Is Melbourne ready for pay-per-use roads?

Moving Well | Words: Steve Colquhoun | Illustrations: Frank Maiorana | Photos: Matt Harvey | Posted on 02 March 2020

As traffic congestion worsens, experts call for a user-pays roads system.

Forty per cent less traffic on CBD roads during peak hour, every day of the week – it sounds like a concept every long-suffering Melburnian commuter can get behind. But is Victoria ready to embrace the mechanism that could deliver such a radical shift: pay-per-use roads? 

Late last year the Grattan Institute added its voice to a growing chorus calling for a user-pays road-pricing scheme for Melbourne as a means to deal with the city’s growing traffic congestion problem, joining the likes of RACV, Infrastructure Victoria, the Productivity Commission, City of Melbourne and Infrastructure Australia. 

The Institute’s Right Time, Right Place, Right Price report proposed a three-stage plan beginning with a tolled cordon around the CBD – similar to London’s – followed by pay-per-use charges on key arterial roads during peak times, and eventually a network-wide system of charges based on time of use and congestion levels.

Monash freeway traffic

What is network road pricing? 

Pay-per-use or network road pricing is designed to encourage people to rethink the need to drive – especially during peak times – in favour of alternative options such as public transport, cycling or walking.  

Advocates argue that road-pricing charges would also help replace declining fuel-excise revenue, which currently pays for road improvement and infrastructure, but is expected to plummet as electric vehicles gain traction over the next decade. 

Several cities around the world have already implemented various forms of congestion charging, including London, Singapore and Stockholm, while New York City is expected to begin in late 2020 or early 2021. 

The Grattan report recommends that a tolled CBD cordon be introduced within five years, where entering or exiting the area would trigger a congestion charge of $5 during the weekday peak and $3 at shoulder times, via licence-plate recognition technology.  

The Institute’s Transport and Cities director, Marion Terrill, says setting charges at a rate comparable to the cost of catching public transport into and out of the city could result in 40 per cent fewer cars driving into the CBD in the morning peak. “It would also ripple out through the whole network; you’d see network-wide improvements, sometimes many kilometres away from the CBD.” 

While the idea of charging motorists to use the roads is politically tricky – neither the state nor federal government has an appetite for introducing a road-pricing scheme – Infrastructure Australia’s CEO Romilly Madew says the alternative is to accept traffic chaos as the new normal. “The outlook is bleak, and that is, congestion costs will double by 2034,” she told ABC TV’s 7.30 program. 

Indeed Infrastructure Australia’s modelling predicts a 23 per cent increase in delays on Melbourne roads by 2034, regardless of efforts to widen roads and smooth traffic flows. 

Why more roads aren’t the answer 

As the state government embarks on its billion-dollar ‘Big Build’, including major road projects and numerous public-transport initiatives, planning experts argue that today’s mega-cities can no longer build their way out of traffic congestion. 

“As our cities are getting more and more congested and populations are growing enormously, the solution isn’t just building wider and wider roads, because where does it stop?” says RACV’s senior manager transport, Peter Kartsidimas. “Building more roads to solve the problems is not working.”  

He says road users are already paying a de-facto toll in lost time and extra fuel costs that come with traffic congestion. “Politicians don’t like to talk about it, but road users are already paying a toll through fuel excise, no matter where you’re driving or the time of day, and you’re burning it sitting in traffic anyway. This will cost motorists more and more unless we change the way we tackle congestion. 

“The state and federal governments need to work together and start planning for this because technologies change very quickly. Not wanting to make what seems like an unpopular decision will only make things tougher.” 

He says any road pricing scheme needs to be considered as part of a bigger equation that factors in improvements to public transport, the rise of electric vehicles, the removal of fuel excise and a review of car registration fees. “Under road pricing, if you’re in an EV you’re plugging in for free and with a petrol car you’re removing fuel excise (currently charged at 41.8 cents a litre) so your fuel costs come down a lot. Registration might be free or a lot cheaper, and you get a network that’s less congested and actually works.” 

Peter says an effective road-pricing system is likely to charge drivers based on time of day, type of vehicle, distance travelled and where you travel, measured by technology on smartphones or a device fitted in vehicles.   

“So, for example, driving from Brunswick to the CBD in peak hour, along Lygon or Nicholson Streets – which carry abundant trams – would attract a premium because you’re impacting the network more than, say, a Tarneit tradie who drives to Craigieburn every day before the peak, who would end up with a cheaper trip.”  

