Congestion Charge the Answer?


It’s interesting to note we’re not the only place struggling to contemplate new ways to fund infrastructure for public transport.

An Australian engineering lobby group staging a national conference in Brisbane today, released a fascinating paper this morning discussing new funding models to get transport infrastructure on track.

Top of Consult Australia’s list of new funding ideas for Australia is congestion pricing and it looks to overseas experience for learnings.

The original Singapore scheme for road pricing was first implemented in 1975 as a paper-based arealicensing scheme. The scheme was later upgraded to an electronic cordon charge and is complemented by significant charges to restrain vehicle ownership and expand the rail system. The congestion charge (taken alone) is interpreted as being effective at reducing traffic congestion, with estimates of the own-price elasticity to the charge of between -0.19 and -0.58, resulting in significant reductions in road usage. The scheme is regarded as:
  • A technical success (it works)
  • A financial success (it makes $50M per year and costs $10M a year to operate)
  • A political success (it has reduced congestion and was carefully implemented to ensure people were comfortable with the system).
London has operated an area congestion-charging scheme since 2003. Within the scheme’s boundaries, (non-exempted) motorists must pay a fee to Transport for London before the end of the day or face penalty fines. Cars are identified using automatic number plate recognition through a series of fixed and ‘roving’ cameras. The scheme was intended to reduce journey times, improve reliability and to raise revenue for public transport.
The scheme is regarded as:
  • A political success (congestion decreased and the Mayor was re-elected)
  • A financial success (revenues exceed operating costs) and a technical success (vehicle identification has high accuracy)
  • However, there is significant debate as to whether the scheme is an economic success.
The Netherlands is introducing a nation-wide satellite-based road charging regime, which prices based on road location and timing (accounting for congestion). The scheme is undergoing testing of the technology this year with introduction dates of 2012 (heavy vehicles) and 2013-16 (private cars). The scheme and public information campaign have been shaped by social research about perceptions, including how revenues are to be spent.
The current proposal involves replacing many of the fixed-cost taxes (registration and other surcharges) which are to be abolished, while funding is to be increased for public transport. The collapse of the Dutch government in February and subsequent election in June (which has still yet to result in a formed government) means the road pricing plans may not eventuate.

Manchester attempted to introduce a two-tiered cordon charge, with revenues directed towards improving public transport. In 2008, the scheme was overwhelmingly defeated at a public referendum after concerted campaigns from opposition politicians and motoring groups.

The scheme was to be staged in such a way that public transport was to be significantly upgraded before the charges were applied. Nevertheless, because revenues were not to be used to reduce other motoring charges and taxes, the charging was perceived as “just another tax.”

Stockholm introduced an area-based charging scheme similar to London’s in 2007 after a 7-month trial. Unlike London’s scheme, the Stockholm scheme was facilitated by geography, whereby the number of charging points is significantly reduced due to the nature of archipelago cities.  Nevertheless, the scheme was expensive to implement and initially unpopular with voters, though the latter largely reversed with experience

New York sought similarly to introduce a three year pilot of a Manhattan central business district congestion charge. The scheme attracted broad based support in respect of a part of the city where more than 95 per cent commute by public transport and received city council approval in March 2008. However, as a taxing measure, approval by the New York State Legislature was required. There it encountered opposition, on a range of grounds including equity for low-income drivers and alleged impact on surrounding areas that might become ‘parking lots’. In April 2008, the legislature declined to vote on the proposal, with the consequence that eligibility for the federal grant funds that the city was pursuing for its scheme expired.

The episode took place at a time of sharply rising fuel prices – which by July 2008 had themselves reduced vehicle trips into lower Manhattan by 5 per cent.

Cars entering the central city would pay a fee

From this, the group concludes these as the key learnings:

Public opinion is generally negative towards road charging. Support can be improved by:

  • Good public transport alternatives to congested roads (London).
  • Using revenues to remove other road-based charges and taxes (Netherlands).
  • Hypothecation of revenues to road and public transport improvements (Netherlands, London).
  • Actual experience with a scheme through a trial and referendum (Stockholm).
  • Public information campaigns explaining motivation and operation (Netherlands).  Avoiding or, if not possible, addressing any split in political responsibility between different levels of government (New York).
  • Judging the timing of introduction well, in particular avoiding fuel price spikes (London, Stockholm, Manchester and New York).

