Auckland Council to consult on congestion pricing

Long time readers will know I have followed (and worked) on Auckland congestion pricing studies for some time.  Most recently two big steps have been taken to advance the idea, noting it is labelled "Time of Use" road charging in New Zealand (just to add to the colourful vernacular in road pricing):

• New Zealand passed a law authorising the introduction of Time of Use road charging, enabling local authorities to develop proposals to work with central government;
• Auckland Transport commissioned study on more detailed options for Time of Use road charging

Incredibly, the Land Transport Management (Time of Use Charging) Amendment Bill was passed unanimously in the New Zealand Parliament, by all six parties. 

Auckland Council has voted to proceed with consultation on three time-of-use road pricing (congestion pricing) options for Auckland City later this year. 

There was extensive debate about whether to include in consultation an option of the public being able to reject road pricing altogether, but the amendment to do this did not proceed, so the consultation is not the end of the process.  Curiously, long standing City Councillor, Maurice Williamson (who was a Minister of Transport in the 1990s and a long advocate of road pricing) wanted the option of the public to say "no" because he said he had a record of pushing through unpopular policies before.  However, the consultation will simply focus on what the public thinks of the three options.  The process is depicted below. As you can say, once feedback is received on the options, Council will vote on which, if any, of the three options, it will support through to Scheme Initiation.

Scheme Initiation requires a Scheme Board to be set up jointly with central government, which will then commission the more detailed work.  That Board will finalise the detailed proposal, obtain public input and require approval of Council and then the Transport Minister to be proceed. The current schedule assumes approval will be finalised in mid 2028, with implementation no earlier than 2030.  That means there is plenty of work yet to do.

The options are:

• City centre cordon

• City centre and fringe cordon

• Core motorways with cordon (either 1A or 1C)

The common elements to all proposals are:

• AM peak charges in one direction, PM peak charges in the other direction
• Shoulder charges so that rates rise and decline either side of the peak
• No interpeak charges

City centre cordon

The city centre cordon concept sees an AM peak charge of NZ$3-NZ$4 and PM charge of NZ$2-$3. It would charge around 3.1% of all morning peak car trips, but 23% of trips would see some saving in time. It would reduce car trips by 0.8% and speeds increased by 1.0-2.4% region wide on average (although clearly it would be much higher closer to the cordon and lower in outer suburbs), with a reduction in region wide congestion of 2-4%.  The estimate is that those paying will save four minutes on average. 

It has the following key advantages:

• Most passenger (unlike freight) trips are modally substitutable either by PT or active modes

• Exclusion of the hospital (and Port)

• Through trips are excluded (which are much less easily substitutable by PT).

However, it has very limited impact. Beyond approach routes into the city centre, it is unlikely that there would be much effect noticed on congestion. While there may be some easing of congestion through the Central Motorway Junction, it is unclear how sustainable that would be as it may attract more through traffic through the centre. It would also encourage some degree of “park and ride” or “park and walk” activity near its fringe, making car parking in Newmarket and Ponsonby significantly more valuable simple because of where the cordon is drawn.

Even those who pay may not notice much improvement, because so much congestion is on motorway and arterial routes far from the downtown cordon, so the benefits of paying to drive in the peaks might be perceived as poor value. The benefits at the city end would be noticeable, but if drivers remain on largely slow roads such as Onewa Road or the Northwestern Motorway for long periods, it may suffer from perceptions of whether it was worth it.

Maybe it is good as a first step, to demonstrate it has some impact, but it is hardly worth being the major scheme.

City centre and fringe cordon

The city centre and fringe cordon has more merit as it captures more trips, including Newmarket, Newtown, Ponsonby and Parnell (there is ambiguity about this). This is likely to have more notable impacts on trips on all arterials and motorways approaching the city.  It might be somewhat trivial, but as the “middle” option, I am betting this is the one most likely to be advanced. It moves the “park and ride” issue further out, more into suburban areas (so there will be a need for more residents’ parking or on-road parking restrictions in neighbouring suburbs).  

It is notable that this proposal has much higher charges in the AM peak ($5-$6), with $2-$3 in the PM peak, so it is unclear how much of the higher benefits is a function of price, not scheme design.  It sees 5.1% of AM peak car traffic charged, with a 1.4% reduction in region wide car traffic. The effect is a 1.0-4.1% increase in region wide traffic speeds (again it seems the averaging will see little impact beyond the Isthmus approach corridors). This represents a 3-6% reduction in congestion across the region.  Those paying are estimated to save five minutes on average.

A big issue is inclusion of the hospital, which either can be ignored (as peak only charges do not affect many users), or some discount or subsidy can be offered to vulnerable users with appointments. That would add some costs and require careful design (I recall designing and modelling such an option for Manchester). 

Overall, it would demonstrate noticeable benefits for the inner isthmus and even roads approaching the Northern Motorway from the lower North Shore but could only be seen as a first step.  The inner motorways would benefit with the reduction in trips using them, but it seems likely this would not be sustainable, as the Central Motorway Junction would gain an uplift in level of service compared to the Western Ring Road, which may attract a transfer of vehicles to take advantage of the (uncharged) time saving. 

Core motorways with cordon

Core motorways with cordon is easily the most superior option from the perspective of congestion reduction. Noting it could be included with either of the cordon options above. 

The charge would indicatively cover the Northern Motorway (SH1) from the Harbour Bridge south along the Southern Motorway to the Mt Wellington Interchange, and along the Northwestern Motorway (SH16) to the Waterview Interchange, alongside a cordon.  The proposal is for peak direction charging on the motorways, although this could be bi-directional.  $5 is proposed for the AM peak to access the motorway and the cordon. 

The effect is to target 6.9% of car trips in Auckland, reducing car trips by 2% (it is notable that this isn’t a significant increase on the city centre and fringe cordon). It increases regionwide speeds by 4-6%, reducing congestion by 13%. There would be a 9-12 minute time saving on motorways, with a 5 minute saving crossing the cordon (it is not clear if the savings accumulate for those driving on the motorway to cross the cordon). This is significant, but indicates that this option crosses the tipping point where traffic conditions break down, and relieves traffic volumes enough to allow a much more efficient flow of traffic. While 93% of car trips across the region in the peak are not charged, 31% are expected to benefit. Unfortunately, because the option includes no options to prevent rat-running off the motorways, it also predicts 12% would experience minor delays due to diversion.

That point is worth noting only because the option has been developed rather simplistically, when it is technically possible to capture rat running with appropriate sets of number plate camera (ANPR) to deter drivers from leaving the motorway to avoid the charge then using local roads to go past a motorway offramp point. Detailed traffic modelling should be used to ensure this can be addressed.

However, it is clear this option is the one with the most merit in transport policy terms. It has the attraction of being able to be tailored more finely for the conditions on each of the three motorways. It shouldn’t be the same fee on each route in each direction, and at a later stage there are merits in extending charge times on corridors that have enduring congestion – notably the Southern Motorway between Greenlane and Mt Wellington. 

Are there better options?

This will be a source of some debate.  

Double cordon?

