Tuesday 21 November 2023

Auckland's Mayor and Council vote overwhelmingly for congestion charging, but there are some issues

The big road pricing news in New Zealand in the past week was the Mayor of Auckland, Wayne Brown, calling for congestion charging and appearing on media declaring how critical it was for the city. This was not in terms of raising revenue, but in addressing congestion.  On Radio NZ he said Auckland could not afford another motorway, and that the charge would be avoidable by driving outside of peak times.

“I am of the view that this should be on our motorways in the central areas of Auckland, which are the most congested, and this is also where public transport works best, which gives some people an option rather than paying the charge”

He ridiculed concerns about equity around trade businesses, saying that to pay $5 to save 20 minutes was a small fraction of the price the tradespeople charge their customers in an hour. He also said that schoolchildren “don’t’ have a right to be taken to school in a BMW” and more should walk, bike or use public transport. 

The Mayor was elected in 2022 and has a three year term, but his support for the concept was only solidified when Auckland Council voted 18-2 in favour of setting up a team to oversee implementation of congestion charging.

Despite that report, Auckland is not going to get congestion pricing in two years. Legislation will take around a year to introduce and pass at best, and it will take around 18 months to procure and install a system at best. However, you have to admire the ambition.

The astonishing level of local political support for the concept is unheard of in any other city where the private car is by far the dominant transport mode.  In 2018 (according to the Census), around two-thirds of Aucklanders commuted by car (whether as driver or passenger), 11% by bus, 9% walked and 8% worked from home, 3% by train and just over 1% by bicycle. It seems likely that the proportion working from home, cycling and using public transport has increased since then. 

Let's be clear to those unfamiliar with Auckland. The Mayor is ostensibly "centre-right" and got elected opposing the "war on cars". The Council as well is fairly balanced between left and right wing members.

Unlike New York and almost all other US cities that have been investigating congestion pricing, Auckland is regarding the net revenues as secondary (although the Mayor is interested in revenue, as the incoming government has pledged to abolish the regional fuel tax of NZ$0.10 per litre that raises revenue for transport projects in the city). The primary focus is reducing congestion and encouraging behavioural change. However, it would clearly generate net revenue and would also have positive environmental benefits.

Why does this matter?

All of the cities that have introduced congestion pricing around the world so far have been quite different from Auckland, and indeed all of the predominantly car-oriented low density cities that are seen in New World cities in New Zealand, Australia and North America. Singapore, Oslo, London, Stockholm and Milan all have significant mode shares for public transport. However, Dubai and Abu Dhabi (and soon Doha) are car dependent cities, even moreso than Auckland, whereas Gothenburg in Sweden is much closer to the mode shares seen in New World cities. 

Although New York will be the first US city to introduce some form of congestion charging, it is being implemented in lower Manhattan, which is much more like central London than most US cities, and it is being introduced 24/7 (with peak charges) primarily to raise revenue. New York is not a model for other North American cities.

Auckland on the other hand, has around 87% of its employment outside the central city, it has around a 50% mode share for public transport and active modes for trips to the central city at peak times, but a much lower mode share for trips to other parts of Auckland at peak times. In short, congestion in Auckland is primarily about trips across the city, not to the downtown.  Pricing in Auckland will work only in part by encouraging modal shift, but will in a large part be about encouraging a small proportion of trips to shift time of day or frequency of driving. 

Furthermore, unlike many other developed cities, Auckland has had over 20 years of billions of dollars in continuous major capital spending on its transport networks.  During that time, the road network has been significantly upgraded, with additional lanes on motorways and a ring route around the west bypassing the congested central motorway junction. The commuter rail network was extended to the downtown, electrified with new trains, adding new lines, and is now being expanded with an inner city loop. Bus services have been expanded, with busways and new buses, routes and expanded frequencies.  In short, Auckland has seen extensive capital spending on its transport infrastructure and it has been unable to keep up with demand, and congestion has not been resolved.  

Supply of transport infrastructure does not sustainably reduce traffic congestion. 

If Auckland successfully implements congestion pricing, it will be a world leader in implementing road pricing in a city with automobile dominance.

What has been proposed?

The Mayor has specifically proposed a charge on two segments of motorway of NZ$3.50 - $5 per trip.  It would operate in the AM and PM peaks only on the North Western Motorway (SH16) between Lincoln Road and Te Atatu Road, and on the Southern Motorway (SH1) between Penrose and Greenlane. These are two of the most congested parts of Auckland’s motorway network.  The map below depicts the short section of North Western Motorway, the segment of Southern Motorway and the earlier proposed downtown cordon (which is bypassed by the motorway network which goes from south to the Auckland Harbour Bridge and from the west to the Ports of Auckland).

Auckland congestion pricing concepts.

Undoubtedly the motorway proposals would have a positive impact. While the North Western motorway at this location has no reasonable alternative route, the Southern motorway does have a wide at-grade arterial road, albeit with multiple sets of traffic signals and a much lower speed limit. Some measures would need to be taken to minimise diversion onto the parallel routes. 

