Money for jams

Congestion charging is back on my list of good ideas

For a while there, I was influenced by the equity arguments against it. The lack of substitutes to travel, and the unique role of commuting to work in a person’s well-being tipped me against congestion charging. Good economic reform doesn’t throw out equity every time it can get an efficiency dividend, and I decided congestion charging equity problems made the policy unworkable.

I dreamed up a ‘clever’ scheme that was a halfway-house to full congestion charging, preserving the substitution effect of a price rise, but without an income effect.

But I’m swinging back to support for a simpler price signal. What has captured my attention is the following graph from a new Grattan Institute report. It shows the extent of congestion in Sydney. Amazingly, most people experience almost no congestion. Their commutes are swift.

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What this tells me is the the impact of a congestion charge is actually not likely to be widespread. Serious congestion, of more than ten minutes in a trip, is the purview of a small subset of commuters.

That  subset is likely to be going into the CBD, where congestion is real.

Screen Shot 2017-10-05 at 6.04.58 PMRemember that despite the importance of CBDs, most jobs are still in the suburbs.  If we know one thing about CBD jobs – especially nine to five CBD jobs – it is that they tend to be the good kind.

City centres are where the business services jobs are. The specialised jobs that pay big coin, as opposed to the population-serving jobs (pharmacies, florists, bakers, doctors, schools) that are found disproportionately in the suburbs.

Screen Shot 2017-10-05 at 6.17.48 PM

It looks like driving into the city in peak hour is an elite problem. No wonder it gets so much attention. The Grattan analysis makes it clear the congestion charging would really only have to be applied in a narrow area.

Screen Shot 2017-10-05 at 6.21.09 PM

This fact also counters the argument that congestion charging can’t be introduced until better public transport happens. Melbourne and Sydney have radial public transport systems that provide terrific CBD access.

 

Traffic is bad. The absence of price signals on the use of existing infrastructure causes crowding and delays. You end up listening to way too much FM radio. But that might not be the most costly effect. The big downside is probably the pressure to build yet more infrastructure.

Daniel Andrews has green-lit the West Gate tunnel – a big freeway that will not only soak up $5.5 billion but also lock Victorians into a regimented tolling regime (not a congestion charge system) for decades.

Big freeway projects have a lot of side effects.

One is making the places that they travel through less pleasant. Place-making is a big theme in urban planning now and a lot of money is spent on making areas seem nice. This “tunnel” which is actually an elevated road for a good section of its length,is kind of the opposite of place making.

A second side effect is city-shaping. You can cut travel times to the city, but that encourages yet more sprawl and inefficient urban form. (Thanks, marchetti’s constant._

If you want a policy that is likely to be equitable, can potentially conserve scarce government funds for more valuable projects, and prevent the paving over of the inner city, then congestion charging is your horse.

To finish with here’s some data to make you go “huh!” – rain, apparently, has no effect on traffic:

Screen Shot 2017-10-05 at 6.39.15 PM

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thomasthethinkengine

Thomas the Think Engine is the blog of a trained economist. It comes to you from Melbourne Australia.

2 thoughts on “Money for jams”

    1. Aren’t they mostly new toll roads tho? Its one of those things you acclimatise to. But in my experience the idea of paying money to use a road that used to be free definitely makes people cross!

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