One considered was a double cordon on the Isthmus, which is a bad idea.  The proposal below was sourced from the Options Assessment and Policy Framework report (PDF)

Besides the downtown, it added an inner cordon, which would still exempt through trips on the motorway, but charge anyone entering either of the cordons in peak times (so those within the outer cordon would still be charged to enter the inner one). Although it has some positive impacts, this is offset by the blunt impact of having a cordon cutting through residential areas, separating homes from schools, parks, shops and other local amenities for no other reason that the convenience of a traffic engineer drawing the line. It is quite unlike the city centre, which is bounded by the Central Motorway Junction, Grafton Gully and the harbour. 

Cordons are effective and avoid serious distortions if there are natural geographic or large scale artificial boundaries which a cordon can be placed onto. Stockholm has much of this, London not so much, but the very low proportion of car trips taken in inner London saw the distortions being very minor indeed.  Cordons are for the sake of simplicity and ease of understanding. However, cordons through suburban residential areas have considerable scope to create distortions. Gothenburg experienced this in the northern suburb of Backa, where the cordon literally splits the suburb in two.  This meant that local residents, notably elderly ones, driving from their homes to local amenities faced the same fee as those driving into the central city. Technology has been implemented so that only people driving from outside Gothenburg are charged when passing the cordon that runs through Backa (the Backa exemption). The scale of Auckland, which is much larger than Gothenburg, means that a cordon beyond the city centre would mean residents literally charged for taking cars one block, or charged to take children to one school but not another nearby.  

I am pleased this option has been rejected, and I fear the city centre and fringe cordon might present some similar issues, but this is about as far as any cordon should go in Auckland

Motorway hotspots

Another option that was rejected was pricing targeted motorway hotspots. 

The concept was to price the most congested parts of the network, effectively creating a pilot scheme that could demonstrate the benefits of time-of-use pricing before a wider rollout. While it was never intended as the end-state for Auckland, it could have delivered valuable evidence and public familiarity with road pricing. Unfortunately, I think the option was short-changed by the way it was designed and assessed.

First, no effort was made to mitigate rat-running around charging points. ANPR systems can identify vehicles that leave a motorway immediately before a charging point and rejoin shortly afterwards. Charges can then be applied only to those passing both camera locations, while legitimate exiting traffic remains exempt. The Backa exemption in Gothenburg demonstrates that this is both feasible and established practice. Ruling out motorway hotspot charging partly because of diversion impacts, without incorporating available mitigation measures, risks understating its potential benefits.

Second, modelling behavioural responses remains inherently crude. This is not a criticism of the modellers; it reflects the difficulty of estimating how many people might:

• travel four rather than five days a week;
• shift travel by an hour or two; or
• combine trips more efficiently.

Motorway hotspot charging is likely to rely more on changes in travel timing and frequency than on mode shift, although expanding alternative transport options remains important. The most obvious gap is the absence of the Northwestern Busway, although the corridor already benefits from bus lanes and could support significantly enhanced services.

Finally, the assessment framework appears to favour options with the largest region-wide impacts. That is understandable, but smaller-scale interventions will inevitably produce more localised benefits. Singapore's Electronic Road Pricing system evolved through precisely this approach, targeting specific congestion points and expanding over time. Rather than attempting to solve congestion everywhere simultaneously, it focused on maintaining traffic flow where congestion was most severe.

Too often in the report materials Singapore is depicted more as the Area Licensing Scheme from 1975 (which was a small cordon with manual enforcement of paper based permits) rather than the Electronic Road Pricing system which evolved from 1995 onwards.

Singapore ERP charging points

Auckland could trial a small number of motorway segments with simple, targeted pricing designed to improve traffic flow on those corridors. Such an approach would not transform the entire network, but it might deliver visible results and prove easier to gain public acceptance for than a larger and more comprehensive scheme.

Distance based option

20 years ago, the UK Department for Transport was funding local authorities to develop congestion pricing schemes that would leap ahead of the level of sophistication of the London Congestion Charge (which wouldn't be hard). One way it was going to do this was to fund piloting an option for motorists to pay by distance, time of day and location, rather than just time of day and location, by allowing those who want to, to use in-vehicle technology to measure distance at peak times only, on specific roads identified beyond specific boundaries.

In the New Zealand context this could mean that subscribers to any of the three existing electronic road user charging (eRUC) providers could be charged directly, not based on entering a cordon or a motorway as a flat fee, but by kilometre and have that be at a much lower rate until the fee accumulated to the full charge. The ability to do this has not been explored at all to date, but once the Land Transport (Revenue) Amendment Bill passes, there may be more scope for new entrants into the eRUC market to offer an option to customers to not just pay RUC automatically, but to pay on a different basis to the blunt single charge approach anticipated.

I don't expect either time or budget permitted exploring this further, but it is definitely something that should be considered not just for commercial vehicle users, but any private motorists who wish to do so. e.g. it may be much cheaper to pay for a few kms of driving on a charged motorway in the AM peak than a single flat charge, and also more directly discourage rat running. 

Next steps

As public discussion expands, resistance is inevitable.

The Council debate revealed a vocal minority opposed to road pricing in principle, alongside a group of sceptics who remain open to persuasion. Those concerns are understandable. Road pricing is a new charge, and net revenues are expected to be reinvested in the transport system. Questions about whether that spending represents value for money, and whether those paying directly benefit, are legitimate and deserve answers.

What has been largely absent from the debate, however, is a clear discussion about the cost of congestion itself on a personal level, rather than the multi-billion dollar aggregate which most people cannot get their heads around.

No major city has successfully eliminated congestion by building its way out of the problem, whether through road expansion or investment in alternative modes alone. Managing demand is an essential part of the solution.

For Aucklanders, congestion means waking earlier, arriving home later, spending less time with family and leisure activities, and consuming more fuel or electricity. For businesses, it means fewer deliveries, fewer service calls, fewer meetings and lower productivity. Congestion makes the city less efficient, less prosperous and less liveable.

None of the options under consideration will eliminate congestion. They can, however, make the network function more efficiently, improve travel time reliability, encourage better use of alternative modes, and spread demand more evenly across the day.

That alone would be a worthwhile outcome.

Most importantly, momentum must not be lost. Progress to date has been slow, perhaps reflecting the complexity of joint decision-making between central and local government. If the proposals pass the next stage, careful public communication will be critical. The detailed design process must address genuine concerns while avoiding the misunderstandings that so often dominate debates about road pricing.

I look forward to the consultation beginning in November 2026.

What to do?

Clearly those who have strong views on congestion pricing in Auckland should participate in the consultation, but they should all read the documentation provided along with earlier reports (links above).  The likelihood that there will be a lot of public opposition is fairly reasonable and understandable, but what would be most productive is to get some indication of the options people dislike and like the most, and why. Besides helping to select the best option, it would also help to refine options and indicate concerns that perhaps haven't been explored sufficiently. There is also merit in understanding whether opponents will be affected directly or not, as well as those who will benefit.  What is almost invisible is that bus users at peak times are likely to benefit noticeably with less congestion, as long as buses are not overcrowded as well.

