Tuesday, 29 January 2013

London consults on changes to congestion charge

Transport for London is consulting currently on a series of changes to London's congestion charging scheme.   All of them affect a relatively small number of users, and the net effect is likely to be a modest reduction in traffic, an increase in revenue and reduction in costs.  Below I summarise the proposals and my view on them.  The deadline for submissions is 8 February 2013, and they can be made here online.   

1.  Creating a new Ultra Low Emission Discount to replace the Greener Vehicle Discount and Electric Vehicle Discount : The purpose behind this is three-fold, one is to simplify the discount for environmentally vehicles into one category, another is to tighten the scope of the discount, in part because the congestion charge is a congestion charge, not an environmental charge, and finally to make the discount technology neutral, by being based on an emissions standard, not a fuel.  However, the discount is seen as part of a whole package of measures to encourage those who wish to drive in central London to use vehicles with the lowest environmental impact.

The change will mean that from 1 July 2013, all vehicles of less than 3.5 tonnes which emit 75g/km of CO2 or less and meet the Euro 5 standard for air quality, will gain a 100% discount from the congestion charge.   To obtain it, there is a £10 annual registration fee.

The effect is that all vehicles currently under the Electric Vehicle Discount (pure electric and plug-in hybrids) would qualify for this discount, but most vehicles under the Greener Vehicle Discount would not.  That emissions standard effectively excludes all pure petrol and diesel vehicles, and all hybrids, although it is expected that this will change as engine technology continues to improve.

As a transition, all vehicles eligible for the Greener Vehicle Discount up till 28 June 2013 (the registration cut off date) would retain the current 100% discount for two years (till June 2015), unless the owner sold the vehicle (the new owner would not retain eligibility).

One report suggests that 19,000 vehicles will have to pay from 2015 when the transition ends.  Motortorque mentions that cars like the Fiatv500 have been advertised as not being subject to the congestion charge, and will no longer be able to be marketed accordingly.  According to FleetNews, the British Vehicle Rental and Leasing Association supports simplifying the discount, although it considers the cutoff level to be too low, although "Fleet operators at least have some warning this time, but they should remember that a vehicle that qualifies for a 100% discount could lose it at any stage".

Note that it is a discount, not an exemption, making it easier to remove.

The DailyMail says that this one change will generate an additional £2 million a year.  

My view

The primary purpose of the congestion charge is to reduce congestion.  Road vehicles take up road space, and so any discounts or exemptions should be minimised.  With the exception of the disabled (who have their own discount), there are many alternatives to bringing a car into central London during the times the congestion charge operates.  It has intensive rail, underground and bus services, and still has considerable congestion.  A discount to encourage ultra-low emission vehicles is not necessarily inconsistent with that, but must be kept particularly focused, and preferably address not just CO2, but noxious emissions given that central London has a high concentration of pedestrians exposed to such emissions.  In short, I approve of this change, and do not believe that owners of other low emission vehicles, who are demonstrably not on low incomes, should continue to access central London's scarce road space, with no charge.

2.    Removing the option to pay the charge in shops and petrol stations:  From the start, users of the congestion charge have had the option to pay in various retail outlets.  The reason was to ensure that nobody would have difficulties in finding a way to pay.  Since then, new options have emerged (motorists can register to autopay, whereby their vehicle number plate, once detected, automatically deducts the charge from an account or credit/debit card), and the proportion of motorists paying through retail outlets has dropped to 6%.  It was 35% as reported in the 2nd annual Impacts Monitoring report in 2004.   Autopay, online payment, phone and text message based payments are now most popular.  The retail option costs more, as it includes a payment to the retail outlet for handling the charge.  However, there is no difference in cost paying by this means.

The effect of dropping this option (there remains an option to pay by post oddly), is to eliminate an easy way to pay by cash.  Clearly, the purpose of dropping retail payments is to save money.

My view

There is a portion of the population which is "unbanked", and functions without bank accounts.  Whilst the congestion charge remains a government dictated levy, it is unreasonable for people who do not have access to other payment options to be unable to pay.  The answer to the cost of retail outlets is to impose a surcharge on paying by that means.  This would dissuade those for whom the retail option is a convenience, rather than a necessity, would raise revenue to cover the additional costs and provide an additional disincentive to driving into central London for those without bank accounts.   Other entities incentivise use of lower cost payment channels, there is no reason for TfL to not follow.

3. Increasing the penalty charge from £120 to £130:  The sole reason given for this simple move is to bring it into line with other penalty charges in London, which have also increased.  The penalty charge applies if someone does not pay the congestion charge, and is halved if payment is received within 14 days.  The penalty charge is a critical part of the scheme, although is now a far smaller proportion of revenue than it was originally.  In the early years, there was talk of it being nearly half of all net revenue, but that would be far from the case today.

My view

The penalty charge level for this and indeed all London penalty charges is onerous, and I doubt whether there is a higher deterrent effect at £130 compared to £100 or indeed £65.  As such, it really is about revenue, capturing the ignorant and the lazy.  If the increase parallels a new campaign of publicity about the presence of the congestion charge and what it means, I would support it.  London has a significant transient population, many of whom would not have been around when the charge was introduced (that includes me). It is appropriate to maintain a campaign about the charge to reduce the numbers of people inadvertently facing penalties.

Conclusion

None of the measure proposed are particularly radical, but there are some subtle tweaks that should be included with two of them.  It is important for Transport for London to note that while reducing congestion and reducing costs (and increasing revenue) are all key objectives, customer service is another one, and a few minor improvements for an otherwise easy to use scheme, could make a worthwhile difference to some users.

Tuesday, 22 January 2013

Oregon progresses pilot of vehicle mileage tax

The State of Oregon has long been seen to be the US leader in distance based road usage charging, also seen by others in North America as VMT (Vehicle Mileage Tax) or MBUF (Mileage Based User Fees).  

TV station KMTR reports on its website (with TV footage) about the Oregon Department of Transportation (ODOT) pilot programme involving 50 people paying per mile.  

It is part of its efforts to develop a system so that vehicles not powered by fossil fuels or that are, but are very fuel- efficient (e.g. hybrids) pay a fair share of the costs of using the roads.  The concern is that the US$0.30/gallon (US$0.079/litre) gas tax (state not federal gas tax), which is mostly hypothecated to road spending, is unsustainable as the vehicle fleet transitions away from conventional engines.  The fear is a 25-60% reduction in revenue over 25 years.

Oregon projections of eroding fuel tax revenue

The pilot involve the 50 participants being billed US$0.0156 c/mile (US$0.009 c/km) based on their mileage being measured by different means.

