Brussels Government to introduce road pricing across the Brussels region

In a radical reform of how light vehicles are to be charged for road use, the Brussels Government has announced that it is replacing high annual vehicle registration fees with a charge based on distance.  If successful, it is possible this model will be replicated in other jurisdictions that charge ownership of a vehicle rather than usage, such as in the Netherlands, Denmark, Sweden and also Australian states and territories.  

The policy is called "SmartMove" and has its own dedicated website in English, Flemish, French and German.  It means that vehicles registered in Brussels (which is one of Belgium's three Federal "states") with gross mass of less than 3.5 tonnes will pay a per kilometre charge that will vary by time of day and engine size (the latter appears to be a legacy of the existing registration fee system).  

It applies to all roads except the Brussels ring road and access roads to park and ride stations at the periphery of the Brussels-Capital region.   

Brussels SmartMove charged roads

Objectives

The scheme objectives are to:

• Improve fairness: Charging light vehicles by how much they use the road network, rather than simply ownership, will mean the costs of maintaining and developing the network are born the most by those who use it the most.
• Improve mobility: It is expected that the reform will reduce congestion, and through use of the app, enhance mobility by making it easier to make choices about alternative modes (and for those who drive, less congestion improves mobility and makes freight and bus traffic more efficiient).
• Improve quality of life: Reduced congestion and traffic levels will reduce emissions and improve air quality.
• Provide 24/7 assistance to road users, using technology.

It is hoped that the reforms will reduce car trip numbers by 25% by 2030, by encouraging motorists to consolidate trips and choose other modes of travel. 

Timelines

The policy was announced in July, and an impact analysis is currently underway.  The project is seeking volunteers to test the app, with the full test phase to be launched in 2021. The impact analysis will look at transport impacts, as well as socio-economic and environmental impacts. It is expected to be fully operational in 2022.

What vehicles?

All light vehicles, including cars, vans and motorcycles. Heavy vehicles are excluded as they are already part of Belgium's nationwide heavy vehicle road user charging scheme called Viapass. It applies not only to vehicles registered in Brussels, but ALL vehicles entering the Brussels-region. They will all be subject to a distance based charge. No exemptions have been announced (other than heavy vehicles of course), except mopeds with a maximum speed of 45 km/h. Electric vehicles are expressly included, as the proposal is about congestion.

As it will replace the registration fee and annual road tax, it is worth looking at what those fees are.  Below is the table for registration fees (on first registration in Brussels):

Brussels Capital Region - first registration tax

As can be seen, it ranges from €61.50 for a moped through to €2478 for a 3.1-3.4 litre engine vehicles that is less than one year old.  From then, the annual road tax is as follows (up to 5 litre CC, the table does go up to 8.8):

Brussels annual road tax (up to 5 litre)

This means annual road tax is €292.38 for a 1.6 litre vehicle, but escalates rapidly with larger engines. This is a broad proxy for emissions, although bluntly (as a large capacity engine may be cleaner burning than some older smaller capacity engines) and not officially.  As the distance based road pricing scheme would still charge more for larger engines, it is unclear whether any vehicle owners will benefit based on engine size, but it is likely they will benefit if they drive relatively low distances within Brussels region. It isn't difficult to envisage this benefiting car owners who don't commute by car in Brussels, but drive longer distances outside the region (which itself will benefit Brussels by reducing congestion).

How will it work?

All vehicles using the scheme will have number plates registered and Automatic Number Plate Recognition (ANPR) technology will be used to identify vehicles as to whether they have:

• Registered for the app with an account; or
• Bought a day pass (intended for visitors/occasional users).

However, unlike a traditional congestion charge, the Brussels system will operate seven days a week, 24 hours a day, but will have higher charges at peak times.

The mobility app is intended to:

"enables the comparison of mobility alternatives (travelling at a different time of day, public transport, bicycle, car sharing, taxi…). The SmartMove app also keeps track of individual travel costs and calculates the impact on air quality and the climate so people can make the best travel choice.  It’s our ambition to also link MaaS (Mobility as a Service) to the app, allowing users to plan a quick, affordable and sustainable journey in just a few clicks. Occasional drivers, tourists or visitors can also purchase a day pass via the app (or website)."

So it doesn't just manage the account, but also is intended to measure distance travelled and promote alternatives.  However, the website does indicate that "other systems may also be made available, in cooperation with other external parties, for calculating the kilometre charge".  This could be a dedicated On Board Unit or a vehicle's own embedded native telematics, but none of this is determined yet.

