LUKE FRASER. Congestion charging: Stockholm, Melbourne and Turnbull’s legacy.

On congestion charging. There are three lessons: first, congestion charges are devilish hard to put in place, even when they work demonstrably well; second, don’t try to implement this in a city where there is no serious traffic congestion, or people will smell it for the revenue grab that it is – and respond accordingly. A third, vital lesson: Stockholm needed more than one level of government support to implement the charge.  

In 2008, Sir Rod Eddington wrote for then-Victorian Premier John Brumby that:

‘…some form of congested-targeted road charging is inevitable in Melbourne, although this may be a decade or more away’.

Eddington’s report found Melbourne’s major cross city arteries were almost fully-congested in peak; there was increasing pressure even during off-peak times. One way or another, the report wrote, Melbourne would solve its congestion problem – either through a combination of congestion-targeted charging and new transport infrastructure, or through declining economic performance and lower population levels. Congestion charging can work because it makes people think twice not so much about travelling to or from the city, but about how frequently they choose to travel through it. Much of Melbourne’s main road networks cross the city centre, more or less, rather than distributing traffic around the city.  The experience of useful congestion charging elsewhere is not that economic activity drops off as much as people are more efficient and rationalise their driving habits.

With a decade nearly past since Eddington’s report, as if on cue, Infrastructure Victoria’s latest report also advocates a Melbourne congestion charge as top priority: it found that this could bring the working city back to school holiday-type traffic levels.

The hostile treatment this latest report received (including the State opposition leader’s memorable ‘it sounds like something dreamed up at a Fitzroy dinner party’) was the subject of an earlier post. That post also touched on Stockholm’s experience of congestion charging, which is generally overlooked in the Anglosphere in preference to the far blunter London model. Stockholm’s model now enjoys majority public support and is accepted by all shades of Swedish politics as productive economic policy. It reduced traffic in that city by around 22 per cent almost immediately, equating to a 30-50% drop in congestion levels[ii] and continues to perform. It is a larger and more sophisticated model than London’s, with time of day pricing, tax deductibility for businesses, maximum daily charges capped so as not to disadvantage very frequent users and no charges at all in the evenings or in peak summer.

Before we chalk Stockholm’s success up to Scandinavia’s famous ‘consensus politics’ (or the tragic lack of Ayn Rand in their diet, as you prefer), we should reflect that even this overwhelmingly successful congestion charge nearly collapsed: despite a seven-month trial proving that charging a few dollars for city trips in peak and shoulder periods reduced congestion dramatically and changed driver behaviour, the model barely survived a municipal referendum: only central Stockholm city residents were in bare majority favour at just 53 per cent of the vote. Every surrounding municipality voted it down.  What is more, in 2014 the Swedes tried to implement a new congestion charge in the city of Gothenburg – a smaller city than Stockholm, without a world-standard congestion challenge. That proposal failed.

Three lessons: first, congestion charges are devilish hard to put in place, even when they work demonstrably well; second, don’t try to implement this in a city where there is no serious traffic congestion, or people will smell it for the revenue grab that it is – and respond accordingly.

A third, vital lesson: Stockholm needed more than one level of government support to implement the charge. This has direct relevance for Australia at a time when our Federation model is truly on the skids, leaving State Premiers without the necessary top cover to drive big reforms on the ground.

The nadir of Canberra-State transport relations probably came in the wake of Melbourne’s East-West Link motorway cancellation in 2014. The new Victorian government had just cancelled that multi-billion dollar project as a poor use of taxpayer funds, yet the Prime Minister and his bureaucracy continued to set billions aside for the now-deceased project and refused to allocate Canberra revenue to other projects. This gave immense succour to some of the hold-outs in the East-West Link consortium. The mess dragged on until the Victorian government paid these hold-outs over a billion dollars of taxpayer money to go away. Truly, a failed Federation model at work.

