Sunday 25 September 2011

Auckland congestion charging - not happening yet

Congestion pricing for Auckland? 

Auckland, New Zealand's largest city, is not typically thought of as a place for road pricing, or where there is severe traffic congestion. Yet work undertaken a few years ago indicated that average traffic speed at peaks are worse in Auckland than in Sydney or Melbourne in Australia – cities that each have a population of the whole of New Zealand. One estimate puts the cost of congestion at NZ$750 (US$580 million) p.a.  Given I am originally from New Zealand, I confess I do have a bit of a personal interest in this.

Auckland metropolitan region
The city has a population of around 1.3 million. The leading mode is by far the car, although around 44% of commuters to the central city travel by public transport, bike or foot, only 13% of employment is located there, so less than 5% of all trips in metropolitan Auckland are by public transport, and most of them by bus. 

In the past decade over NZ$1billion (US$780 million) has been committed to upgrading Auckland rail network. Most recently, central government has committed to the same to be spent again electrifying the network and supplying new trains (all of the current trains are refurbished secondhand units from the UK and Australia).

Recent local government reforms saw a creation of a single local authority for the whole region replacing eight local authorities. Now the first elected Mayor is enthusiastic about further expansion of the rail network even before electrification has occurred, wanting to build an underground rail loop in central Auckland at a cost of NZ$2.4 billion (US$1.86 billion).  According to Radio New Zealand, he has suggested that one way of funding the project would be a congestion charge.

The Council for Infrastructure Development – a lobby group of construction companies, transport users and business, has previously advocated a NZ$1-2 (US$0.78-US$1.55) toll on motorway ramps to raise money for transport projects.

The response of the current National led government (facing election in two months time) has not been positive.

According to the New Zealand Herald, Transport Minister Steven Joyce said “he had "significant reservations" about tolls and congestion charging, as motorists already contributed about 11 per cent of their fuel taxes to public transport”.  All fuel tax in New Zealand is hypothecated to the National Land Transport Fund, which is used by the government to pay the full cost of state highways, around half the cost of local authority roads and half of the cost of local authority public transport subsidies (which all must be delivered on a tendered contract basis).

So far it's been shown to have quite limited benefits in terms of relieving congestion with something like 1,500 to 2,000 cars a day off the road which in the context of Auckland is very little,"..."If road users were being asked to contribute I hope they'd want to push pretty hard as to what benefit there would be really for them in terms of congestion."

It is unclear whether the Minister is opposed to congestion charging per se (it is hardly going to be a vote winner to say so in election year) or just opposed to using it to fund a rail tunnel project he doesn’t believe is worthwhile.

Concept of Auckland CBD downtown cordon
The only option that could be seen to be linked to a CBD underground rail loop would be an inner city cordon or area charge like the one depicted here. Yet it would be unlikely to raise much money or make a big difference to congestion beyond that area or the approaching roads.

The Automobile Association is adamantly opposed saying: “In a recent survey, AA Members sent a very clear message that central and local government are to be considered the primary and secondary funding sources for any public transport projects. Motorists may be prepared to contribute more than they already do, but they must not be considered the main funding source for public transport” in addition Aucklanders also sent a very clear message in 2006 that they would not accept road pricing - including congestion and network charging. 75% of AA Members surveyed were opposed to road pricing."

"We live in tough economic times. When people are already struggling with their finances, the last thing they need is being made to pay to use a motorway. The $2 network charge being proposed could cost a regular motorway user $1000 a year in extra tax."

"If a congestion charge is introduced to stop people driving into the CBD, motorists will simply decide to shop and work elsewhere. At the end of the day that will hurt the CBD retailers and employers."

It also quotes from the government report that claimed the proposed underground rail link would only remove 1,400 cars from the roads in the morning peak (less than 5% of cars entering the CBD) - that means "the Council wants motorists to pay $1.7 million to remove each car". In other words, the main beneficiaries of the rail link are not road users, but public transport users getting a better ride and property owners getting improved access. The connection between congestion charging and the rail link is poor.   The acid test would surely be if Mayor Len Brown makes it an election platform when he comes up for re-election in two years' time.  I somehow doubt he will do that.

Auckland Council does not have the legal powers to introduce a congestion charge under current legislation, but the last (Labour led) government (voted out of office in 2008) undertook a study – the Auckland Road Pricing Evaluation Study (ARPES) – to determine whether road pricing on Auckland’s roads would make sense.