I'm a firm believer that pricing can be designed in a way that has significantly positive outcomes with negative outcomes that can be mitigated, with major city shaping effects. It is particularly important for those who see road pricing as a great tool to punish driving and treat motorists as "car fascists" (as a politician once quipped a few years ago) to end that sort of talk. Nothing will kill off road pricing more than it being dominated by people who want to treat driving as a malignant activity, and by default treat people's choices around where they live, work and play as needing "correction". That's not what the intention of the legislation is, and it is notable that a centre-right government in New Zealand has advanced this policy with the primary objective of easing gridlock, not raising money and not punishing driving.  If you can't convince the people that will have to pay that they can be better off from this, it isn't going to proceed, and if you seek to design it so they are not, then it definitely won't.

Does road user charging deter electric vehicle sales?

 

On 20 May 2026 I had the privilege of presenting a seminar at the University of Sydney, Institute of Transport and Logistics Studies,  on the topic of "Road user Charging in Australia: Finally, after 20 years?".

One small piece of research I pulled together when preparing the seminar was to look at reported quarterly sales data for EVs (pure EVs, not hybrids) as a proportion of all new light vehicle sales, for New Zealand, Australia and Iceland. 

The reason being fairly simple. It is to identify any discernible impact on EV sales of the presence or absence of a distance based road user charge (RUC).

New Zealand introduced RUC for EVs on 1 April 2024.

Australia has no RUC for EVs.

Iceland had introduced RUC for EVs on 1 January 2024 and expanded it to all vehicles on 1 January 2026.

New Zealand's RUC rate for light EVs is the same rate for light diesel vehicles, and broadly equivalent to petrol tax.  That rate is NZ$0.076/km including GST of 15%.  Excluding GST this would be US$0.038/km or US$0.06 per mile.

Iceland's RUC rate for light EVs is ISK6.95 per km or around US$0.06 per km or US$0.1 per mile.

The result is fairly clear. There is no significant relationship between the introduction of RUC and EV sales.

Nine months after Iceland introduced RUC on EVs, sales grew and have continued to grow as a proportion of new light vehicle sales.  

In New Zealand there was no drop at all, although sales remained slow and only picked up recently, this is mainly attributable to poor economic growth and the after-effects of the removal of a major subsidy to buy EVs that was scrapped at the end of 2023 (bringing many sales forward before that time). 

Meanwhile, Australia, which has no RUC at all, has only slightly higher EV sales than New Zealand (although Australia has lower fuel tax, and higher incomes).

The oft-cited claim, seen in Australia, the UK and the US, is that requiring EV owners to pay to use the roads would deter their sales, relative to non-EVs, is largely specious. While lobbyists in those jurisdiction get political and media attention for their claims, the reality - in jurisdictions that actually have introduced mandatory RUC for EVs, is that it makes next to no difference.

New Zealand Transport Minister recognises road pricing as a tool to defer new road capacity

It’s extraordinarily rare for politicians leading transport policy to understand road pricing beyond one dimension. Either they think it is a great way of raising money they can spend on projects that they can sell to the public, or it is a great way of reducing traffic, it’s rare to see an understanding of economics.

In New Zealand it is seen with the current Minister of Transport, Hon. Chris Bishop.  For context, New Zealand has recently passed legislation to allow for time-of-use road charging, the term used in New Zealand for congestion pricing. It will allow local authorities, in partnership with central government, to set up road pricing schemes specifically targeted to reduce congestion. Auckland is already some way ahead in developing recommendations for congestion pricing and is expected to advance proposals in the coming year.

The primary purpose of congestion pricing in New Zealand will be to reduce congestion, noting that such pricing will also generate net revenues, which will be used subject to agreement between central and local government. This will likely see net revenues directed towards a range of transport projects in the city or district where the pricing scheme operates.  

However, there is another feature that road pricing enables, beyond raising money and getting better use of existing road infrastructure, which is to provide information on where better to direct future road capital spending.

Bishop hinted at this in February 2026 when the National Infrastructure Plan was released by the Infrastructure Commission. It noted that road pricing could “defer the need for expensive capacity expansions”.

Radio New Zealand reported on 18 February 2026:

Asked whether time of use charging should be used first before committing funds to two tunnels, Bishop said it was an option under consideration and he would have more to say soon.

"I'm not cancelling the tunnel, but we are giving active consideration to what time-of-use pricing might do to our transport projects. You have to factor these things in, because thay are a mechanism for demand management and making more efficient use of our infrastructure, which is exactly what the commission says."

The project referred to is to duplicate two tunnels in Wellington city (known as the SH1 Wellington Improvements project), both of which are subject to significant congestion at peak times (and frequently off-peak times). It's a project primarily about congestion, but also resilience (the Terrace Tunnel has one-lane southbound, and Mt Victoria Tunnel is 95 years old with only one-lane in each direction) and helping to move traffic from the waterfront highway (which acts as a backup to the network, but separates the waterfront from the central business district). 

Wellington State Highway 1 network issues

Proposed second Wellington Terrace Tunnel (northern end)

Proposed second Mt Victoria Tunnel (western end)

Both tunnels are part of State Highway 1, which is the main highway into the city, but also bypassing the city centre towards the airport, eastern and southern suburbs. Congestion pricing would be likely to reduce traffic on this route, particular traffic using the tunnels to drive into the central city.

The current New Zealand Government went to the previous election promising to build the project. That may still happen. Finance Minister, the Hon. Nicola Willis, has said it will proceed. 

Of course the simplest, and possibly least controversial option, would be to proceed with the project, and introduce time of use road charging to help pay for it, but also manage demand from the additional capacity, by placing a cordon within the boundaries of State Highway 1. This would mitigate fears that the new capacity would induce demand away from public transport for trips into the central city, ensure that the new capacity worked efficiently.

Yet the most economically efficient option is to introduce pricing in advance, to determine if it would sufficiently reduce demand to defer the need for the new tunnel capacity.  That is certainly worth investigating.  There are two key elements to this approach:

• What sort of road pricing scheme should be proposed in Wellington, that would optimise network use?
• Can that proposed be sufficiently publicly acceptable to proceed?

I've doodled on a map of Wellington suggest a basic cordon concept that might work (inbound AM peak, outbound PM peak) that puts most of the central city behind it, which is also the area with the most intense public transport service (and is accessible on foot and cycle for inner city suburbs as well). 

Wellington Time of Use Road Charging cordon concept

Leaving aside a lot of details (e.g. keeping Oriental Bay and Mt Victoria outside the cordon, where to draw the line in Te Aro), the idea is the through route of SH1 isn't priced, because use of it is much less amenable to modal shift, so the first priority should be to encourage modal and time of use travel shift to and from the central city, with a second priority being to encourage time of use shifting predominantly through traffic (see below with lines on the main routes towards the central city from the north and the east).  Again the details on whether someone pays twice or just once, whether it be through the cordon or on State Highway 1 is a moot point, and the timing of operation might vary to manage demand, but this is only conceptual at this stage.