There are some big questions about this approach such as:

1. What happens if your phone is off when you drive? You have an account, but it isn't measuring distance travelled, do the ANPR cameras take enough records of number plates to match in the back office vehicles that don't have active smartphones reporting trip data? What happens if the phone is on and off while driving during the day?  How is it enforced? 
2. Who is responsible if the battery on the phone expires whilst in use, or the phone reboots due to a manufacturer's setting?
3. What happens if your phone is on and you don't drive? You could be in a friend's vehicle, or on a bus, will it measure distance and charge you accordingly? Or will ANPR be used to avoid this?  How many ANPR cameras will there need to be around Brussels to enable this?
4. What happens if you switch vehicles and don't update the app?

These are some of the challenges that have meant other jurisdictions have not adopted mobile phones as the platform to measure road trips on a continuous basis, because it has been difficult to ensure that a phone is on and running the app the whole time a vehicle is travelling (and not running the app when a driver leaves the vehicle), and also that no more than one phone and app are operating at once. 

Conclusion

The Brussels scheme will be ground-breaking, as the first time any jurisdiction has replaced high ownership based taxes with distance based charging, with a time of day element to reduce congestion.  It will be the first distance-based charging scheme in Europe designed for light vehicles, but not the first light vehicle distance-charging scheme globally (New Zealand, Utah and Oregon all have these, but only in Utah is distance-based charging an option to replace higher annual registration fees).

More importantly, it doesn't just mean a shift from ownership based taxes to distance based, its attempt to include a congestion charging element could significantly improve mobility and environmental conditions in Brussels. Albeit that the congestion charging element is blunt (it doesn't vary by road, which it would have to, to seriously target major bottlenecks), it may yet provide an example of how a flat non-usage based tax might be replaced with charging based on usage in a way that improves the performance of the network.

I'll look forward to seeing how trials progress in 2021, and if the technical issues around exclusively using mobile phones to measure distance can be resolved.  If so, Brussels may set the path for other jurisdictions in Europe seeking to move away from high fixed charges to lower usage based charges.  However, it is notable that this is not a replacement for fuel duty, which is charged at the Federal level in Belgium (at €0.61523 per litre (US$2.83 a gallon)).

Footnote

However one point on its website is inaccurate. "In other major cities that have introduced smart kilometre charges (e.g. Stockholm, London and Milan), many positive effects on the local economy have been identified: more attractive and pleasant cities, time gains for economic activities, a more attractive and accessible labour market".  None of those cities have any form of distance based charging at all. They do have cordon/area charging schemes to reduce congestion.

Auckland congestion charging to go to Parliamentary select committee

Following the release of the Phase Two report and significant numbers of reports on congestion pricing in Auckland, Stuff reports that a Parliamentary Select Committee (presumably Transport and Infrastructure) will conduct an inquiry into the issue.  This arose from comments from both the New Zealand Transport Minister Michael Wood (who is new to the portfolio, since Labour won the general election in October 2020) and Finance and Infrastructure Minister, Grant Robertson, alongside the naming ceremony for a railway tunnel boring machine - part of the NZ$4.4 billion Auckland City Rail Link project. 

The congestion charging report indicated that the two scheme options with the greatest merit are:

• City Centre peak time cordon scheme;
• Congested Strategic Corridors scheme.

The significance of the Auckland City Rail Link project is that it adds considerable capacity to Auckland's electric commuter railway system, by replacing the terminus arrangement of the downtown railway station at Britomart, with an underground loop, connecting the three main railway lines (to the west, south and east-south) in both directions. The Mayor of Auckland has suggested that congestion pricing for the downtown area be introduced to coincide with the opening of the rail project, as it significantly enhances the capacity of public transport along some major corridors into downtown Auckland. 

It was notable that although the Mayor of Auckland spoke favourably about congestion pricing after the reports were released, both Ministers were non-committal about the proposals in the reports. Deputy Chair of the Transport and Infrastructure Select Committee, Green MP Julie-Anne Genter has been reported as supportive of congestion pricing stating:

"The Green Party is supportive, and believes the government should be driving this forward, especially if there are mitigations in place to ensure it doesn’t disproportionately penalise low-income households...Replacing the regional fuel tax with a congestion charge would do that because it is disproportionately high income people who drive into the city centre...We are disappointed the report didn't focus more on the impact on greenhouse gas emissions, I suspect congestion charging could make a big diff[erence]."

This is a positive start and she is correct, there should be positive impacts on low-income households if introduction of congestion pricing replaces the regional fuel tax, so that only those driving at peaks on congested roads are paying more, but everyone else is paying less. 

It is also worth noting that there have been no statements opposing congestion pricing from Opposition political parties on the centre-right (National) and free-market right (ACT) (both supported congestion pricing as a concept before the election). There has been no statement to date from the Maori Party (centre-left) either.

