Making the right choices: Options for managing transport congestion A draft report for further consultation and input April 2006 © State of Victoria 2006 This draft report is copyright. No part may be reproduced by any process except in accordance with the provisions of the Copyright Act 1968 (Cwlth), without prior written permission from the Victorian Competition and Efficiency Commission. Cover images reproduced with the permission of the Department of Treasury and Finance, Victoria and VicRoads. ISBN 1-920-92173-7 Disclaimer The views expressed herein are those of the Victorian Competition and Efficiency Commission and do not purport to represent the position of the Victorian Government. The content of this draft report is provided for information purposes only. Neither the Victorian Competition and Efficiency Commission nor the Victorian Government accepts any liability to any person for the information (or the use of such information) which is provided in this draft report or incorporated into it by reference. The information in this draft report is provided on the basis that all persons having access to this draft report undertake responsibility for assessing the relevance and accuracy of its content. Victorian Competition and Efficiency Commission GPO Box 4379 MELBOURNE VICTORIA 3001 AUSTRALIA Telephone: (03) 9651 2211 Facsimile: (03) 9651 2163 www.vcec.vic.gov.au An appropriate citation for this publication is: Victorian Competition and Efficiency Commission 2006, Making the right choices: options for managing transport congestion, draft report, April. About the Victorian Competition and Efficiency Commission The Victorian Competition and Efficiency Commission is the Victorian Government’s principal body advising on business regulation reform and identifying opportunities for improving Victoria’s competitive position. The Commission has three core functions: • reviewing regulatory impact statements and advising on the economic impact of significant new legislation • undertaking inquiries into matters referred to it by the Victorian Government • improving the awareness of, and compliance with, competitive neutrality. For further information on the Victorian Competition and Efficiency Commission, visit our website at: www.vcec.vic.gov.au Opportunity for further comment You are invited to examine this draft report and provide comment on it within the Commission’s public inquiry process. The Commission will be accepting submissions commenting on this report and will be undertaking further consultation before delivering a final report to the Government. Submissions may be sent by mail, fax, audio cassette or email. By mail: Transport Inquiry Victorian Competition and Efficiency Commission GPO Box 4379 MELBOURNE VICTORIA 3001 AUSTRALIA By facsimile: (03) 9651 2163 By email: [email protected] The Commission should receive all submissions by close of business on Friday 9 June 2006. iii Terms of Reference VCEC Inquiry into Managing Transport Congestion I, John Brumby MP, Treasurer, pursuant to section 4 of the State Owned Enterprises (State Body—Victorian Competition and Efficiency Commission) Order (“the Order”), hereby direct the Victorian Competition and Efficiency Commission (“the Commission”) to conduct an inquiry into managing transport congestion in Victoria. Background An efficient, integrated system of roads and rail throughout Melbourne and in major regional cities is essential for the smooth transit of goods and people in a modern economy. Transport congestion can cause lengthy, often unanticipated delays in traffic on freight and people movement, which can generate unnecessary costs for business and inconvenience for households and the community at large. The Metropolitan Transport Plan sets out the Government’s strategic directions in relation to reliability of public transport, improving use of existing roads, improved service co-ordination and better demand management. To complement this, the Commission’s inquiry into the effectiveness of policy instruments and institutional structures at the Government’s disposal to implement the objectives of the Metropolitan Transport Plan will inform the development and application of future Victorian Government decisions. Scope of the inquiry The Commission is to inquire and report upon: (1) the nature and incidence of transport congestion: a) in Melbourne; b) in major regional cities of Geelong, Ballarat and Bendigo; and c) at key modal and inter-modal freight transport facility interfaces (including road junctions, the port, airport, and rail–road terminals). (2) the impact of transport congestion on businesses and supply chain efficiency in Victoria; (3) any present regulatory and institutional barriers to achieving progress in tackling existing transport