A congestion charge will help unclog Sydney's roads and save drivers money

11 March 2016

It's time to rethink the way we price the use of our roads if we want true reform to ease congestion, writes Professor David Hensher.

The accident on the Harbour Bridge on Wednesday, which led to chaos on many roads well beyond the harbour crossing, highlights once again that traffic congestion whatever its cause – typically accidents or breakdowns and not just the volume of traffic – is a curse on our society.

It reflects in large measure the growing evidence that we have failed to tame the growth in traffic. Simply building more roads under the existing pricing regime is no panacea to improve the road journey.

We know that if we build more roads and improve travel times that we will simply attract more cars using the roads. We will be accommodating, if we are lucky, a containment of a few years of traffic growth at slightly improved travel times, and then we will be back where we started in terms of traffic congestion.

Despite many attempts to sort this out, the fundamental weakness in all the well-intentioned initiatives is the failure by all governments to tackle pricing issues so that we can deliver roads where the benefits are worth paying for.

It is time to rethink the way we price the use of our roads to ensure users are getting value for money and society accrues the many benefits of faster and safer roads (which translates into greater productivity of our cities).

I am, among others, of the view that we have to focus on reforming the pricing of use of roads across the entire metropolitan area and not just the CBD since traffic levels are typically bad in many locations. 


We need to begin a journey away from fixed charges, such as car registration, to use-based charges.
Professor David Hensher

Research backs reform

At the Institute of Transport and Logistics Studies we showed a while ago that for the Sydney metropolitan area, if you halved registration charges and introduced a 5¢ per kilometre peak period charge, then almost every driver would be better off financially (as would state Treasury, though the federal government would lose out on some fuel excise due to reduced distance travelled by cars). 

It would result in a 6 per cent drop in peak traffic (similar to traffic drop during school holidays), which makes a huge difference to the performance of the road network. It also a way of ensuring that those who benefit for the time savings under the new reform also pay.

To convince people we are talking sense, take a simple example of typical peak period kilometres in Sydney per year (4000 kilometres out of the typical yearly average 12,500 kilometres for private cars). Halving registration charges should save on average $200 a year and 4000 kilometres with a peak charge at 5¢ per kilometre is $200 so it is cost neutral. We could reduce registration charges even more, as per the view of Infrastructure Australia, and then saving to motorists is greater than $200 (possibly as great as $500).

We know from our surveys of commuters and non-commuters (and yes, at least 35 per cent of peak period car trips in Sydney are not commuting trips) that there are at least 6 per cent (and we believe more) of people who can and would switch to travel outside of the peak if the price incentives are there.

Over time we should review and increase the distance-based charge once the time benefits are revealed and experienced. Additional revenue can be used to fund much needed road and public transport infrastructure while delivering significant travel time savings on our roads.

The issue of reform is no longer about economics and engineering, but about politics and marketing of the real benefits to travellers and society of more effective pricing to tame congestion.

Professor David Hensher is the director of the Institute of Transport and Logistics Studies at the University of Sydney Business School. This article was first published in the Sydney Morning Herald.

Trevor Watson

Director of Media, Business School
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