It's worth noting that a major study into congestion pricing in Auckland, called The Congestion Question, was carried out from 2016-2020, and recommended that a downtown cordon be introduced, followed by corridor charges on major routes in the isthmus and beyond.  The Mayor is proposing the second stage, but that is good as the downtown cordon concept was likely to have a less dramatic impact than the proposed corridor charges.

The proposed technology would be automatic number plate recognition (ANPR) cameras.

What needs to happen?

Congestion pricing is currently illegal in New Zealand. The outgoing Labour Government had draft legislation prepared to implement it, but this will be revised with the incoming National led Government. National included congestion pricing in its transport policy, so there is little chance of the policy being rejected by the new government. Until legislation is introduced and passed, congestion pricing cannot be implemented, but in the meantime, it is possible for Auckland Council and Auckland Transport (a separate entity under the auspices of Auckland Council) to plan and prepare for road pricing. 

The motorways in Auckland are not under the control of Auckland Transport, as they are State Highways. They are Crown owned (and fully funded by) and managed by the New Zealand Transport Agency/Waka Kotahi. It seems unlikely that central government would devolve power to impose pricing on motorways it owns and manages to local government. However, it seems much more likely that a joint entity, between central and local government could be set up to manage pricing across roads in Auckland. 

What are some of the big issues?


A key issue is how much control central government, in particular the forthcoming Minister of Transport and/or Cabinet, wish to have in approving and later amending congestion pricing schemes. At present the Minister approves tolling schemes, which are only for new roads. At present there are only three toll roads in New Zealand (one in outer Auckland). It seems unlikely that government will want to give road controlling authorities free rein to implement congestion pricing, but it would also be unwise to require changes in pricing to go through a political process. 

A middle approach would be to require Ministerial approval for a road pricing proposal (by a road controlling authority on specific roads within certain time periods) concept but grant powers to road controlling authorities to adjust pricing and business rules within set parameters, with oversight by an economic regulator (such as the Commerce Commission or a more specialised highway economic regulator).  The oversight would be to ensure prices were not set to be higher than necessary to relieve congestion, or to be unduly burdensome on different types of road users, and to monitor use of net revenues (which is another issues). Ultimately the need for political approval could be reduced, if the economic regulator has sufficient powers to protect consumers.


The other governance issue is what entity should be responsible for pricing? It could be left to the relevant road controlling authority, but for Auckland it would make sense to have a joint-governance entity for both Auckland Transport and NZTA roads, with sufficient delegated authority to manage pricing within set parameters. A joint entity would mean that there could be a single road pricing account, and that enforcement, communications and information could be unified. It would also provide a structure for managing net revenues, contracting for equipment and services.

Use of Net Revenues

The Mayor would like pricing to replace the regional fuel tax in Auckland, which raises around $150m per annum. However, this is likely to be controversial. There are clearly a range of options available such as:
Capital funding for public transport and active transport projects
Capital funding for road improvements
Offsetting ratepayer funding for road maintenance and improvements (reduces rates)
Offsetting ratepayer funding for public transport subsidies (reducing rates)
Dividend to ratepayers, households or residents

Internationally, the most popular options have been to use the net revenues to support some mix of road and public transport projects. If that option is selected, the projects ought to be high-quality (i.e. net economic benefits) and ideally be related to the locations subject to pricing (i.e. new transport capacity). However, it is likely to be tempting to simply replace the regional fuel tax as a revenue source (as removing that tax will benefit all Auckland motorists). It may also be tempting to use it to offset ratepayer funding on transport capital projects in any case, but if done on the scale proposed by the Mayor, it seems unlikely to gain much support if revenue from specific locations is used to benefit transport users not using those corridors. If motorways are going to be priced, it seems unlikely that central government will want to pass on control of use those revenues to local government. However, if a joint pricing entity is established, it may be reasonable to get agreement across both levels of government as to the use of net revenues for several years in advance.  

Prices, products, discounts and exemptions

Rates should be set at levels that will achieve enough behavioural change to relieve traffic, they should only be applied at peak times, and have a shoulder rate either side (for say half an hour) to avoid rushes to avoid the peak.  Rates should only apply in the peak direction (which may be both ways).  Exemptions and discounts should be minimised, and focused on local buses, emergency services, drivers with mobility disabilities and motorcycles, and there is a case for higher charges for heavy trucks and coaches (due to the amount of road space they occupy). A daily caps on charges might be considered, but if pricing is implemented on the scale proposed by the Mayor it seems likely to be unnecessary.

Motorists could be billed directly through direct debit, or have prepaid accounts able to be topped up through internet banking, phone banking or manually using cash at selected retail outlets.  Visitors could be offered “daypasses” for unlimited driving of congestion priced routes, but if only operating at peak times, it seems easier to simply send an invoice to a registered vehicle owner through post/email. 

Is it a good idea?

The biggest strategic decision is whether the Mayor’s idea of pricing a couple of sections of motorway should be the first step or if the downtown cordon concept should be.  There are advantages and disadvantages of each option.