It’s inevitable a congestion charge will be debated as part of Auckland’s forthcoming challenge to find the money for the big rail project dreams. I would love to see one introduced.

This is helpful background to see if we can, in a car dominated city, make it work and be politically acceptable.

Consult Australia Discussion Paper




  1. Doloras says:

    Congestion charge = tax on people who’re too poor to afford to live near the CBD. A regressive tax; reject in favour of increased rates (i.e. a tax on property value).

  2. Luke says:

    A congestion charge will not be regressive if it is used to upgrade PT or make it more affordable.
    Rates are can be very regressive because they are based on house value, not income.

    Especially bad for low/middle income people who have lived near the CBD for a long time, and now find themselves in expensive houses.

    Also If the tax is only on those entering the CBD in peak times then this will be fair as all will pay the same no matter where they live.

  3. karl says:

    Also, while our suburbs around the CBD are (relatively) wealthy, they are still outside of the CBD, so affected just like everyone else.

  4. Nick R says:

    Doloras, under the options considered by NZTA recently it was people who lived near the CBD who were affected the most, especially under the dual cordon model. Being that they would be charged for driving into the CBD yet also charged for driving outward to the suburbs.
    People who lived in outer suburbs would only be charged if they drove on congested routes into the CBD, driving across town or within the local district was unpriced.

  5. Matt says:

    Doloras, so long as the funds are directed to improving public transport the low-income people affected should have alternative options for travel. That’s kind of the point. If they then choose to drive, they have no right to complain about the costs.

  6. antz says:

    Well, i hope Joyce sees it as tax for building and improving PT ONLY.

    im not bothered about the Congestion Charge, im just worried that he’ll use it to spend on more worthless motorways.

  7. Kurt says:

    Most if not all of the countries/cities you name already have a decent public transport system set up. Auckland on the other hand has bugger all but buses in most areas which are not a decent alternative to cars.

    A congestion charge is just another tax on top of all the other taxes this government has created in its 2 year life.

    Interesting to read Rod Orams article in the Sunday Star Times 21/11/10 re the Holiday highway and how the figures don’t fit Joyces cost benefit criteria.

  8. karl says:

    “Auckland on the other hand has bugger all but buses in most areas which are not a decent alternative to cars.”

    Okay, lets put this into a bit of much-needed context - we don’t have a world-class public transport system, but we have one that is quite servicable for getting TO AND FROM THE CBD and that is progressively getting better, such as with electric trains. That excuse that we have a crap system cannot hold us back forever, it’s an argument promulgated as much by the “build roads” crowd as by the people wanting more PT. Do you think Londoners don’t complain about how their PT system is crap?

    Further, the “build PT first, then congestion charge” order kinda makes the idea moot - we need money for better PT, that’s what the congestion charge is supposed to provide as one of the effects. Horse goes in front of cart. Admittedly, if one wanted to be smart, one could introduce it as one of the levies on the day the CBD tunnel opens - using it to pay back a loan, rather than to fill a warchest for more PT.

    As for taxes and this government, that is neither here nor there - I would have loved the fuel tax, because it would have been at least used for a good purpose. A congestion charge would hopefully be hypothecated to PT improvements only, thereby not being “just another tax”.

  9. Kurt says:

    Londoners may complain how crap their PT system is but its vastly better than Auckland’s.

    You can’t hit people with yet another tax for driving cars without a decent alternative. People brought small motorcycles & scooters to beat fuel prices and have been whacked with sky rocketing ACC taxes, it never ends

    All a congestion charge will do is drive people away from whatever area its implemented in apart from workers which if you were a retailer is bad news. Steep parking prices amongst other things in Auckland’s CBD have slowly but surely ensured people avoid it and go to the suburbs.

    Yes the fuel surcharge was a great idea but Steven Joyce and his National mates thought otherwise, maybe because they had several other taxes in mind for other things. Now we Auckland’s have to start again and pick up the pieces.

  10. Luke says:

    I guess there is a political problem with congestion charging over fuel tax. Once the fuel tax has been in place for a while people forget that they are paying it.
    However the congestion charge is a separate payment
    so people are constantly reminded of the policy.