However, there are much greater impacts from congestion pricing on strategic corridors, compared to the Auckland city centre. Already around half of all commuting trips to downtown Auckland use public transport, cycling or walking, so there is less scope to shift mode compared to all other commuting, which is dominated by car use. 

Key to the next steps is how to conduct public engagement and consultation, with Auckland Council's planning committee approving ongoing work on the project last week.

Part of this absolutely has to be to present the case as to how congestion pricing can replace the regional fuel tax, and what to do with additional revenue generated assuming that, as it scales up in size, it raises more than the regional fuel tax does now. It could replace ratepayer funding for new capital transport projects, but there will be a range of views including reducing ratepayer contributions to road maintenance and public transport subsidies. Questions around governance and delivery of congestion pricing must also be considered, particularly as there will be pricing on a mix of local roads and state highways, and governance will affect decisions on operational policy, rate setting and use of net revenues.

The Congestion Question project has been innovative in developing options for congestion pricing in a city dominated by car use, with most employment not located in the downtown area, and with 74% of commutes by private motor vehicle (11% by public transport, 5% by active modes, remainder work from home or "other means"). Auckland is a new world city, with relatively low density development, so is much more akin to many North American cities than European cities. If it can pioneer congestion pricing that effectively reduces congestion across the city, for lower density cities, it will be an example for others to follow.

Arguments against EV road user charging in Australia refuted

Should Australian states introduce a EV tax - a road user charge based on distance for electric vehicles?

Over the past couple of weeks a coalition of the Australian electric vehicle industry and the leftwing/progressive think tank The Australia Institute have been waging a campaign (actual campaign) against the introduction of road user charging (RUC) for electric vehicles in South Australia, Victoria and New South Wales.  It went so far as The Australia Institute hosting a nearly one hour long webinar (see bottom of the page if you have the time to spend on it) that made a whole series of points which ranged from a whole set of ideas for promoting electric vehicle sales in Australia to opposing RUC not only for electric vehicles. It goes so far as justifying road funding being completely disconnected from how road vehicles are charged, but then arguing for road user charging and including some red herrings, so I thought it would be worth responding to.

Bear in mind that there have been some clear blunders in the design and communication of the “EV tax” announcements to date, but I’ll come to those later.

Behyad Jafari, as CEO, has led the criticism from the Australian Electric Vehicles Council of the proposals for charging electric vehicles by distance.  His claims need to be refuted and the Electric Vehicles Council ought to be engaged to take a far more constructive approach to improving conditions for electric vehicle owners and the road transport sector more generally.  Not only because failing to do so will harm efforts by States to establish RUC, but because if the States fail to do this now, it will come at a much higher price at a later date, for Australia and for electric vehicle owners.

• There are insufficient incentives to encourage sales of EVs in Australia:  This may be true. Certainly the Luxury Car Tax shouldn’t apply to them, and there are multiple policy initiatives that could be taken to incentivise sales of lower emission vehicles. The purpose of this blog is not to discuss these, but arguments around the absence of sufficient measures to encourage electric vehicle sales should not be an argument against charging such vehicles for the use of the roads.

• RUC for EVs would be a significant disincentive to sales: On the face of it, charging EVs for road use should have an impact on sales, but it is more likely to have an impact on usage. The only state to discuss a rate for EV tax so far is Victoria, at A$0.025 per kilometre.  Given average distance driven by a vehicle in Victoria per annum is around 12,000km that is around A$300 a year to pay to use the roads. It’s difficult to see how this will discourage purchasing electric vehicles except at the bare margins.  Indeed, the idea that someone should buy a car because it costs nothing to use the roads, is negative, because the car still takes up road space (which is scarce in cities and on busy roads) and still benefits from the capital tied up in the network. Bear in mind that most Australians don’t buy new cars (there are roughly three times as many used car as new car sales in Australia each year), indicating those that do tend to be on higher incomes, so are unlikely to see a small per kilometre charge as being a significant disincentive to buying an electric vehicle.

• Fuel excise isn’t hypothecated so a loss in revenue doesn’t affect road funding:  This is true, but the analogy to tobacco tax (that if revenue drops governments don’t go looking for new revenue) is a poor one. For heavy vehicles at least, fuel excise is not charged on off-public road use, and there has never been an explicit policy to treat fuel excise as a disincentive to using the roads (unlike tobacco tax which exists, in part, to reduce demand for smoking). If fuel duty erodes, it will affect the capacity of the Commonwealth to fund multiple activities, but there would be merit in it being hypothecated for road spending, at least in part, at the same rate for heavy vehicles and light vehicles. Heavy Vehicle Road Reform proposals have included the concept of hypothecation, in part because a shift towards more direct user charging would establish a relationship between road users and the provision of roads. It is true that, for now and for some years, there is unlikely to be serious erosion of fuel duty revenue in Australia from electric vehicles, but that erosion will become an issue.  

