m not entirely sure what this means with regards free public transport, except for the fact that with trains at least, we are already much of the way there. It would be interesting to see what the staffing costs are for city rail and test the contention that it wouldn’t cost any more if we got rid of the whole ticketing operation.

No real conclusions here, but I though it would be interesting to throw in some data.

More discussion of these issues here.