It’s time to consider charging drivers for using urban roads

Once the decision was taken to establish a national water utility, just about everyone, including Sinn Féin, went along with the presumption that consumers should pay — as they do for other critical household supplies such as electricity, gas, waste collection, Sky Sports and Netflix.

Everyone except Paul Murphy — a socialist politician, who secured a by-election victory on the free water ticket in Dublin South West in October 2014. A disappointed Sinn Féin had been favourites to win the seat, and promptly discovered the merits of Mr Murphy’s position, followed by all other political parties. This included even the Green Party, in a synchronised Damascene conversion.

Their joint discovery of the virtues of free water saw Ireland in the unaccustomed role of pioneer in this corner of environmental policy, with no imitators, according to the OECD.

It left Irish Water with no proper revenue base and no staff — they all still work for 31 local authorities, and are threatening industrial action to avert the horror of transfer to a monopoly semi-State employer, a coveted status in the eyes of many.

Irish Water has been endowed with a massive capital investment backlog, a ropey balance sheet, no staff, and an obligation to supply most of its customers for free. The latest political brainwave is that this designer casualty needs constitutional protection from privatisation. It needs help, especially revenue.

There are ambitious plans for transport investment in Dublin — including megaprojects costing numerous billions, on a scale rivalling the recent debacles of the National Children’s Hospital and the National Broadband Plan.

When projects on this scale overshoot on costs, the amounts involved are big enough to starve the rest of the capital programme. The OECD did not seek to assess the Dart Underground, Metro North or Bus Connects proposals, which are not in final form and for which definitive estimates of costs and benefits have yet to be
released.

The OECD authors have, however, raised a critical issue for Dublin transport policy which needs to be addressed before decisions about these huge projects can prudently be taken.

The issue is congestion charging for urban road space.

Demand for urban road space varies enormously by time of day and across the week. Where road use is free at the point of use, inadequate peak capacity can only be rationed by queues and congestion.

There will be insistent demands for wider roads or more bus and rail infrastructure. Since congestion suppresses latent peak demand, extra capacity summons forth extra traffic and the big-ticket investments yield disappointing results.

The alternative is to charge road users for their actual demands on capacity when it is scarce, instead of invariant taxes on vehicle registration or ownership. This is called congestion charging: cities around Europe, including London and several in Scandinavia, have opted for variations of cordon charging, where entry into central areas requires payment of a daily fee.

A recent report for the Department of Transport by the engineering firm Systra considers the possibility of cordon-based charging for Dublin and possibly Cork. There are better technologies on the way.

Cars are nowadays ‘connected’, and it is feasible to monitor centrally which vehicles are using pieces of scarce road capacity, and when — and to charge them a monthly fee. This is pretty much how the mobile companies operate at present.

There is an opportunity in Dublin to skip cordon charging and go straight to electronic road pricing. The charge would likely be zero outside cities, and would also be zero in urban areas during off-peak hours.

Other taxes on motoring, such as the purchase taxes and annual standing charge, could be reduced. It is sometimes objected that congestion charges would be regressive, but the evidence is flimsy. Poorer people tend not to be car owners and rely more on public transport.

After a trial, the congestion charging system using the old (cordon-based) technology was approved by referendum in Stockholm. Bus users should be easily persuaded, since pricing away some of the peak car traffic frees road space for buses, improving journey time and fleet utilisation without capital cost.

Another technology on the horizon, to which the auto companies have committed serious money, is the driverless car. If city transport goes in this direction, private car ownership will become less attractive since mobility-on-demand — via robot cars summoned from your smartphone — will become cheaper.

A smaller car fleet means less city space devoted to all-day parking, freeing up lanes for buses and off-street sites for more productive uses.

The time horizon attaching to urban transport investment is important here. The first proposals for underground railways in Dublin were floated 50 years ago, in the 1971 Dublin Transportation Study.

The expectation that something is just about to happen on a grand scale can freeze the adoption of more affordable improvements along the way. Some of the schemes currently under consideration (on which politicians have bestowed their premature endorsement) would hardly be operational inside a decade, even if commenced promptly. Given the superior technologies becoming available, there is a risk of blindly constructing stranded assets.

The OECD has other worthwhile suggestions to dampen car commuting, like ending the benefit-in-kind exemption for workplace parking. Smart employers, including the Government, do not provide company cars; they provide ‘free’ parking, courtesy of the Revenue Commissioners.

Before further commitments are made to expensive investments in peak-time capacity in Dublin or in the provincial cities, it would be reckless not to consider in detail the option of congestion charging for urban road space.

The OECD has furnished a timely warning.