Editorial

All You Can Drive

Market-based highway tolls would get us out of our traffic jams and into an optimistic future of high quality regional transit, stronger job growth and better economic prospects.

By Ryan McGreal
Published December 09, 2009

What would be the demand for an all-you-can-eat buffet ... if it were free?

Imagine line-ups running out the front door and down the street, hungry people waiting in frustration for the line to inch forward. Eventually you get in and manage to push your way to a table.

After more standing in line to get to the buffet itself - a long table ravaged by the unrelenting rush of hungry patrons - you try to enjoy your meal amidst the frenzy of grumpy, jostling diners that surrounds you.

Off to your right, someone finally loses their temper and starts yelling. A shoving match breaks out. Overturned chairs clatter to the floor and dishes smash. Restaurant staff cordon off part of the dining area to clean up the mess as the antagonists are ushered out the door.

As the line-ups keep getting worse, demand builds to expand the restaurant's capacity by taking over the adjacent buildings, hiring more staff and increasing the volume of food production. More entrances are added and the lobbies are widened.

Eventually, it becomes necessary to build a whole new buffet to service the demand. The new buffet is twice as big as the old one. For a while, it's possible to get in, enjoy a decent meal and get out again without a lot of congestion.

Over time, more and more people start moving near the new buffet. Eventually it becomes just as congested as the old one. Pressure mounts to widen this buffet as well and, ultimately, to build yet another buffet farther out.

Insatiable Demand

Try to imagine how we might pay for this arrangement. Actually charging diners to eat is out of the question - political suicide for any government that dares to propose it - so it requires public funding to the tune of billions of dollars a year.

All citizens must pay for the buffets whether or not they decide to eat there. Of course, most citizens do eat there. What kind of sucker would pay for food when you can get it for "free"?

You don't need to be an economist to draw the obvious conclusions from this thought experiment: the market "demand" for a free buffet is insatiable. If people don't have to pay for it themselves, they have no incentive to conserve. Because it's "free", alternative food arrangements have no chance to compete.

Obviously, such a scenario couldn't possibly work in practice. People need to eat, but no one in their right mind would recommend a free buffet as the way to feed everyone.

The Buffet is Real

Yet we have no problem defending this very same arrangement on our highways. Everyone has to get to work, after all. If we didn't have "free" highways, how would people get around?

We see all the hallmarks of our hypothetical free all-you-can-eat buffet in our actual all-you-can-drive buffet: the insatiable demand, the unmanageable congestion, the frustration and stress - and the perverse public demand to maintain it at all costs.

As I write this, an online Spectator poll asks: "Would you support polls on existing roads?" Granted that it's a straw poll, the result - 86.05% of respondents said "No" - is instructive.

I'm surprised the Ontario government is even floating this idea. One of the reasons Metrolinx, the provincial body coordinating rapid transit across the GTA and Hamilton, doesn't have a long-term funding model in place is that the idea of highway tolls was considered too politically radioactive to contemplate.

Easy Fix

The problem of congestion and induced demand on "free" highways is very difficult to address politically, but quite straightforward in technical terms. The government needs only charge a toll that varies by time of day to ensure enough spare capacity that traffic can move freely.

The revenue can fund improvements to GO Train service so that it becomes a viable - i.e. fast, convenient, and flexible - alternative to driving.

Everyone wins. Drivers no longer have to sit in traffic. People who would rather take the train now have that option. Air quality improves. Cities intensify (a provincial planning goal) as the false economy of cheap houses in highway-serviced suburbs gives way to high quality neighbourhoods served by local amenities and transit.

An OECD report released just a few weeks ago concluded that the GTA's infamous highway congestion is a significant drag on our economy. We lose billions of dollars a year in productivity because people and goods are stuck in traffic.

Market-based highway tolls would get us out of our traffic jams and into an optimistic future of high quality regional transit, stronger job growth and better economic prospects.

If we actually go through with this, once we see how well it works we will scratch our heads and wonder why we didn't do it decades ago. That's not going to happen until we recognize the folly of today's "free" all-you-can-drive buffet.

