Civic Exchange’s Written Submission to Transport and Housing Bureau and Transport Department on the Electronic Road Pricing Pilot Scheme in Central and Its Adjacent Areas

Introduction

  1. In December 2015, the HKSAR Government (the Government) launched a three-month consultation on an electronic road pricing pilot scheme for Central and its adjacent areas (ERP Pilot Scheme). In the public engagement document, the Government highlighted the deteriorating state of traffic congestion in Hong Kong as a matter of great concern, with average car journey speeds of certain road sections in Central as low as about 10 km/hour during morning peak hours in weekdays. Traffic congestion causes travel time delay, exacerbates roadside air pollution, and undermines the economic and social wellbeing of the city.
  2. Earlier in 2014, the Government invited the Transport Advisory Committee (TAC) to conduct a study to identify factors contributing to traffic congestion in Hong Kong and to offer practicable recommendations to address the problem. In TAC’s report to the Government, one of their recommendations was to put in place a congestion charging pilot scheme.1
  3. Civic Exchange strongly supports the Government’s plan to roll out the ERP Pilot Scheme. We believe congestion charging is an effective means to manage transport demand and to reduce traffic congestion in Hong Kong. We have to shift from adding road capacity to managing transport demand and giving priority to efficient road users.
  4. Traffic congestion is a long-standing problem in Hong Kong, as in many other cities. In the past, congestion was largely considered as a capacity issue, and the natural and most popular solution was to increase road capacity in order to accommodate growing transport demand. This is the conventional approach to address traffic congestion.
  5. However, we must realise and accept that there is always a limit to adding road capacity, as space is often scarce and highly competitive for different uses in a city, and there are other trade-offs to consider when more roads are built. In Hong Kong, the Government acknowledged the need to manage the efficient use of limited road space as early as in the 1970s.2 However, impacts of past efforts to discourage car ownership were short-lived, and the Government had failed to consider other demand-side measures to manage car use. In short, while we understand the logic of according priority to efficient road users like double-decker buses or trams over private cars and taxis, more often than not we were unable to introduce the right tools to get the desired results. Something has to change, and it is opportune time for the Government to bring on board proven transport demand management measures such as congestion charging to rationalise the use of road space in Hong Kong.We have to account for the external costs of driving, and charging a road price is actually a way to give the motorists a price signal and to influence their decision on mode choice.
  6. In transport economics, it is often argued that driving is underpriced, as there are external costs incurred by driving but not directly borne by the motorists. These uncompensated costs will be borne by the whole society instead. In layman’s terms, the cost of driving perceived by motorists usually covers only the running cost, such as fuel cost, parking charge, and toll fee. However, the full cost of driving should also include costs associated with time delay, vehicular emissions and traffic noise. These external costs are often ignored and not paid by the motorists, but will eventually be shared by all the people being affected. This is obviously unfair, as society by and large is literally subsidising the motorists.
  7. According to the “user pays” principle, motorists should be responsible to pay the full cost of their own act (in this case, driving). One way to enforce it is to charge the motorists a road price, which is equivalent to the external costs of driving. By internalising the external costs, the motorists’ perceived cost of driving will become higher and closer to reflect the real full cost. This price signal is often significant enough to influence the motorists’ decision to drive or not, or when and where to drive, based on a better understanding of the cost of driving. This is not a new approach at all taken by the Government to address environmental externalities, as we can draw comparisons with the levy scheme on plastic shopping bags. A levy is charged for the use of plastic shopping bag as a reminder of the uncompensated cost of landfill disposal of billions of plastic bags, and as a means to change people’s behaviour.We need a good road pricing scheme for fair and successful implementation
  8. While the rationale behind road pricing is sound, implementation of which still requires a good system to make it effective. In this regards, Civic Exchange urges the Government to carefully devise a road pricing scheme that is both fair and transparent.
  9. Revenue neutrality: On fairness, it is important for the Government to make it clear upfront that revenue generated from road pricing will remain neutral and will be ploughed back inclusively to improve Hong Kong’s transport system.
  10. Net societal benefits: Moreover, it is also essential to understand that under a road pricing scheme, not everyone will benefit and someone will lose out. For example, road-based public transport patrons and commercial vehicle operators will gain because of less congestion, whereas some motorists will be priced out from driving during the charging period in the charging zone. Nevertheless, the success of the scheme should be measured by net societal benefits over individual gain or loss.
  11. Alternatives for motorists: To soften the impact on motorists who have to change their mode choice, alternatives must be provided by the Government. Under the proposed ERP Pilot Scheme, the Central-Wan Chai Bypass, which is scheduled for completion in 2017, will serve as an alternative route for motorists. Also, Central is well served by a variety of public transport options.
  12. Charge levels and exemptions: Given the main objectives of congestion charging are to rationalise motorists’ decision to drive, as well as to optimise the efficient use of road space, in principle all vehicles driving into the charging zone during the charging period must pay a road price. Charge levels should be set by main vehicle types and determined by how efficient they are as road users. No exemption should be granted except for emergency vehicles.
  13. Regular review mechanism: The charging principles must be made clear and transparent, and the motorists must have easy access to information related to the ERP Pilot Scheme ahead of their journeys. Civic Exchange recommends that a regular review mechanism, similar to the one under the Singapore ERP Scheme, has to be incorporated into the ERP Pilot Scheme so that the charge can be adjusted quarterly either upward or downward, in order to achieve and maintain an optimal average car journey speed in the charging zone.

Conclusions

  1. Civic Exchange reiterates our full support to the ERP Pilot Scheme. Encouraging results from Singapore and London, two cities that are comparable to Hong Kong in terms of density, urban morphology and economic status, make it clear that this is a proven demand-side measure to tackle traffic congestion. With less traffic, roadside air quality is also improved in the charging zone. Experience from overseas best practices provides Hong Kong with the much needed expertise for designing and developing the most practicable scheme according to local conditions.
  2. Last, but not least, Civic Exchange also encourages the Government, in parallel with the ERP Pilot Scheme, to consider other transport demand management tools as complementary measures to address traffic congestion. For example, contrary to suggestion that more parking space should be provided in Central as a means to alleviate congestion, an enhanced parking management strategy should be introduced instead to disincentivise drivers coming into Central with their cars, but switching to public transport and other non-motorised modes such as walking.
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1 Transport Advisory Committee, Report on Study of Road Traffic Congestion in Hong Kong, December 2014, p.62, Hong Kong: HKSAR Government, http://www.thb.gov.hk/eng/boards/transport/land/Full_Eng_C_cover.pdf (accessed 18 March 2016).
2 Hong Kong’s first White Paper on Internal Transport Policy, Keeping Hong Kong Moving, was published in 1979. The three main principles to tackle traffic congestion and to formulate a blueprint for Hong Kong’s transport system were (a) improvement of the road system, (b) expansion and improvement of public transport, and (c) more economic use of the road system.