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Road pricing: Necessity or nirvana?


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Road pricing: Necessity or nirvana?Road congestion costs the Australian economy $13 billion each year and this figure is expected to grow to $20 billion by 2020. Road pricing could help manage demand and raise revenue for reinvesting in roads and public transport – but is Australia ready?

Public acceptance of any variable or direct road user charge will require reforms to these existing charges, a substantial proportion being reinvested in public transport and political and bureaucratic courage.

The introduction of variable or direct road pricing is generally seen as a way of satisfying two main objectives:

  • Managing demand
  • Raising revenue for reinvesting in roads and public transport.

Finding a balance between both objectives can be a challenge – that is, if demand is managed successfully, fewer people will use the roads where charges are applied, therefore raising less revenue, and vice versa.

Policy makers need to consider how the pricing signals they are setting will impact upon users’ behaviour and in turn, how this will affect the objectives.

Winning over the public support will not be easy, so policy makers need to be innovative in developing road pricing policies and in its implementation in order to meet road users concerns.

The document raises some of the key issues and identifies several options for road pricing.

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