The options available include:

- A state provided option of a mileage measurement device (could be odometer) that measures all distance regardless of location (including out of state);
- A state provided option of flat pre-payment of US$45 a month (equal to over 2,500 miles a month);
- A private service provider option of paying miles accumulated per month as measured by basic means (i.e. odometer), but with more payment options than the state option.
- A private service provider offered option with an onboard unit incorporating GPS, to identify when a vehicle is out of state or driving off of public roads (and so not liable for VMT);
- A private service provider offered option with a smartphone based application, providing a similar service.

If successful, and the legislature agrees, then from 2015 all new vehicles in Oregon with an Environmental Protection Agency estimated  fuel efficiency of 55m/gallon or higher will be required to pay the VMT.

Those vehicles that get an estimated 55mpg or higher that do use fossil fuels, would still pay the gas tax when filling up, but would get a refund based on their mileage driven and the vehicle efficiency rating, which is interesting, but presumably is a way of not over-refunding.  Bear in mind that the VMT tax rate for the pilot is very low, and will need to be higher over time to be commensurate in value to the gas tax.

The pilot ends in February 2013, so it will be interesting to see what the conclusions will be.  A report to the legislature is due out in February, and a complete evaluation report will be released later this year.

ODOT has a website about the pilot project outlining the details and reports behind the programme.  There is even a blog set up so participants can write about their experiences.

The excellent frequently asked questions section includes comments that ODOT has been replying to.

Comment

Oregon remains at the forefront of developing a future source of revenue from road vehicles in the US. The efforts are focused on the most fuel efficient vehicles (and those that don't use taxed fuels), and are based on the philosophy of choice, with both state and privately provided options to pay.  Having no compulsory GPS unit, and not state provided GPS unit are both important for privacy, with the option to simply pay a flat fee every month or to pay for mileage recorded by means that do not include GPS.  The concept is one of “User Choice” to select the means to report the mileage and the agency the user trusts to do so. Certified Service Agents are part of the overall system concept to help provide privacy protection and lower operating costs.  That is a testament to Jim Whitty, the Office of Innovative Partnerships and Alternative Funding Manager, who has been leading these efforts for some years.

Disclaimer - I worked on this project for D'Artagnan Consulting.

Monday, 21 January 2013

Congestion pricing or using congestion as a policy

Alan Davies on Crikey writes about the Australian Professor on Global, Urban and Social Studies, Dr Paul Mees of RMIT (Royal Melbourne Institute of Technology), who is critical of road pricing because he believes that the reduction of congestion encourages motorists to drive further.  He cites Vancouver as a city that has used congestion as a tool to encourage mode shift and discourage car commuting, although as Davies points out, Mees has not demonstrated a causal relationship between that professed policy and the reduction in commuting times that is reported for Vancouver.  There could be a multitude of reasons for this around changes in land use patterns.  Besides that, Vancouver itself is not happy with congestion as a sustainable policy tool, as is seen by its own consideration of road pricing, primarily to raise extra revenue but also driven by the objective to positively reduce congestion.

Dr Mees has a firm reputation amongst followers of the "New Urbanism" philosophy of transport and urban planning, and has been strongly critical of much public policy around transport in Australia.   He adopts the familiar line that generally supports more publicly funded public transport and opposes increasing road capacity, because he sees this as a formula for long term behavioural change.  However, he is unusual in also not being supportive of road pricing, because he believes that improving the standard of service for road users is a negative, in terms of encouraging mode shift and behavioural shift more generally.   I have found that many advocates of increasing usage of public transport, walking and cycling tend to support more urban road pricing, for reasons that appear to be fairly obvious.  However, it is worth examining his perspective.

This line of reasoning seems superficial, as of course any form of road pricing that charges for congestion, does two things that "just letting congestion get worse" does not do.  For a start, if motorists have to consider the price of a trip before they undertake it, they are more likely to reconsider whether to undertake the trip in the first place. You see fuel taxes are essentially pre-payment for future trips, and are not seen as payment for using the road, just an incidental expense of driving.  Secondly the mere point that pricing improves congestion is because some motorists have been priced off of driving at that time.  To look only at those remaining on the roads, whilst ignoring those who are no longer driving at peak times, seems rather odd.

The fact that those paying get a better trip is good because they will have paid for it. Mees seems to implicitly treat all those driving as undertaking trips which should be deemed as less valuable than those taking public transport.  I am unsure how he can sustain such a broad generalisation over those using the roads, particularly since I would guess that in any city with congestion charges, he would no doubt advocate the net revenues from those motorists get used to support other modes.  He is in no better position than anyone else to know why a vehicle is on the road, after paying a charge, it could be due to the origin, destination, the time sensitivity of the trip, the driver or passenger being elderly or disabled, or indeed it could be freight. It is all very well pontificating that the freight is being affected by private motorists, but congestion imposes costs upon freight without there being alternatives except changing time of travel.  Professor Mees also seems to suggest that it is fairer to have people deterred from driving because conditions are poor rather than because they unwilling to pay what essentially is something akin to the marginal costs they impose on other motorists by driving.   Queuing isn't seen as a fair way of rationing most goods and services in a modern liberal democratic mixed capitalist economy, so why should it be so for roads?   Particularly when queuing in traffic is not just about wasting time, but about wasting fuel and emitting pollution as you do so!  It is also worth noting that traffic congestion imposes other costs on those dependent on emergency services.  Lives get lost when ambulances and other emergency vehicles are stuck in congested traffic.  Congestion pricing wont eliminate that problem, but it demonstrates that congestion isn't a good thing, it is the breaking down of the efficient use of a scarce and expensive piece of infrastructure.

In addition, what of the traffic for which a mode shift is impossible (e.g. most freight) or so expensive in terms of time, comfort (and price) that it is impracticable (e.g. commutes that would require multiple public transport interchanges or to sites that are too remote for public transport to be viable)?  

I understand Mees wanting to promote mode shift for commutes, where that is viable, but congestion is not a policy tool that is economically or environmentally positive.  Congestion pricing is about applying the widely used price mechanism to roads, so that demand can reflect supply, and so encouraging others who would otherwise drive at certain roads at certain times to either not drive, drive at different times or take different routes.   

Efficient pricing of roads does make driving more attractive, but only at times and places where it is usually now congested for those willing to pay.  It means that a scarce resource, road space, is valued by those using it, and the evidence from all cities that have introduced even a fairly blunt form of pricing is that it can encourage people to consider the number of trips, the timing of trips and their modes.   Of course, it will mean some of those priced out of the peaks drive anyway, at other times, but this means better utilisation of existing road capacity (without having to build more) and is more fuel efficient and environmentally friendly (as it will be in free flow traffic).

