Optimising traffic congestion requires a national approach to transport

In August 2002, Brisbane City Council (BCC) released a Draft Transport Plan for Brisbane 2002-2016. It explained that Brisbane faced serious traffic congestion without appropriate action now. BCC referred to the Bureau of Transport and Regional Economics' forecast that Brisbane would be Australia's most congested city by 2015.

The Draft Transport Plan proposed a package of measures to tackle congestion. The package included a North-South Bypass tunnel under Kangaroo Point, the Brisbane River and Fortitude Valley.

In February 2003, BCC started promoting the tunnel. Brisbane households received red cards proclaiming, "The answer to easing city congestion is BORING". Not to be outdone, the opposition proposed several tunnels, so the answer is even more boring.

Dr John Nightingale's recent article suggested BCC politicians suffer from "tunnel vision". He complained, "The car is unquestioned and unquestionable", and accused politicians, transport planners and engineers of "pandering to car-usage".

Dr Nightingale attacked the rhetoric of the "boring" slogan, rather than the policy package in the Draft Transport Plan. BCC's plan does not pander to motorists. The same applies to the Queensland Government's Transport 2007: An Action Plan for South-East Queensland (April 2001). Indeed, both transport plans strongly favour public transport over cars, as does Dr Nightingale.

Public transport accounts for only seven per cent of trips in Brisbane, but BCC wants 51 per cent of public-sector transport budgets for Brisbane allocated to public-transport infrastructure and subsidies. Also, BCC intends reallocating more road lanes from general traffic to buses. This will follow completion of sections of orbital road, such as the North-South Bypass, but sometimes lanes will be reallocated without provision of compensating capacity. Therefore, effective allocations to public transport will substantially exceed 51 per cent.

Already, around $600 million a year is spent on public-transport operating and capital subsidies. But John Nightingale wants to increase the rate of subsidy to equate fares with the private cost (much less than social cost) of using a car.

Dr Nightingale argued that social costs of congestion, emissions and road-provision justify larger subsidies. However, economic analysts have shown that subsidising public transport is a second-rate measure compared with congestion charges that vary from time to time and place to place with the degree of congestion. For example, economic modelling by Dr Ian Parry of Resources for the Future indicated that subsidising public transport would provide only 11-24 per cent of the gains to the community of a properly designed system of congestion charges. Gains from congestion charges include shorter delays, lower fuel consumption, less vehicle emissions and more efficient use of existing infrastructure and public funds.

In addition, funding of public-transport subsidies requires higher taxes than otherwise and therefore means greater economic damage from taxation. In contrast, a well-designed congestion-charging regime could fund reduction of economically damaging taxes or more expenditure on public infrastructure and services, as well as alleviating congestion and pollution.

The third-last sentence of John Nightingale's article recognised that congestion charges reduce congestion. He envisaged this measure would apply in conjunction with larger subsidies to public transport. However, public transport subsidies, particularly at higher rates, are superfluous when congestion charges are applied. Congestion charges would more effectively induce people to drive at non-peak times, car-pool, use other routes, ride bicycles and switch to public transport. Not only are public-transport subsidies less effective in encouraging public transport use, but also they discourage other desirable options.

Dr Nightingale, like the Queensland government, considers that not providing more road capacity is a weapon against congestion. As population and incomes grow while road capacity remains static, congestion will increase. He thinks this would induce drivers to "try something else". However, overseas experience has shown that drivers will endure an extraordinary degree of congestion before switching transport modes. It does not make sense to try to reduce congestion by letting it get worse.

Dr Nightingale correctly argued that adding road capacity makes driving at peak times more attractive relative to public transport and other travel modes and times. So, driving at peak times increases, and as population grows, roads become congested again.

But, this assumes that access to busy roads at peak times is free. Then, each driver experiences the average cost of congestion, but does not take into account his/her contribution to the problem and the resulting extra cost imposed on others. From a community perspective, key parts of the road system will be overused at peak times and congestion will be excessive. Congestion charges make drivers take into account the extra congestion costs they impose on others, and road-use at peak times falls accordingly.

It is important to note that elimination of traffic congestion is not a sensible policy objective. The appropriate aim is to reduce congestion to the optimal level. Reducing congestion any further adds more to social costs than to social benefits.

The key to reducing congestion to the optimal level is not just more road capacity, including "boring", or congestion charges only, or simply improvements to public transport. A combination of the three is required.

Congestion charges reduce the amount of road space required at peak times and facilitate more efficient use of existing and new road infrastructure. However, as population and incomes grow, road improvements will eventually provide a superior balance of social benefits and social costs than rising charges. Even in the short term, there will be many circumstances in which road expenditures provide a higher ratio of social benefits to social costs than other measures. For example, new orbital road and river-crossing capacity that takes through-traffic off congested radial roads will reduce congestion. Such capacity will also increase the effectiveness of congestion charges by increasing the availability and quality of alternatives to driving on congested radial roads to the CBD.

Because congestion charges will encourage a shift from cars to public transport, economically viable investments to increase capacity, reliability and convenience of services will complement congestion charges in tackling traffic jams. Savings from cutting subsidies to public transport that has become more viable could be applied to tax cuts or government programmes.

Economically justifiable, complementary road and public transport improvements should be in place when congestion charges are introduced. These improvements could be funded by debt to ensure timely availability. This is equitable because present and future users share the cost of the infrastructure. It is fiscally responsible because congestion charges provide funds to service the debt.

It is widely recognised that the existing tax on fuel artificially increases the cost of inputs to business activities, thereby interfering with production efficiency and reducing the total value of goods and services in the economy. Reduction of fuel tax to make room for congestion charges, which improve efficiency of resource-use, would reduce the adverse economic effects of the tax system as a whole.

Cutting fuel tax would also avoid higher imposts on the average motorist. This is politically important. The poorer sections of the community pay a higher proportion of their incomes in fuel tax for various reasons. Also, motorists generally resent the commonwealth government's allocation of just 16 per cent of fuel tax revenue to roads.

But, the Commonwealth wants to keep the rest for other purposes. So, the Commonwealth's AusLink Green Paper (November 2002) said congestion is a problem for state and local governments.

In December 2002, the National Transport Secretariat described congestion as a problem of national economic importance. The Commonwealth needs to be part of a solution, not an obstacle to one. Another challenge is looming for Australia's system of fiscal federalism.

Being trapped in traffic is "boring". If our three spheres of government fail to implement appropriate measures, perhaps we should try to make traffic congestion more enjoyable. Dr Anthony Downs of the Brookings Institution suggested acquiring a car with climate controlled air conditioning, a radio, CD player, hands-free phone, a fax machine, and a microwave oven. Also, we can drive to work with someone whose company we enjoy. Then, we can make traffic jams part of our leisure lives.