Second stage Wellington time of use road pricing, tunnels in addition to cordon

What matters more fundamentally is that a Transport Minister is talking about it.  Demand and traffic assignment modelling would identify whether a reasonable price for a downtown cordon would sufficiently reduce traffic numbers to relieve congestion at the two tunnels, or whether by pricing the waterfront route, the 15-20% of traffic on that route that is bypassing the city relocates onto the unpriced tunnels, effectively leaving congestion at those tunnels where it was before.  Although some routes into the city would be relieved, and traffic flow within the city would improve, if it meant no net improvement to traffic along the route the SH1 Wellington Improvements project was intended to fix, then it would be likely to generate some public and political opposition. Moreover, it would not dissipate calls to build the highway improvements.

However, if pricing was also placed on the tunnels, as well as the downtown, then it might make a difference if there was sufficient traffic with enough demand elasticity to be priced away from driving in the peaks.  

What next?

The New Zealand Government has a fiscal problem, in that it (like so many governments) has ambitions for capital spending on transport projects that it is struggling to fund. The temptation to delay or defer a project like the SH1 Wellington Improvements project is significant.  I expect there to be considerable analysis on the potential for tolling the project (as is the policy of the government), but just tolling the tunnels is problematic, as there are alternative routes (which are inferior, and which analysis has indicated it is preferable to attract traffic from as it is an urban setting, rather than encourage traffic onto). I very much doubt tolling is suitable for this project given tolls are likely to worse congestion on key bus routes rather than improve them.

Time of use road pricing in Wellington is likely to have merit regardless of the SH1 Wellington Improvements project, so should proceed, but there will be a political debate about use of the net revenues. I expect the Mayor and City Council to want to use net revenues to further their preferred projects, but the Minister will likely prefer supporting the tunnels project.

One option could be to use pricing to phase the SH1 Wellington Improvements project, so that the elements with the highest net benefit are advanced first (e.g. around the Basin Reserve, which is a troublesome bottleneck only partly related to tunnel capacity), and tunnels are built in a sequence reflecting demand impacts from pricing.  

Whatever happens, it's a great illustration of the key benefit that road pricing can bring, which is a reassessment of the merits of transport capital projects in the light of pricing. For example, it is also possible that road pricing could improve traffic flow for buses, that the need for additional bus priority measures erodes. That has its own political implications for those advocating taking road space from general traffic to give to other modes. It makes it easier to do it, but also reduces the case to do it.  What helps is there is the political will to be rational about this, hopefully this will persist regardless of the outcome of the New Zealand General Election later this year.

For the sake of my many overseas readers, some might note that Bishop is from the centre-right National Party, which is in coalition with the free-market liberal ACT Party and the nationalist-conservative NZ First Party. New Zealand's Parliament passed the  Land Transport Management (Time of Use Charging) Amendment Bill unanimously, including the three opposition parties.  I am unaware of any national Parliament anywhere in the world which showed unanimous support for enabling road pricing by time of use.

New Zealand's Parliament passes legislation to enable congestion pricing - unanimously (but the details will come later)

In a possibly unprecedented step, the New Zealand Parliament has voted - unanimously - to pass legislation allowing for "Time of Use road pricing" to be enabled, based on proposals from local road controlling authorities in partnership with the NZ Transport Agency (NZTA) (the central government transport funding and regulatory agency, which is also the State Highway manager).  

The Bill was introduced into Parliament by the three-party centre-right coalition government, and at the end was backed by the three leftwing Opposition parties as well.  I believe this is the first time anywhere in the world that congestion pricing has received unanimous political support at a national level.

According to the press release from Transport Minister, the Hon. Chris Bishop:

Sitting in traffic wastes time, costs money, and drags down productivity,” 

“Travel times in our major cities are up to 30 per cent longer than in comparable Australian cities, with Auckland congestion alone estimated to cost up to $2.6 billion by next year.

“Time-of-use charging is a common-sense tool that encourages people to travel at off-peak times or by other modes. It’s about keeping our cities moving - whether you’re a parent on the school run, a tradie heading to a job, or a truckie delivering exports to port.

“Time of use charging has been talked about in New Zealand for years and now we’re getting on with it. I am really pleased that the legislation to allow the establishment of time-of-use charging schemes passed Parliament unanimously. After years of discussion, it is great to see that all of Parliament is up for reducing congestion and improving productivity.

Ironically, there is next to no political appetite for such a policy in Australia in the near future, in any State or Territory.

Of course the legislation itself does not actually implement road pricing, but it does provide a framework for time of use pricing proposals to be generated, as a local-central government partnership, for approval by the Minister.  The details as to what it will mean, in practice, will only come once the Minister of Transport has approved a road pricing scheme, following a proposal submitted by local and central government authorities.

Objective

Unlike some congestion charging schemes implemented elsewhere, the primary purpose of any proposals in New Zealand must be to relieve congestion, not raise revenue (although it is acknowledged that revenue will be generated). It is not designed to reduce emissions, but it is acknowledged that this is likely to be a benefit from it.  It is fundamentally not intended to punish driving, but to reduce driving on specific roads at specific times so that traffic can flow more freely.  It more closely resembles the objectives of the Singapore Electronic Road Pricing policy, than say New York or London.

This is not surprising, as New Zealand is one of the most car-oriented countries in the world.  Auckland, which has 1.7 million people and has made the greatest progress in developing options for road pricing, may be the first to implement it. However, Auckland has highly dispersed travel patterns with around 80% of trips in Auckland undertaken by car (either as driver or passengers), with 18% by walking or cycling (and the remainder by public transport).  

Timing

The legislation does not come into force for a year after Royal assent, and subsequent to that, the Minister can receive proposals for approval, amendment or refusal. Given the next New Zealand General Election must happen before the end of 2026, it seems unlikely that the Minister will receive a proposal in advance of that. 

What's next?

Auckland Transport and subsequent to that Auckland Council are expected to make decisions on what sort of Time of Use road pricing scheme it wants to implement, with NZTA, and a proposal will need to be developed for acceptance by NZTA and then submitted to the Minister.  Before that happens, there will need to be public consultation on the proposal, and at that point the pressure will be highest on local politicians as to whether they want to advance any proposal for implementation.

Other cities can submit their own proposals too. Wellington, Christchurch, Queenstown and Tauranga have all been mooted in recent years for congestion pricing on some scale, so it will be interesting to see which, if any, look to advance work on concepts for pricing in the coming year. Although much smaller cities and towns than Auckland, all have some congestion at peak times which can be severe for their size, and could benefit from road pricing. 

Of course nothing is guaranteed.

The UK has had legislation enabling congestion charging by local authorities for around 24 years, and only Durham and Nottingham (the latter being a workplace parking levy) have implemented schemes under that legislation (London happened under specific legislation setting up Transport for London).  New Zealand will not be quite the same, as the UK has generally enabling legislation (not requiring central government support), whereas New Zealand will see proposals go to the Minister for approval and will need to be a central-local government partnership. However, I would wager that it is more likely New Zealand will have a congestion pricing system operating sooner than any other UK cities will implement it.

New Zealand, appears on the face of it, to have a rather unique set of political willingness to enable congestion pricing, which is unseen elsewhere, but the reality of what any proposal will actually mean for motorists will come later.

Let's hope whatever proposals advance, that they can bring enough political and public acceptability to enable them to be implemented.

The Bill (which won't be law until Royal Assent) is available here.