Finally, Mees makes much of what he sees as the importance of rail based transport or dedicated rights of way for public transport to offer a real competitive alternative to private motoring, but many people rely on buses operating on conventional roads and congestion makes them even less attractive than driving.   Road pricing can relieve roads sufficient for bus journey times to become reliable and, when compared to driving and paying the price to use the roads, more competitive.  Motorists comparing an unpriced drive plus parking to a bus fare, both in congested traffic, to a priced drive plus parking and a bus fare, in free flowing traffic, are more likely to make a different choice, bearing in mind that in many cases, it is simply impractical to build a grade separated rapid transit system or dedicated bus ways.

Allowing traffic in cities to sit congested, wasting time, keeping buses and trucks stuck with cars, wasting fuel, emitting far more noxious pollutants than with free flow traffic, is not a responsible policy from either economic or environmental perspectives.  It takes an overly general view that all motorised road transport is negative and should be "punished" by allowing it to essentially fail, when it fact it involves many people and businesses undertaking activities of value to them.   Pricing the roads efficiently will mean those who value road space the most will get to use it, at that time, whereas others may drive at different times, mode shift or simply decide that the trip wasn't important enough in the first place.

The strategy by many cities to simply continue to subsidise more supply of public transport, refuse to supply road capacity and hope that this carrot and stick approach is enough, has proven not to be enough.   Singapore, Stockholm and now Gothenburg have all made significant dents in traffic congestion thanks to pricing, and a similar impact has occurred in central London, albeit it is less discernible because of the reallocation of road space to other modes. Road pricing alone is not enough in itself, but to deny that it works and to claim traffic congestion and the waste it ensues is positive is quite irrational.

Sunday, 20 January 2013

News Briefs - India, North Carolina, South Africa, UK

Apologies these are a couple of months late

India - GMR Infrastructure looking to sell down toll road investments

GMR Infrastructure owns six highways in India, and according to MyDigitalFC it is looking to sell between 50 and 74% of its stakes in three toll roads.

The report says:

GMR Highways has three toll roads and three annuity roads under operation spanning around 421 km. Also, there are three annuity-based assets under development, totalling around 309 km.

Overall, the company has spent around Rs 1,800 crore (US$332 million) on these projects till now.

Besides there are two toll roads under development in Tamil Nadu and Karnataka aggregating to around 260 km.

The company plans to use the funds raised from the stake dilution to finance the Rs 8,000 crore (US$1.4 billion) Kishangarh-Udaipur-Ahmedabad mega highway project and also partially pare debt in the highways business.


North Carolina - Environmentalists oppose toll roads, because they are opposing new roads

NewsObserver reports that environmental groups are legally challenging new toll roads in North Carolina on the grounds that the need for them has yet to be demonstrated, and that new roads by definition cause environmental damage.

South Africa - Toll operator saves tree

The Witness reports that TRAC (Trans African Concessions), the private concessionaire, that owns and operates the N4 toll road, to relocate 1km of road away from a 200 year old tree.  The gist being that the company was willing to pay R1million ( US$112,000 ) to respond to public concern about the tree.


UK - Conservative Party MP floats reducing fuel tax replacing it with tolls

Andrea Leadsom, MP for South Northamptonshire, has proposed that there be more widespread use of tolls in the UK, and that such tolls should enable a reduction in fuel excise duty, according to the Daily Telegraph.  She is a member of the Free Enterprise Group of Conservative backbenchers who themselves support a more market oriented approach to highways.

Some statements from MPs include:
- Kwasi Kwarteng, MP for Spelthorne  said "Our approach is you should reduce fuel duty, which should reduce its impact. Getting private finance into this makes sense. To expect the taxpayer to pay for our roads without making any distinction between those who do and don’t use it is unfair. I think if there was a real debate we could see a cultural shift.”
- Charlie Elphicke, MP for Dover was reported saying ""The M6 toll has been relatively successful,' he said. Mr Elphicke added that private finance should not only be used for new roads but tolling should be considered where existing roads are widened. "While public finances are in the state they are in, it is something worth looking at."
- Mark Pritchard, MP for The Wrekin said: "Toll roads have a part to play in a mixed economy of of providing new roads as long as there are safeguards about the financial viability and the prices are kept affordable.”

Of course I agree, but it needs to be more strategic, a more comprehensive new deal for motorists that engenders trust in pricing, which simply doesn't exist now.

Thursday, 17 January 2013

IBTTA launches campaign to promote tolling in the USA

The International Bridge Tunnel and Turnpike Association (IBTTA) is probably the nearest there is to a global industry association for providers of tolled roads, regulators and policy makers, and suppliers of the technology, systems, services and equipment for tolling and road user charging.  However, it does have primarily an interest in the United States market, and as such its focus and its value is primarily in networking within that country.  The IBTTA was founded in 1932 and its name clearly was too, as it implies a fascination with bridges and tunnels, with toll roads almost being tacked onto the end, but have no doubt about it - this is essentially a body of toll road operators and public and private bodies responsible for charging road users directly.

Given it is a tolling industry association focused on the US, it is not surprising and indeed welcome that it has launched a campaign in the United States to promote the use of tolls as a means of paying for road use.

The press release says:

Generating more than $10 billion in annual revenues from 5,431 miles of tolled highways, bridges and tunnels, tolling is already a big part of the solution to the challenge of creating new, dedicated revenue streams to support our country’s transportation infrastructure needs.


Everyone in this industry knows that tolling delivers a safer, more reliable drive for many millions of customers each year. With the launch of Moving America Forward, IBTTA has assembled the financial and staff resources to translate that knowledge into action. With the transportation funding crisis receiving significant attention, and severe events like Hurricane Sandy putting a different kind of spotlight on highway infrastructure, this is our moment to put forward the arguments and win the decisions that will benefit our members, our customers, and the public at large.

In short, the tolling industry in the US is going to be loud and proclaim that more tolls are a key part of the answer to the highway funding crisis in the country.

IBTTA is also quoting statements from the free market oriented Reason Foundation.  Dr Daryl Fleming  and Robert Poole, Director of Transportation Policy produced a report in November 2012 where they claimed tolling was no more expensive that fuel taxes, because the latest technology can reduce collection costs to as low as US$0.16-$0.25 per transaction (and they believe fuel tax administrative costs are underestimated, and pale in comparison to the opportunity cost of not being able to charge by time/location to influence congestion). 

The report from Reason is here.  It suggests that the Federal Government should remove prohibitions on tolling the Interstate network, and that many roads (freeways/limited access highways) could be switched to tolling now, as a precursor to vehicle mileage tax in the longer term.

It is good that the tolling industry sees that it can explicitly play a role in dispelling myths about itself, and promote greater use of tolling across the US.  I suspect the Federal Government's attitude to it will remain lukewarm, as it was in the first term of the Obama Administration.  However, some of the states are far warmer towards tolling and if this causes them to think more broadly than some crossings and manual toll booths, all the better.

Certainly it is a welcome antidote to the bizarre policy swing seen in Virginia.  It will also be interesting to see if the information and work done by IBTTA and its members will percolate beyond the United States, to influence debates elsewhere.