Ryan McGreal, the editor of Raise the Hammer, lives in Hamilton with his family and works as a programmer, writer and consultant. Ryan volunteers with Hamilton Light Rail, a citizen group dedicated to bringing light rail transit to Hamilton. Ryan writes a city affairs column in Hamilton Magazine, and several of his articles have been published in the Hamilton Spectator. He also maintains a personal website and has been known to post passing thoughts on Twitter @RyanMcGreal. Recently, he took the plunge and finally joined Facebook.

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By frank (registered) | Posted December 09, 2009 at 15:51:11

Alternatively, people can get sick of waiting in line at the buffet and make their own food at home. I'm fine with tolling intercity highways not so much when it comes to intracity highways and my reasoning comes from this logic...

I can drive to Toronto and it takes me an hour and a half at rush hour or close. I can take the train to Toronto and the time is relatively equal. However I can drive from my place near Eastgate to the Meadowlands in about 20 mins. If I were to take the bus, even the beeline would be a lot longer than that.

Tolling highways is great as long as the transit alternatives are actually present.

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By Inhocmark (registered) | Posted December 09, 2009 at 16:37:55

This is a vicious loop. In order to be able to institute a Toll policy you'd have to be able to demonstrate an effective alternative (ie. Transit). To have that effective alternative you need to have the revenues that proactive anti-driving intitiatives would generate.

Personally as somebody who carpools with my wife to near her work in Mississauga and then takes the GO the rest of the way in, I have no problem with using tolls as a way to lessen traffic flow and put the necessary funds into Transit. But in order for it to be successful it has to be viable as Frank has said above.

That means affordable and available.

Subsequently, those who have jobs that are in areas that are underserved by transit also need to be able to afford their cars, so while the toll would have to be big enough to encourage transit use, it would have to be modest enough to allow those people who depend on their cars some sort of affordability.

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By Ryan (registered) - website | Posted December 09, 2009 at 16:51:00

while the toll would have to be big enough to encourage transit use, it would have to be modest enough to allow those people who depend on their cars some sort of affordability.

Two thoughts on this.

First - and this is pretty pedantic - the toll should be geared to optimizing traffic flow as opposed to other metrics (e.g. transit). There has to be a direct benefit to drivers who choose to pay. In any case, a toll high enough to ensure traffic flow at rush hour is by definition high enough to incentivize transit as an alternative.

Second, the fact that people can choose to live far from effective transit or nearby amenities and then drive everywhere is part of the problem. Such an arrangement is inherently expensive, and it's possible for so many people today only because of the huge basket of artificial subsidies that includes "free" highways.

An incentive not strong enough to encourage intensification is not an incentive at all.

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By Inhocmark (registered) | Posted December 09, 2009 at 17:20:24

See, some people move out because of necessity. My wife and I were living in a very transit friendly area of Southwestern Toronto that we quite liked. I was a walk to the GO Train or the TTC Rail Line was right outside my door and she was a 10 minute drive against traffic into Mississauga.

But the reality is living in that area and owning a home (which can run $450-$500k for 1200sq ft) was not in our reach and in order to afford to get out from under the thumb of a landlord we had to go to where we can afford.

It's a convenient excuse of those who are quick to roll their eyes at people who move out the suburbs to point out that we chose to move out to a place with limited transit. I say that if you look at areas of the world where Transit work, people live a lot farther out of major areas than a lot of us in the Golden Horsehoe do and have access to better transit and that any comprehensive transit plan needs to address those areas and beyond.

Honestly, it's tough to encourage people to use transit when they only have access to one or two unreliable routes. And it is those people you have to convince to abandon their cars for any sort of transit initiative to work.

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By Ryan (registered) - website | Posted December 09, 2009 at 17:24:05

I'm not being judgmental. My point is that it's a false economy to move to a place with highway access but poor transit and limited nearby amenities. It seems cheaper only because of the myriad of subsidies that hide the real cost.

By adjusting the balance of incentives in which people make decisions - as with market-based highway tolls combined with investments in transit - people will make different choices in their interests.