(meanwhile it would be nice if the NZ Ministry of Transport updated its website)

New Zealand's next steps to road user charging for all vehicles UPDATED

I've written twice before (here and here) about the policy announcement from the New Zealand (NZ) Government around introducing road user charging (RUC) for all vehicles.  This was a policy commitment by the National Party-led coalition government after it was elected in 2024.

On 6 August, Minister of Transport, Hon. Chris Bishop, has made a further announcement about this.

On the face of it, it looks like following Iceland to become the second country in the world to phase out fuel excise duty (FED) in favour of charging vehicles for road use by distance and vehicle class. For those who know about NZ's RUC system I don't want to go into detail as to how it works now (there is a Handbook with information here published by the NZ Transport Agency which manages the existing RUC system), but here are some very quick points for those unfamiliar with it.

NZ's RUC system

In NZ motor vehicles registered to use public roads either pay based on consumption of a taxed fuel (petrol/gasoline, LPG and CNG) or on distance based on vehicle class (RUC).  In summary (I've omitted some details that are inconsequential, for the sake of pedants):

• All RUC and Fuel Excise Duty revenue is hypothecated into the National Land Transport Fund (NLTF), which is used by the NZ Transport Agency (NZTA) (along with revenue from motor vehicle registration and licensing fees, and direct government funding from the Crown) to fund the National Land Transport Programme (NLTP), which is central government's funding of roads, public transport, walking and cycling infrastructure, rail and coastal shipping.
• RUC rates are informed by a cost allocation model applying economic and engineering principles to future NLTP spending.

Depiction of how New Zealand's RUC rates are based on cost allocation

• 1.2 million vehicles in NZ are subject to RUC. This includes all heavy vehicles regardless of fuel source (vehicles with a Gross Vehicle Weight of over 3.5 tonnes) and all light vehicles that are diesel, electric (EVs) or plug-in hybrids (PHEVs). Around 80% of vehicles subject to RUC are light vehicles.
• RUC raises NZ$2 billion (US$1.19 billion) per annum in net revenue, which is around 40-45% of the revenue to the NLTF. Fuel excise duty raises around the same from petrol powered light vehicles only.
• The RUC system comprises prepaid distance licences, either paper or electronic.  The rate structure for RUC varies by vehicle class and weight, based on a cost allocation model that allocates future spending based on the consumption of that spending by vehicle class/weight.
• Over 95% of light RUC vehicles and a majority of heavy RUC vehicles are on the "manual system". This means regular checking of the paper RUC licence against odometer (hubodometer for heavy vehicle) readings, and purchases of new licences in blocks of 1,000kms or more either online or at retail outlets.  Once purchased the new RUC licence is issued and is typically displayed on the vehicle windscreen in the bottom corner.  At regular safety inspections, the odometer reading is recorded by the inspector and forwarded to NZTA to check against the latest distance licence.

Sample RUC distance licence as displayed on windshield

• Over half of heavy RUC revenue is raised through eRUC system providers:  Three companies offer eRUC, with electronic distance recorders that measure distance matched against locations, primarily for commercial vehicle fleets to more efficiently manage RUC and their vehicle fleets. These companies collect revenue for NZTA at virtually no cost to government, and attract commercial vehicle fleets due to the convenience of billing them for all vehicles, rather than monitoring and buying RUC licences for each vehicle.  The three companies are telematics providers (EROAD, Teletrac Navman and RUC Monkey).  The market for these systems was legally established in 2009.

Teletrac Navman electronic hubodometer

 

Early EROAD distance measurement device

• Electric and plug-in hybrid light vehicles were added to the RUC system in 2024. This was around 120,000 vehicles with over 95% compliance.
• Heavy vehicles are required to have either hubodometers or electronic distance measurement devices installed to be registered. This includes all heavy trailers, in order to capture variations in vehicle configuration that affect applicable RUC rates.

Hubodometer as required to be installed on all registered heavy vehicles

• Distance travelled off public roads is not subject to RUC. Vehicles with eRUC automatically have off-road distance not measured to avoid consuming RUC, owners of vehicles on the manual system may apply for refunds through a manual (and time consuming) process.  The same applies to petrol powered vehicles operating off of public roads and any other equipment using petrol. It is possible to apply for refunds of FED, but many do not do so because of the time and complexity required.
• NZ has an Emissions Trading Scheme, which sees a cost of CO2 emissions included in the price of fuels used domestically in NZ. FED has never been designed to be an environmental tax, noting there is no FED on diesel.  FED is a proxy road user charge.

What's the objective?

Revenue sustainability and fairness.

While FED is a very cost effective way of raising revenue, the variations in what petrol vehicle owners pay are considerable based not only on engine size but engine type.  Although EVs are on RUC now, as are PHEVs (at a reduced rate to reflect their use of petrol), battery electric hybrid vehicles (BEHVs) and small fuel efficient petrol vehicles are paying much less per kilometre to use the roads compared to the average petrol powered car.  There are already 350,000 BEHVs effectively paying half as much as all other light vehicles to use the roads.

In future years, rates of RUC and FED would both need to increase to reflect inflation and the Government's ambitions for significant capital spending on improved roads. While tolls are to be used to help with some projects, they will not be able to be applied to many capital improvements. Raising FED creates a distributional impact on those unable to afford new vehicles that are more fuel efficient or have different drivetrain technologies such as EVs, PHEVs or BHEVs.  FED is simply no longer fair compared to RUC which can apply a flat rate across all light vehicles to reflect their use of the road network and the spending from the NLTP that benefits them all equally.

Putting all vehicles on RUC means that changes in vehicle technology won't affect revenue and future RUC increases will apply equally to all light vehicle owners, reflecting spending on land transport infrastructure.

What's going to happen?

RUC legislation will be amended:

• to remove the requirement for paper RUC licencesa and prepaid licences.  This will enable RUC to be billed based on past travel, rather than future distance travelled. 
• to enable use of telematics systems already built into vehicles as a means of measuring and reporting distance travelled, rather than simply the odometer or a third-party device.
• Separating NZTA's role as regulator of electronic system providers and provider of the manual RUC system, to remove conflict of interest in encouraging competition in the supply of RUC service provision.
• Allow tolling and future congestion pricing services (time of use charging in NZ parlance) to be bundled with RUC for those choosing to use electronic system providers, to avoid the need for multiple accounts.

The intention is that this should enable a wider range of technical and commercial options to measure, report and bill for RUC.  With the existing market base of around 1 million vehicles on the manual RUC system, the potential should be there for new providers and technical solutions that are cost effective.

The expectation is that by 2027 a next generation of RUC providers and options will be available supplied by private companies, to attract existing RUC users from the manual system and make it easier to transition other light vehicles onto RUC.

No deadline for the RUC transition has yet been set, which is sensible as there are some major issues to work through.

It appears that the manual system will remain and that location will NOT be mandated as part of an eRUC system. This should help address concerns about privacy.

