Throwing stones from glasshouses

Victoria’s Opposition Leader, Daniel Andrews, is asking the public “what are your transport priorities in Victoria? Let us know using the hashtag #notunnel”. He’s promoting his campaign with the line “Napthine’s $8 billion tunnel won’t fix Melbourne’s congestion problems” (see exhibit).

I agree that the East-West Link freeway the Victorian Premier, Denis Napthine, is committed to building won’t provide a lasting fix for traffic congestion. But I’m equally confident Mr Andrews won’t be going to the 2014 state election proposing anything that fixes congestion either.

In fact both politicians would do all Victorians a really big favour if they stopped talking as if they’re really serious about fixing congestion. The fact is no additional transport infrastructure, whether road or rail, will fix traffic congestion.

Relative to the demand for travel at peak times, Melbourne’s road network is so constrained that any increase in capacity created by a new road will simply unlock latent demand. Similarly, any additional capacity “created” by some drivers switching to rail will be taken up by other drivers.

New rail lines do not of themselves reduce traffic congestion. In an important paper published in The American Economic Review in 2011, The fundamental law of traffic congestion: evidence from US cities, Gilles Duranton and Mathew A Turner concluded that “both road capacity expansions and extensions to public transit are not appropriate policies with which to combat traffic congestion”.

Rail lines are valuable – they make it possible for land uses to cluster together at densities roads couldn’t possibly support (e.g. the CBD), but they don’t stop some travellers taking to their cars. Reducing congestion requires positive measures to make cars less attractive.

If Messrs Napthine and Andrews seriously want to reduce congestion, then they have to find a way of making driving less attractive. The most plausible way to do that is to start charging for road space in congested conditions.

Congestion charging discourages drivers who make relatively low value trips. Those who aren’t prepared to pay will make the trip at another time, shift to public transport, or decide it’s not worth making.

According to research cited in the State of Australian Cities 2012 report, only one third of AM peak motorised trips in Melbourne are for work. Moreover, 17% are for recreation and shopping purposes. The pattern for Sydney is similar.

It only takes a reduction of around 5% in the number of vehicles to increase average vehicle speeds by 10-30%. It won’t be at the speed limit necessarily, but it will be fast enough to satisfy the expectations of most drivers.

Requiring motorists to pay for the congestion they cause can be done in a number of ways with varying degrees of efficiency and levels of cost. With suitably sophisticated technology, it would be possible to track the location of every car. Or it could be implemented by a cordon system as in London and Singapore, or via a proxy such as charging for parking.

Congestion pricing isn’t a radical concept: after all, we already charge for public transport and provide concessions fares for those of limited means. We already ration other finite resources like water, electricity and gas by charging according to the level of use. Indeed, we usually apply a progressive tariff i.e. the price increases as consumption increases.

By reducing demand at the margin, congestion pricing delays or puts off entirely the need to invest in costly new infrastructure like Melbourne’s proposed $8 billion East-West Link – see Infrastructure: what to do about the ‘Cleopatra problem?’ (1).

There’s an enormous amount of “latent capacity” in our existing infrastructure system that’s going to waste – it needs to be unlocked by sensible pricing policies (2).

I appreciate that neither Mr Napthine nor Mr Andrews is courageous enough to go to next year’s state election with a promise of implementing congestion charging. However it would greatly improve the standard of public debate if they’d stop pretending they can do something about fixing congestion.

It’s not just them either, other political parties and advocacy groups often find it convenient to market their favoured policies as congestion fixes. Here, for example, is The Green’s Federal Deputy Leader, Adam Bandt, claiming that a rail line to Doncaster “is the best thing we can do fix congestion”.

Mr Andrew’s question about transport priorities in Victoria is nevertheless an interesting and important one – I’ll come back to it soon.


(1) The East-West Link will most likely be tolled, but the tariff will be structured to maximise revenue, not optimise demand.

(2) See more detailed discussion of road pricing here, here, here, here, here and here.