Congestion charging ‘inevitable,’ but not now

A congestion charge is being ruled out by the Minister of Transport for now, but he is thinking longer term about how to use GPS transponders to track car usage and charge road user fees instead of fuel taxes, Dileepa Fonseka reports

Minister of Transport Phil Twyford believes congestion charging is “inevitable,” although he is ruling out introducing it in the "immediate future".

The issue has become more pointed in this election year after National suggested in a discussion document late last year they were open to congestion charging. That would have left the way clear for Labour to use the idea without the fear of a 'new tax' attack in an election campaign.

"We have no plans to introduce congestion taxes," Twyford told Newsroom in a phone interview.

But Twyford also told Newsroom it could be part of a future GPS-based road user per-kilometre pricing system aimed at replacing declining fuel tax revenues. 

“We're doing some thinking about what might the future look like and the most likely option I believe is a kind of GPS-based transport pricing system based on time and space use of the transport networks,” he said.

“If you do move to a system like that where every car has a transponder and so on, that would then give you a pretty powerful tool to do congestion pricing.”

'Bizzare policy caution'

Arthur Grimes, Senior Fellow at Motu Economic and Public Policy Research Trust said there was no reason to wait for a new GPS-based system before going ahead with a congestion tax and believed refusals to put on a charge were “purely political”. 

“The last government wouldn't have a bar of it because they thought it would be a vote loser: full stop,” Grimes said. 

“It doesn't seem like the current Government is any better, it's bizarre,” he said.

And on the other side of the house National Party spokesman for Transport Chris Bishop said he wanted to “get on with it”. 

“Everyone that looks at this knows that we need better ways of managing demands on our roads and congestion pricing is our single best way of doing that,” Bishop told Newsroom. 

“I would characterise the last seven to ten years as everyone going 'yeah this is a good idea' but never actually making a commitment to do it.”

Auckland and Wellington “need it now”

Congestion charging is a price on roads that charges people more for using busy roads and motorways during peak hours and can be done with automated cameras capturing licence plate numbers. 

Chris Bishop says it's time to get on with congestion charging. Photo: Lynn Grieveson

The aim is to smooth out demand and give people financial incentives to delay their travel to a time when roads are less busy - or to use public transport for peak time travel. 

In Singapore it takes the form of a charge that dynamically adjusts according to the number of cars on the road, while in London it is a price paid by every vehicle that enters the central city. 

”Auckland and Wellington drastically need it now and have needed it for the last 10 years.”

National policy has shifted

When Auckland Mayor Len Brown raised the idea in 2011 of congestion pricing in Auckland, he was quickly shot down by then-Transport Minister Steven Joyce. 

Two years later the National Infrastructure Unit put out a discussion document on demand management of infrastructure which also appeared to gain little traction. 

But when he became Finance Minister Joyce changed his tune. In 2017 he and then-Transport Minister Simon Bridges announced a multi-part study to look at congestion pricing.

“Alongside our current multi-billion dollar transport investment in Auckland, we need to look at new ways of managing demand on our roads to help ease congestion. Smarter transport pricing has the potential to be part of the solution,” Joyce said.

'The Congestion Question'

Twyford has continued to fund that study into congestion charging in Auckland, but in the intervening years its name has changed from the Smarter Transport Pricing project to “The Congestion Question”.

“I think it's inevitable, I think it's the way the world's going and we're following through on Auckland demand pricing work that the former government started,” Twyford said.

The study will deliver its final report by the end of the year. 

Grimes said the failure of the nation’s politicians to deliver congestion charging despite a wealth of evidence supporting it was “woeful”. 

”Auckland and Wellington drastically need it now and have needed it for the last 10 years,” he said.

'Don't mix congestion charge issue with fuel levies'

Grimes said lumping in the issue of a congestion charging scheme with declining fuel tax revenues was "really, really poor analysis".

The upkeep of New Zealand’s national transport infrastructure, including roads, is funded through the National Land Transport Fund (NLTF). 

Its revenues come from fuel excise, but as cars get more efficient or go electric they will use less fuel and less money will be available for the upkeep of roads. 

“I don't imagine anybody voting against it except maybe truck drivers, but even they might vote for it as long as they were then told that it was going to be introduced more widely.”

National's RUCs for fuel duty swap

Late last year National published a Transport and Infrastructure discussion document outlining an idea to levy Road User Charges (RUCs) - a per kilometre fee - as fuel duties declined. 

Twyford also sees the need for this and believes the path forward is a transponder-based system where people would be charged for the time they spent on the road and the number of kilometres travelled. 

But Grimes said it was a mistake to lump a congestion charge in with other policy schemes targeted at raising revenue for the upkeep of roads as they were separate issues.

While a GPS-based system might be there to pay for wear and tear on a road, a congestion charge wasn’t there to raise money for anything - just to discourage the behaviour of using a road at peak times. 

"You don't worry about what the money's being used for, you worry about what's the activity you're trying to stop or reduce.”

'Charge the truckies first'

Grimes suggested a congestion charge could also be made more politically palatable by being levied on the road freight industry at first to encourage more off-peak deliveries.

“I don't imagine anybody voting against it except maybe truck drivers, but even they might vote for it as long as they were then told that it was going to be introduced more widely.”

Opposition to a congestion charge could also evaporate after such a charge was put in place. Grimes pointed to Stockholm, where strident opposition had forced the government to implement it alongside a promise of a referendum on the issue. But once congestion charging began, much of the anger dissipated.

“There was overwhelming opposition to start with and then when they had the referendum on it two years later there was overwhelming support,” he said.

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