It looked at several options, including one similar to that proposed by CID.

It came to some conclusions:
- A congestion charge focused on the city centre would generate little revenue and make little overall difference to congestion, mainly because most trips at peak times did not commence or terminate there; 
- A charge only to use the motorways (as suggested by CID) would generate a lot of revenue, but divert a lot of traffic onto parallel local roads, making congestion worse overall;
Motorway only road pricing option from ARPES

- The best option in terms of generating revenue and reducing congestion would be network wide distance tolls, but technology and cost made it prohibitive at the time;
- The proposed options were large cordons around the “isthmus” that comprises the immediate suburbs around central Auckland.

However, it was decided then not to proceed, but to focus on building motorways and upgrading public transport, paid for by increases in fuel taxes and road user charges (the distance/weight charge on all diesel vehicles).

Twin cordon road pricing option (preferred by ARPES)
I doubt whether congestion charging just to pay for a single rail loop would add up financially, or politically, especially since the rail network doesn’t serve the north shore or many of the suburbs to the south of the city.  Auckland's main newspaper, the New Zealand Herald, says that regardless of what government thinks it should be up to the Auckland Council to decide.

It says charging could be done very easily by putting electronic toll readers on motorway off-ramps, thereby ensuring that traffic not destined for Auckland could pass through on the motorways for free. But any traffic leaving the motorways to use the city's roads and other amenities would pay the charge, and should. If the Auckland Council can convince its voting residents to pay the full cost of the project without calling on central funds, sceptics will have to reassess their view.

The problem is that the motorways are not owned by Auckland Council, but the Crown. Central government owns and manages them as state highways, so would have to agree (and besides it has to change the law to permit councils to introduce such charges).  Until the railway electrification and the Western Ring Road, I doubt Aucklanders will feel there is no alternative to more roads or public transport.

So I don’t think Auckland will have congestion charging soon. As a new world city that has grown and developed with highly diverse travel patterns, with employment, education, leisure and retail located all across the city, it is too artificial and distorting of land use patterns to put cordons in place. The motorway ramp option is also flawed as the distances between interchanges are too short to avoid encouraging diversion onto local roads.

Key concerns about introducing a new charge are fair.  Using the money to pay for a rail loop is unlikely to be wise, as it is taking money from motorists to spend on a project that is not expected to make a measurable difference to traffic congestion (so wont benefit motorists), but rather benefit downtown property owners and rail users.  Given that project has a poor benefit/cost ratio, it is hardly surprising that the AA and motorists would oppose road users paying for most of its costs.

In addition, a charge focused on the downtown is likely to discourage investment there.  Auckland is not London, New York or Hong Kong.  Employers will choose downtown Auckland or Auckland's satellite centres on the North Shore, Henderson or Manukau, or if large enough, Sydney.   Indeed, if the enormous public spending on rail is about encouraging growth of the CBD, congestion charges will counter that quite effectively, especially since it is clear that it would not address the more endemic Auckland wide congestion problems.

However, that isn’t a reason to reject it outright.

Just because a solution for Auckland isn’t easy doesn’t mean it should be abandoned. Decentralised New World cities can benefit from road pricing too. However, the question is first whether pricing should be about raising new money or improving the way current funds are raised (and it can mean both).

60% of the revenue to pay for local road maintenance and improvements in Auckland come from a local tax on land (rates).  While there is an argument for property owners to pay for some of the fixed capital costs of roads because access generates property value, there is a case in busy cities to transfer most of that to users, to help reduce congestion.  Cutting rates and replacing them with congestion charges may be a more clever solution, and certainly more politically palatable.

To manage congestion effectively, a network road pricing solution is needed. Perhaps the existing distance charging system (Road User Charges) that applies to around 20% of vehicles in the country already (heavy and diesel vehicles) can provide a platform to better charge other vehicles (but only to replace fuel tax). However, to have it based on time of day would require all vehicles to pay by distance, varying by time and location.

Such a charge would minimise distortions, manage congestion and be a sustainable source of revenue.   Yet the biggest challenge is always public acceptability.  That is why I think the future for Auckland congestion charging is in replacing existing taxes that pay for roads.  At the very least local authority rates, but ideally fuel tax.  However, any system will need to make a worthwhile difference to congestion, avoid localised distortions and not result in significant diversions of traffic.

Declaration of interest: I worked on the Auckland Road Pricing Evaluation Strategy.

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