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The Price is Right – The road to a better transport system

This article was written by Dr Patrick Carvalho and published on The New Zealand Initiative website

Bold policy changes in the form of congestion pricing, which charges drivers higher road user rates at peak times in overcrowded routes, can solve New Zealand’s shocking congestion problems, says a new report from The New Zealand Initiative.

The Price is Right: The road to a better transport system provides compelling evidence that without proper road user pricing, congestion will continue to increase in our urban centres. Government forecasts shows New Zealand’s total vehicle kilometres travelled might increase by as much as 66% by 2040.

“Introducing congestion charges can encourage commuters to find trip alternatives, such as other travel times, routes and transport modes. That would reduce the overuse of road services at peak times,” says report author Dr Patrick Carvalho.

“In return, to avoid congestion charges becoming ‘just another tax’, commuters should expect the government to commit to a revenue-neutral system – where every net dollar raised through congestion charges would be offset by, say, a dollar less through property rate collection or lower fuel prices.”

“Variable peak and off-peak rates are already part of our daily lives, from electricity bills and cinema tickets to hotel rates and public transport fares. Why should it be any different with car use”?

“In a sense, we are already paying for congestion through hours wasted idling in commutes every week. Instead of Soviet-style rationing of road space by widespread queuing, congestion charges would harness the power of markets to solve our daily, and costly, road bottlenecks,” says Dr Carvalho.

Congestion pricing is not a new concept, with close to 100 years of academic research backing it, and plenty of international case studies validating it. In New Zealand, politicians across the spectrum are in favour of congestion charges, and both the Tax Working Group and the Productivity Commission have proposed congestion charges as an efficient way to modify behaviour and improve environmental quality.

Read a summary of “The Price Is Right – the road to a better transport system

Read the full report