Prof Anton Brits
There is no question that transport is indispensible for the citizens of a country. However, the financial burden of upgrading and maintaining road infrastructure is enormous – a burden that weighs heavily on the pockets of commuters. This is reason enough for a road-user pricing system that’s acceptable to society in terms of equity and sustainability. Putting the road-user pricing approach in perspective was Prof Anton Brits of the Department of Transport Economics, Logistics & Tourism, through his inaugural lecture on 30 August 2012.
Transport infrastructure is regarded as a public good, with its production necessary for all consumers. In many cases, no individual can be excluded from benefiting whether or not he or she pays for it. This can dredge up consequences regarding the upkeep of infrastructure. “However, in terms of road-user pricing with the road infrastructure with monopolistic features, market forces does not always apply and therefore it is necessary for an equitable socioeconomic approach to promote the acceptability of the road-user pricing approach. If the monopolistic power is in the hands of the government, the emphasis of socioeconomic equity is vital to promote coherence and trust among its citizens,” said Brits.
An equitable and justified road-user pricing
Acceptance of road-user pricing, based on equity, should be underlined by the principles of justice, liberty, equal opportunity and the principle of differences.
From a South African context, the South African National Roads Agency Ltd (SANRAL) has been entrusted by government “to provide and manage a world-class, sustainable national road network as cost-effectively as possible, in order to stimulate economic growth and improve the quality of life of all South African people.” Funding for SANRAL’s national non-toll roads is provided by the National Treasury, which also levies general fuel taxes. However, the fuel levy is not intended to be a dedicated source of funding for transport investment or maintenance but rather to raise revenue from sources other than the general citizen income base.
Unfortunately, over the years, SANRAL has accumulated a budget deficit, as the income from the fuel levy tax is combined with other state revenues and allocated according to priorities. Priorities such as poverty, education and health are often ranked higher than expanding road infrastructure, and as a result approximately 33% of the South African fuel levy is allocated to roads.
Calculating the road-user price
The South African approach of road-user pricing is that a feasibility study is done in terms of the total road project costs, maintenance and operating costs, traffic volumes, road-user cost savings, a toll implementation strategy and a financial analysis. The total project costs are calculated in terms of the necessary structures, the road works and other aspects such as toll facilities and land acquisition. A socioeconomic impact assessment is then undertaken to assess the project’s economic and financial feasibility. Said Brits, “Traffic volumes are determined by an aggregated network transport model, and a traffic diversion curve is determined to establish a toll rate based on a percentage of the road user saving which will generate an acceptable rate of traffic, prepared to pay the predicted toll tariff.”
In terms of the equity of road-user pricing, the first best option, namely marginal cost pricing, may deviate from the actual road-user pricing because of the attributes of the road-user market. Territorial, horizontal and vertical equity as fairness approaches are therefore of utmost importance for the South African socioeconomic circumstances. “Based on the vertical equity approach, changes in the consumer surpluses of the different income groups should be determined to establish the impact of the toll. If free roads, parallel to the toll road are restricted or not available, the cost for road users with no alternative but the car will increase. This is specifically applicable in South Africa since available alternative public transport is limited,” said Brits.
Driving socioeconomic sensitivity
The socioeconomic sensitivity of introducing a specific road-user pricing approach under monopolistic circumstances, as applicable in South Africa, is critical for public acceptance and ultimately to be successful and sustainable. If the advantages of the improved road system are not financially positive, road users may regard it as another tax – something which is not needed in this country. Therefore, said Brits, “Any non-differentiated toll tariff will be unacceptable; because it may worsen the situation of those already financially disadvantaged and have no intention to improve their situation. An equity framework should be used to strategise an acceptable road user pricing approach and promote sustainability.”
*Written by Kirosha Naicker
