Resistance in Ireland to more tolls on existing motorways

It’s fairly well known that Ireland has a severe fiscal problem. Its public debt and budget deficit have ballooned, primarily because the Irish government gave 100% backing to Irish banks, which subsequently collapsed (and were nationalised) following the bursting of the Irish property bubble. So as a result, the government has been looking for money.

Dublin's M50 bypasses the city to the west. Yellow marks the toll plaza

The National Roads Authority, already responsible for Ireland’s network of toll roads (most of which are under concession), is currently seeking out consultants to help it with tolling. One of the key issues is where and whether to introduce new tolls on existing roads. One idea that has been discussed is to institute more tolls on the M50 – Dublin’s “ring” road bypass to the west – which already has one toll plaza, which was recently converted to fully electronic free flow operation.

Unlike the Minister's recent comment on Dublin congestion pricing, his view is that it is "unfair" that motorists are only charged at one point on the M50. According to the Herald, he said:

You pay quite a high toll just to cross over the Liffey, the section between Blanchardstown and Lucan. The idea is to have multi-point tolling, a lower toll but spread out over a number of points on the M50...estimate is that it could bring in an extra €50m

In blue is the untolled Jack Lynch tunnel, part of Cork's bypass

He is advocating using the extra money to reinvest into roads and public transport.  He says the toll could be €0.60 (US$0.80) at various points rather than the current single toll of €2-3 (US$2.67-US$4).  The Irish Examiner reports that he is also advocating imposing tolls on the Jack Lynch Tunnel in Cork - part of the city's N25 ring road. 

The idea has resulted in considerable opposition being expressed in some quarters, as this will be Ireland’s first example in modern times of tolling a section of road that was not previously tolled.   The Herald reports the view of the Automobile Association which says "It is a basic mistake to put a toll on a bypass...In the case of the M50, a toll will automatically recongest suburbs like Sandyford, Dundrum, Rathfarnham and Blanchardstown. "

Apparently the M50 toll as it stands raises €80m per year, with a €20m cost to run the system according to the AA. It ran a poll asking motorists what they would do if there was a toll on the route they commute on, and 61% said they would find an alternative route (hardly scientific or useful as a poll though).

There is merit in replacing one toll point with several on the M50, particularly if it is to spread the toll over multiple points.   Low tolls at multiple points could result in low levels of diversion as well as picking up more vehicles,  but the traffic modelling will take some doing to ensure that realistic sensitivity tests are undertaken.  By no means should there be a rush into this as motorists have time and time again proven that every extra euro, dollar or pound they are charged is worth more to them to avoid tolls than it is in spending at a shop.

Another bonus of tolling the M50 more thoroughly will be to manage congestion, except that it is no longer that congested. 

It was, but a combination of three things has changed that dramatically:

- The recession. Demand on the road has dropped because of the economic downturn;

- Removal of manual tolls. Instituting fully electronic free flow tolling has eliminated the toll plaza queues that once existed;

- Widening. Much of the M50 has been widened to three lanes in both directions with additional lanes between some interchanges.

In other words the road is actually functioning well. More tolls are likely to have a small impact on demand, but do create the risk of diversion if not located in the right places. A sound economic argument might be made for sufficient tolls to be in place to cover the long run capital costs of the road, except motorists may rightly note that they pay fuel taxes as well, which should be taken into account. Another point is the claim of a 20% operating cost for the toll, which is comparatively high, which may result in some criticism (although NRA no doubt expects its yet to be appointed consultants to help improve that).

The use of the money from extra tolls will be critical.  Motorists tolerate the M50 toll being used to pay for the road itself and the recent widening and improvements.  Using more of that money to make further improvements on that road or adjacent roads is likely to be more acceptable than using it for public transport projects that do little to benefit the users of the M50.

For the Jack Lynch Tunnel in Cork, there is a risk of diversion through the city centre, but a deal with motorists on using the money for some road improvements doesn't seem out of the question.

The policy reasons to toll sections of road currently untolled, are understandable. The money is needed, but in exchange for paying more, motorists are right to want something in return.  Concepts of tolling existing roads need to be created and linked to a programme of future expenditure of road improvements that would otherwise not proceed.  Tolling has been widely accepted in Ireland to date, as it is helped enable the financing of a significant network of new intercity motorways.  New tolls should help finance smaller scale improvements to the road network, but also be clever enough to manage congestion where and when this makes sense.  However, there are limits.  

Conventional tolls can only be easily applied to motorways and crossings.  It will be possible, political will notwithstanding, to expand tolls on existing Irish highways, using electronic free flow technology, but Ireland's motorway network is not ubiquitous.   If the issue in Ireland is revenue, surely the time will have to come to consider more universal network charging, perhaps of heavy vehicles so that road maintenance costs can be recovered from the vehicles creating most of those marginal costs.  Such a road user charging system would vary revenue according to demand, but could also charge in a way that avoids diversion, avoids the risk of revenue erosion that fuel taxes create and can target charges towards specific types of roads and regions.

