PDF: 1832 KB - Bureau of Infrastructure, Transport and Regional ...


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Chapter 4 | Congestion charging and community attitudes

Prud’homme and Bocarejo were also critical of the unquestioned allocation of the

London revenue to public transport. They argued that this is a negative feature of

the scheme, since the bus system is already heavily loss making and that further

funding increases the losses and has more than doubled the subsidy per passenger

(Prud’homme and Bocarejo 2005).

There are two issues here: equity and

efficiency. While public transport clearly

provides a community service, it does

not necessarily follow that subsidising

public transport is the most effective

way of pursuing equity objectives;

indeed, whether it contributes to equity

objectives at all. In many cities, the most heavily subsidised public transport services

are in the older and generally wealthier areas. Low-income earners often live in more

remote areas where housing is more affordable. 71 Also, low-income earners may

be less likely to be engaged in the type of regular employment (in terms of both

hours and location) that readily lends itself to public transport use. Hence, increasing

public transport subsidies may not contribute to vertical equity.

While little research has been done in this area, a review of urban transport in

Australia tentatively concluded that public transport subsidies are neither regressive

nor progressive in that they generally ‘boost the income of the more affluent by

virtually the same proportion as those who are less well off’ (Industry Commission

1994, p. 195).

The International Transport Forum (ITF) has highlighted the potential for misdirection

of subsidies underlying public transport funding, arguing for a ‘need for greater

clarity in the setting of fares, with subsidies focused on those people in particular

need’. Further, it argued that ‘pricing needs to be consistent across transport modes,

with charges approaching the marginal costs of travel’ (ECMT 2005, p. 13). For public

transport, this could imply significantly higher charges (congestion charging) during

peak periods.

The supply of strong alternatives to driving in congested areas is critical to both

scheme success and acceptance, nonetheless the non-empirical earmarking of

congestion charging revenue to public transport can seriously undermine the

economic credentials of the scheme.

Community acceptance of congestion

charging may be won through applying

funds to public transport but an

indiscriminate application can leave the

community relatively worse off. Thus, to

the extent that the scheme funds public

transport projects, it requires the same

rigorous evaluation that is applied to

funds raised from other sources. These

Scheme revenue has an opportunity

cost and the community is best off when

the allocation of revenue is rigorously


For a scheme to be successful,

behavioural change is necessary. This

requires strong alternatives. However,

such a link does not obviate the need

for rigorous assessment of revenue use.

funds have an opportunity cost and the community benefit is maximised if they are

allocated to their highest value use, which may or may not be public transport.

71. Ironically, housing is more affordable partly because of the limited access to public transport.


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