Introducing user charging for autonomous and electric vehicles

Can autonomous and electric vehicles be the fresh start we need

Steven Siewert via AFR. Traffic going into newly build road tunnel (link)

There is a glaring hole in the push for a wide base user pays road system that Infrastructure Australia — and most recently Infrastructure Victoria — have recommended as a means to improve urban congestion. I am an advocate for a fully variable user pays system because without it all we can’t adjust road supply to try to address the growing problem of congestion. The problem we have is that improving the road also induces new demand — adding new people into the network that would otherwise have stayed at home or used other transport modes.

“The existing approach to charging for road use is not well understood by users…Many users see roads as free, or at least free at the point of use.” — Australian Infrastructure Plan (2016), Infrastructure Australia

What is the problem?

At the moment the problem is that a wide-base congestion charge is too hard politically to implement. There are a few main reasons why this hard to implement, including:

  1. Perception that user pays road system would increase taxation;
  2. Social equity concerns, because the poorest people who lived in outer suburbs who would be hit the hardest; and
  3. Perception of increased car expenses, because the existing fuel excise tax is hidden in the petrol costs and not perceived when deciding to drive.

What is being proposed?

The solution currently being proposed by Infrastructure Australia is to scrap the fuel excise and vehicle registration and replace it with a user pays system based on how much people travelled. New technology may facilitate different pricing based on the time taken, time of day, distance and location — all being priced dynamically to reduce demand in congested areas.

Infrastructure Australia has called for similar freight charging to start within five years, with wide based vehicle user charging shortly after that. Similarly last week Infrastructure Victoria called for a broad-based city congestion charge, in an attempt to manage road demand and ongoing congestion issues. Both initiatives are unlikely to be politically popular and remain on the ‘politically-too-hard’ shelf.

Are there any solutions?

The conditions for implementing a broad-based user pays system are not here today, but tomorrow is a new day. The next few years brings a once in a century opportunity to address the fundamental funding and equity issues that plague the transport industry. The next decade will bring a fundamental shift in the way that users travel (autonomous vehicles and ride-sharing), in addition to the shift towards electric vehicles. Existing road funding sources will erode over time with a reduction in licence fees, vehicle registration and fuel excise.

The fundamental changes that are occurring provide a unique opportunity to change the way users pay for the roads they use.

This is my unique take on how we can transition from the current paradigm to a broad-based user pays road pricing system:

  1. Start with sectors with high willingness to pay or where they are already conditioned to pay for trip distance, these would include ridesharing, taxis and the freight industry.
  2. Similarly to above, abolish fuel excise and other costs in favour of a user pays system for AVs and EVs. The current taxation methods will not work for them because they will drive a lot more under autonomous mode or not use fuel like normal vehicles.
  3. Over time the proportion of trips using the user pay method will increase, until an inflexion point when user pricing will be acceptable to the community. At this point, all vehicles should switch to the user pays system.

Using this method (I call it the ‘growth wedge’ method) all new AVs and EVs will be taxed using a different structure to normal cars, primarily because their usage patterns mean that they won’t pay as much tax as regular car drivers for an equivalent distance travelled, and over time this will grow until all road users subscribe to a user pays model.

The introduction of AVs and EVs provides a once-in-a-generation opportunity to reinvent our transport systems from the ground up. We can’t afford to let this opportunity slip by.

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Chris is currently challenging the way cities are planned by understanding the link between transport accessibility and how cities evolve. Feel free to reach out to him on Twitter or Linkedin if you are interested in talking about the boundaries between society, technology and the built environment.