Why it’s time for congestion charging - Grattan Institute

When Australian governments see congestion, the solution they reach for is more roads and more public transport. But decades of more roads and more public transport have given us the levels of congestion we see today. It’s time for a new approach. It’s time for Sydney to embrace congestion charging.

Excessive congestion is costly and wasteful. No one wants to pay more to drive, but neither do they want the ordeal of delays and unpredictability when they do travel. Fast and reliable transport of people and goods is essential if Sydney is to remain both an economic heavyweight and a vibrant global city.

COVID hasn’t helped the congestion challenge. Even before the pandemic, Sydney was very car-dependent, with two-thirds of commuters driving to work, and only 22 per cent taking public transport. Once the pandemic hit, people abandoned public transport, even outside of lockdown periods. As recently as last week, public transport movements were still down 17 per cent on pre-pandemic levels in the CBD, and down a quarter to a third in areas from Campbelltown to Ku-ring-gai, Hornsby, and Fairfield. Meanwhile, driving is up.

The cost of buying and running a car is a private cost, and people spend this money if they judge it worthwhile according to where they need to go, what they need to do, and their own tastes and priorities.

But driving also affects the community as a whole. On the upside, it’s good for people to be able to get about, and for workers to be able to commute conveniently to a job that makes use of their skills and efforts. On the downside, driving not only causes congestion, but also accounts for 11 per cent of Australia’s carbon emissions. Driving also creates harmful tailpipe pollutants and accidents, not to mention the huge quantity of public space occupied by roads and carparks.

Now more than ever, the NSW government needs to dampen demand for driving in the city. The most effective way to dampen demand for driving is congestion charging. Grattan Institute research shows that a congestion-charge cordon tightly drawn around the Sydney CBD would provide clear net benefits to the community.

Sydneysiders would benefit from at least 3,000 fewer cars on the road during the morning and afternoon peaks, with some people switching to public transport at those times. Fewer cars would mean better traffic flow. Across the Sydney metro area, speeds would increase by up to 1 per cent in the peaks. This doesn’t sound a lot, but it is much more than the speed improvements of 0.3 per cent across the day from the first stage of the F6 Extension, which will cost $2.6 billion.

In the Sydney CBD, traffic speeds would increase by an average of 11 per cent in the morning peak, benefiting motorists and also tens of thousands of bus commuters, many of whom find getting through the CBD the most frustrating part of their trip. Benefits would extend beyond the CBD too, with modest improvements in traffic flow as far from the CBD as Frenchs Forest, Brighton-Le-Sands, Burwood, and Macquarie Park.

Opposition Leader Chris Minns has argued that western Sydney residents would lose the most, but Grattan Institute research suggests otherwise. It’s typically higher-income workers who drive further to work – and those who drive longer distances tend to have higher incomes. Plus, very few of those who drive to a CBD job are on a low income; the median income for a full-time worker who drives to a CBD job is higher by more than $1,000 a week than that of the typical full-time worker in Sydney.

A congestion tax is not a punishment. It’s a device to encourage those drivers who can be flexible to save money by travelling earlier or later, taking the train or bike, combining two trips into one, or catching up by Zoom. On the day when you really need to get to an appointment or interview, or to carry a heavy or bulky load, you’ll get a faster and more predictable run.

The stars are aligning. The massive investment in public transport makes it more viable now than it’s ever been to tilt the balance towards non-driving options. The Sydney community will win both economically and socially if the legacy of the pandemic is a city that’s less rather than more car dependent.

Marion Terrill

Transport and Cities Program Director
Marion is a leading transport and cities expert with a long history in public policy. She has worked on tax policy for the federal Treasury, and led the design and development of the MyGov account. She has provided expert analysis and advice on labour market policy for the Federal Government, the Business Council of Australia, and at the Australian National University.

While you’re here…

Grattan Institute is an independent not-for-profit think tank. We don’t take money from political parties or vested interests. Yet we believe in free access to information. All our research is available online, so that more people can benefit from our work.

Which is why we rely on donations from readers like you, so that we can continue our nation-changing research without fear or favour. Your support enables Grattan to improve the lives of all Australians.

Donate now.

Danielle Wood – CEO