Should Australia Implement National Roadway User Fees? 2

Monday, March 28th, 2016
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As Australia prepares for the population of both Sydney and Melbourne to reach eight million by the year 2061, understanding surrounding the need to change how we manage road and rail networks and fund necessary infrastructure upgrades is growing.

Whilst much attention revolves around the idea of value capture, calls to overhaul road user charging arrangements and replace charges associated with registration and fuel excise duty with a new system based around time, location and distance travelled are getting louder.

In January, Infrastructure Partnerships Australia (IPA) called for Canberra to offer itself up as a location in which trials of various user charging arrangements could be conducted. In February, Infrastructure Australia called for a full user charging system for heavy vehicles within five years and for light vehicles within a decade, labelling the current approach toward charging for road use and investing in road infrastructure as ‘unfair, unsustainable and inefficient.’

IPA CEO Brendon Lyon said failures within the current system are evident in the volume of congestion on our roads.

“If you look at the transport network, it’s very clear that the way in which we are allocating existing capacity is not very efficient because we’ve got blocked up CBDs and problems getting into and out of ports and airports,” he said. “At the same time, we are not able to marshal the degree of funding that we need to be able to perform routine maintenance on the network that we’ve got and invest in the new projects that we need to.”

University of Sydney adjunct professor and Bus Industry Confederation senior research fellow John Stanley agrees.

“The main problem is that we have got very extensive congestion on our roads during peak periods and those peak periods in many cases are extending for much longer parts of the day,” he said. “One of the ways in which you can try and tackle that problem is to widen your roads and build more roads, but that’s not an effective long-term solution. All that really does is effectively build more traffic, so in four or five years’ time, you are back where you started with more congested roads.

“Congestion pricing is really the only way to get rid of some of that congestion and have it stay gone.”

Precise details about how the system would work would need to be determined through trials of different options, but the favoured solution generally revolves around the concept of time distance location charging. Under this system, charges vary not only with the number of kilometres travelled but also the time and location of travel, with heavier charging rates being applied for use of busier roads during peak hour. A different charging rate would also apply to heavier vehicles in order to reflect their more extensive impact upon road condition.

According to proponents of reform, such a system would deliver advantages compared with the current system in at least three areas.

First, it would provide governments with a transparent, efficient and sustainable means by which to raise money for road maintenance and upgrades. This contrasts with the current system in which the apparent link between these types of works and the charges being levied is tenuous at best and which at any rate will deliver progressively diminishing revenues in terms of fuel excise in real terms as take-up of alternative fueled vehicles gathers pace and fuel efficiency continues to improve.

In addition, by charging more for travel during peak hour and/or in busy areas, the new system would ease pressure on major roads by encouraging those who do not need to travel at this time to instead choose alternative times. Supermarkets, for example, would have an incentive to arrange for deliveries to take place earlier in the morning prior to roads becoming busy and higher charging rates kicking in.

Finally, proponents argue that the current system is inequitable. Modelling contained in a discussion paper released by IPA in conjunction with NRMA, the Royal Automobile Club of Queensland (RACQ) and the Royal Automobile Club of Victoria (RACV) in 2014, for example, showed that under the current system, infrequent and low distance users pay more on a per kilometre basis compared with those who use the network more frequently.

The current system also sees residents of rural or provincial areas ultimately pay for a share of capacity on capital city roads which they rarely use, Infrastructure Australia argues. By contrast, a user charging system based around the time distance location model, it is argued, would result in a more equitable sharing of the burden under which charges levied upon individual road users are more closely aligned with the relative demands placed upon the network by their activities.

Add this all up and you have got a system which is more equitable and sustainable and which discourages non-essential travel in busy locations during peak hours, Lyon says.

Of course, potential negatives need to be managed. To ensure residents in outer suburbs are empowered with genuine options to road travel, public transport in these areas must be improved, Stanley says. In order for user charging to gain public support, meanwhile, extensive consultation will be necessary.

Meanwhile, opinions vary as to time frames which might be realistic, with Stanley suggesting such a system could be in place within five years but Lyon saying a minimum of 10 to 15 years might be necessary in order to go through the trial process.

Still, both remain adamant that user charging is the way to go.

“It’s a real economic reform and if we are going to try to grow the economy, reduce the social costs of congestion and reverse the current situation where Sydney’s situation is worse than New York, then it’s pretty clear that these things aren’t going to get better if we keep doing everything the same way,” Lyon said.

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  1. Roger Jones, P.Eng, FEC.

    From Canada:
    Given that you pay a vehicle registration tax, a licence fee and gas taxes, also sales taxes on the car itself, maintenance and car insurance, then road tolls are not ethical, just a tax grad. Spend the automobile taxes already collected on the roads. In particular, the gas tax prices the use of the roads directly.

    • Roger Jones

      That's "tax grab"… sorry! Can't find an "edit" point.