In any case, the idea that the user pays principle can be sold as being fair and that modern tolling with electronic free flow technology can be sold as the norm (in the UK at least, far too many people think tolls must mean manual barrier controlled tolling), ought to help change the debate about funding highways.

However, part of this must be some understanding that toll prices should be related to the costs of the infrastructure being operated on, with factors to manage demand at times when it gets close to exceeding capacity. A reasonable rate of return should also be part of any toll (that being a return on the cost of capital), and what is done with that should be up to the owner of the road.  The policy that will not promote acceptance of tolling is using tolls to extract monopoly rents that are used to pay for other government activities largely unrelated to the road.  The controversy over using the Dulles Toll Road to pay for a parallel rapid transit railway is in this category.

The simple points that politicians and policy makers should take from the campaign ought to be clear:

- There is no longer any need to think of tolling as involving manual tolls with barriers, in any modern economy with good enforcement systems, laws and reliable motor vehicle registries;
-  Electronic free flow point tolling, on crossings and on limited access highways can be cost effective and efficient in collecting revenue, with the key limitation being issues of diversion onto untolled roads;
-  Vehicle mileage tax (VMT) or distance based charging is likely to be the long term best answer, but in the meantime much can be achieved with electronic point tolling on limited access highways.

Wednesday, 16 January 2013

Free roads - no, really!

For those of us who advocate better road pricing, the objectives may vary somewhat, but some of the principles remain clear.  One of them is "user pays", that those who use the roads should pay for them, in proportion to the degree to which they use the roads, and the costs they impose upon the system.   This may be around wear and tear, road space when demand is at a premium, or simply sharing the fixed costs amongst those who use the network the most.

Fuel tax is seen as very much a second rate option, largely because although those who use the roads more pay more, levels of fuel consumption don't vary at the levels necessary to reflect variations of other costs.  For example, as trucks get heavier their fuel consumption doesn't raise at levels commensuration to the damage they cause to roads, similarly it doesn't rise to reflect scarcity of road space when demand for it exceeds supply.   Still, it is better than nothing - a point that seems to have somewhat escaped Virginia's governor Bob McDonnell (Republican).

According to various news sources he wants to abolish the state's gas tax  (fuel tax) and replace it with an increase in the general sales tax of 0.8%  (which wont apply to "groceries" but will be hypothecated into transport).  In short, he wants roads to be paid for, not on the basis of usage, but on the basis of how much shopping you do in the state.   Those who drive the most, but are frugal with consumer goods, will be getting subsidised by those who don't drive at all, but buy large expensive items.  Of course it will also promote interstate tax arbitrage, as motorists in neighbouring states will seek to buy petrol at the lower rates.

He wants to retain tax on diesel, because he recognises that trucks cause more damage to the roads (although transport economists will explain that the 4th power rule means that when trucks get beyond 9-12 tonnes of gross laden weight, diesel tax is simply incapable of fairly reflecting this increased damage).  

The lack of diesel cars in the US means this will make little difference to light vehicles, although I would have thought anyone with light commercial diesel vehicles would move to the petroleum equivalents.   Interestingly about two-thirds of state diesel tax revenue comes from interstate trucks, it's curious that there hasn't been a similar figure given for interstate cars (although the figure would be lower).

He wants to introduce new ownership taxes on alternatively fueled vehicles (US$100 a year) and increase other ownership taxes by US$15 a year.  However, according to TollRoadsNews this extra revenue is going to subsidise public transport.  It's not clear the economic justification for that connection to those fees, as again, it penalises those who hardly use their cars at all, but not those who drive the most frequently.

Virginia's state fuel tax is 17.5c/gallon (4.6c/litre), so that is the saving that would be made for motorists.

It is economically irrational as it means highways will be subsidised by virtually everyone buying goods and services in the state.  Environmentally, it means that those who drive the most and emit the most will pay no more than those who do not drive at all, unless of course they also do bigger shopping sprees.

McDonnell makes the sound point that fuel tax is unsustainable because of vehicle efficiency and alternative fuels, but then claims that it is "regressive" because people in rural areas pay more, yet the main costs upon the system are in urban areas.  Unfortunately, this misses some key points.

Maintenance is the bread and butter of highway expenditure, and it is commonplace that motorists in urban areas tend to cross subsidise those in rural areas, because around half the costs of maintenance are fixed, and in rural areas there are less vehicles to divide those fixed costs between.  It is possible to justify charging the fixed costs of highway maintenance in part to property owners adjacent to roads (because they benefit directly from the access amenity), but this argument is difficult to sustain when a road is primarily arterial.  It is also possible to justify charging those costs using a fixed annual licence fee, as an access charge, but this creates its own deadweight distortions, and the externality costs of congestion (and emissions) can be equally as serious, and they are not readily addressed by ownership taxes.

However, what's apparently missing is any serious economic analysis behind this proposal.

I'd argue that what Virginia needs is an economic land transport costs and charges study, similar to those carried out in the UK, New Zealand and several countries in Europe.  That would establish who is underpaying, who is overpaying, the long run infrastructure costs for the state, costs of congestion (and emissions if desired), what existing taxes, tolls and charges do (it can also include public transport and the private railroad networks as well if desired), and provide an evidence base for moving forward.  That would be more robust in terms of economic impacts and distributional impacts, and would address concerns about any existing taxes being regressive or otherwise.

My expectation is that the conclusion would be that motorists do not pay enough to keep the network in a steady state, except those on toll roads.  It would need to be followed by a separate evaluation of options for charging, including expansion of tolls, the role of fuel taxation and options for alternatives like ownership taxes, property access levies and vehicle mileage tax (including a weight based one for trucks).

You see, as much as politicians may focus on the finances, they ignore the economic impacts of what they do.  Abolishing the gas tax will increase private vehicle use, increase congestion and emissions, which will increase demands for new capacity.  Increasing other taxes will see a small deadweight loss in consumption of various goods and services, which will likely have a distributional impact highest on those with the least discretionary spending.

It's astonishing, it is economically irrational and is a step away from the sort of smaller government more market oriented agenda some in the Republican Party espouse.  Indeed, it does absolutely nothing to ensure the roads are better maintained and the quality of service motorists get improves, in fact why should it?  They aren't paying for it.  They should expect what happens in other jurisdictions when governments offer something for next to nothing - unpredictable and wildly varying standards of service.

It has been criticised in many quarters, the Baltimore Sun suggests it would complicate debates for neighbouring states such as Maryland, but some of the public think they would be better off.  Motorists, of course, would be.

I can only hope for a rational debate to come about this proposal.  Well intentioned, with the key issue of the sustainability of fuel tax being central to it, but creating new subsidies and almost completely disconnecting the cost of highways from most of the users is neither economically rational, nor sustainable, nor a solution I'd expect in an economy that purports to be predominantly embracing the principles of market capitalism.

