A congestion pricing system basically sorts out these trade-offs. So how should the charge be set in practice? The mayor has suggested a flat rate of $5 per rush hour trip, but I think we can do better than that. The payment system would be set up electronically, and so too could be the charging, adjusted in real-time according to actual road speeds and conditions, with commuters able to read off the latest prices from phone apps before they travel. Call it Uber-style surge pricing if you like - it is the smart thing to do.
However done, there would be two main results. First, rush-hour travel speeds would be higher, with fewer motorists on the roads. That’s good. Second, there would be a big pot of, basically free, money raised from those fewer motorists.
How much? I’d have to do the sums, but I would expect that, if the $1b cost figure is reliable (it may not be), then congestion charging would bring in about half this - say, $500 million/year. So, what to do with this? Being an economist, I suggest that it be handed back to the people of Auckland as a rebate on their rates. This would reward the splendid contribution made by the great majority of our citizens who do not use the commuter roads at all during rush hours.
But if this is politically unattractive: well, put it into improving the public transport system as the alternative to private vehicles for those who must travel at peak periods.
And, for heaven’s sake, don’t let us get cute about exemptions for people on “low incomes”, or pensioners, or any other worthy-seeming pressure group. If a super-annuitant is not still in the workforce, then they can probably make their trips off-peak. If they are still working - well, they can afford to pay the charge. People will adjust - just keep it simple, stupid!
If we had introduced congestion charging a decade ago, we would not have needed to build the ruinously expensive and disruptive underground railway. Okay, that’s water under the bridge now, but, talking about water and bridges – if we do bring congestion under control, we probably will not need to go ahead with ruinously expensive second-crossing schemes over or under Auckland harbour.
It’s great that Auckland’s mayor and councillors are finally getting serious about applying common sense to really one of our most manageable urban problems. Let us urge them on at full speed.
· Tim Hazledine is Emeritus Professor of Economics at Auckland University.