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8. What happens next?

Unlocking the full potential of our transport network will require changes across the board, not just to pricing. Infrastructure Victoria will continue our work in areas that will support a pricing system.

  • In the meantime, immediate measures can and should be taken to reduce congestion. We have provided a range of short, medium and longer-term options for government to consider.

Options for Government

Infrastructure Victoria has identified a range of options for the Victorian Government to consider ahead of network-wide transport pricing reform. These options allow Government to test, validate and refine new ways to pay for transport to ensure it is efficient and fair, addresses congestion, helps manage demand and gets the most out of our transport system.

Public Transport

  1. Commence randomised control trials of changes to public transport fares
  2. Introduce variable pricing for all public transport trips

Roads

  1. Conduct a randomised control trial of a large sample of motorists including different types of road pricing options targeting congestion across Melbourne
  2. Apply demand managing tolls to all new freeways, bridges and tunnels
  3. Introduce distance-based road user charge for electric vehicles

Parking

  1. Conduct a full-scale trial of cordon charging in inner Melbourne and other congestion hot spots
  2. Price the use of all roads in the Melbourne Metropolitan area
  3. Expand and increase the existing car parking congestion levy
  4. Trial dynamic pricing of selected areas of on-street and off-street council parking
  5. Trial dynamic pricing for a selection of new and existing carparks at railway stations and park and rides
  6. Apply dynamic pricing to all on-street and council controlled parking with prices set to target a certain number of places remaining vacant at all time.
  7. Apply dynamic pricing to all parking at all railway station and park and ride carparks

The government should, as much as possible, keep options alive for introducing transport network pricing in the future while new transport infrastructure is completed. For example, contracts with the providers of new roads should include possibilities for time-of-day/differential pricing.[17] Ideally, demand-managing tolls would be applied to all new freeways, bridges and tunnels.

For public transport, it would also be worthwhile beginning extensive randomised control trials of more sophisticated public transport pricing, such as mode-specific and peak pricing. This could possibly be done through mobile apps already in place. This would also provide information needed before full-scale reform of public transport pricing. An example is the extent to which travelers can change their mode, route and time of travel in response to differentiated prices. Unless the price changes are perceived as permanent, any responses are likely to be an underestimate of the response to a full-scale permanent change.

Valuable large-scale evidence could also be collected from a randomised control trial of different types of road pricing models targeting congestion across Melbourne. Though it is important to note that participants will not experience the full benefits from such pricing unless the trial is at full scale as occurred in Stockholm.

In both sets of trials it is important to specifically estimate the responsiveness of low income and vulnerable Victorians. Each trial could include different mechanisms to reduce any unfairness potentially introduced by transport network pricing reform.

Reform of parking pricing can also proceed relatively easily. We note the interest of the City of Melbourne in a pilot of demand-responsive parking pricing in their transport strategy (City of Melbourne, 2019). The Victorian Government could support this pilot if it proceeds. Similarly, if other local governments with parking and congestion hot spots (such as Port Phillip, Yarra and Hobsons Bay) are also interested to pilot dynamic pricing of on-street parking, they should be similarly supported.

A sample of new and existing car parks at railway stations and park-and-rides could also be selected for trials of dynamic pricing of parking at these locations. Funds raised in the trial would cover implementation costs and the excess reinvested in parking or other local transport infrastructure services during the trial.

The pattern of successful reforms overseas suggests that another possible next step in reforming transport pricing would be to introduce a cordon charge in inner Melbourne as suggested by Clarke and Hawkins (2006) and Terrill et al. (2019b).

The City of Melbourne is also advocating for general road user pricing reform (City of Melbourne, 2019). This could either be done via a full-scale trial, as was done in Stockholm, or implemented without a trial, as occurred successfully in London. While this doesn’t immediately address congestion which is occurring across the suburbs, beginning with inner Melbourne has two advantages.

First, there are already extensive public transport alternatives in place and in the pipeline. Their benefits could be further improved by reforming public transport pricing. Second, as highlighted by Terrill et al. (2019b) the consequences for fairness are likely to be less acute. Beginning with transport network pricing reform in the outer suburbs would be more challenging in both these respects (but nevertheless should eventually be done).

If an inner Melbourne cordon is perceived as successful, it would certainly be worthwhile exploring if there are other regularly heavily congested areas to which cordon-style pricing could be applied. This could include around shopping centres or crossings of rivers or other natural barriers for which there are few alternatives. These would be intermediate steps towards pricing congestion wherever it occurs (and not pricing congestion where it never occurs – which would be most of Victoria).

[17] For any road pricing component of transport network pricing reform which interacts with roads share tolls locked in by existing contractual arrangements, such tolls will need to be accommodated for. How this is done will depend on the type of road pricing adopted

Next steps

Infrastructure Victoria will continue to model, analyse and research options for transport network pricing in Melbourne and Victoria. This will be done within the context of reform to the broader transport system.

To this end, the next phases of Infrastructure Victoria’s work will examine:

  • How Victoria’s transport services are governed and the appropriateness of incentives and decision-making frameworks.
  • How we might better value and allocate Victoria’s finite road space, with a particular focus on parking.
  • Changes to transport charges that could progressively move the system towards one that delivers reduced congestion and better choice, including a new approach to public transport fares.

Following further consultation and research, our final recommendations for the introduction of transport network pricing in Victoria will be made in the 2020 update of the 30-year infrastructure strategy.

Getting involved in the discussion

You can find out more about Infrastructure Victoria’s work on transport network pricing through our website: infrastructurevictoria.com.au

Infrastructure Victoria welcomes comments on this paper and contributions to the ongoing discussion about transport network pricing as we prepare the update to the 30-year infrastructure strategy.

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