Buying back toll roads

Reports that the NSW Liberal government is planning to buy back the Cross-City tunnel, following the bankruptcy of the second set of private owners mark an important step in the failure of the private infrastructure program launched in the 1980s with the Sydney Harbour Tunnel[1].

The interesting failure here is not the bankruptcy of the operators but the recognition that the whole idea of imposing tolls on a road designed to divert traffic from the city is nonsense. The most sensible plan, after buying the tunnel is to remove the toll and free road space in the CBD for a variety of initiatives including light rail and cycleways.

Unfortunately, the lessons have not been learned. The new WestConnex project in Sydney is to be a largely private tollway. The proposed East-West link in Melbourne is also a toll road but “is being procured as an Availability Public Private Partnership (PPP), with the State initially retaining tolling and traffic risk.” Whether or not these projects are economically and socially justified, there is no doubt that the use of toll funding will greatly reduce the benefits, leaving more traffic on congested, but untolled, roads.

fn1. A sham deal, which was eventually reconstructed as a publicly owned tunnel with a private operating contract.

91 thoughts on “Buying back toll roads

  1. @Megan: You won’t find me arguing against heavy PT subsidies. Entirely free is possibly wasteful. But it should be cheaper than driving. Zero chance of that here, though.

    @kevin1: I don’t have enough knowledge of (or interest in) transport policy to add more than anecdote. On reflection, my anecdote probably isn’t representative anyway: what commuting I’ve done has always been by bike, so the trips I’ve priced have been atypical re times, parking availability and price, etc. I certainly know people here who would far prefer a PT commute, but reluctantly drive because of PT’s patchy availability and exorbitant cost.

    Anti-PT / pro-fossil-fuel values amongst the Queensland elite (probably reasonably representative of the population, though the two groups’ motivations differ) inevitably trump detailed policy considerations here anyway, so transport economics, as it relates to Queensland, is just a word game. Values are more important than the detail, as so often.

  2. One development that could greatly reduce congestion is the use of mobile phones apps, or alternatively specialized devices, that allows everyone who desires it to let their car function like a taxi. You tell your mobile phone where you are going and it guides you to passengers going in the same direction that you pick up on the way. I presume there would be a rating system that would give people who are uncouth low scores and make them less likely to be picked up by drivers or less likely to be used by passengers. Of course organised opposition will make such systems hard to implement.

  3. @Crispin Bennett

    I’d very much like to see the question thoroughly and independently assessed.

    If PT was totally free to use, some things on the ‘plus’ side are:

    – no ticketing, enforcement, money handling, no time spent ‘swiping’ cards or buying tickets to get on and off;
    – less traffic congestion and road building/maintenance;
    – faster travel time for PT and others;
    – less GHG;
    – increased economic activity via tourism, worker utility, customer convenience and amenity in CBD and other centres.

    About the only thing on the ‘minus’ side is how much extra it would cost net of the savings.

  4. @Megan It would be interesting. But ’till all the redneck burghers are replaced with something better, it’s no more than entertainment.

  5. @Crispin Bennett

    I quite take your point. If there is indeed spare PT capacity during periods when there is congestion, along parallel corridors then in theory substitution would be some of the answer. Also, if pricing is as you say a serious barrier, then you’d have an argument for pricing roads and parking and underwriting public transport more heavily. Part of that underwriting should be the capital expenditures on new capacity and also new urban housing.

    I still would say though that more fundamental changes would be needed in the design of cities.

  6. @Luke Elford
    Could I ask for a comment on why parking levies at destination rather than journey levies are a highly imperfect substitute for congestion pricing? Is it because of exclusion of through traffic, although this might be included by camera tolling?

  7. Public transport that is entirely free has several benefits: it encourages people to make use of it; so long as the services are managed so as to provide appropriate capacity, it would reduce car traffic, all other things being equal; the entire ticket/smartcard machinery can be dispensed with; the ticket inspectors are unnecessary; in the case of buses, the bus driver’s job has a little less risk, as they no longer need to carry cash from direct ticket sales with them; there are no zones to worry about; the system is trivial to understand; car park spaces in the city areas can be freed up for other uses; the higher density of people to vehicle helps reduce overall pollution, including GHG emissions; fewer raw resources (metals, plastics, rubber, etc.) are required for people-shifting; quite probably a reduction in car accidents and the associated costs; etc. There are some obvious costs as well, and it doesn’t play nice with capitalists I suppose, as it has the obvious effect of reducing car sales, among other things. Councils that are locked onto car park revenue and traffic / parking violations probably won’t like it at first, either.