A congestion charge for Melbourne presents an opportunity to rediscover a better model – in transport and perhaps beyond.  No State Premier in their right mind would risk championing something as contentious as a congestion charge without Canberra in lockstep. There is a structural perspective to this reluctance: modern Australian economic reforms have been guided by national consensus and usually some funding assistance – States rarely do big reforms by themselves. That said, Victoria at present is probably the right shade of politics – progressive Labor – to sponsor early planning of congestion charging for Melbourne: after all, Stockholm’s model began as Green/Labour Left ideology and inner Melbourne –including dinner-party-prone Fitzroy – appears increasingly a Greens stronghold.

Stockholm also tells us not to discount the value of the Lord Mayor of Melbourne as a catalyst for a congestion charge. Stockholm’s model relied heavily on the leadership of its mayor Annika Billström. It should be of interest to current Lord Mayor of Melbourne Robert Doyle that Billström had – like Doyle – rejected congestion charging several years earlier, prior to her advocacy of a trial in 2006. Mayor Billström was in turn supported – if not directed – by her colleague, Prime Minister of Sweden Göran Persson.

Here’s the national leadership bit.

Without explicit Canberra support, no Premier –possibly not even a Lord Mayor – would ever advocate a congestion charge in Melbourne, for fear of being wedged politically: Canberra could harness the same potent forces that were unleashed over East-West Link to trash any such charging model. These same forces all-but killed the worthy Stockholm charge in municipal referenda.

‘Canberra support’ needs to involve more than a warm and supportive press release.

It falls to the Prime Minister to offer both a safe national policy framework and some money on the table to drive any productive congestion charge in Australia’s biggest cities.

Prime Minister Malcolm Turnbull makes much of his love of public transport and his passion for more productive major cities. Here are some simple steps he could take to deal Canberra into this discussion in a substantive way and thereby promote far-sighted State action:

  • A National Congestion Charging Policy could be developed and agreed between Prime Minister and Premiers. This would ensure no ‘wedging’ – it would shut the door on the risk of political opportunism at the crucial early implementation and advocacy stage of any city’s congestion charge. This would allow matters to be planned and trialled responsibly.
  • As part of this policy, there should be formal recognition that the benefits run far beyond reduced congestion. Congestion charging helps treasuries spend much more productively on all future city transport projects: well-designed congestion charging – a form of road pricing and rationing – improves treasury decision-making because it reveals a far more rational picture of genuine road and public transport demand. In other words, the choices people make when real money is at stake through the congestion charge will reshape future traffic patterns and project priorities for the better. This has multi-billion dollar efficiency implications for the taxpayer. It will shake out ‘white elephant’ mega-projects far more reliably than any amount of shiny new infrastructure advisory bodies and sundry paperwork factories.
  • Commonwealth research funding should be made available to any State wishing to examine and even trial congestion charging. Noting the Gothenburg lesson that you need real congestion before you even consider congestion charging, in practice this means only the major east coast capitals need be interested. This should further-de-risk the Prime Minister’s national policy foray at the Council of Australian Governments.
  • The Commonwealth should be prepared to go beyond offering political support to State Premiers and Lord Mayors. Via suitable legislation, funding could be made available to support complementary transport infrastructure projects in the congestion-charged city. As John Austen[iii] and I have both pointed out previously, these decisions should, from a Constitutional perspective, be made by the Commonwealth Parliament, not the Executive, and most likely through a Senate committee.

It is well within the gift of the Prime Minister to lead this sort of discussion. It doesn’t cost a great deal of money and will be irrelevant to Premiers with small capital cities. In adopting such a policy, Turnbull creates a safe space in which Premiers and Lord Mayors can consider action to stoke the boilers of our biggest economic engines – our big cities.

Developing National Congestion Charging Policy would also see Turnbull resurrect the sort of robust cooperative Commonwealth-State structures that underpinned the Hawke-Keating era economic reforms, but which have since been lost entirely, to Australia’s great cost.

Not a bad legacy.

Luke Fraser is the founder and principal of a transport policy and investment advisory. In 2012 he was appointed to the board of the Prime Minister and Premiers Road Reform Project. Prior to this he was a national freight industry chief executive.

[i] http://johnmenadue.com/blog/?p=8657

[ii] Eliasson, Jonas, The Stockholm Congestion Charges, An Overview Working Paper 2014:7, Centre for Transport Studies, Stockholm (2014)

[iii] http://johnmenadue.com/blog/?p=7286

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