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By rusty (registered) - website | Posted December 09, 2009 at 18:42:16

Nobody is demonizing suburban dwellers here. Of course we all move to wherever it is we can afford. All that's being said is that there is a false economy at work and it needs to be addressed. Yes that would mean short or medium (or probably long...) term pain for many folks but that's no argument for saying it's not the most prudent thing to do.

As for buying your food rather than queuing up for it, sure - road tolls will be more accessible for those that can afford it. This is no different to the way we eat today. Those of us with no moola eat crappy food. This creates a valid concern with Ryan's hypothosis: Even if we charge for road use, what assurances would we get that transit would improve exponentially? (Would the poor lose out again?)

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By luke (registered) | Posted December 10, 2009 at 02:49:57

Inhocmark, in my experience, having one less car is the equivalent of a $10,000 raise. You might have to pay more for the house, but you make that money back over a few years. YMMV.

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By frank (registered) | Posted December 10, 2009 at 09:34:12

Ryan, while it may be cheaper in the long run to live in the city close to transit, if the transit sucks why would someone use it? Also, while it may be cheaper to live in a city and take transit versus outside and driving in, I think you're omitting the fact that at least in Hamilton it takes 3 sometimes 4 times as long to get somewhere by bus than by car. So if the economy is based on dollars alone you may be correct but if time is included (and time is money isn't it) then it's not. I'm sorry, but your solution and by extension your false economy only exists if the transit system in that area is a viable alternative to driving.

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By Ryan (registered) - website | Posted December 10, 2009 at 09:49:20

while it may be cheaper in the long run to live in the city close to transit, if the transit sucks why would someone use it?

Of course, Frank. No one's arguing differently. That's why I'm saying that highway tolls should be coupled with transit improvements. The combined effect of this would be to foster more neighbourhood intensification with better amenities closer by.

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By Inhocmark (registered) | Posted December 10, 2009 at 10:34:11

Inhocmark, in my experience, having one less car is the equivalent of a $10,000 raise. You might have to pay more for the house, but you make that money back over a few years. YMMV.

Actually my thinking is the same. We have one car with no desire to buy a second and I add about 20 minutes onto my commute to make the arrangement work. Heck, I work in TO, I couldn't afford to drive in and you couldn't pay me enough to deal with the aggrivation. Since our move it has worked out quite well driving to a GO station near her work and continuing on to Toronto from there.

For tolls to work, they'd have to be area based rather than specific road way based to avoid clogging up secondary roads with those trying to beat the toll.

Transit would also have to come before tolls. The funds would have to be outlayed in advance to get the network in place to get people where they are going and in an acceptable timeframe. London can charge tolls to enter the city centre because they can point to their expansive public transit network and present a viable and cost/time effective alternative. Sadly I think in today's political climate the initial cost of getting the idea off the ground would be too prohibitive for cowardly politicians.

The final piece of the puzzle would have to be the modification of laws regarding car pooling and providing value for a person's toll beyond the right to drive. Making it officially legal to car pool (it is currently not from my understanding), adding HOV lanes and ultimately implementing measures that ensures a smooth traffic flow in 'normal' conditions.

I'm a huge proponent of thoughtful and effective public transportation. I've lived in some of the biggest cities in Canada and seen the good, bad and ugly. I love the ideas of municipalities, especially in the Southern Ontario corridor charging modest tolls to plug back into the entire transportation system.

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By FenceSitter (anonymous) | Posted December 10, 2009 at 18:53:16

"Making it officially legal to car pool (it is currently not from my understanding)"

As crazy as that may sound, it is true.

If I remember, you are allowed to car-pool, but you are not allowed to accept payment (gas/mileage etc..).

Can anyone help here?

Great article, I really enjoyed the buffet analogy.

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By FenceSitter (anonymous) | Posted December 10, 2009 at 18:56:50

Here it is....

"You have to meet four criteria. Those criteria state: you can only go to work, you can only go with the same driver, you can only go within your municipality and you can only pay the driver once a week."

