In 2018, Australia’s roads are plagued with problems: the long-term decline in the road death toll has slowed, congestion is tipped to increase and long commutes are linked to poor mental health.
And now a multi-billion-dollar road funding black hole looms.
It’s caused by the growing popularity of fuel-efficient cars, prompting a multi-generational reset to national roads policy which will change how you pay to drive.
For the people who rely most on their vehicles, that means trouble.
The price of roads
Australians are big users of roads, and they pay for the privilege … even if most don’t know exactly how.
Car is by far the most common way to get to work. About two out of three travel to work this way.
And that number is increasing — it’s up by more than half a million since 2011.
It’s the most popular way to get to work in every city, by far.
Behind the wheel, pulling out from your garage onto the street, it might seem like access to roads is free.
But the average vehicle is actually charged more than $1,300 by state and federal governments each year, according to information from the Productivity Commission.
That’s on top of fees paid directly for toll roads or parking.
The largest component is fuel excise — the tax paid on every litre of petrol, of about 40 cents — which goes to the Federal Government.
All up, governments spend approximately the same amount of money on road infrastructure as they receive from drivers.
At more than $12 billion of new engineering work done for the public sector per year, it’s greater than the spending on energy, telecommunications and water combined.
But even with today’s road outlays, the cost of congestion — which covers environmental, health and social impacts, plus what you could be spending your time on otherwise — is tipped to increase more than 5 per cent annually over the next 15 years in a recent report by Deloitte.
And while the long-term trend in the road toll is downwards, the decline has slowed. Approximately 100 Australians still die in incidents every month.
A Tesla-shaped loophole
Fuel excise means — for most drivers at least — the more they drive, the more they pay.
However, low-emission vehicles are letting some drivers get away charge-free.
The CSIRO has predicted revenue coming from fuel excise will drop by almost half by 2050.
Urban Infrastructure Minister Paul Fletcher argues the current road funding system has “some features that don’t seem very fair”.
If you are able to buy a $125,000 Tesla, the amount you pay through fuel excise to use the roads is zero.
“If you’re buying a 10-year-old Commodore, the amount you’re paying is effectively four-and-a-half cents per kilometre.”
The Federal Government is looking at ways to more closely link how people use the roads with what they pay.
Mr Fletcher will soon announce the terms of reference of the formal review into this concept, known as “road pricing” or “road user charging”, and similar trials for trucks are earmarked for 2018.
The ultimate solution might link how much drivers pay to their car’s GPS tracker. Instead of a rough fuel-based taxation method, the result would be accurate to the metre: the further you drive, the more tax you pay.
In a trial in the US state of Oregon, all drivers were charged one-and-a-half US cents per mile — no matter how fuel efficient their car was.
An overhaul of road funding such as this would require support from the states.
In the past year, the Productivity Commission and the Grattan Institute have recommended the states introduce trials of user charging to discourage drivers from using the roads during busy times.
An anti-congestion scheme operates in London, where drivers are charged almost 12 UK pounds — $20 — to visit the inner city between 7am and 6pm on weekdays.
Such an arrangement theoretically encourages people to use public transport or explore cheaper alternatives.
But there’s little choice but to drive for many right now.
The neighbourhoods that need their cars
The orange areas in the map below show the neighbourhoods where a larger proportion of workers drive to work.
In many areas on the fringes of Australian cities, more than four in five residents either drive to work or get driven to work.
Some might choose public transport if they could, but many just don’t have an option.
The concept of “forced car ownership” is where low-income households are forced to spend a high proportion of their income on cars due to a lack of alternatives and the need for mobility.
Research from Monash University found these households became more common on Melbourne’s outskirts between 2001 and 2011.
Professor Graham Currie from Monash said the people that use cars more are more vulnerable to pricing changes as they typically come from low income groups.
Not only are they car dependent, they are very, very car dependent, they are more dependent than anybody else. Which means if you change the price of driving, you affect them more than others.
Mr Fletcher is keen to emphasise that no decisions have been made about road charging and that it’s still not clear who might end up paying more at the end of reform that could take more than a decade.
“It’s not necessarily right to say this is going to be detrimental to people in outer suburban areas or in rural areas because those people are paying a lot today,” he said.
Although residents in areas poorly-served by public transport might find it difficult to ditch the car if costs for them go up, the loser from a user charging-based approach might actually be higher-income, inner-city residents.
A study linked to the Oregon trial by the Oregon State University found that drivers of high-efficiency vehicles would pay more regardless of how far they travel.
Urban drivers were found to be more likely to drive fuel efficient vehicles, so they would be likely to pay more under a user charging program.
Western Australia resident Rob Dean, who has owned his Tesla Model S for more than three years, said he would be happy to pay a “fairly proportioned distance tax” for his road use, but there’s a catch.
“I would also expect any progressive government to add an air quality tax on fossil fuel vehicles that emit damaging tailpipe emissions into the air we breath, in turn placing a heavy burden on the health system,” he said.
Turn here for a better system
It’s still early on the journey of reform, but every day more cars are being added to the existing road network.
Congestion is a drag on productivity and even mental health. A study from Deakin University published in April linked commuting for more than four hours per week to negative mental health outcomes.
The only significant user-charging trial run in Australia, by toll-road company Transurban in Melbourne in 2015 and 2016, found drivers were open to a transparent, fair scheme.
But it’s not yet clear whether user charging is the best solution to improve the road network, particularly when a major goal is to reduce congestion.
Labor and the Greens both want greater investment in public transport options such as rail, and others have suggested modest road reforms in the meantime.
A recent Grattan Institute report recommended limiting the amount of on-street parking and banning right-hand turns in congested areas to reduce the attractiveness of driving there, further reducing the price of off-peak public transport fares and increasing the cost of CBD parking.
In the longer term, the expansion of ride-share services and fully autonomous vehicles could cause significant disruption to the way Australians use the roads.
Jayme Harrison, Adjunct Professor at the University of NSW and founder of road user charging company Clearways, describes road congestion as a “very vexed challenge”.
“There have traditionally only been ‘supply side’ measures — increasing road supply [building roads],” he said
Does [building roads] improve things? It does in the short term, but then you get into the phenomenon of ‘induced demand’.
“That means increased road supply, the roads become less congested, it encourages more people onto them, and you move back to [similar levels of] congestion.
“I’m not saying we shouldn’t build more roads, we absolutely need to continue to fund roads, and improve the road networks, but if we only have supply side measures when it comes to the road part of our transport networks, it’s not sustainable.”
For the moment, the path to reform is not straightforward.
“The question is,” Mr Fletcher asks, “could you find a better system?”
“The answer right now is we don’t know, but it’s certainly worth having a look at.”