It's even more astonishing when you consider the point made in TollRoadsNews that tolls are important in Virginia today, yet don't form part of the Governor's plan.   Though I am now less surprised that there are now politicians in the state seeking to nationalise some private toll roads, because they think the price is too high.  Yes, they are Republicans too.   No, really!

Tuesday, 15 January 2013

UK highway reforms split on road charging


The emphasis has been on the strategic road network for England - the network of motorways and major highways managed by central government through the Highways Agency (highways in Wales, Scotland and Northern Ireland are the responsibility of the devolved administrations).  The purpose has been to find ways to get more investment in improving the network, both through greater efficiencies in potentially restructuring the Highways Agency into a more independent commercial enterprise, and to attract private investment into the network.

However, whilst it would appear that the objectives are clear, there are divisions in government about to how to progress them.  A recent Financial Times report indicated that it is explicitly about road charging, with the Chancellor of the Exchequer (no doubt backed by Treasury) advocating allowing tolls to be introduced on existing motorways, whilst the Prime Minister wants nobody to be "worse off" (i.e. nobody should pay more than they do now).  

The fundamental problem is clear - how does the Government get more capital spending on roads?  Given the tight fiscal situation, there is little appetite to expand government spending on roads beyond what has already been committed.  Similarly, the political cost of increasing existing motoring taxes (none of which have any link at all to what is spent on roads) appears to be too risky, given the Government seems unable to increase fuel tax, even though the increase recently cancelled was actually set by the previous Labour Government.

The Prime Minister's initial speech that talked about highway reform and later statements about reform gave the impression that the private sector could ride in and rescue the network, pour lots of capital into it and get a return, but the problem with that is how to pay the private sector back in the absence of tolls.

One idea that was floated was to restructure vehicle excise duty (commonly and misleadingly referred to as "road tax"), the tax on vehicle ownership, into a two-tier duty.  All motorists would pay a universal lower rate for access to the road network generally, but a top-up second tier would be voluntary for those wishing to access the motorway network.  In effect the second tier would be similar to the vignette systems in operation in several continental European countries.  The expectation would be that this could provide a revenue stream for a restructured strategic road network, with private owners having a hypothecated stream of revenue based on such charges (Austria's ASFINAG gains its revenue from light vehicles on this basis).

The obvious problem with this is that there would be a diversion from the motorway network onto local roads, which in some cases would create significant congestion as people avoid the motorways to save money.  Furthermore, the option would mean revenue would have a low relationship to network usage (except at the level of regularity of access, as regular users would probably pay for a year of access, whereas occasional users may buy access for a day or more at a time).  It also inverts the capital costs of the different parts of the network, given that the marginal infrastructure costs of using the motorways (given the sheer volume of traffic to spread costs between) are lower than that of the local road networks.   However, it is clear that the unintended consequences of such a proposal would be the sudden emergence of new bottlenecks that would mean exemptions being granted to use many parts of the motorway network to fix them, which would be a political liability.  In addition, there would be a drop in revenue as significant numbers of motorists would suddenly decide they don't need to use the motorways regularly (i.e. many in cities), plus something would have to be done for those in Wales, Northern Ireland and Scotland (as the tax is levied across the UK, but Westminster does not manage roads in the other devolved "countries").

Having seemed to have moved away from this, the thought has turned to conventional tolls.  The initial announcement by the Prime Minister was that tolling would be allowed for new capacity, but the problem is that most projects on hold for improving the highway network are not conducive for tolling.  Tolls need a major new corridor or a substantial length of new lanes to be technically (let alone economically) feasible.  The project highlighted as being able to be toll funded - the A14 corridor upgrade - will only be able to recover a fraction of its capital costs from tolls.  The simple truth is that tolling really only works if the route to be tolled is a significant improvement to the untolled capacity so that motorists are willing to pay the extra. 

So now discussion has moved to whether something can be done to allow tolling on existing capacity.  There is one view held by some that, despite UK fuel taxes being amongst the highest in Europe, that if tolls are taken into account, some motorists in Europe pay notably more per mile than those in the UK (Italy has tax on petrol at around EURO 0.02 less than the UK, but tolls would easily be more for those using the motorways).   That may well be true, but it is obvious that any approach to introduce tolls on existing roads, without some countervailing reduction in other motoring taxes, would be politically suicidal.

This is in the context of the Government having been unable to increase fuel tax because of the political price it would pay for doing so, and the poor reputation of existing tolled roads, in part because of policy that smacks of bureaucratic short cuts rather than any attempt to treat those who are paying as customers.

I've written already about one approach that I think has merit, but there needs to be a very clear distinction between five components of any new policy.

- Institutional reform:  Commercialising the Highways Agency should proceed, as this will encourage efficiency improvements and create an incentives structure to improve performance and be more dynamic and innovative.  A similar approach should be taken to local authority roads, at least in the major conurbations.  Such new entities should be allowed to introduce tolls on any new capacity if viable and propose new relationships with the private sector.

- Funding framework:  If it is accepted that motoring taxes, in their present form, will remain for some time, then there should be some hypothecation of a portion of existing revenue, dedicated to an independent regulator/funder to buy improvements and maintenance of roads from the new highways companies.  This will also incentvise efficiency and can enc

- Regulator:  The new highways companies will need a regulatory framework to govern tolls, to seek funding from existing sources and to set standards.

- Private sector involvement: Until this new structure is established, the initial role of the private sector will be in a new generation of PFI projects, but this will evolve to include taking control and be part shareholders in parts of the highway network.  However, this cannot readily happen until the public sector governance framework is established.

- Charging:  Allowing tolling on new capacity is obvious, but there should also be a framework to allow tolling on existing capacity with a system to refund part of vehicle excise duty and part of fuel duty.  Again, this cannot readily happen until the public sector governance framework is established.

There is little doubt that to achieve all of this means a lot of work, it is akin to the "deregulation" and privatisation of the telecommunications, water and energy sectors, and should be treated as such.  My concern is that there has been the impression given that there are quick solutions, when there are not.

The slow progress is a good sign, because it shows some degree of caution and consideration being given about what to do and how to move forward.  Highways are assets worth tens of billions of pounds (hundreds if you include the local network) and generate tens of billions of pounds for the Treasury every year.  Reform will be a big job, and it should be done in stages.

There can be reform that extracts more efficiencies from the sector, changes the incentives structure and provides a long term framework to allow more tolls  in due course (and enables private investment).  However, nobody should pretend that the private sector can provide the answers without a suitable funding framework especially in the absence of either more road charging or some hypothecation of existing revenue over the longer term.