Undoubtedly the pricing of two sections of motorway would have a more direct and obvious impact to motorists and could be seen as demonstrating more clearly how pricing could work, and be implemented incrementally around Auckland. It is likely to be higher risk than implementing a downtown cordon because of that impact, but will be more effective.  Given that, it makes sense to seriously consider the Mayor’s proposal.

On the other hand, the downtown cordon would be an effective pilot. It is clear that almost all drivers into downtown Auckland have modal alternatives, and with the opening of CRL (City Rail Link) which provides an underground rail loop around downtown Auckland, that case is strengthened.  Such a cordon would improve congestion on a range of routes approaching the city centre, including three motorways, but the effects of that reduction would drop significantly a good kilometre or two away, as so much traffic in Auckland is not focused on trips to downtown. 

If it were up to me, I’d say it would be preferable to implement the Mayor’s proposal of pricing on two stretches of motorway as a first step, rather than the downtown cordon.  The downtown cordon should be implemented, but in and of itself it doesn’t demonstrate to Aucklanders the effectiveness of pricing a corridor, which is as much about shifting time of demand as it is about shifting mode. The downtown cordon should be timed to be implemented shortly after CRL opens (CRL needs to work seamlessly first). 

The North Western Motorway corridor ideally wouldn’t have pricing until the North Western Busway is built, but the existing bus lanes could provide sufficiently additional services to make pricing worth implementing there. The Southern Motorway corridor parallels a railway line, and some bus services, so that shouldn’t be a problem in terms of alternatives.

If rat running is an issue (which it may be for the Southern Motorway) then technology can be used to deter it, by identifying vehicles leaving the motorway early to avoid a charging point and returning to it after. Pricing could be set at levels to make diverting not worth the time penalty.

What do stakeholders think?

The Employers and Manufacturer’s Association (EMA) head of advocacy and strategy Allan McDonald was supportive according to RNZ saying “You come back to getting the most out of the system you can and finding different ways to help those who may be disadvantaged by the cost but there are significant benefits too”. He noted Auckland needed better public transport, but the road network needed to work better too. 

Automobile Association Auckland issues spokesperson Martin Glynn said there were benefits, but he was concerned about the impacts on low-income drivers with few alternatives. 

Public Transport Users Association chairperson Niall Robertson was concerned that there needed to be better public transport alternatives. 

What next?

First and foremost, a new Government needs to be formed, and the incoming Minister needs to make it clear the parameters within which congestion pricing will be authorised. 

Secondly, the policy and the messaging around congestion pricing needs to be clear, to address fears and concerns, and to avoid the public guessing, wrongly, about what may be implemented, why and how.  It needs to be clear it is about reducing congestion and pricing should be based on meeting performance standards. It also needs to be clear that pricing does not need public transport alternatives for all drivers, to be implemented, but that the choices drivers have range from changing time of travel, mode of travel, route of travel or to drive less frequently. 

Thirdly, legislation needs to be drafted and introduced to implement the intended policy.

Fourthly, Auckland Council, Auckland Transport and NZTA need to work together on a detailed design and implementation of a phased plan for congestion pricing in Auckland. Starting with either two corridors or a downtown cordon. 

Fifthly, NZTA and Wellington and Tauranga local authorities also need to work together to undertake more detailed studies for both cities, consistent with legislation and central government policy.

What NOT to do?
  1. Don't see London as an example to copy. London is an area charge, it has a flat all day rate and has not enabled traffic to flow relatively efficiently for over 10 years because it is too blunt. London may be seen as culturally closest to Auckland, but it is vastly different. Better examples are in Singapore and Stockholm.
  2. Don't make this project about raising revenue. When the focus becomes revenue raising, the design will change and it becomes a lot more difficult to get the public on-board, because you are designing a tax, rather than a traffic management and pricing scheme.
  3. Don't make this about reallocating road space. While there will be localised cases where there is merit in doing this (specifically for cycling safety or bus priority at intersections), a successful congestion pricing system should enable all traffic to flow efficiently, including buses, and will improve conditions for all modes on the roads.  Some advocates for congestion pricing see it as a tool to penalise driving and to make it more difficult for motorists to drive. If this is the policy adopted, it will be rejected by the public (as it has been in many many cities), as pricing need not be a tool of penalty, but a tool to make existing networks work better. 
  4. Don't play with technology yet. There would be nothing wrong in eventually linking the current eRUC telematics systems to congestion pricing so their users (almost all commercial vehicles) pay charges automatically, alongside RUC.  However, ANPR is just fine for now.
  5. Don't make any announcements on details until you have decided on most of them, and have responses as to why you made certain decisions. Don't let the media and public discourse determine policy. Design a good system with defensible policies, and then present it to the media and public, so you can make clear what might be negotiable and what is not.  A litany of failures elsewhere are due to letting policy debates get out of control, raising fears and uncertainty, and consigning the concept to the "too hard" basket.

(Disclaimer: I worked on The Congestion Question project from 2016 to 2019)