congestion and effective traffic demand management; and (4) the potential application of approaches to tackling transport congestion used in other major international cities. iv The Commission should take into account any substantive studies or developments undertaken in Victoria and elsewhere—including by the Commonwealth and other States, and international best practice. Inquiry process In undertaking this inquiry, the Commission is to have regard to the objectives and operating principles of the Commission, as set out in section 3 of the Order. The Commission must also conduct the inquiry in accordance with section 4 of the Order. The Commission is to consult with key interest groups and affected parties, and may hold public hearings. The Commission should also draw on the knowledge and expertise of relevant Victorian Government departments and agencies. The Commission is to produce a draft report for consultative purposes and a final report is to be provided to me within twelve months of receipt of this reference. JOHN BRUMBY MP Treasurer 14 September 2005 v Preface The release of this draft report of the inquiry into managing transport congestion gives interested participants the opportunity to comment on the Commission’s analysis of transport congestion in Melbourne and the regional cities of Geelong, Ballarat and Bendigo and the options available to the Victorian Government for addressing it, prior to the presentation of the final report to government in September, 2006. In preparing this draft report, the Commission has sought to consult widely with a range of government departments and agencies, public and private operators, local governments, businesses and individuals with an interest in transport congestion. The Commission would like to acknowledge the contribution made by those who participated in the inquiry, via the many meetings and through submissions. The Commission has also benefited from their input, and particularly wishes to acknowledge the help of the Department of Infrastructure. The Commission invites written submissions on the draft report. These submissions may address any of the issues covered. In light of the submissions received, the Commission will hold public hearings as necessary. At the conclusion of consultation on the draft report, the Commission will produce a final report to be presented to the Victorian Government. The Order in Council establishing the Commission says that the Treasurer should publicly release the final report within six months of receiving it and that the Victorian Government should publicly release a response to the final report within six months of the Treasurer receiving it. The Commission looks forward to receiving feedback on the draft report. The Commissioners have declared to the Victorian Government all personal interests that could have a bearing on current and future work. Moreover, while the Commissioners confirm their belief that they have no personal conflicts of interest in regard to this inquiry, the Chairman wishes to disclose that he has shares in Transurban and ConnectEast. Graham Evans AO Robert Kerr Alice Williams Chairman Commissioner Commissioner vi Contents Opportunity for further comment iii Terms of reference iv Preface vi Contents vii Abbreviations xii Key messages xiv Overview xv 1 Introduction 1 1.1 Background to the inquiry 1 1.1.1 The transport context 1 1.1.2 Defining congestion 3 1.1.3 Possible costs of congestion 4 1.1.4 The policy context 6 1.2 Scope of the inquiry 9 1.2.1 Options not recommendations 9 1.2.2 An input into a broader decision-making process 10 1.2.3 Not solving specific congestion problems 10 1.2.4 Focus on achieving the Government’s policy objectives 11 1.3 Conduct of the inquiry 11 1.4 Report structure 12 PART A 2 The transport network 17 2.1 Physical characteristics 18 2.1.1 Roads 21 2.1.2 Urban public transport 22 2.1.3 Other modes including cycling, walking, taxis and motorcycles 24 2.1.4 Freight transport infrastructure 25 2.2 Usage of urban transport networks 29 2.3 Key drivers of transport usage patterns 33 2.3.1 Urban sprawl and dispersed land use 34 2.3.2 Flexibility of motor vehicles 37 2.3.3 Economic growth and changing economic structure 43 2.4 Dynamics of modal choice 44 2.5 Outlook for the demand for transport 48 CONTENTS vii 3 Nature and incidence of congestion 53 3.1 What is congestion? 53 3.2 Evidence for Melbourne and the regional cities 61 3.2.1 Previous studies 61 3.2.2 Patterns of congestion in Melbourne 64 3.2.3 Congestion and the public transport system 76 3.3 The underlying causes of congestion 83 3.3.1 Externalities associated with road use 83 3.3.2 Patterns of usage 85 3.3.3 Infrastructure issues 87 3.3.4 Public transport capacity 89 3.4 Implications 92 4 Regulatory and institutional