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6. Parking pricing reform

Driving and parking go hand in hand. Most parking across greater Melbourne is currently free, with 96% of trips resulting in free parking. This abundance of cheap parking encourages people to drive.

  • The road space taken up by parked cars could be put to better use, by providing space for free-flowing traffic, bus, tram or bicycle lanes and wider footpaths.
  • To get the most out of our transport system, we need a new approach, where all parking must be priced, along with roads and public transport.

Each example of transport network pricing we have modelled (see Section 5) included pricing parking at train stations and park-and-ride facilities. Our view is that parking must be priced alongside roads and public transport to deliver an effective, efficient and fair transport pricing system.

Current pricing is inefficient

Currently, several factors combine to deliver inefficient outcomes in on-and off-street parking in Melbourne.

The first factor is that local government policies have kept the price of parking low or free, imposing time restrictions instead. At present, 96% of trips in Greater Melbourne end in free parking (City of Melbourne, 2019).

More than half (55%) of people who regularly drive during the weekday peak have access to free, time-unlimited parking and just 17% of those who regularly drive during the weekday peak pay for parking (Infrastructure Victoria, 2018). These figures show that the price of parking across the city – and especially in the inner city – does not reflect the cost of providing it.

One reason local councils do not make greater use of pricing parking could be that the revenue does not justify the collection and enforcement costs. Where parking is priced, there is only very limited variation in pricing over time and location, instead of an efficient system that would vary prices across locations and over time.

‘Free’ parking is actually expensive as it uses a considerable amount of increasingly valuable land. As noted by the City of Melbourne (2019), free or low cost on-street parking comes at a significant opportunity cost for the city, taking up space that could be used for higher value purposes that would benefit many more people (City of Melbourne, 2019).

The City of Melbourne (2019) has also pointed out that while on-street parking is a ‘premium product’ that provides a high level of convenience by being located directly adjacent to the footpath, it is generally cheaper to park on rather than off-street. One effect of the low price of on-street parking means drivers cruise looking for cheap on-street parking, contributing to traffic congestion.

The responsiveness of car parking to prices is shown by when Melbourne CBD parking is in highest demand. It is not a weekday when thousands come to the city to work and shop, but rather, Sunday (Taylor, 2018). There are two notable differences about Sundays: first, public transport services are not as frequent and second, all on-street parking is free (although there are still time restrictions).

Another factor contributing to inefficiency is that minimum parking planning provisions for commercial and large-scale residential buildings artificially increase parking supply in some locations.

Minimum parking provisions have been criticised extensively (see, for example, Shoup 2005) but continue to be used in Melbourne – particularly in suburban Melbourne (Taylor and van Bemmel-Misrachi, 2017). A related issue is the compulsory bundling of parking rights with property. This reduces land use flexibility, increases property prices and generally overlooks the fact that some buyers may prefer to pay less for a property without parking rights.

Currently, parking at train stations, bus stops and park-and-ride locations are free. These spaces are often occupied all day and are reported to regularly fill up early on weekdays. In some areas, parking spills over into nearby residential streets. Free parking is allocated on a first come, first served basis, which may be inefficient and unfair. For example, parents dropping their children at school often cannot use train station car parks because they are rationed on a first come, first served basis rather than willingness to pay.

Overall, the abundance of free and cheap parking in Melbourne gives many people an incentive to drive rather than use public transport. Previous community research by Infrastructure Victoria found that many people who sometimes used a mode of transport other than driving did so because parking at the end of their trips was a problem (Infrastructure Victoria, 2018).

A new approach to pricing parking

Our preferred model is that, as part of transport network pricing, all parking is priced and that prices vary over time and across locations. This would apply to car parks attached to railway stations and park-and-ride carparks. This may sound impractical but time varying demand-responsive pricing is being implemented at scale in San Francisco.

There would also be no minimum or maximum parking planning provisions.

One advantage of pricing all parking is that it complements road pricing. Pricing literally all road space creates a clear signal about the best use of the land – whether it is for free-flowing traffic, parking, bus and tram lanes or footpath extensions. Developing clear price signals around road space will become even more important if there are substantial technological changes associated with transport, such as autonomous vehicles. Autonomous vehicles or mobility-as-a-service changes are going to require more road space to pick up and drop off passengers.

Another advantage is that parking linked to public transport is priced, which would be more efficient and fairer than current arrangements, and also reflect the value of the land where these car parks are located.

Given Melbourne’s extensive network of public transport services that share traffic lanes with drivers cruising for parking, dynamic parking pricing could improve the efficiency of these services and improve traffic flow. Roads such as Swan Street in Richmond, Chapel Street in South Yarra/Prahran/Windsor, Smith Street in Collingwood and Burke Road in Camberwell are good candidates for trialling the San Francisco approach.

While we could only apply simple parking charges in our modelling, public transport car parking is another good candidate for dynamic parking pricing, allowing those who benefit most from this parking to access it.

Dynamic parking pricing could also be highly beneficial in popular precincts where the demand for government-provided parking fluctuates considerably (such as Melbourne’s beach car parks in summer, the Lygon Street precinct on Saturday nights or Richmond and East Melbourne on-street parking during events). Prices would be set to encourage a minimum level of parking vacancy so that customers and visitors always have the option to visit these areas by car.

San Francisco’s demand-responsive parking pricing

In San Francisco, demand-responsive parking prices are set to achieve an occupancy target to eliminate cruising for parking.

Generally, when more than 85% of on-street parking spaces are occupied, people will have difficulty finding a park, indicating that the price is too low. Rather than charging the same hourly rate all day, the San Francisco system (SFpark) adjusts prices per city block to achieve occupancy rates of between 60% to 80% during defined pricing periods. Prices are adjusted no more than once per month and announced ahead of time so drivers know them.

A pilot of the SFpark scheme showed that prices actually went down more than they went up, reflecting the fact that for the majority of the day parking is underused. The pilot also showed increased sales for local businesses, reduced cruising for parking spaces and fewer parking fines issued (SFMTA, 2014).

SFpark is now being rolled out across San Francisco on a large scale.

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