Thankfully, one is on the horizon with the Land Transport Management (Time-of-Use Charging) Amendment Bill currently before Parliament.
If passed, the bill will establish a framework for implementing congestion pricing in our cities. Motorists will be charged for using congested roads during peak hours. This internationally proven approach could transform our transport landscape.
The economic principle behind congestion pricing is straightforward: when a resource (in this case, road space) is scarce, pricing can allocate it efficiently. Currently, drivers face the same costs regardless of when they travel, leading to overuse during peak hours.
Road space during rush hour is valuable, yet we give it away for free. The result is predictable – everyone tries to use the roads at once, creating gridlock.
International examples demonstrate the effectiveness of congestion pricing. Singapore pioneered road pricing in 1975, achieving immediate results: delivering a 13% congestion reduction and 22% speed increase. Stockholm introduced congestion charging in 2006, reducing traffic by 22% and cutting travel times by 30-50%.
New York City implemented congestion pricing in January this year. Early data show promising results. Average travel times have decreased by 9% and speeds have increased from 17.6 km/h to 19.4 km/h. Even more impressively, crashes in the charged zone dropped by 55%.
The bill before Parliament creates a framework enabling local councils to propose time-of-use charging schemes, subject to approval by the Minister of Transport. Schemes will have to improve traffic flow and travel times demonstrably, and ensure the focus remains on congestion reduction rather than revenue generation.
Revenue would be hypothecated to transport purposes in the region where it is collected, potentially funding public transport improvements or better roads. Emergency vehicles would be exempt, but no other exemptions or discounts would be allowed.
Experience from other cities shows exemption creep undermines the effectiveness of congestion pricing. For example, London’s congestion charge was diluted because nearly half of vehicles received some exemption or discount.
Critics argue congestion pricing could disproportionately affect lower-income commuters. But congestion itself is already highly inequitable, imposing high time costs on those who cannot adjust their schedules. And congestion pricing would make public transport far more reliable, which could disproportionately benefit low-income households. Buses that are not stuck in traffic are more likely to show up on time.
Impacts can also be addressed through income support rather than by compromising the pricing mechanism itself. Some portion of the revenue raised could provide a “congestion dividend” to households with Community Services Cards living in the area.
Information generated by the congestion pricing system could also help improve value from transport spending. Say there is a project to add lanes to a road or to build a new tunnel. They should not be needed if only a low charge is needed to ease congestion relative to the cost of adding the lanes or tunnel. The money could then be put to a higher-value use. But if a high charge is needed to clear congestion, that could signal sufficient demand (and value) to warrant the lanes or tunnel.
Public communication will be critical to the success of any congestion pricing scheme. Stockholm’s experience demonstrates that, while initial resistance is common, support grows once people experience the benefits firsthand. Within four years of implementation, Stockholm’s public approval had risen to over 70% as residents enjoyed shorter commutes and cleaner air.
New Zealand’s transport system faces additional challenges beyond congestion. The current funding model, heavily reliant on fuel excise duty, is increasingly unsustainable as more drivers switch to electric and other more fuel-efficient vehicles. Time-of-use charging is important; more comprehensive road pricing reform would also be welcome.
As Parliament’s Transport and Infrastructure Committee examines the bill, Auckland has an opportunity to join the ranks of world-class cities that have successfully tackled congestion through smart pricing policies.
In the meantime, for stressed Aucklanders and visitors alike, the promise of shorter travel times and more reliable journeys should make congestion pricing a no-brainer. After all, time is money – and we are currently spending too much of both sitting in traffic.
Nick Clark is a Senior Fellow at The New Zealand Initiative (www.nzinitiative.org.nz)
