Monday, 6 December 2021

Victorian Government "Supports in Principle" replacing registration fees with distance, time and location based road user charges

What was proposed?

Victoria, Australia, Infrastructure Victoria (an independent government advisory body on funding, regulation and governance of infrastructure) put out a series of recommendations for the next thirty years as a draft strategy for the state. That draft is available here (PDF).  It made several recommendations regarding road pricing notably the following (there are several on parking pricing which I will NOT cover here, but are adjacent to the road pricing proposals:

48. Remove annual charges while introducing distance-based pricing for electric vehicles

Remove annual up-front charges, such as registration fees, while introducing a distance-based road user charge for electric vehicles in the next two years. Consider extending this to other types of vehicles on an opt-in basis, allowing for expansion over time.

This was implemented earlier this year.


49. Appoint an independent transport pricing adviser

Immediately appoint an independent body to advise on and monitor transport prices.

This isn't just tolls/road pricing, but also public transport fares, but it is interesting to want more transparency and objective advice on pricing

51. Incorporate congestion pricing for all new metropolitan freeways

Apply congestion reducing tolls to all new metropolitan freeways, including the North East Link.

This is fair enough too to help spread demand, with lower tolls off-peak and higher during the peak, with a commitment to use such tolls to manage demand permanently.

52. Trial full-scale congestion pricing in inner Melbourne

In the next five years, trial full-scale congestion pricing in inner Melbourne.

This also seems reasonable, the presumption being it is some sort of cordon, but given the intensity of public transport and active mode provision, it also seems worthwhile.

and finally

55. Phase out fixed road user charges and introduce user pays charging

In the next 10 years, replace fixed road user charges with variable distance-based and congestion charges. Ensure user pays charging reflects the relative costs of providing roads, and encourages drivers to change their behaviour.

This is a much bigger deal, because it means replacing annual registration fees with distance, time and location based road user charging, reflecting both the costs of infrastructure and congestion.

The Victorian Government response

The Victorian Infrastructure Plan, is the State Government's response to Infrastructure Victoria's proposal. So what did it think of these road pricing proposals?

Number 48 is already implemented, so was obviously accepted..

49 (Independent pricing advisor) was not supported because "current legislation and procedures provide sufficient scope to review and set transport pricing to ensure positive community outcomes". It's effectively not wanting oversight of existing processes and political direction over pricing, which is disappointing. The National Road Transport Association (NatRoad) supports such oversight.

51 (Congestion pricing for all new metropolitan freeways) was not supported because "This recommendation does not align with existing government policy. Each new tolling project in Victoria currently requires its own project-specific legislation to establish a legal basis to facilitate the operation and tolling powers involved in the project. These tolls are set at rates that aim to achieve balance for a number of movement, revenue and contractual objectives. The North East Link motorway will be tolled, but rates have not yet been set. This legislative requirement means that significant lead time is required for each new tolling project to ensure that it has the required rights and powers to charge tolls and enforce their collection."

Victoria COULD move from project-specific legislation to general empowerment legislation for tolling, and this could then allow for this. Project-specific legislation is desired by concessionaires who want certainty over the regulatory environment, but this is not essential. The reason the proposal has been rejected is not about the merits of the policy. 

52 (Trial congestion pricing in inner Melbourne) was not supported because "This recommendation does not align with existing government policy, however the Government is continually monitoring the balance of public versus private vehicle use and congestion on inner-city roads. Impacts of management of the COVID-19 pandemic have significantly changed travel patterns particularly into Melbourne CBD and this has increased uncertainty about future demand, particularly in central Melbourne."

Again, there isn't a claim about the merits of the policy, it isn't either a concern that Covid means that there is concern congestion pricing might go too far (which is a function of the scheme design, not the concept). If there isn't congestion, then it isn't worth implementing. Again there is no real criticism of the proposal on merit.

BUT there is hope...

55 (Phase out fixed road user charges and introduce user pays charging) is supported in principle.

This has much more potential that congestion pricing on new freeways or in central Melbourne, as it involves drastically cutting registration fees and replacing with distance based RUC with charges varying by time of day and location (congestion pricing).

The official response is: 

The Government supports the intent of this recommendation and is considering the long-term effects of the erosion of revenue from the fuel levy as more vehicles move to non-fossil fuels and electric propulsion. The introduction of distance-based charging for zero and low-emission vehicles in Victoria is a first step in ensuring the long-term sustainability of the transport network by making sure everyone pays their fair share to build and maintain our roads.

The Victorian Government is also currently working with its state and Commonwealth counterparts to enhance the manner in which heavy vehicles (those over 4.5 tonnes) are charged for their road use. The Government will continue to work with the Commonwealth Government on heavy vehicle road reform to develop a future model that is fair for all users of the transport network while funding maintenance and development of infrastructure and services that provide the best value to Victorians. The Government will continue to monitor the policy settings associated with road charges.

Victoria starts the journey towards expanding RUC

The simple fact remains that Victoria is the fourth jurisdiction in the world to introduce a road user charge based on distance for at least part of the light vehicle fleet (the others are New Zealand, Oregon and Utah).  Victoria recognising that it will need to transition other vehicles to RUC eventually.  It is working with the Commonwealth Government on Heavy Vehicle Road Reform (which includes a trial of heavy vehicle RUC).  

However, although it supports it "in principle" it is, technically, a huge deal to think about implementing RUC by location and time of day not just distance, across the State.  It requires all vehicles to have the necessary technology to distinguish distance by location and time of day, such as on-board telematics (mobile phones aren't up to it for multiple reasons).  However, it COULD be that if confined to Melbourne, that a backup system could be in place for unequipped vehicles (particularly out-of-state vehicles) to pay based on location and time-of-day.

Let's not get too excited, but it is a positive step forward and it is about a ten year transition.

Worth noting the responses to date:

The Australian Logistics Council is supportive but wants it to be nationally co-ordinated (which makes some sense, as there will need to be some interoperability and common approaches to dealing with vehicles from one state measuring distance travelled in another and being billed for it). 

Opposition MP Roma Bricknell (Liberal) is opposed, adopting the commonly held opinion that it would mean people in regional areas paying more, even though there is no evidence at all that people in rural areas drive more distance on average than people in cities.  Research in the United States indicates that it varies considerably, largely because people in cities tend to do many more driving trips (there is more to visit, more places to go), but shorter trips. So on average, people in rural areas may drive on average more or less the same as people in cities. However, what also matters is the fuel efficiency of the vehicles people drive, and if you cut registration fees significantly, people with multiple vehicles will pay less, because it is based on usage. 


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