Francis Vierboom's Blog

A blog about things. Mostly news, ideas, and Sydney

Congestion charges in Sydney

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I love the idea of congestion pricing in Sydney. This is because I am highly self-interested. I ride a bicycle everywhere, including to work every day; I live in Glebe, ten minutes ride from the city centre and within walking distance of most of the pubs I like; and I ride a motorbike whenever I need to go further than my legs can be bothered (or when I urgently need to buy 5kg of laundry powder and 3L of milk). So basically, congestion pricing would probably cost me nothing, and cost a lot for people with very different lifestyles to me.

That being said, I’m still pretty sure it is a great idea for NSW overall. State governments basically have no money, for constitutional reasons, and almost half of the NSW budget is grants directly from the Commonweath (see p17 of the NSW Budget Overview). The majority of the remainder relies on a few taxes for revenue: cigarettes, and alcohol, gambling and stamp duty.

There are odd issues around choosing what to tax. You can tax ‘bad’ things, like cigarettes or gambling, in order to discourage them… but that means that the state government then has a direct financial interest in seeing people continue to drink and smoke while playing the pokies. Of course the state government has to pay for hospitals and police as well, and that does provide a useful incentive for them to prevent the harmful effects of drinking and smoking. (Which, it suddenly strikes me, is possibly a good argument to not federalise the health system).

Creating a new stream of tax revenue from driving seems like a better option. I’m not aware of any reported cases of people becoming ‘addicted’ to driving, unlike booze, cigs and gambling, so if the state government can convince lots of people it’s worth paying tolls to drive on roads, then philosophically to me it just seems a much fairer thing to tax.

But taxing driving itself is also a big winner for the citizens and economy of NSW. A little while ago Felix Salmon (via Matt Yglesias) looked at a study quantifying the costs associated with congestion in NYC. It found that a single extra car in Manhattan on a weekday typically caused a total of 3.26 hours in extra waiting for other people. From Felix:

Komanoff calculates (check out the “Value of Time” tab) that the average vehicle has 1.97 people in it, and that the value of an hour of saved vehicle time south of 60th Street in Manhattan on a weekday is $48.89. Which means, basically, that driving a car into Manhattan on a weekday causes about $160 of negative externalities to everybody else.

I have very little doubt that comparable numbers apply to people driving into the Sydney CBD. As Matt says:

If we implemented congestion pricing in those metropolitan areas suffering from chronic congestion and then gathered up all the revenue and lit it on fire, we would swiftly find ourselves living in a more prosperous society. And if we gathered up the revenue and did something else with it, we’d be even better off.

So entirely ignoring the particulate pollution impacts, carbon emissions, the health benefits of cycling or a bit of extra walking to use public transport, and the mental health benefits of not being stuck in a car listening to Kyle and Jackie O, congestion pricing is a winner.

Written by Francis

November 30, 2009 at 12:08 pm

Posted in Uncategorized

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