Thursday, 10 January 2013

Gothenburg introduces congestion charging

On 2 January 2013 Gothenburg became the second city in Sweden to introduce congestion charging.  I wrote about the planned scheme in 2011 with some details, more details are now available from the Swedish transport website here.

Gothenburg is Sweden's second city with a population of around 0.9 million in the wider metropolitan area.   The Council agreed to the congestion tax in 2010, but it has been controversial with some citizens demanding a referendum similar to Stockholm.

Lots of information is available in Swedish on the website.

Governance

Traffic Technology Today reports on the governance of the tax:

The project is a partnership between the Swedish Transport Agency (Transportstyrelsen) and the Swedish Transport Administration (Trafikverket). The Transport Administration is in charge of operating and maintaining the tolling infrastructure, while the Transport Agency is responsible for collecting revenue and operating the administration and financial systems.


Price, operating hours and exemptions

There are 36 crossing points on the system's cordon, which operates for 12.5 hours every weekday (except public holidays, the day before a public holiday and the month of July) between 0600 and 1830.  

The charging points are said to be designed to target congestion, and comprises one single cordon, with an additional charging point on the Älvsborg Bridge (part of the western ring road bypass to the city), and a curious series of charging points off to the north along the E6 motorway.   The website in Swedish offers explanations for these unusual additions based on traffic management, the Älvsborg Bridge is a matter of concern that it would be more congested due to diversion if it was not charged, and the E6  approaches because of fear that charging the road itself would create diversions through residential areas, so it is better to charge the approaches from those areas it would appear (although it is likely to cause concern for those seeking to drive onto the E6 to go north rather than towards the city).

Gothenburg congestion tax map of charging points
The price range is between SEK 8 (US$1.22) and SEK 18 (US$2.74) per crossing, with a cap of SEK 60 (US$9.14)  as follows (there is no differentiation by vehicle type in that trucks and minibuses pay the same as cars):

Time of day Tax
00:00 – 05:59 0 SEK
06:00 – 06:29 8 SEK
06:30 – 06:59 13 SEK
07:00 – 07:59 18 SEK
08:00 – 08:29 13 SEK
08:30 – 14:59 8 SEK
15:00 – 15:29 13 SEK
15:30 – 16:59 18 SEK
17:00 – 17:59 13 SEK
18:00 – 18:29 8 SEK
18:30 – 23:59 0 SEK
 
Only Swedish registered vehicles are required to pay (Sweden's authorities are preferring not to chase up foreign registered vehicles) and the exempt vehicles include emergency vehicles, military vehicles, full sized buses, motorcycles and vehicles with disabled parking permits.

There is no exemption for electric or other low emission vehicles on the grounds that they contribute to congestion.  Taxis are also not exempt on the grounds that they will benefit from the reduction in congestion, and will likely reach the daily capped amount.

The issue of foreign vehilces is not being ignored as the government has appointed a commission to examine how it can charge a tax or fee for foreign vehicles.  Findings are expected to be reported in February 2013.  I expect the example of London to be considered as one approach (as Transport for London has a contractor that pursues such fees and fines from foreign EU jurisdictions, and I was last told it has about a 33% success rate)

Technology, payment and fines

Q Free was contracted to provide the system at a price of US$25.5 million, using ANPR (Automatic Number Plate Recognition) technology, with higher charges at peak times compared to the interpeak (similar to Stockholm).  A tweet from one Magnus Rex indicated 97% accuracy for the system, a far cry from the less than 50% accuracy some such systems had over a decade ago. Payment is either by account with direct debit, or by prepayment or postpayment online or via retail outlets.   At the end of each month, a bill is sent to the vehicle owner which provides information on the number of crossings of the cordon and the amount billed per day.   Failure to pay results in a SEK500 (US$76) fine.  A website exists to register for automatic payments (in Swedish, but then few non-Swedish speakers will have Swedish registered vehicles).   

What has been the result so far?

Scancomark reports that the congestion tax has resulted in traffic dropping 19% on Monday 7 January (confirmed by the TrafikVerket website in Swedish), during the morning peak (0630-0830) the first full working day since the tax was introduced (1 January was a public holiday), presumably compared to the same day last year.   It was 25% down for the first three days (2-4 January).  Of course it is far too early to determine how much of this is trip suppression, time shift of trips (to outside the peaks or charging periods) and mode shift.  Hopefully, there will be some more details after a full month of operation.

The expectation has been that traffic volumes at charging points would drop by 10-15% on average, with a 4% overall reduction in traffic volumes across Gothenburg.  It was also expected that particulates and other pollutant levels would drop by around 10-15%.

Where is the money going?

The operating cost is declared to be SEK 200 million per annum (US$30.4 million) said to be over 20% of gross revenue.  The expectation is that these costs will drop to between 10-15% of gross revenue over the longer term. This implies gross revenues of around SEK 1 billion (US$152 million) per annum (2009 prices)

A surplus of SEK 14 billion (US$2.1 billion) (in 2009 prices) is to be generated over 25 years to spend on transport improvements.  This will raise part of the revenue for the "West Swedish Package" of transport improvements (the rest comes from central and local government taxes). 

The cost of the transport improvement package is SEK 34 billion (US$5.2 billion), it includes improvements to public transport (more commuter railway carriages, railway station improvements, 55km of new bus lanes and increased rail, tram and bus service frequencies), a new Göta älvbron (road and tramway bridge at SEK 2 billion), a new road tunnel under the Göta Älv River (SEK 4.2 billion), the West Link (new railway line under the city to make the main central station a through station rather than just a terminus SEK 20 billion) and a wide range of smaller road projects to improve safety, access and environmental impacts.

Conclusion

It is politically courageous to introduce a congestion tax in an environment of low economic growth, but I hope that it delivers net benefits to Gothenburg, both in improved mobility and reduced environmental impacts, but also with the net revenues used in a way that has widespread support across the city, particularly those paying for it.

As always, the truth will come over some months, to see what travel patterns people adopt, but I am also keen to observe the impacts on business, as this is often the key concern for central city focused congestion charge concepts, particularly given that it is an all day charge.   If business see few negative effects (and some positive ones potentially), then it will be important in promoting acceptability.  However, the political impacts will be closely observed, to see if opposition dampens if the results in reduced congestion are sustainable and see to be worth it by the public.

For me the most positive part of the system is that charges are higher and lower at different times of day, to reflect levels of congestion.  It would be good for that to evolve to different charges at individual charging points, so that charges may be lower or higher to more specifically influence traffic levels at those points.   The biggest weakness with any cordon is that it is relatively blunt, having charges that vary at individual charging points is exactly what Singapore has long had, and I expect it could improve acceptability as well as improve overall economic and environmental outcomes. Critical as well will be the process for deciding how to revise the tax rates.  Stockholm's have not changed since its system was introduced in 2007.

