Road pricing may be the answer to transportation funding

In an article published on the Australian Financial Review recently, transport consultant John Cox claims that the potential introduction of road pricing is much needed with discussions going on under the surface.

One of the biggest driving factors in the examination of road pricing has been the realisation that the congestion issue in Australian cities will actually be greater than previous projections due to greater population forecasts. For example, the projections in the 2007 congestion estimates of the Bureau of Transport and Regional Economics now seem significantly too low (Melbourne was assumed to have a population of 4.1 million by 2020, where the population has already reached 4 million and is estimated to reach 4.7 million in 2020).

Another is that the hopes of economically efficient road pricing having a significant effect on reducing congestion have been reduced, with the perceived proposed pricing reduction of 9¢/km now thought to be too low to have any affect (with the perceived cost of private travel in Sydney and Melbourne at around 53¢/km). Finally, there now seems to be less reluctance by politicians to consider increased in road user charges.

According to Cox, most of the increased road traffic in Australian cities is being taken on the freeway network, and there is a realization that the only way to effectively reduce congestion is with increased road capacity that transfers traffic from costly urban arterial roads to high-capacity freeways.

Although road pricing is not useful for reducing congestion, it would raise significant annual funding for capital road investments to increase road capacity and thus reduce congestion. A 4¢/km increase in road user charges would equate to an increase in the de facto fuel charge of 32¢/litre, which would raise an additional $1.7 billion each year for road investments.

Cox claims that a Council of Australian Governments road reform study has developed a plan for efficient pricing and infrastructure funding for heavy vehicles, showing what a long-term project the introduction of road pricing would be – with a seven year timetable to introduce such prices.

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