Can road pricing really improve urban productivity

 The Grattan Institute has this month released a report entitled, Productive Cities: Opportunity in a changing economy offering solutions to help increase economic productivity and efficiency in Australian cities.

The report analyses housing, income and transport data in Australia’s four largest cities to show that while highly paid and qualified workers are living close to city centres, workers with trade skills and low skills, and people on low incomes, are living further from the centre.

Amongst its recommendations, the institute advocates building more homes in established areas of cities and improving urban transport. Wayfinding Forum wrote about the benefits of transport oriented developments in established urban areas last month.

However, of most interest to our subscribers, the report also recommends consideration of road-user charging to ensure that road space is preserved for the most productive uses and as a way to raise funds for public transport.

According to the report “in order to address traffic congestion, it is not enough to rely solely on building new roads without also paying attention to managing the demand for road space. A more efficient use of road space could be achieved by introducing a pricing system such as road user charges, congestion charges or time-of-day tolling.” It notes that this was a recommendation of the 2010 Henry Review into Australia’s Future Tax System.

Recent research by our PTC team relating to the time-of-day tolling introduced a couple of years ago on the Sydney Harbour Bridge and Tunnel had practically no impact on congestion and use of these roads. The reduction of vehicles between 2008 and 2009 of 1.6% was more than compensated by the increases in cars using the Ryde Bridge ( 5.2%) and Gladesville Bridge (+2.7%) with an overall result of +0.7%.

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