Can read the article here.

www.canada.com/ottawacitizen/news/story.html?id=9605e954-e719-4aee-a636-de59c5f54179&p=1

Not sure if any legislation as changed since this article was posted.

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By Ted Mitchell (registered) | Posted December 10, 2009 at 19:45:01

Tolls on major routes- absolutely- but there's also a problem with congestion on local roads.

Therefore you also need a real gas tax, and funnel this combined revenue into transit, road maintenance, and other externalizations of car culture such as trauma, diabetes and heart disease mediated through inactivity and poor air quality.

I don't know when the political will can be found to do this, but it has to happen or increased congestion and the reason for it - stagnant, selfish thinking - will creep further into our society and weigh down all kinds of innovation. Canada is already a laggard in creativity and R&D as a result of the last couple decades of middle class hollowing out, tax cuts, and shifting spending to the squeaky wheels. This will drag down our economy and make us progressively less competitive globally.

Any self-interested strategy is bound to fail, because that's what got us into this mess. Road tolls + gas tax funding better transit is a collective action that benefits society on the whole and is unequivocally more fair than the current subsidized arrangement. Some good leader has to have the guts to say this is more important than any individual gripes.

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By Andrew (registered) | Posted December 12, 2009 at 02:26:36

Drivers pay their fair share already. They pay for gasoline (which is 50% tax), insurance (supports the finance sector), purchase an automobile (support's the sales, service, and manufacturing industry), driver's licence fee (supports safety and road maintenance), plate permit fee (supports safety and road maintenance), and parking fees (revenue for the city). Take away cars and drivers and you have a fruitless economy. Now I'm not saying it's so black a white.

What I would like to see is for transit providers stablize their books. Each year more and more people take transit due to the government pushing for more people to take it. Each year, the transit providers jack up their prices. Doesn't make sense. Riders should cover 100% of their fare, then you won't have a funding problem. The transit providers should actually make a profit to invest back into the system.

Here's my honest view:r. 1. Transit providers should cover 125% of their operating expense through fares. 2. Transit providers should cut down on operating expenses. 3. Businesses should be more open to spread out their offices so employees don't have to travel very far. 4. Transit should be faster than taking the car. 5. Transit should be economical even when owning a car. 6. Support the car and transit industry, both complimenting each other. 7. The government should not create a false market where they manipulate the cost of driving to drive the use of transit, then raise the price of transit. 8. Keep fares low, service fast, and social, and increased customer service. 9. No tolling of roads. In Ontario, we seem to take everything to the extreme. A toll charge in Florida would be $0.25, but here it would be $3.00. 10. The government has to bear some responsibility to cut down expenses and improve efficiency. 11. Incentives for businesses to build in local communities. 12. Build modern LRT systems in advance of growth in growth centers. 13. Make the airport a central hub for transportation in the GTA. 14. Remove centralization of transporation of downtown Toronto else where. Growth is not happening in the core anymore. People are moving out and around.

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By Jonathan Dalton (registered) | Posted December 12, 2009 at 17:18:19

In response to the above:

"Drivers pay their fair share already"

No. According to the Transport Canada study, they don't. Drivers pay alot, I will concede. This is due to the fact at an automobile based transportation network is obscenely expensive. A similar study found the US interstate network was only 50% covered by user fees: http://www.subsidyscope.com/transportati...

"1. Transit providers should cover 125% of their operating expense through fares." "2. Transit providers should cut down on operating expenses." "8. Keep fares low, service fast, and social, and increased customer service."

I'm still trying to figure this one out. 1 implies jacking fares by 300%, which fails to satisfy 8. 2 suggests reducing expenses reduce the fare revenue required to satisfy 1 and 8 at the same time. But operating expenses would then have to be negative. So, become an international transit operation academy where the students drive our buses?

