Shaping the road pricing and provision debate

Road pricing in Australia is shaping up to be an incredibly important policy instrument to change the behaviour of road users and to address the decline in federal fuel excise revenues. The current system of recovering basic costs from road use treats roads as a free-access ‘public good’ and, aside from toll roads, users do not pay directly for their use of the road network or contribution to congestion. The present system of levy charging (fuel excise and registration charges) has little impact on the behaviour of road users and, if the current system remains unchanged, traffic congestion in metropolitan areas is set to cost some $30 billion by 2030 (BITRE 2015). For most non-commercial road users, the cost of using the road network is limited to a fixed annual state government access charge (vehicle registration and licence fee) and the federal fuel excise (currently 40.1 cents per litre). However, since the early 2000s, more fuel-efficient vehicles have reduced fuel usage overall and, consequently, revenue from the fuel excise has been steadily declining (BITRE 2016). Further, the existing user charges (fuel excise and vehicle registration) may discriminate marginally between vehicle types and capacities, but not between heavy and light users of roads (although heavy users will necessarily pay more fuel excise). Moreover, fuel excise is collected as consolidated revenue by the Commonwealth, and therefore provides no market signals on the demand for particular roads. Consequently, estimates used to direct road provision and maintenance routinely prove to be inaccurate, and often simply increasing the capacity of roads reinforces the behaviour that led to traffic congestion in the first instance.