The introduction of a congestion tax could reduce carbon emissions and transit times in each of Australia’s capital cities. With the environment playing such a large role in the lead up to the federal election, it is surprising this important issue has not received more attention from each candidate.
The much anticipated and long awaited Henry Tax Review strongly recommended a congestion tax as a way to reduce the severe traffic jams that many Australians living in major cities experience. A congestion tax could well be a way of addressing one of the biggest headaches felt by governments of all levels. Billions of tax-payer dollars are spent each year dealing with the traffic mayhem that has become common in Australia’s capital cities.
Motorists would note the irony then that their own inability to move forwards though blocked and congested motorways is a result of the federal government’s failure to move forward with any comprehensive tax reform. Neither the Henry Review’s recommendation, nor the Liberals rejection of the tax could move the Labor Government to respond to the concept.
A congestion tax, if properly designed, could simplify and reduce the way in which Australians pay for road usage, as well as significantly reduce congestion in metropolitan areas. However, the proposal is likely to be so electorally toxic in key marginal seats that no government would put forward such a proposal during an election campaign without bipartisan support.
Congestion taxes charge road users based on how much they contribute to traffic. This model recognises that time spent wasted in congestion is a very real cost for many Australians. It is therefore disappointing that no real serious political discourse has occurred on this issue.
In a simple model, those who drive from the outer suburbs to the city would pay much more to work in the city than those who lived closer to the city centre. As federal marginal electorates are disproportionately located in the outer suburbs, introducing a congestion tax policy in a knife-edge election is unlikely to be helpful to the government’s chances of re-election.
The people of Stockholm, one of two major western cities to have introduced a congestion tax, had a referendum on the subject. Those located inside central areas to which travel was taxed overwhelming supported the initiative. However, areas with residents who would have to travel to the congested areas voted against the initiative.
The initiative passed because the Swedish government claimed residents living in central areas would be most affected and as such, only counted the votes of those residents. The Swedish government had the luxury to introduce such a measure because it enjoyed broad support across Sweden’s political spectrum. However, Tony Abbott’s recent statement that there absolutely won’t be a congestion tax clearly demonstrates that no such support exists in Australia.
It is no coincidence that Tony Abbott decided to broach the topic in Logan, which is located in the marginal seat of Moncrieff. However, by arguing that a congestion tax would unfairly burden those who live in typically less affluent suburban areas, Abbott ignored the fact that those people are already unfairly burdened. Other than higher fuel costs (partly due to the fuel excise tax) and inconsistent toll roads, they also lose many more of their productive hours in traffic.
A simple model, such as a charge levied on all vehicles entering the CBD could significantly reduce traffic levels. Such a charge saw a reduction of more than 20 per cent in the volume of traffic entering London’s city centre.
A similar reduction in any of Australia’s major cities could significantly reduce total transit times. Indeed, the failure of toll roads to meet usage expectations in Australia’s three largest cities is proof that motorists are less willing to drive on roads they have to pay for.
Australians currently pay fuel excise and vehicle registration fees, with all three levels of government bearing responsibility for roads. The Sydney University's Institute of Transport and Logistics Studies found the construction of new roads often, ironically, only leads to higher levels of traffic. A federal system that based road fees on distances travelled in congested areas could significantly reduce levels of bureaucracy without increasing how much the majority of motorists actually pay.
The institution of a means to measure and charge a congestion tax would be impossible without further infrastructure. These practical difficulties, in addition to the electability issues associated with the tax, will likely ensure a congestion tax is not on either of the major political parties’ agendas in the near future. However, there is sufficient merit behind the concept that it will hopefully not remain off the political table forever.
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