    It would be interesting to see how a totally free system—with appropriate extra capacity to cope comfortably—stacks up against our current mix of private and paying public transport system, with car park fees and all those other costs taken into consideration. Obviously from city to city there will be substantial differences, at least potentially, given geography, urban layout, demographic factors, and so on.

  8. And yes, there could be some bounce-back as a few souls decide to drive, once free public transport has de-cluttered the road system. On the other hand, if free public transport has adequate capacity and frequency of service to satisfy the vast majority of people, any bounce-back that occurs is likely to be quite limited.

  9. kevin1, Yes the conventional argument against using parking charges is that they are only an imperfect substitute for congestion charges. The usual reason is that they impact only on terminating traffic and by doing this and making the roads less congested on this account encourage more through traffic. In addition they don’t reflect congestion costs. A car travelling a short distance pays the same charge as one travelling a long distance. Finally its hard to figure out exactly how to use them as a surrogate. You don’t want people to drive during the peak. So “early bird” offers might make sense – you pay a low charge if you arrive before 7-00am and leave after 6-00pm for example. Generally the charge you would want to levy should depend on when you arrive and when you depart.

    There are however huge advantages in using parking charges. They have high community acceptability – people see paying for a space as paying for something tangible unlike congestion charging. There is a long history of using parking charges. They are also relatively low transaction cost.

    Transport economics nerds like me got a lot from Donald Shoup’s “The High Cost of Free Parking”. Its the best reference I have seen on parking economics and enjoyable though long reading. Strongly recommended for city administrators trying to improve city congestion and parking issues.

  10. About the objection to congestion pricing on the ground that some have rail alternatives and some do not. Surely, until congestion pricing revenue generates an income stream to cover the financing of new rail where needed, and until that rail is constructed, congestion pricing will enable uncongested bus services to serve those priced off the roads.

  11. In relation to an earlier post on this blog, I’ll just mention that congestion charges, electronic car pooling, and free public transport are all things that are apparently worse than the collapse of civilisation.

  12. @Donald Oats

    One of the other advantages of free public transport is that people who aren’t using it (eg: trades with utes full of tools) also win by getting all the rest of us off the roads and out of their way so they can get about their business.

  13. Megan :
    Like AGW nothing will be done unless people make it happen. Or at least try.

    Point taken. But what kind of “try” generates how much useful effect? And at what opportunity costs to other efforts? Clive Hamilton hit the nail on the head re AGW in this AGW piece. The crux of it is:

    If the science challenges the values, the values will win.

    It’s clear with AGW politics that scientific findings are a small and diminishing influence on what actually happens. I’d venture that the same may be true with rational transport policy. The corpulent Brisbane Club geezers who run Queensland have a picture of how things are to be. Prominently included in that picture would be: concrete, utes, 4WDs, block-filling houses, dogs, coal, yuccas. Barely visible in that picture: the Great Barrier Reef, single-parent mothers, solar power, buses, native shrubs, dugong. The picture acts as a filter. No matter how many reports come in advocating sensible policies for urban design or efficient energy use, the filter excludes them from honest consideration.

    When the mental picture of the world held by leaders (or those shopping for leaders) alters to include the things we might consider of value, then detail (of science, of policy) becomes relevant. Until then: how to change the picture, that’s the thing.

  14. Megan :
    Like AGW nothing will be done unless people make it happen. Or at least try.

    Point taken. But what kind of “try” generates how much useful effect? And at what opportunity costs to other efforts? Clive Hamilton has just hit the nail on the head re AGW in a RenewEconomy piece entitled “IPCC report will make no difference in culture of denial” (can’t link because doing so enforces moderation). The crux of it is:

    If the science challenges the values, the values will win.

    It’s clear with AGW politics that scientific findings are a small and diminishing influence on what actually happens. I’d venture that the same may be true with rational transport policy. The corpulent Brisbane Club geezers who run Queensland have a picture of how things are to be. Prominently included in that picture would be: concrete, utes, 4WDs, block-filling houses, dogs, coal, yuccas. Barely visible in that picture: the Great Barrier Reef, single-parent mothers, solar power, buses, native shrubs, dugong. The picture acts as a filter. No matter how many reports come in advocating sensible policies for urban design or efficient energy use, the filter excludes them from serious consideration.

    When the mental picture of the world held by leaders (or those shopping for leaders) alters to include the things we might consider of value, then detail (of science, of policy) becomes relevant. Until then: how to change the picture, that’s the thing.

  15. @hc
    Thanks for ref. to Shoup hc, lots of insights there.

    John Q, I have tried to track down your 1993 sub to IC Inquiry into Urban Transport “External Costs of Private Vehicles – Harm to Other Road Users” without success. Not on PC site, nor on your UQ site under submissions, and can’t find at CAEPR. Would be interested to read it if available somewhere. Thank you.

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