A new report in Australia calls for Sydney and Melbourne to adopt a more sophisticated time of day road pricing scheme as both cities continue to experience logjams and delays on a regular basis.

On the American continent, snarling traffic chaos affects the quality of life of the San Francisco Bay Area; and in response, a transportation group has also recently recommended road pricing schemes.

London is updating its longstanding flat-rate congestion charging scheme, and a major new public policy announcement concerning the UK’s infrastructure deficiencies warns of growing transportation bottlenecks right across the UK. Logistics businesses are naturally keeping a close eye on the unfolding implications of these developments.

In the first of a series on congestion charging, Forward with Toll looks at recent developments in Australia. The Australian report released last month was written by Grattan Institute, an independent think-tank focused on Australian public policy, and is entitled “Stuck in traffic? Road congestion in Sydney and Melbourne”.

In Australia, the use of toll roads has long been established and there now exists an extensive private road network operating under a road pricing structure, whereby trucks and other users must pay a charge. Both Sydney and Melbourne have the largest toll road systems in place, levying charges for the use of the roads.

The Sydney Morning Herald recently reported that the state government should investigate a network-wide cap on charges to relieve the burden of residents from toll charges. While charging cars and trucks to operate on private toll roads is common in Sydney and Melbourne, the Grattan Institute argues that more can be done with these roads and others to manage road congestion.

The authors warn that the two cities face gridlock soon unless something is done to alleviate traffic congestion, especially during peak hours. They reject building more city freeways as the solution since most of the congestion occurs in the Central Business District (CBD) where smaller scale engineering solutions and traffic light coordination are far better alternatives.

The authors added, “We should be sceptical of the idea that big new roads are ‘congestion busters’: they cost a fortune, take years to build, and can often fill up with new traffic of their own.”

Indeed, one of the main recommendations is that governments should publish an economic analysis of the pros and cons of building new road capacity vis-à-vis non-construction options to achieve the same goal.

They call for more sophisticated solutions and insist that the New South Wales and Victorian governments introduce “network-wide time-of-day pricing schemes that should be tailored to

Sydney and Melbourne’s specific challenges”.

The authors explained, “Congestion pricing would be the most effective policy response to congestion in Sydney and Melbourne, and state governments should start planning to introduce it. This will mean a rethink of the way future urban freeways are tolled.”

They added, “People who want to drive on congested roads in the peak should pay a small charge to do so. The revenue should be returned to the community as discounts on car registration, and improvements to public transport.”


Potential Congestion Charging Benefits

  • Reduced travel times and improved reliability for drivers, buses, taxis and deliveries
  • Potential source of funds to improve transit frequency and coverage; for bicycle and pedestrian improvements ; and to increase road safety and cover road maintenance
  • Reduced emissions of greenhouse gas and local air pollutants
  • Does not restrain (and may encourage) economic growth
  • Public health benefits due to increased cycling/walking and potentially lower accident risk due to decreased private vehicle use
  • Can encourage use of the cleanest vehicles through discounts to the charging system

Potential Congestion Charging Challenges

  • Securing public acceptance
  • Need for upfront investment in transit
  • Ensuring low income populations realize improved mobility
  • Addressing public concern over privacy issues
  • Allaying business owner concerns
  • Designing the system to meet technical and cost-effectiveness criteria
  • Assuring net benefits for most drivers in the form of reduced congestion and/or improved transit

The report then suggests that as more toll roads are introduced, state governments should ensure they have the flexibility to adjust future tolls to manage traffic flows. They recommend time-of-day congestion pricing in the most congested areas of each capital city. Research revealed in the report showed every-day Australian drivers to be extremely sensitive to road toll pricing.

Leaving aside the possible environmental improvements, the economic benefits of congestion charging are not clear-cut. The Bureau of Transport, Infrastructure and Regional Economics (BITRE) states congestion costs $6.1 billion a year in Sydney and $4.6 billion a year in Melbourne, and these costs are projected to more than double by 2030. However, the report authors conceded that the costs of implementing mitigation measures, including road charging, means the economic payback is not straightforward.

The political dimension to congestion charging is critical. Report authors pointed to the success of congestion charging in other major cities, such as Stockholm and London, as beacons of success. Both cities experienced political and community resistance to its introduction. However, once the congestion charge had bedded in, support for it blossomed in both cities.

However, many freight industry organisations in Australia urge the Federal Government to proceed with caution and consider all the alternative options.

Travis Brooks-Garrett, Director, Freight and Trade Alliance (FTA) Pty Ltd and Secretariat, Australian Peak Shippers Association (APSA), states that Melbourne is Australia’s export hub, and as a city, it is completely dependent on road freight movements. While he concedes congestion is an issue in the city, he warns that during 2017 road toll costs for heavy vehicles increased in some cases by 125%. He also cited a situation where one stevedore increased their “terminal access fees” for transport operators by 980%.

Brooks-Garett articulated his concerns, “First and foremost, this should not be about revenue raising. Congestion has real economic impacts, particularly for the international trade community. Any road pricing model must recognise that Melbourne’s export supply chain is wholly dependent on road freight movements. We need to support and facilitate these movements, not penalise or tax them.”

He added, “I think a formal review of road pricing should take place, with the direct involvement of supply chain owners and the freight industry in the development of the model. The stated goal should be to reduce supply chain costs and to optimise freight movements.”

He, therefore, warned against any further spikes in transportation costs. He reflected, “There needs to be stronger oversight and more involvement from Australia’s competition regulator, the Australian Competition and Consumer Commission (ACCC), particularly with the Government continuing to privatise key roads and assets. The Government needs to consider the impact of our transport costs and supply chain costs on our international competitiveness.”

Therefore, Brooks-Garrett suggests the alternative solution to easing road congestion issues should be switching more freight onto rail. This should be a priority for both the Government and the new port leaseholder, he insisted. There has been progress in shifting cargo onto rail in Sydney, but Melbourne is still completely dependent on the road for freight movements.

He then outlined how Melbourne’s newest container terminal, Webb Dock, has no access to rail facilities, and bridge weight restrictions will funnel many heavy vehicles through the city. Furthermore, Webb Dock is situated close to a large residential development.

He commented, “So we essentially have a perfect storm of growing freight volumes, no rail access and a booming residential area…something has to give. In this instance, disincentivising road use through pricing or charges won’t deliver the answer. Infrastructure investment is the only solution.”

Brooks-Garrett noted that the FTA and APSA provided expert evidence to the Federal Inquiry into National Freight and Supply Chain Priorities, where supply chain costs and capacity and planning issues are key areas of interest. This Inquiry will inform Australia’s National Freight Strategy, which will serve as a blueprint for Australia’s future infrastructure planning, he added.