Unanswered questions

While there is a lot of speculation as to what will happen and when, some of the big issues remain to be worked out in the coming years. These include:

• Will the manual RUC system remain in some form? There is an argument to retain it for vintage vehicles and some older vehicles that are not suited for third party devices for various reasons. Furthermore, retaining the manual system will address a raft of privacy concerns for many people, even if it is modernised to be based on reporting distance travelled rather than prepaid distance.  On 7 August the Minister indicated that a manual option will remain for those who want it. 
• How will the transition be structured?  Vehicles using a specific fuel can either be switched all over overnight or in groups, while having some means of exempting, refunding or crediting FED as long as it remains.  There are merits and costs in both approaches, and there should be flexibility around FED to facilitate the latter by technical means.
• Will RUC remain a single national rate for the time being?  The merits of eRUC which includes location are minimal for light vehicles that don't go off road, so the transition raises questions as to wider reform of pricing roads.  On 7 August the Minister indicated that location measurement would not be mandatory.  Given the commitment to more tolls and time of use charging, location will be an option for those wanting to use eRUC as an interface to such systems, but they will remain separate policies. Existing governance structures are almost certainly not going to be able to deliver more disaggregated road pricing by location and time of day efficiently, and there are reasonable concerns as to whether future government may use it to act punitively against certain classes of vehicles in specific locations.  Not mandating location should ameliorate those concerns.
• How is non-compliance going to be managed? There are obvious merits in treating road as a utility, but there are costs too which are born by utilities. These are around customers at the margins of being able to pay invoices and those who seek to evade the system altogether (along with vehicle licensing and safety inspections). Existing RUC compliance is focused on heavy vehicle compliance generally, with one means of checking light RUC compliance, this is unlikely to be adequate for a system that will have 95% of its customers as private vehicle owners.
• How will the market for eRUC service providers be adequately incentivised?  It is not a brand-new market but the market for eRUC for private vehicle owners is almost non-existent under current settings. Some mix of mandating RUC and allowing a wholesaling of RUC may provide the answer to this, but other options may need to be considered, such as revenue sharing.
• Will OEM (Original Equipment Manufacturer) telematics systems be opened up to enable use of data for RUC? Whether by OEMs or by legislation, being able to unlock the potential for these systems (which raises some issues in itself) for service providers to bill vehicle owners, will be important in maximising convenience, compliance and minimising costs.

Assuaging concerns

There may be some work to be done in convincing the public that FED will be abolished and people won't be paying twice. Associated with that will be concerns about RUC being used to raise much more revenue at higher rates, although this was entirely possible with FED (and for many years part of FED revenue was general Crown revenue not hypothecated to the NLTF. This was abolished in 2008 as the Government spending on land transport had been increased considerably, and there had been a successful political campaign for some years to end FED revenue being split between the NLTF and the Crown.  One way of assuaging concern about rates would be to review and update the Cost Allocation Model used to inform the setting of RUC rates, so that it is at least seen as being based on economic calculation to generate revenue for specific land transport spending and not simply political whim.

There is also some concern about privacy, if everyone is required to have an electronic device or system that measures and reports distance by location (which isn't essential if RUC is going to remain a single national rate for some time).  Other concerns are around use of data, especially the idea it might be used for speed enforcement. While it seems highly unlikely that the current centre-right government would want to implement such a policy, it is not inconceivable that a different government which seeks to rigorously pursue a policy of zero road fatalities and to discourage private motoring might use such a system punitively.  The current eRUC system allows fleet operators to be notified if their drivers exceed speed limits, but this is entirely voluntary and does require real time tracking, which is not cheap to implement given data requirements (and is typically applied by fleet operators to ensure that their expensive vehicles and cargos are being protected).  RUC legislation ought to be drafted to ensure that it addresses concerns around privacy and scope creep.

Ultimately this is a revolutionary move, far moreso than any of the US states moving towards RUC for EVs (with the possible exception of Hawaii which IS looking to transition all light vehicles onto RUC by 2033), and more than any countries in Europe, which all struggle to implement RUC on light vehicles. If successful, it will certainly put NZ at the leading edge of RUC internationally.

All of this at the same time as NZ is progressing legislation to enable congestion (time of use) pricing (see the Bill for that here), which is expected to be implemented using automatic number recognition technology in the foreseeable future.

UPDATED: Following a TVNZ news story which included an interview with Hon. Chris Bishop on 7 August which provided further elaboration of his intention, several elements of this post have been amended. 

New Zealand aims to shift all vehicles onto road user charges

Yesterday, 29 August 2024, the New Zealand Minister of Transport, the Hon. Simeon Brown, outlined the Government's ambitions on revenue policy (distinct from policy on time-of-use/congestion pricing).

RUC for all vehicles

The "Revenue Action Plan" has several elements, but by far the most ambitious step is to transition away from fuel tax toward distance-based road user charges (RUC) by "as early as" 2027. The objectives of this is fairness as seen in this statement:

Transitioning to RUC will ensure that all road users are contributing fairly to the upkeep of our roads, regardless of the vehicle they drive.

Note that NZ has had a RUC system since 1978 which applies to all heavy vehicles (vehicles over 3.5 tonnes) regardless of fuel (although electric heavy vehicles have an exemption which expires in 2025), and all vehicles powered by a fuel not subject to excise tax. That means all light diesel vehicles, and since earlier this year includes EVs and plug-in hybrids.

The transition to all vehicles being on RUC means battery-electric hybrids and petrol (gasoline) powered light vehicles (and the handful on natural gas).  

RUC in New Zealand currently has the following numbers of vehicles:

• 176,000 heavy vehicles
• 885,000 light diesel vehicles
• 103,000 light EVs and PHEVs

Note there is no excise tax on diesel in NZ.

NZ has the world's largest light RUC system today, and will be extending it to another 3.7 million vehicles. For most vehicles paying RUC, their owners buy prepaid licences in blocks of 1,000s of km based on vehicle class, with paper licences posted following online purchases (there are also options to buy "over-the-counter"). Some commercial vehicle owners paying for telematics services from three certified service providers are charged RUC through those service providers, which supply on-board units using GNSS and mobile data technology to measure and report travel, and calculate RUC to be prepaid almost "just in time".  Around half of heavy vehicle RUC revenue is generated through these providers.

Other heavy vehicles are required to have hubodometers installed (including all trailers) and have paper licences issued, and light vehicle owners have odometers as the distance reference.

It is fairly clear that there will some challenges in the coming months and years in scaling up and reforming NZ's RUC system to accommodate a significant growth in vehicle numbers.

Of course Iceland also announced it was shifting all vehicles onto RUC by 2025, although it is unclear where that programme is at yet. However, if NZ does this, it will be the largest country to have shifted all vehicles onto RUC and, as it appears, to have abolished fuel excise duty.

Toll

Other parts of the revenue plan include expanding the scope for tolling, with the presumption that all new major roads would be tolled.  The announcement included that three roads currently under construction or approved would be considered for tolling namely:

• Takitimu North Link
• Manawatu Gorge replacement (Te Ahu a Turanga) and
• Otaki to north of Levin highway

All three of these routes are dual-carriageway/expressway standard roads so will be practical to toll, albeit modelling will need to determine the revenue vs. costs. All will have alternative inferior routes available, so motorists will be expected to pay a premium for the significantly improved routes. It will be interesting to see what proportion of capital costs of these projects will be recoverable from tolls.