It is also mildly interesting to see that it is also an exclusively ANPR system (although I understand that is, in part, due to Swedish tax law that requires an image of the licence plate to enforce the tax).  The relatively high level of accuracy for this, and the lowering of the cost of this technology starts to challenge the long held advantage seen in DSRC technology for free flow tolling.

News reports on the Gothenburg congestion tax

Fewer cars on first day of congestion charges
Driver attempts to evade congestion tax by covering licence plate


Wednesday, 2 January 2013

Review of 2012

Given the New Year I thought I would do a geographic overview of the whole world and what I saw as important.

UK

It has come with news, that isn't so much new, that the UK government is likely to announced in 2013 that it will allow private investment in the strategic road network and that this investment will allow for new capacity or "substantially upgraded roads" to be tolled.  I've already expressed my views on how this should be taken further to allow motorists to contract out of existing motoring taxes by paying directly.

It also repeats earlier claims that Vehicle Excise Duty may become a two tier system, with a basic level for everyone to access all local roads, and another level for accessing the strategic road network.

That, at least, shows a policy with a little innovation, although the fundamental problem of splitting Vehicle Excise Duty - a tax on owning a vehicle - into a system that requires more to operate on the strategic road network, risks some serious diversion onto local roads.  Given that the marginal costs of maintaining and renewing such roads is lower than the local road network, and that Vehicle Excise Duty does not reflect any factors of usage (although if converted into a European style vignette it may allow motorists to buy anything from 1 day to a year of access), it seems like a desperate attempt to try to have a form of faux road pricing, which delivers little in behaviour change, nothing in revenue (unless it is a stealth way of increasing charges) and is really only designed to introduce the much maligned concept of hypothecation back into UK motoring taxes.   Of course a real leap forward would be to treat a portion of fuel tax as a motoring tax, which would finally confront the point most motorists notice - that they already pay a lot in tax when they use the roads.   The political impossibility of raising fuel tax may well have been reached, and for the first time ever the unsustainability of fuel tax given rising fuel efficiency of vehicles (and alternatively fueled vehicles) is appearing on the horizon.

Sadly the politics of road pricing in the UK have constrained a willingness to be truly innovative and bold.  The themes in the past year have included a desire for more tolled new capacity, with the A14 upgrade showing some courageous options in redesigning a major capacity upgrade to rebuild a new local untolled route to be parallel to the tolled main highway.  It's clever, but let's not pretend there is much scope for new tolled capacity.   Beyond that, there are three other notable points in the UK:

1.  Dartford Crossing will get electronic free flow tolls by 2014, except that instead of it being recognised as offering major economic savings in itself in terms of travel time, and being paid for by the users of that system, existing manual toll users are paying for it - now - in an astonishing political blunder, as toll payers are paying for something before they can use it.   You'd think that the UK government wants to make tolling as unpopular as possible, whilst also expanding it.

2.  Lorries 12 tonnes and over will pay a vignette to use all UK roads, not because it will raise much money (£20 million a year net), not because it will see more efficient use of the network, not because it offers a step forward in better pricing, but because it is a cheap and easy way to partially "level the playing field" between UK and foreign lorries.  For all of the scaremongering from the Daily Mail and UKIP, the UK government wouldn't dare contemplate GNSS based tolling because it fears it couldn't contain the costs and risks, and isn't prepared to do what it takes to make it economically worthwhile.  Bear in mind that while the UK introduces vignettes for lorries, two European countries are replacing such systems with distance based tolling using GNSS technology.

3.  Whilst there is no real possibility of expansion of congestion charging in the UK (Cardiff oddly contemplated it for a short time this year before running scared), London is considering a new tolled crossing of the Thames, which also involves tolling an existing parallel (and heavily congested) crossing.  If that can get past the political test (it is likely to be both financially and economically worthwhile), it will cross another minor line, which involves tolling existing capacity parallel to new capacity.  Meanwhile, the London mayoralty passed by, with Boris Johnson being re-elected, and congestion charging being almost invisible as an issue, with neither of the two front running candidates (the other being Ken Livingstone, famous for introducing and expanding the charge) proposing any changes, after Johnson had abolished the Western extension of the congestion charge.

Europe

Outside the UK, several European countries have seen PPP concession toll roads under enormous pressure as demand forecasts based on continual growth in buoyant economies have been proven to be as realistic as the forecasts of perpetual economic growth.  Ireland, Spain, Portugal and Greece are obvious contenders for toll road concessions that have been bailed out by the state or simply refinanced by creditors writing off the equity in them.  Some other concessions in Italy, France, Germany and Poland are healthier.   The big developments are coming with France's "Ecotaxe" truck tolling system planning to be in operation in 2013.  Meanwhile, Belgium, Russia and Denmark are continuing development of their systems.  Interest will grow in other European states for the introduction of similar systems, largely for revenue purposes, with Spain, Italy and (once again) the Netherlands all contemplating the value of doing so.  The Netherlands will find it most compelling given that it will shortly be surrounded by countries with such systems.  For private vehicles, debate may become more open in Germany, France and Spain for the introduction of vignette systems for cars, also for revenue purposes (if only to raise some money from foreign vehicles).  However, in almost all such cases it will involve some reduction in existing ownership taxes for residents.

Congestion charging will have commenced in Gothenburg, Sweden on 1 January.  However, it is highly unlikely that other contenders for such a charge (Copenhagen, Helsinki) will progress this year.

European countries will start to acknowledge the longer term issues around the sustainability of fuel taxation in the coming year, as the politics of increasing fuel taxes become ever difficult, and revenues from such taxes yield slowly decreasing returns in western Europe (if not eastern Europe).

North America

Canada will see more interest at the provincial and city level to expand the use of tolls, with Vancouver likely to see forms of congestion charging as complementing its interest in promoting public transport and active modes, and in providing a sustainable source of future revenues.  Other provinces will also consider how they can move towards other forms of road pricing primarily for revenue reasons.

In the United States, states will be split between those avidly promoting conventional tolling for new highway capacity (e.g. Florida, Texas, Virginia), those promoting HOT lanes (e.g. California), those considering vehicle mileage taxation (e.g. Oregon, Washington, Minnesota) and those who are unsure exactly what to do.  Conversions from manual to free flow tolling have been picking up and will continue to do so, as the obvious traffic efficiencies and long term cost savings become clearer, as long as jurisidictions have the legislation to enable intelligent, effective and fair enforcement.   As free flow tolling becomes more widespread, and HOT lanes become more commonplace, US highway administrators will face the inevitable point whereby they cannot expand tolling further on existing roads without major equity issues arising about the roads that can be practicably tolled and those than cannot.  VMT/MBUF/distance based road pricing will appear increasingly attractive, and Oregon's progress will be watched with interest, but maybe, just maybe, those other states with VMT based truck road user charging systems (Kentucky, New Mexico and New York) will see these as platforms to modernise and expand.  Transit states will embark on a few studies to demonstrate just how well off they would be introducing some form of charging for traffic on major highways, which will cause some to raise constitutional issues, which will need careful management.

