Time for congestion pricing has come - NZIER

By Gavin Evans

Sept. 20 (BusinessDesk) - Options being considered to fund transport development in Auckland and ease road congestion need to be part of a consistent framework that can be applied in other parts of the country, the New Zealand Institute of Economic Research says.

Congestion pricing will be necessary to help drive greater use of public transport and cycling as part of the government’s goal to reduce emissions from transport, the institute says.

But it will also be a necessary source of funding as the take-up of electric vehicles reduces the fuel taxes available for roading and other transport, institute principal economist Chris Nixon says. Additional funds will also be needed to provide the public transport, light rail and cycleways required.

“There is a tendency to think that Auckland traffic and road development funding is the problem that needs to be 'fixed’,” Nixon says in a discussion document on road pricing. “Our view is that fixing Auckland’s problems may be part of the solution but what needs to be done in Auckland needs to be consistent with the rest of New Zealand.

“Until drivers are incentivised to stop and think about how and when they use selected roads, congestion will remain a problem,” he says. “Now is the time to start thinking about how to reduce congestion in a way that is fair to all Kiwis.”

New Zealand has about 83,000 kilometres of local roads maintained by councils and 11,000 kilometres of state highways paid for by the government.

In 2013, the New Zealand Transport Agency estimated the cost of traffic congestion at about $1.25 billion a year. By 2017, NZIER estimated the value of de-congesting Auckland alone at between $900 million and $1.3 billion a year.

In July, the Automobile Association said morning congestion on Auckland’s local roads had improved in 2018, but average lost time for motorway users there had increased to 85 hours from 79 hours in 2017.

The government is investing heavily in new rail services for Auckland and is also looking at congestion charges, Transport Minister Phil Twyford said at the time.

The NZIER has been looking at the issue since 1993. Its latest paper – What price to relieve the gridlock? - says the time for congestion pricing has “undoubtedly” come.

The problems are only becoming more pressing and user-friendly technology, such as number plate recognition software, GPS, and open road tolling devices are increasingly available, it says.

But the institute warns that public support for the change will be key and that policymakers need to be very clear on what they are trying to achieve, and what will work best in each particular geography.

Cordon tolls with few entry points, such as in Oslo, are generally more effective than area charging schemes like that in London, which relies on more intensive monitoring and is more expensive.

Price signals must be clear in advance and people need choice, either as to when they travel, to use public transport instead, or to car-share with others to take advantage of lanes for high-occupancy vehicles.

NZIER says road pricing schemes will also tend to place more burden on the poor, unless there is ample public transport available or other support is offered for low-income workers.

To be effective, the charging system must be cost-effective and convenient for motorists and charges should accurately match each trip.

“Good implementation is good economics. Simple is likely to be cost-effective and complex technologically-driven options probably not,” Nixon says.

“The public need to be satisfied that the new system improves their situation ‘on average’. Getting implementation right is therefore extremely important.”

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