Ireland's issues are significant, but it should expand tolls in a way that can get support from motoring groups, by offering something in return - which will mean lower tolls, at more frequent locations, and for the majority of extra toll revenue to be put into roads.  Beyond that, Ireland should look more seriously at road user charging beyond the motorways.

Dublin congestion charging ruled out for now

The Irish Herald reports that Transport Minister, Leo Varadkar, has ruled out an introduction of congestion pricing in Dublin in the medium term.   Dr. Varadkar has been Minister since March, after the Fine Gael party roundly defeated the Fianna Fail party in the general election in February, so has had a chance to consider transport policy.

He was responding to the government's National Transport Authority proposing a congestion charge for driving into downtown Dublin as part of its draft transport strategy for the city through to 2030.  The previous government had endorsed the concept as being part of a long term strategy.

However, it has been ruled out because the Minister believes Dublin's public transport system is not good enough to provide an alternative to motorists.  He insists that motorists have a viable alternative to commuting by car.   Dublin already has a commuter rail system, light rail and an extensive bus network.

I don't think congestion pricing must be limited to ensuring all motorists can have an alternative mode, when there are other alternatives, which could be changing time of travel, or even route (depending on the design of the congestion charge).  It simply isn't viable to ensure all have an alternative, but certainly what public transport exists should be seen as being a major useful alternative.   Alternatives include public transport, cycling, walking, telecommuting, off peak driving, changing destinations and car sharing.  Congestion charging is likely to shift demand in a wide range of ways, not just a shift to public transport, as important as that is.

See the Dublin Demand Management Study of around six years ago for a rather basic consideration of congestion charging (and other measures) for Dublin.   However, I suspect a key reason for not considering congestion charges for Dublin for now, is the economic situation (and the simple fact that congestion in Dublin has notably reduced in the past few years due to the economic crisis).   So for now, this politically controversial idea, will be parked, until Dublin's economy revives enough for congestion to get back to the levels of five or so years ago.

Ireland pays for poorly performing toll roads

I’ve written a few articles celebrating the benefits to governments from PPPs that transfer risk of failure to the private sector. Examples most recently being in San Diego, USA and Brisbane, Australia. However, if PPPs are not so attracted by bearing all of the risk, they may demand risk sharing if usage is below a minimum level. That, of course does mean that the PPP bears all of the upside, but taxpayers bear much of the downside. Ireland has adopted this model for two expensive toll roads and is now paying for it.

The Independent in Ireland reports that the Irish National Roads Authority (NRA) is paying €5.7 million this year to privately owned toll operators because traffic figures are not meeting estimates. The two routes suffering from low traffic are the Limerick Tunnel and the M3 motorway from Clonee to Kells. Similar guarantees do not apply to other toll road PPPs in Ireland.

The Limerick Tunnel is part of the N18 Limerick Southern Ring Road, effectively an east-west bypass for the city. It costs €1.80 for cars and up to €5.70 for the heaviest trucks. It was expensive by Irish standards, at €600 million, one correspondent to the Irish Times claims traffic figures are 25% below what is needed to avoid state subsidies. The concession is owned by the DirectRoute consortium comprising Strabag AG, John Sisk & Son (Holdings) Ltd, Lagan Holdings Ltd, Roadbridge Ltd (Mulcair), and two third party equity providers - Meridiam Infrastructure Finance S.C.A. SICAR and Allied Irish Banks p.l.c.

The Limerick Tunnel was meant to be part subsidised in any case, with €180 million paid for construction, and another €60 million to be paid over the life of the operation of the road (31 years out of a 35 year concession). However, if the road succeeds it is also mean to be revenue sharing between the NRA and the concession, so there is a potential upside, with a similar arrangement for the M3.

The M3 cost €650 million and is essentially a northwest corridor from Dublin. The toll costs €1.30 per toll plaza for cars and up to €3.30 per toll plaza for the largest trucks. The concession is owned by Eurolink M3 a consortium of Spanish company Cintra Infraestructuras SA and Irish contracting company, SIAC Construction.

It has traffic figures 22% what is the minimum to avoid state subsidies.

However, there are Irish toll roads that do make money. The NRA said it was paid €1.47 million in revenue sharing from successful concessionaires (though this still means a net loss). The N1/M1 (from Dublin to the northern Ireland border towards Belfast) and M4 motorway (west from Dublin towards Galway).

The NRA justifies its decision to guarantee minimum usage of those routes because of their expense, in that if it didn’t happen the prices would be higher as the bidder would factor in the risk. The interesting question would be whether that escalation would be more than what is likely to be paid by the state in the coming years. Under the current economic climate in Ireland, it may be some time before traffic figures recover sufficiently to avoid such subsidies.

Meanwhile, Dublin wont be getting congestion charging soon according to Transport Minister Leo Varadkar, saying that the public transport alternative isn’t good enough. A better reason is that an economic recession is not the right time to impose new charges on road transport.  However, I suspect the real reason is politics.  The Independent in Ireland also reported that the National Transport Authority said there had to be congestion charging in Dublin by 2020 or the city faces gridlock.