Some parts of the network, he says, might remain free. There might be a price cap on distance and concessions might apply based on household income and access to public transport.  

User pays graphic
“As our cities are getting more and more congested and populations are growing enormously, the solution isn’t just building wider and wider roads, because where does it stop?”

Why better public transport is crucial 

Crucially, he says, significant improvements to public transport would be needed to provide a genuine alternative to driving. This kind of  holistic approach, he says, could mean that road users who switch to non-car alternatives end up reducing their transport costs and commuting time.  

“What this would allow us to do is better manage the network so people who have to be on there can use it when they need to, and those who don’t have to be on there can use it at a time when there’s more capacity and it’s cheaper.  

“It’s not saying  you can’t use it during those peak periods, it’s saying you’ve got options, and the fewer people on that road at a particular time, the better it is for you.  

“We understand how much easier it is to travel in the school holidays – just taking a few cars off the network can make a big difference. Taking unnecessary trips off the network in the peak hours would have a similar effect.” 

Despite the strong arguments in favour of road pricing, the Department of Transport says the government has no plans to deviate from its established infrastructure upgrade program, nor to introduce congestion pricing or tolls on any existing roads.  

“We are investing in a world-class transport system for Victorians by building the Metro Tunnel, North East Link and West Gate Tunnel, while also removing level crossings and putting high-capacity trains and new trams on the network,” says a department spokesperson. “We’re also investing in state-of-the-art technology to manage traffic flow and reduce congestion across the network.” 

But Infrastructure Victoria’s 2016 study, The Road Ahead, warned that Melbourne’s population would reach almost six million by 2030, with 400,000 additional workers. By that point, it estimated urban congestion will cost every Melburnian an extra $1700 a year, or $7 a day, in additional travel time, vehicle operating costs and loss of reliability. 

The benefits of road-user pricing would extend beyond reducing congestion, says Infrastructure Victoria’s CEO Michael Masson. “Benefits would include improved health and environmental outcomes, fairer costs for users and a more sustainable revenue stream for government.”  

A holistic city-wide road pricing system has yet to be put into practice elsewhere, says RACV’s Peter Kartsidimas. “But all the world’s big cities are talking about this now. Victoria has traditionally led the way in transport for many decades, from our free-flow road tolling system on CityLink to seatbelt rules, and there’s no reason why we can’t lead the world in this as well.  

“We’ve got the best managed motorway system in the world already, the rest of the world comes here to learn from Victoria. Why not be the first city in the world to do it then sell that technology back to other countries?” 

Around the world 

Congestion charging has been viewed as largely successful in several major cities around the world. A 2018 report by the Tri-State Transportation Campaign, a transport advocacy body for New York City, assessed congestion pricing strategies used in Singapore, London and Stockholm. It found: 

  • London’s cordon was erected in 2003 across a 21-square-kilometre section of the city, charging a flat daily fee of $A22 to enter between 7am and 6pm. This resulted in a 15 per cent decrease in congestion despite a 19 per cent lift in the city’s population to 2016. 
  • Stockholm has experienced a 22 per cent decrease in traffic congestion since launching its cordon around  35 square kilometres of its CBD in 2006, which charges drivers $A5.40 to enter or exit the city. 
  • Singapore introduced an Electric Road Pricing scheme in 1998, using variable pricing via a network of 80 gantries throughout the inner city. Each gantry charges motorists up to $A4.35 to pass, resulting in a 15 per cent decrease in congestion. 

Other cities to have introduced congestion charging include Italy’s Milan and Gothenburg in Sweden, while New York City approved a plan in early 2019 that is expected to start late in 2020 or 2021. 

Westgate Bridge


The RACV's position

“We need a smarter way to manage transport, and part of that solution is managing the way we travel in our private motor vehicles. What road pricing will do is manage that demand.  

“London stopped building roads a long time ago. They’re solving congestion by building as much other transport as possible. While Melbourne doesn’t yet have London’s population, our rapid population growth and urban sprawl make the transport task equally difficult, because we’re going to have to move a lot of people longer distances, without the luxury of London’s public transport system. So we need a solution that solves those long commutes. 

“Ideally we should have a user-pays system no different to your electricity. If you use electricity during peak period, you pay higher prices, but if you use it in the off-peak period, you pay lower prices. So everyone pays, it just depends on the time of day and where you’re travelling to.” 

RACV senior manager transport,   
Peter Kartsidimas.