Jun 282012

Who really pays for roads and public transport?

Dr Ben Ewald,  Epidemiologist, University of Newcastle.

There is a widespread misconception that motorists pay for roads through fuel taxes, which has been brought up in recent commentary in the Newcastle Herald on bikes and cars sharing the road. A full analysis of the costs of the various transport options is a complex undertaking as it should include not only the cost of cars and fuel, but the costs of parking, of road injuries, of air pollution, traffic congestion and for public transport the costs of the rails and bus lanes and capital cost of busses and trains. A comprehensive analysis of these costs has never been done for Newcastle, but it has been done for Sydney and the results are rather surprising. A Sydney academic Dr Garry Glazebrook examined the  total costs of transport by car, bus and train for Sydney and found that the cost per passenger per kilometre was 86c for cars, 57c for buses, and 48c for trains. When these costs were separated into that portion paid by the user, and that portion paid for by the public at large, car use costs comprise 48c/pKm of user costs and 38c/pKm of public subsidy. Buses cost 19c/pKm ticket price plus 38c / pKm public subsidy, and trains cost 11c/pKm ticket price and 37c/pKm subsidy, so the external costs are remarkably equal across these three travel alternatives as shown in Glazebrooks graph below:

The costs were based on estimates from reputable sources, such as car ownership costs published by the NRMA, Toll road takings of $446 million per year published by the road operators, an economic cost to society of $1.6 million for each road death and $350 000 per serious injury as published by the Victorian Dept of Infrastructure, and a cost of 20c/pKm for road congestion as estimated by the Centre for International Economics. The cost of road congestion accounts for the time and resources wasted sitting in traffic, compared to the equivalent trip done on an empty road.

For the whole of Australia when the $52 billion total costs of car use are compared to the $35 billion total revenue collected from motorists in fuel taxes, GST, registration, insurance, and tolls there is a $17 billion dollar deficit. Every year.

A similar complete analysis of the costs and benefits of building 12 specific cycleways in Sydney was done by Price Waterhouse Coopers in 2009 and published by the NSW government. It shows that the economics of cycling are a net saving of 16c/bicycle Km in transport costs for the rider, and a saving of  32 c/pKm in public subsidies, even after accounting for a cost of 2c/pKm due to injuries to cyclists and a value placed on the health benefits of the extra exercise of 1.4c/pKm. The overall return on building these cycleways for Sydney would be a financial benefit of $1.80 for each dollar spent, and the social benefits would be on top of that.

So, when you see a cyclist making their way to work don’t fret over the fact that they have not paid any fuel tax that day, but rather rejoice that they are effectively subsidising the rest of the community by not creating traffic jams or air pollution, not damaging the road surface, and not taking up road space to park all day. Give them a cheerful wave and know that their good health will reduce everyone’s taxes in future years.


Taking the con out of convenience. The true costs of transport modes in Sydney. G.Glazebrook, Urban Policy and Research, 27;1: 5-24

PublicTransportUsers Assoc        http://www.ptua.org.au/myths/petroltax.shtml