    CBD retailers are very short sighted. They need to realise foot traffic is key, and the only way to increase this is more PT. Less cars = quicker PT = more patronage.

  11. Matt L says:

    If congestion charging of some form was to be implemented it would have to be done vary carefully, as pointed out already it would get a lot of political opposition and could actually harm the PT cause as opponents would try to highlight that PT was getting special treatment etc regardless of the actual merits of any system.

    Another thing we would have to be careful of is the change in land use that could occur. In the late 90′s early 2000′s a lot of business flocked to low rise office buildings outside of the CBD in places like Greenlane as it was cheaper for them and for there employees from things like parking (remember the 90′s were when PT reached its lowest lows). As a result the CBD has not grown at the same level as other parts of the city so its share of employment has dropped. My personal observations are that motorway congestion in the mornings is often passing by the CBD rather than heading to it so it is those trips we need to target. One thing we would not want to see is a congestion charge only on the CBD further detracting from growth and encouraging more development in the suburbs where the charge didn’t apply.

  12. Luke says:

    I think the CBD is now strong enough that it could cope with the charge. Large companies are shifting into the CBD such as the new Westpac, and consolidation of the Telecom offices.
    High land prices should help discourage too much land being used up for parking in places like Greenlane.
    One would hope than forward thinking employers could offset the cost of PT so parking land could be freed up.

  13. DanC says:

    I would prefer a regional fuel tax than a CBD congestion charge as it effects all Auckland commuters. More people on public transport eases congestion for others trying to get to other area’s of Auckland. Also air quality……

  14. Nick R says:

    As it is, around 55% of people accessing the CBD do so by public transport, walking or cycling.
    So arguably the CBD has a sufficient public transport system already to make a CBD congestion charge an equitable option.
    However, a congestion charge of just the CBD wouldn’t be terribly effective, it would have to have a regional focus to really achieve anything.

  15. Andrew Stevenson says:

    Deloittes did a study (for the MoT?) around congestion charges a few years back and found similar levels of support for a cordon-type congestion charge around the CBD as was evident in London. The London experience showed that once it was in place, the level of support went up.

    (If my memory is wrong, please correct me.)

    I regularly use the 007, 008 and 009 for cross-town travel. I find them good, on the whole, but with a few crazy bits.

    I tend to agree with DanC in that a regional fuel charge would be better, even if half went into private transport and half public.

    It’s one area I think the National government wasn’t very democratic - they removed the right for us to choose that option and instead mandated it from central government.

  16. Craig says:

    Hi, I lived in London for 10 years and remember Ken Livingstone (then Mayor for London) bringing the Tax in. It was mooted at the same time that Auckland may do the same.

    2 Things:

    1.When you sit in traffic for 2.5 hours to get 5 miles then think about bringing it in. Congestion Charge? just call it a Tax, in comparison, Auckland in rush hour is a breeze.
    2. They also have a PT that works (most of the time - the population of NZ is moved daily on the Tube network alone) so can charge those who decide to take their vehicle in. Going without a vehicle in London is easy. We do not have that luxury so vehicle transport is a necessity. To then Tax your misfortune again under the auspices of Congestion Charging is ridiculous.

    Yes, we have to generate the money from somewhere but do not look at other mega cities as models for a little city like Auckland.At least compare like for like.

    As a vehicle is listed as a luxury item (no matter how necessary in Auckland) charging extra road charges per vehicle across the AKL region may be the way to go, or channeling some of Akl’s petrol tax back from the rest of NZ.

  17. Lance says:

    Everyone here is missing the real facts and that is for 40 years ,18-24% of the petrol tax collected in Auckland has gone to other districts. Who paid for Wellingtons rail network and electric buses, certainly not Wellingtonians, when Auckland needed to upgrade it bus fleet we were told that new electric buses were to expensive so they went for cheaper diesels, that were far more expensive to run. It is about time these other districts started paying back the money to Auckland.

  18. Nick R says:

    Craig, the term Congestion *Charge* is appropriate as most system would vary the price according to the level of congestion at the time. Calling it a ‘tax’ might suggest a flat charge or rate.

    One reason to create a congestion charge would be to acquire funds to build a high quality rapid transit alternative, the two could be introduced in stages together.


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