traffic scene road-based pricing
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A “gaping hole” in the Commonwealth’s $11 billion a year fuel excise revenue caused by an electrified car fleet could shift the political appetite in favour of road-based pricing and other innovative transport reform measures, according to Monash University’s professor Graham Currie.

This revenue drop-off could lead to less money flowing to state and local governments to spend on additional infrastructure to relieve congestion, and make alternatives such as road-based pricing more attractive.

The City of Melbourne this week joined federal entities such as Infrastructure Australia, the Australian Competition and Consumer Commission and the Productivity Commission in pushing for the reform of existing road pricing systems, releasing a discussion paper that proposes a congestion charge scheme.

Under the proposed congestion charge scheme, Melbourne motorists would pay for every kilometre they drive instead of paying for registration fees as an annual lump sum.

The policy would be designed to reduce congestion by encouraging drivers to take alternate forms of transport and travel in off-peak periods.

The new tax system would be modelled on an opt-in user pays system such as that used in Oregon in the US. This scheme charges volunteer motorists 1.7 US cents (AU 2.3 cents) per mile travelled, and similarly replaces registration fees rather than adds to them.

The eradication of registration costs could also help make a congestion charge more politically palatable, with Victorian state politicians on both sides still wary of such a tax.

The Age today reported roads minister Luke Donnellan stating that the Andrews government had “no plans to introduce a congestion tax or to replace car registration with a road user charge”, and that shadow roads spokesman David Hodgett said he was more likely to “partner Dustin Martin in Richmond’s midfield” than consider a congestion tax.

Ultimately, the council is only able to push the agenda because it does not have control of carregistrations. Action would be needed from the state government.

Because fuel excise is a substantial revenue stream for the federal government – at 40 cents a litre – the Commonwealth is more receptive to the notion of a congestion tax and any alternatives that might replace falling fuel excise receipts.

Earlier this year, federal minister for urban infrastructure and cities Paul Fletcher supported the shift to road user charging, suggesting the journey would take over a decade and would depend on confidence in the policy from all levels of government.

Road-user pricing elsewhere

Road user charging schemes vary, with different cities around the world implementing different models.

Professor Currie advocates a system where cars have tags that can detect when a driver is in a congested area and respond appropriately.

Other options include cordon pricing schemes where drivers pay to enter particular areas. These systems have been useful for keeping congestion out of central locations, but can be difficult to monitor and enforce.

In Milan, a pay-to-enter zone was introduced that lowered traffic volumes by 16 per cent, reduced public transport delays by 12 per cent, and reduced carbon emissions by 15 per cent in four years.

The introduction of road pricing in Singapore saw a 20 per cent reduction in delays within the cordoned zone, and in London congestion stabilised for 10 years following the introduction of zone charging, despite population growth of 1.3 million.

A cordon charge in Stockholm led to 24 per cent fewer commuter trips by car, with most people switching to public transport.

However, professor Currie suggests that a lot of people have no choice but to travel in congested areas, which would be one downside to a congestion charge scheme.

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  1. Australians, will break-up with their cars when public transport allows them to. No serious commentator can compare Sydney’s PT service with European cities such as Milan, Stockholm, London or Paris.

    Yes people do drive because they don’t have a choice.

    Maybe give the ideology a miss, when trying to basically make it more expensive for every day to live.

  2. There are a number of bizarre suggestions in regard to Fuel Excise that are frequently quoted in the press, Yesterday it was “Professor Harper” of some “business school” quoted excise as being a tax for roads.

    The notion that fuel Excise is a tax for road construction was concocted by the NRMA in the late 60’s, this idea has routinely been touted by politicians with a law degree including the eminent Law Graduate Tony Abbott.

    The truth is, “S81 of the Australian Consitution” clearly states, All revenues or moneys raised or received by the Executive Government of the Commonwealth shall form one Consolidated Revenue Fund, to be appropriated for the purposes of the Commonwealth in the manner and subject to the charges and liabilities imposed by this Constitution.

    The Excise Act 1901, the Excise Tariff Act 1921 and amendments, make no mention of hypothecation of fuel excises for road construction, and can’t because of S81 of the Australian Constitution.

    Therefore there is no Hypothecation of fuel excises for roads.

    Excises are a Commonwealth Tax. State Governments construct and regulate roads, therefore only the State Government could implement a Congestion Tax and only the Commonwealth could reduce or abolish fuel excises.

    The Federal Government is unlikely to consider any reduction In fuel excises as they are implemented for a host of other economic reasons unrelated to road users.