Other measures

The announcement also noted that value capture would be unlocked as a tool to raise revenue from the likes of property owners directly obtaining uplifts in property values from spending on large transport projects.  "Better use of existing funding tools" would also be part of the plan.

Big step forward

With the recent announcement enabling time-of-use road pricing (congestion pricing) and this announcement, this places NZ at the forefront, globally, in advancing road pricing. As some jurisdictions (Iceland, Netherlands and US states) are advancing RUC for part of their fleet, NZ is about to embark on a major step towards covering all of its fleet. While progress on urban road pricing on existing roads remains slow elsewhere, NZ may be ahead of most cities if one or two cities introduce pricing in the next few years. NZ will certainly be far ahead of any other car-oriented low density countries in advancing road pricing in some form.

Responding to Simon Wilson of the NZ Herald on Auckland congestion pricing

First a warning. I don't use this blog as a place for debate or polemics, but on this occasion, I have decided to respond to an article which is quite damning, as an example of the sort of debate one endures around the topic of road pricing. This article is by no means the worst I've ever seen, but it is full of assertions with little to no evidence, mistakes and bold claims that appear to be more motivated by a desire to undermine the policy itself (and perhaps this is because it is from a government he himself does not support), than to critically review the merits of it.

The NZ Herald is Auckland’s (New Zealand) newspaper of record. Simon Wilson (no relation) is the NZ Herald’s senior writer on transport issues. Given the NZ Government’s recent announcement of its intention to advance congestion pricing (called time of use pricing), he has written a column on the topic, which is arguably a polemic of weak argument against it. Note it is behind a paywall. I am a subscriber, but it is not worth you paying to read his article though. 

It is possible to critique time of use pricing in Auckland on some grounds, such as whether it could be expanded at reasonable cost sufficiently to significantly address congestion, or whether net revenues should be redistributed through tax cuts rather than spending on infrastructure, or if it is better to introduce road pricing more generally, so driving outside congested time and locations is cheaper.  It is possible to argue that there should be more and better public transport to accompany road pricing, or that it could cause government to delay or cancel some new road projects, but none of that is apparent.  

I’ve spent over 20 years working on road pricing policy around the world and I have seen arguments against road pricing from a range of perspectives. Some on the right see it as an additional tax that intends to limit motorists’ freedom and increases the power of the state against them or is used to invade their privacy through "tracking". Some on the left see it as unfair that a scarce resource (road space) is allocated on the basis of price rather than queuing.  Wilson is on the left.

Simon Wilson has written many columns in the past about the importance of tackling climate change, of getting more people out of their cars and into public transport or active modes. He is a fervent believer in behaviour change in urban transport policy. Now he is making himself perhaps the highest profile campaigner against the one policy that could achieve more of what he claims to want than any other – more efficient road pricing.

He titles his article “Sorry Simeon Brown, congestion charges are not the key to freeing up the roads”. 

He’s wrong. I doubt Wilson can identify a city in the world that has freed up its roads without road pricing, he certainly doesn’t name any. Short of Pyongyang (or Covid lockdowns), I don’t know of any major city in the world without road pricing that has significantly reduced congestion, although certainly some that have it do still have severe congestion (notably London). Singapore and Gothenburg certainly have much less congestion than before either city had congestion pricing, Stockholm has much lower congestion approaching its central city and along its main bypass route (although there remains congestion elsewhere in its network). Milan still has bad congestion, although it is better with pricing.  Wilson does not indicate which cities on a scale of Auckland have freed up their roads without either road pricing or depopulation

So what else did he have to say?

He repeatedly asserts that time-of-use pricing, congestion charging etc is a “tax”, which presumably he is saying for pejorative impact to appeal to readers on the right of politics (new taxes are "bad" from a traditional rightwing perspective).  Whether or not it is a tax would be a legislative matter. I’m not sure if he thinks water meters are a “tax” or electricity meters, but applying a price, that varies by time-of-day, and is periodically reviewed as to user demand (as in Singapore), is not very much like a tax. In Sweden, congestion pricing is called the “congestion tax” for legal reasons, in Singapore the term “Electronic Road Pricing” is used to describe simply a fee for using the roads. Does he see bus fares as a tax? Does he see the existing toll roads in NZ as a tax? This is hardly a major point, but it sets the tone for this article, which is a not particularly coherent piece, sometimes opposing road pricing and in one place saying "it has a role". 

Although he admits that congestion pricing works, he then makes several claims that do not stand up to scrutiny, namely:

• They can “do a lot of harm”;

• They are “not the key to reducing congestion”.

He also says they are not popular, which is hardly a surprise, as reports from The Congestion Question (the last major study into the topic from 2016-2020) indicated that public acceptability is the greatest challenge to implementing congestion pricing. Wilson’s column is of course helping to add to this challenge. I don't think you should complain about something being unpopular by contributing to its unpopularity sans the merits.

What about "do a lot of harm”? He doesn’t elaborate, and in fact provides zero evidence of a "lot of harm" anywhere, so why say it? Why scaremonger?

He then acknowledges that for commercial traffic, congestion is a cost, whether for freight delivery or simply providing services that require getting between sites.  However, he then describes Stockholm, London and Singapore as all being cordon schemes, which isn’t quite accurate. Although he cites The Congestion Question report, he clearly did not read the report on international experience (PDF) (disclaimer: I wrote that with colleagues of mine).

Let's be clear, Singapore is predominantly a corridor scheme (with two small cordons), with most charging points on major roads and arterial routes approaching the downtown. Stockholm is a cordon (PDF), but also now has a corridor charge for the Essingeleden motorway that passes through the city.  London is strictly an area charge (it charges circulation within the cordon as well as crossing it).  

Wilson mentions this because he prefers cordons it seems but sees corridor charging (which the Mayor of Auckland did propose last year) as being flawed because they are easy to avoid by rat-running on local roads. That’s true, if you don’t put in place measures to price that rat-running (e.g. by pricing exiting and then re-entering a road to avoid a priced point). 

This appears to be a very weak attempt to condemn road pricing schemes that aren't cordons, but the Government's policy is not that there should not be cordons, or that there should be any specific type of congestion pricing scheme at all.  

Of course, there has been no decision at all about what proposal to introduce in Auckland, but the Congestion Question did recommend a downtown cordon supplemented by corridor charges, on the most congested routes on the Isthmus and towards the North Shore first. More work has to be done on what the first scheme would look like. So it seems rather premature to be antagonistic to the very concept as a whole at this stage.

The Congestion Question indicative downtown cordon

His next point is to appear to be critical of the timeframe, as he claims the first scheme would not be in place until 2028. This seems pessimistic. Sure the legislation and approvals will not be finished until 2025, but it is entirely plausible for a scheme to be operational within two years of that. He indicates that the timing of elections (local in 2025, national in 2026) is driving this, but it’s unclear that this could be accelerated to be significantly faster. He says it should be operational when the City Rail Link opens, which I agree, but it seems unlikely that even if approved today, that a scheme could be operational in 18 months. Yet surely if that is the best time, the second best time is as soon as possible afterwards?