Big issues about the role of private sector investment in highway will continue to be debated by some states, notably Ohio.  New York will continue to debate whether it should fundamentally reform tolling in the environs of New York City to improve revenues and equity, which steadfastly denying that it becomes a de facto form of congestion pricing.

Other studies and attempts at congestion pricing will find difficulties in fairly addressing the boundary effects of conventional approaches to such pricing, as far too many continue to think London and Stockholm are the only examples worth replicating, rather than being more innovative and looking at what others have done to manage traffic access to their cities.

Most definitively, the next year will not see a transformation of transportation policy at the Federal level around this issue, as the status quo means little interest in dealing with the long term revenue sustainability issues of the Federal Highway Trust Fund.

Africa

South Africa had the big news in tolls, with the Gauteng Freeway Improvement Project proving to be a major test as to the political will to introduce free flow tolls on upgraded existing roads in South Africa.  It is finally going to proceed, but the opposition to the tolls on these roads have two key characteristics.  One is the difficulty which is seen worldwide, in introducing tolls on already existing roads.   New roads are easier if only going because motorists can choose to use them.  The second one is fear around the political and bureaucratic environment in a country where corruption is a real concern.   In that context, it is not wholly surprising that some people are suspicious, although SANRAL itself is widely considered to be a model operator of major highways in the developing world.   There can be little doubt that this scandal is hindering tolls in South Africa.

Beyond South Africa, tolling is appearing in more countries in Africa, including Uganda, Nigeria, Senegal and Mozanbique.   However, the problems seen in India of congestion at manual toll booths have also appeared in Nigeria.  It's encouraging to see more tolls in Africa, hopefully it can learn the lessons of others to make the institutional and governance changes needed to allow technology to be introduced where it is viable.

Asia

India continues to expand toll roads apace, as private sector concessions use manual toll systems as the only way to recover revenue to build a national highway network fit for the country of its population and size.   One of the big stories was the chronic congestion on the Delhi-Gurgaon expressway, which is the result of a high capacity highway close to a major city simply incapable of processing high volumes of traffic because its manual toll booths take too long to process customers.

India (and indeed China and other countries with high capacity and busy toll roads) badly needs to establish the systems in place to automate tolling, whether it be coin machines, DSRC accounts or the obvious need for reliable and regularly updated vehicle licensing systems that enable enforcement to be carried out effectively.    A good starting point would be for concessionaires to establish an industry association to set standards and work co-operatively to help make the industry more efficient and lobby when law changes are needed to facilitate tolling as an efficient means of raising revenue and managing traffic.  Avoiding potholing will also help to avoid a backlash against privately owned toll roads.  Meanwhile, Delhi wisely has chosen to focus on parking management before congestion pricing.

China is understanding the need for congestion charging in major cities like Beijing and Shenzhen to address rapidly rising vehicle levels, which are growing faster than the ability of government to widen roads and build new corridors, but Shanghai is preferring to increase taxes on vehicle ownership in the interim - presumably because of the perennial problem with congestion pricing in cities lacking good enforcement systems.  Meanwhile, private/public concession companies dominate the expansion of its highway network, with tolls.

Indonesia is also one of the great toll building countries of Asia, with a rapidly developing toll road highway network across the country, and new toll road corridors across the heavily congested capital Jakarta.   However, toll roads in Indonesia are dominated by state owned concessionaires.  Jakarta is pursuing congestion charging, based on the Singaporean model, but faces the issue of enforcement and licence plates as one of its major barriers to implementation.  

The Philippines also continues to build out a toll road network with private concessionaires, including astonishingly approving two new competing toll roads across Manila, because it expects traffic levels to make both viable. Malaysia also continues to build out a toll road network, although its concessionaires are mostly companies with some degree of state ownership, albeit indirectly through state owned companies.


Japan continues to grow its uptake of electronic tolls on its major highways, and South Korea is not far behind as well, with a wide network of tolled motorways using barrier controlled ETC.

Meanwhile Iran quietly continues to operate its congestion charging system in Tehran.

Australasia

Australia remains split between the east coast states, which have embraced tolling as a way of funding large highway projects in the three largest state capitals, and the others (Western Australia and South Australia) which have rejected tolls and PPPs.  The biggest challenge to this has been the issue of toll traffic and revenue forecasting, which has been the subject of a report that was commissioned by the Federal Government.  The court case between shareholders/creditors of Rivercity Motorway and AECOM is being closely watched by toll road forecasting professionals worldwide, but regardless of the outcome of that case, hopefully a more in depth consideration of the issues behind such forecasts will be taken by investors, and scheme developers.  More spent on better analysis may save more in the long run.

Beyond that case, there are likely to be a handful of more such toll roads emerging in Sydney and Melbourne, but the bigger issue is wider reform of motoring taxation across Australia. It is likely in the shorter term than conventional tolling will be expanded to the extend practicable for new projects.   However, there is strong interest in considering how to reform existing taxes on ownership and fuel to provide a more sustainable, equitable and economically efficient form of charging across the country.

The Federal-State split of responsibilities adds a layer of complexity, as fuel tax is collected Federally, and other motoring taxes at state level.  However, there is likely to be movement on reforming heavy vehicle charges if the states can get together and agree on a programme of work to progress this.  A lot can be done without tackling fuel taxes at present, so expect Australia to closely follow what is going on in the United States, and to talk more about reform, with the political will to act being the key issue.

New Zealand has seen some moderate tweaking of its existing weight/distance nationwide tax on heavy vehicles and light diesel vehicles, but beyond interest in raising revenue to pay for large transport projects in Auckland, there is likely to be little major change in the current year.  The key interest will be in development of a major motorway north of Wellington that may be tolled.

Conclusion

Politics, not technology.  That is what will limit what can be done in road pricing in 2013, as it has been the case for 50 years.  As many people in developed countries now carry with them mobile phones with the capabilities to measure distance travelled, by time of day and location, it isn't difficult to conceptually have a system of road pricing with the key ingredients being verification and enforcement.  However, in an environment where almost all roads are run by government agencies, which are inherently conservative in their approach to technology, and which are largely not driven by service to customers,  the stumbling blocks are going to remain politicians who are afraid that changing how roads are paid for, will be seen by the public as making them pay more, for little gain.

It will be the politicians, public agencies and private companies that can demonstrate that road pricing can deliver better results for users, and more efficient and better quality highways, that will be able to press forward.  The key to that is delivering the message that roads that are untolled are not free and not paid for, as long as road users pay a special tax for the fuel consumed in using them, and as long as roads need maintenance, renewal and to be managed as depreciating assets.