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Carpark tax fails to solve Melbourne's traffic gridlock

23 August 2012

The first major study of the levy by Monash University researchers found the tax had failed Photo: Peter Firus
Melbourne’s traffic congestion levy has had minimal affect on motorist behaviour despite providing considerable income to the state Government, according to a new report.

A Monash University study examined how the congestion levy, introduced by the Victorian Government to deter peak-hour drivers requiring all-day parking, affected users during the period of December 2005 – 2008, and found the tax had failed to reduce traffic congestion and reach the intended road users.

Researchers from the Department of Civil Engineering examined the carpark tax in relation to the use of off-street parking spaces in Melbourne and observed how car park operators responded to the levy’s introduction.

It found some carpark operators either partially absorbed the tax or passed it on to short-stay customers instead of early-bird and all-day customers. In other instances employers were absorbing the tax, which ranges from $650-$910 a year for a single car space.

Co-author of the study, Professor Graham Currie, said parking tax was often used by governments to facilitate efficient movement of traffic, raise revenue and influence travel behaviour.

“The findings suggest that the way the levy is being implemented by parking providers is undermining its stated purpose and may be limiting its effectiveness in changing travel behaviour,” Professor Currie said.

“The recommendation is therefore to develop a closer link between the levy and its intended target in order to obtain the required policy outcomes.”

The authors suggested road tolls or a congestion "cordon" around the city would be more effective than the parking space levy.

During the study period, the paper found early-bird parking prices in commercial off-street car parks increased by 11–17 per cent above the pre-levy level. This increase covered only 40–60 per cent of the total cost of the levy.

Professor Currie said that although long-stay parking charges in commercial car parks increased since the levy was introduced, the scale of the increase suggested that some of the cost of the levy was being borne by short-stay users and the parking operators themselves.