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By Ted Mitchell (registered) | Posted December 12, 2009 at 18:43:23

Andrew, check out the related blog:

http://www.raisethehammer.org/blog/1595/...

and the links showing that drivers clearly do not pay their fair share, despite all the taxes you mention:

http://www.tc.gc.ca/policy/report/aca/fu...

comparing the high estimate of any remotely road related revenues $17.2B, of which $10.2B is gas tax, with the high estimate of road costs $25.8B, you see a clear shortfall which comes out of fixed revenue sources, primarily income tax.

And gasoline is not 50% tax, it's 35%: http://www.caa.ca/mini%20sites/gasprice/... http://www.ontariogasprices.com/can_tax_...

Doing a little math, 25.8-10.2 = $15.6 billion is the shortfall for gas tax covering road costs (this still ignores costly externalities like road trauma, air quality health effects, congestion, etc).

So @ $1/L, $0.35 tax makes up 10.2/25.8 = 40% of what it should cost if gas taxes paid their fair share. Based on that, the revenue neutral gas tax should be $0.89/ L. Similar to Europe. When $1 gas becomes $1.54 through taxation, then Andrew will be almost correct with his statement:

Drivers pay their fair share already.

Until then, we're subsidizing cars, not transit. And I could make a good argument, given more space, for a adding another $1/L in tax (revenue neutral) as a way of funding transit, shifting demand to transit, covering health costs, and improving economic efficiency through increased density and avoiding congestion. I'd be happy happy to pay this much to avoid stop and go traffic forever, and so would a lot of other people. Traffic fatalities would decrease. Then there's the quality of life argument which is priceless.

The point is that the way we use cars is really expensive and inefficient. At 25% seat occupancy, which is what we have in GTA commuters, that's 3 out of 4 seats driving around empty. Unforgivably wasteful.

So the true current situation is not:

  1. The government should not create a false market where they manipulate the cost of >driving to drive the use of transit,

it is that the government has ALREADY created a false economy by manipulating the cost of driving to be paid largely through fixed taxes, so it encourages overuse to get your money's worth with predictable congestion. And by subsidizing cars this way it discourages transit.

Fixed insurance costs contribute similarly to this 'tragedy of the commons' problem, as does vehicle depreciation.

Oh, and:

Growth is not happening in the core anymore. People are moving out and around.

Duh! That's because we are subsidizing car culture! And people who move to the fringes of suburbia not only don't pay enough for gas, they are subsidized by inner city dwellers who have higher density and lower infrastructure maintenance costs.

When all externalities of car travel are paid for through gas taxes alone, then we can debate whether transit should pay for itself, or it is a public good that deserves some subsidy. Private vehicle use certainly does not.

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By crtsvg (registered) | Posted December 13, 2009 at 20:14:32

Just build more roads and teach people how to drive proper

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By TreyS (registered) | Posted December 15, 2009 at 20:21:23

Great analogy Ryan

I'm recently back from a trip to the US, and was surprised to see so many toll roads and bridges, in a country that hates taxes more then terrorism. I'm left to wonder why we don't poll tax our highways and bridges in Ontario.

I was a 'foreigner' using their highways and bridges, some of the local people may never use or drive on them, so why would they be subject to subsidizing me travels..?

Put a toll over the Hamilton Skyway Bridge and put a toll on the RedHill Expressway and a toll at the top of the Chedoke Expressway (for some reason now called the Ancaster Hill) and the Linc.

The image of an open highway, a 1960 Mustang and full tank of gas = freedom, democracy and liberty. Is one of the biggest scams ever pulled on Americans. When in fact, the road, the vehicle and the fuel were all socially subsidized. And to think the US hates anything 'socialist'.?

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By Angela Browne (anonymous) | Posted December 28, 2009 at 22:13:29

I agree. We are not only subsidizing drivers by thousands per capita on an average annual basis, but we as a society are discouraging transit use on a wide scale. Those that do not drive do not have access to employment, beyond the usual minimum wage, low-skilled jobs, and also end up spending a lot more money on necessities, such as groceries.

As somebody that does not drive, I resent paying taxes for roads, policing, traffic lights, parking, and other amenities enjoyed for "free" by drivers, while they receive preference on almost every job when compared to an equally qualified non-driver.

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