Charging for Infrastructure – A (personal) Transport Perspective

Article written by Andrew Body – Company Director

A disclaimer – this article reflects an entirely personal view. I’d love it if readers let me know their views.

I have been fascinated lately with the high profile that charging for infrastructure  has had in mainstream media – not just the geeky, industry-specific websites on which I often spend time. I have to congratulate The Infrastructure Commission / Te Waihanga, whose recent survey has been a catalyst for much of this interest. The interest has, of course, been helped in no uncertain terms by the high profile water / lack of water issues in Wellington and the consternation with removal of the Auckland Fuel Excise Tax and questions about how the revenue might be replaced. Who ever thought that the removal of a tax would be greeted with anything other than celebration?

Te Waihanga’s recent survey[1] found that New Zealanders believe charging for infrastructure services based on usage is the fairest way of charging. The survey asked participants to weigh in on whether they believed payment for services such as roads, electricity and water should be based on household usage, income or location. While 74% of respondents felt usage-based charging was fair for electricity and water, just 34% said the same for roads. This is an intriguing result. What drives the difference between how we should pay for electricity or water, compared to how we should pay for roads?

Everyone understands usage-based payment for electricity given the way the electricity sector works. Some (those in Kapiti and Auckland for example) understand usage charging for water. Does the fact that there are already usage-related charges in these sectors drive the acceptance? Or do we – as New Zealanders – just think that roads and the access they give to opportunity are different? Why? Is it something to do with concepts of freedom? Does it reflect that for many of us there are very few alternatives to using our cars to access employment, education, leisure activities or family? I don’t know the answer, but I speculate that there are aspects of ‘no one likes change’ with a very healthy smattering of ‘I have no ability to change my use, so to charge me more is unfair’.

Whatever the reason, the prevailing negativity towards usage-based charging for roads has not changed in the 25 years I’ve been involved in the sector and nor have the problems exacerbated by the lack of charging. I managed to find a presentation I gave to a conference in 2006, which outlined the following issues with the (essentially unchanged since then) charging and funding systems:

  • Demand for road space at peak times in our urban areas is enormous.
  • Local authorities are struggling to find the funding share required to even maintain their existing networks.
  • There is not enough funding to achieve infrastructure development objectives – uncertainty of revenue was an issue noted by the Land Transport NZ Chair at the 2006 launch of the National Land Transport Programme.
  • Fuel Excise costs are encouraging moves to alternative power sources – hybrids – and vehicles are becoming more efficient anyway, reducing the revenue that can be collected.

Sound familiar? Nothing has changed in 20 years and yet, whenever the issue is studied, the conclusion is that there are real benefits to usage-based charging. Take, for example, ‘time of use’ or congestion charging (charging for use of congested parts of the network at peak times). Three significant studies of which I am aware have concluded that there are significant benefits to implementing a well-designed congestion (or time of use) charging scheme in Auckland:

  • I was personally involved in the Auckland Road Pricing Evaluation Study (ARPES) in 2005.  This comprehensive piece of work showed that a number of different options were feasible and beneficial in Auckland, with the best performing being an area-type scheme (like London) or a cordon scheme (like Stockholm).
  • I was then privileged to be the Ministry of Transport’s Adviser for “ARPES 2” in 2007 and 2008 which looked in further detail at scheme options. Again the findings were that implementation of a scheme was feasible, with travel time, mode shift and environmental benefits, with possible social impacts (cost of travel, inability to afford to make educational or employment trips) requiring mitigation (which the scheme revenues could pay for).
  • In 2020 a further study (The Congestion Question) reported its findings, which included that, with the right design, supported by improved public transport services and a mitigation programme to assist vulnerable road users, the opportunity exists for Auckland to benefit from:
    • a sustainable 8%–12% improvement in network performance
    • the potential to generate a meaningful lift in transport and economic productivity, which will benefit employees, businesses and the wider Auckland region.
    • a more pedestrian and bike friendly street environment.
    • an improvement in local air quality and reduced greenhouse gas emissions.

Where we have, however, recently seen change, is in the degree of central and local government alignment and support:

  • In August 2021 the Select Committee Inquiry into Congestion Charging in Auckland was released with a number of very clear recommendations, including to implement a congestion pricing scheme in Auckland.
  • Earlier this year the Auckland Council’s Transport and Infrastructure Committee endorsed a Time of Use Charging – Indicative Work Programme, and the creation of a joint Auckland Transport and Auckland Council programme team to progress time of use charging as soon as practicable.

The question is, are we now at the point where some form of congestion or time of use charging could be implemented in Auckland (or elsewhere, noting that Wellington, Tauranga and Christchurch have all made recommendations on the need for charging in some form)? Honestly, I don’t know. The same old issues apply, in that:

  • Transport professionals see the benefits, but the public sees that they’ll just pay more for trips they currently make – which is particularly an issue with current cost of living pressures.
  • Everyone agrees that charging can’t be implemented until public transport and other options provide real alternatives to using the private vehicle – but there are significant costs to scale up PT, and no one is quite sure how much is ‘enough’.
  • Politically it is a highly charged issue (as can be seen from Te Waihanga’s survey), and with our short election cycle some very brave leadership would be required.

Personally I am convinced, and have been for many years now, that the addition of a charge is a critical tool to help manage demand for transport infrastructure at peak times in our most congested urban centres. Continuing to add urban road lanes is massively expensive, environmentally fraught and frankly, just really hard to do. So my view is that it is not a question of if, but of when and how. We have momentum currently with central and local Government aligned, so let’s work out where we can start. As an old boss of mine used to say, “you can’t steer a parked car”. Let’s get the car (pun intended) underway, find an area where we can pilot some form of congestion charging, and start steering so we understand how best to do this in a NZ environment. I’m sure we can find a ‘catchment’ in either Auckland, Wellington or Christchurch where public transport and other options are already strong and we have confidence we can use daily caps, concessions or other mitigations to make sure no one is disadvantaged.  I’m convinced we can make it work, and we should get on with it. What do you think?