• Reform of charging for road use should start with heavy vehicles:  There is a lot of merit in this, but this is already happening. There has been a small-scale trial of RUC for heavy vehicles in Australia already, and work underway on developing a larger trial of distance, mass and location based heavy vehicle RUC, alongside supply side reforms. Richard Denniss from the Australia Institute claims in The Guardian that “undercharging of heavy vehicles” has seen a loss in mode share for freight from rail, which is highly debatable.  Railways since the 1980s have moved away from a model of handling wagon loads of goods to small stations (which are not economic to handle or competitive in price and time with road transport), to focusing on bulk goods and line-haul containerised freight.  The same has happened in New Zealand over that period which has had RUC for heavy vehicles since 1978.  The claim that heavy vehicles in Australia only pay 12.5% of land transport taxes is simply wrong, because it ignores what is spent on registration fees, which for heavy vehicles can reach over $10,000 a year. Undercharging may be true in the current year, based on the NTC’s Cost Allocation Model, although the road freight peak bodies note that for several years the amount charged by the fuel-excise based RUC was higher than the model stated should be recovered from heavy vehicles. In other words, the populist belief that trucks are always underpaying is not true. However, the system does need reform, and Heavy Vehicle Road Reform could result in this and this does not reduce the arguments for RUC for light vehicles including electric vehicles.  

So, should electric vehicles get to use the roads for free?  

The argument suggested by some that “we don’t charge people to use public parks” implying that roads are the same doesn’t bear close scrutiny.  Roads are not public parks, as their scarce capacity is much more readily reached in cities and unlike public parks (except at very rare extremes), roads beyond a set capacity becomes congested and their utility is significantly diminished. Congested roads also increase fuel consumption for all vehicles, increasing emissions for non-zero emissions vehicles, but also increasing energy costs for electric vehicles. I doubt the Australia Institute would argue against congestion pricing, but in the absence of congestion pricing, allowing a category of private vehicles to use city roads for free will exacerbate congestion, discourage use of public transport. There IS a legitimate question as to whether electric vehicles pay a discounted rate or even for free when numbers of electric vehicles are extremely low, but that is different from claiming that they shouldn’t pay for road use at all, or that a small per kilometre charge is devastating.

Electric Vehicle supporters should advocate for the interests of Electric vehicle owners in reforming how roads are charged for and funded.

There is virtually no relationship between what motorists pay to use the roads today and what they get, except for toll roads.  A shift towards RUC develops that relationship, and RUC with a hypothecated roads fund, with RUC rates directly related to the costs of spending on the roads attributable to different types of vehicles, WOULD see such a relationship and mean motorists move from being taxpayers to being consumers of a service – roads.  This would mean more emphasis on consistent levels of maintenance, in improving the network in ways that best support the safety and efficiency of road use, rather than political calculations around popular, but low value large projects.

This has the potential to change how roads are charged for, so that users pay for what they use, but also how money raised from that is spent. A shift towards longer-term guarantees of maintenance funding and a more commercial approach to road management and funding, that sees funding based on long-term revenue forecasts and demand, so that capital spending on roads is user driven, rather than politically driven.  Highway England is an example of how that is done, with a five year funding settlement, from a hypothecated roads fund (from registration fees), it has to deliver set service outputs around maintenance, safety and new projects to enhance safety and reduce congestion. 

Are there enough incentives to buy Electric Vehicles in Australia? Probably not, but that’s a different argument from saying they should get free use of a capital intensive resource that excludes the use by others.  More electric vehicles will reduce CO2 emissions and noxious emissions, but it will not reduce congestion and a transition towards direct road user charging for all vehicles needs to include light vehicles and light vehicles that don’t pay fuel duty are an easy and simple place to start, before developing options for those that do.  This is what has happened in Utah and Oregon, and is being developed in other US states.  It is exactly what should happen in Australia, it is just a shame that the Commonwealth Government has been silent on this, because it will need some co-ordination and common policies. 

Given jurisdictions as diverse as Oregon, Hawaii, California, Washington State, Utah and New Zealand are all on pathways (or already are) charging electric vehicles by distance, some of the hysterical responses in Australia to the concept need to be dismissed, including the bizarre non-sequitur that a state-run odometer reporting system for reporting distance is about "privatisation".