Then Wilson goes back to how unpopular it would be. He claims it is a “regressive tax”, yet I don’t recall him calling the introduction of the Auckland Regional Fuel Tax that, even though there is a study that explicitly concluded that (PDF). The fuel tax applied 12.5c/l on petrol and diesel sold in Auckland, and of course meant everyone driving paid it, except those able to afford an EV or hybrid vehicle. Wilson did support the regional fuel tax when it was introduced, and he said “It does hurt the poor disproportionately …. But it also targets almost everyone who's clogging up the roads”.

That’s nonsense. It targeted nobody. He also said “one day we’ll have better ways to manage demand” saying essentially road pricing would be that but “we don't have the technology in place to do that yet and it's controversial”. The regional fuel tax was not introduced as a demand management tool, but moreover the technology to do road pricing exists now.

Now the government is now advancing it, and he opposes it, not because of the unavailability of technology. Of course the regional fuel tax is now history, but that measure improving the cost of living for most Aucklanders is unnoticed, because this is a polemic.

He gives no evidence for road pricing being particularly regressive, although as a concept it is no more “regressive” than pricing water, electricity or indeed public transport or food. As part of developing proposals for Ministerial approval, an impact analysis of the proposed “time of use” pricing scheme will need to be undertaken.  Perhaps Wilson could focus on what that analysis should look like, rather than dismissing the whole idea of pricing as regressive. Now the Gothenburg congestion tax IS regressive, there is evidence of this (PDF), but it was a scheme set up to raise revenue and is far larger in scope than the scheme that would have been needed to relieve congestion.  The NZ Government is proposing time of use pricing specifically to improve network productivity, not to raise revenue, but Wilson ignores that, as it doesn't fit his polemic. Of course congestion is regressive, as the richest don't commute at peak times or can buy homes close to work.

He claims “It’s not the key to solving congestion. And one of the most common arguments for it is economic gibberish”. This is rather embarrassing. If you don’t understand an economic argument then the best way of understanding it is not to call it gibberish, in fact it displays astonishing ignorance. His understanding of the value of time and the economic impacts of congestion is poor indeed.

He claims “These charges will be a cost of doing business that companies will pass on to their customers. For the general public, they will raise the cost of living”. Will they? Having claimed correctly that less congestion will make all sorts of businesses more productive, whether it be for freight deliveries or services such as the building trades, they will be able to undertake more jobs for the same cost (wasting less time and fuel). Pretty much all benefit/cost analysis indicates businesses save much more than congestion pricing costs, so it would not be passed onto customers. Of course congestion costs are passed on.

It's his next claim that is the most embarrassing.

Alan McDonald from the Employers and Manufacturers Association (EMA) has said much the same. “Recent traffic monitoring data has found that Aucklanders are losing 22 million hours per year out of their lives while they sit in traffic,” he declared. “That equates to a $1.3 billion annual hit to GPD.”

Gibberish. You can’t link private travel to productivity because very few people drive to work on company time. However long your commute takes, it’s your own time you’re wasting.

Everyone resents it, and fair enough. But the economic value – the “annual hit to the GDP” – is zero.

Wilson claims that the economic cost of congestion to private individuals is zero. He claims this doesn’t impact on GDP.  Let’s set aside the obvious social cost. Congestion means commuters leave home earlier and get home later than they would otherwise. That’s less time with family, less personal time, less time to cook, to exercise, to sleep even. Wilson understands what externalities are, I think, so he could at least acknowledge that.  However, what he misses out is what congestion does to opportunities for individuals.

You see the available job pool for most people is directly related to the duration of commute from wherever they live to wherever jobs are located. Most people are happy to commute for up to half an hour, and many in a larger city for up to an hour, although those with children to look after are more challenged. Beyond an hour those able to spare that amount to time to travel to and from work are much more limited in number. In short, congestion reduces the opportunities people have to increase their incomes with better employment, and it also reduces the labour pool available to employers to improve their productivity. I’m always a little sceptical of the methodologies used to “cost” congestion, but to dismiss traffic congestion as not imposing costs on GDP as it applies to private individuals is ignorant. There is literature to back this up.

Wilson then determines that the answer isn’t road pricing, but more rapid transit. Yet he doesn’t seem to be able to explain why cities like Paris, Amsterdam, Tokyo, New York, Sydney or San Francisco all have chronic congestion WITH lots of rapid transit? The Northern Busway is a great piece of infrastructure, but it hasn’t fixed congestion on the Northern Motorway, although it has absorbed a lot of demand growth. Buses do carry a lot of people over the Auckland Harbour Bridge, but the idea that this is a substitute for road pricing is simply absurd. He may as well say that you don’t need parking fees if there are free buses.  It’s completely false to equate the impacts of the Congestion Question, which was a network wide reduction in congestion, from the effects of the Busway on one corridor.  He claims rapid transit reduces emissions. This only happens if it enables modal shift from driving cars, which of course congestion pricing promotes as well (bearing in mind transport emission in NZ are capped with the Emissions Trading Scheme anyway). 

The article explains all of the benefits from a lot of public transport, without even really noting that the costs of all of this infrastructure he wants need to be paid for, and one way of doing it would be through congestion pricing. That doesn’t mean I think that’s how the money should be spent, but surely that connection could be made? Furthermore, all of the rapid transit he touts does absolutely nothing for freight or tradies or other commercial traffic, as they can’t use it.

He then makes this remarkable failure to connect thoughts:

Our roads are appallingly congested, we are failing to reduce carbon emissions and our road safety record is among the worst in the developed world. The opportunity is for a rethink about how and why we use the roads, so we can build ourselves a more functional, friendlier city. Instead, the Government proposes a new tax.

He claims “a great many people will not be able to avoid a congestion tax”. How does he know? If it is a downtown cordon, where only 13% of employment is based and half of commuters already travel by public transport or active modes then hardly anyone will be affected. Even if it is just the Mayor’s two corridors, that wont affect most commuters either. Again, this is just nonsense. 

If Simon Wilson can’t see the link between road pricing, reducing congestion and emissions, and making a city more functional and friendly, then he is either ignorant or deliberately disingenuous. I fear he is simply a polemicist seeking a headline and he can’t give any credit to a politician he doesn’t like or support for implementing a policy that does more for what he wants than any other single measure at the lowest cost.

Opposing the very concept of time-of-use road pricing at this critical stage indicates he is not really interested in enabling all of the potential tools to reduce congestion, lower demand for emissions and encourage modal shift at all, but rather is just writing polemics for headlines. 

Wilson would be better placed to focus not on opposing the first government in NZ’s history to advance road pricing to implementation, but rather to focus on the design of the first scheme proposal for Auckland, to ensure it has a positive impact on reducing congestion, minimal impact on those with low incomes and limited choice, and to encourage creative solutions, such as those used elsewhere, to address any issues. If he wants a cordon, then talk about it. If he wants a different option, then fine. However, if he doesn’t know anything much about the topic at all, he might prefer to read a bit more, talk to people who do and not try to undermine a policy that actually has general support across the political spectrum from the Greens on the hard-left to ACT on the classically-liberal right. 

Time-of-use pricing could help Auckland look much more like what Simon Wilson wants it to, it’s just a shame he wants to get in its way, on grounds that are spurious and almost entirely baseless.

The Congestion Question evaluation of impacts