HT to PH

Free-parking in Australia is less on an issue than it is in the US – parking is much more typically charged for here at least in city areas – and free-parking provided by employers is subject to fringe benefits tax which prevents some of the worst US distortions.   A more significant issue in Australia is that on-street parking is typically much cheaper than off-street parking so that  people create congestion and social waste by searching around for on-street spots. This is a problem in Sydney and Melbourne. Underpricing on-street pricing is normally accompanied by inefficient forms of rationing such as limitations on the time you can spend at a metered spot.

I wrote a review of Australian parking policy here.

I am generally opposed to tacking environmental policies onto congestion or parking charges.  That is not to say that these externalities do not exist – they do – but there are much better tax bases to capture these effects such as excises on fuel.  These excises are more closely linked to the generation of pollution externalities, such as CO2 emissions, than are congestion conditions.  A petrol excise targets anti-social, four-wheel drive gas-guzzlers as well as cars driving under congested conditions and, of course, such a tax should be part of a comprehensive effort to target greenhouse gas emissions (GHG). That is not to say that controlling things such as congestion will not reduce emissions since, by reducing periods of waiting-in-traffic and reducing distances travelled it will.

Professor Shoup sent me  this article to me. It explains how congestion pricing can reduce GHG emissions by increasing average speeds and smoothing the traffic flow.  Congestion reduces fuel efficiency and increases GHG emissions because it slows traffic and causes drivers to brake and accelerate frequently. The article estimates how congestion pricing can reduce GHG emissions in typical Los Angeles traffic. Increasing traffic speeds reduces emissions by 7-12% , and smoothing traffic flows reduces emissions by another 7-12%. The article comes from the excellent Access which contains various interesting ideas on transport.

Shoup likes parking policies as means of congestion control since they are both effective and cheap relative to rather expensive road pricing.  On the other hand telematic devices which are useful for measuring and addressing congestion and other externalities can also be used to advise citizens where parking spots are available and facilitate electronic payments for such charges. In the US Shoup is also much concerned with employer subsidies for parking. The effects of existing parking subsidies are larger than the proposed congestion tolls and forcing employers to offer a cash alternative to a parking subsidy rids urban systems of this source of the distortion.  This is the good applied microeconomics that my heart warms to. But in Australia we still have $9 billion in congestion costs in our large cities annually despite relatively hefty parking charges and the fact that employer-provided parking is taxed as a normal income benefit.  I think congestion in Australian cities is much more than a parking issue.

It could be that The Age has misrepresented Professor Currie but, on the face of it, this looks like the most foolish set of proposals I have yet seen put forward to address Melbourne’s congestion – and that is really saying something in Victoria! Many of the proposals –particularly  rationing road use to non-car users in the face of expanding travel demands – will worsen congestion dramatically not improve it – by constraining the times cars can make journeys and thereby creating bottlenecks.  Rationing plans do not allow high-valued journeys to be undertaken – they try to reduce car use by making congestion worse. 

How could a Government shell out hard-earned tax-payer dollars for such advice? My only hope is that The Age have misrepresented Professor Curries’ views.

The only way to manage excessive demands for something whose price of usage has been set at zero is to allow a positive price for road use to develop.  Road use needs to be priced as has been argued by countless commentators for more than 50 years.  This reduces the excessive demands for road space and allows journeys to be undertaken which do have high value.  To be specific suppose your wife is pregnant, her waters have broken and you urgently need to get her to hospital.  Under the Currie proposals you will face a more difficult task of getting her to the hospital since, with reduced effective supply, congestion will be worse – with congestion pricing you simply pay the toll and avoid the excesses of congestion.  With pricing people making marginal journeys defer or shift to another transport mode – about half of all journeys in a city are discretionary so it is quite easy to cut out 10-15% of demand to eliminate excessive congestion by pricing.

Parking spots shouldn’t be cut but priced properly so that, again, high-valued journeys can be taken.  Professor Currie is out of touch with the recent literature on parking  - much of this associated with Professor Donald Shoup – which again emphases using economics not heavy-handed prohibitions to manage scarcity.

Transport planning in Victoria is a black hole but this type of nonsense should be buried and a rational rethink of transport issues developed which is based on the science of scarcity – economics . Forget about daft engineering solutions that are usually ineffective – this proposed solution is worse than that since it will make things worse.

The solution is to price the parking spots so there is never any search time at a station site – this means hefty parking charges. Indeed according to parking expert Donald Shoup the ideal is to have 15% of parking spots free at any time in any location to prevent wasteful searches. Melbourne has the second highest fraction of its lands allocated to parking of any of the world’s cities – it is just eclipsed by Los Angeles. This is a wasteful use of land that imposes huge community cost.

I agree with Public Transport Users Association president Daniel Bowen – bus service upgrades should be a priority which will encourage people to switch toward bus rather than train services alone. It is often easier to walk to the local bus stop and even ‘park and ride’ solutions for bus travel and less likely to lead to the excess parking demands that occur at train stations.

Congestion issues are not straightforward to resolve. Parking issues need to be resolved if traffic congestion issues are to be sensibly addressed.