Will a car park tax solve city congestions problems?

The South Australian State Government stands accused of revenue raising as they attempt to introduce an unpopular $750-a-year parking levy (per parking space) for Adelaide CBD amidst renewed public backlash. The State Government claims it will use the revenue to invest in an upgraded public transport network for Adelaide.

Whilst it should be said that the supply of parking versus the demand suffered a decline across all Australian cities between 2006 – 2011, with the exception of Brisbane and Canberra, Adelaide recorded the highest number of car spaces per 100 CBD workers in a 2013 survey, more than twice the number of Sydney.

The Government’s position is that car park operators should absorb the levy and pay it out of their profits, permitting the cost of city parking to remain the same.

The big question for property owners is how to deal with the impact of the levy. Will the owner be able to pass this cost onto the car park operator and to what extent? This will depend on the provisions of the lease or management agreement. But it is likely that operators will seek to minimise their exposure by either re-negotiating rentals or trying to limit their liability to CPI increases, leaving owners in many cases with the responsibility for the hike.

Some city operators suggested that they would pass on tax, even before it has been introduced into law. Others have committed to not raising prices until any law has passed. Legislation is to be introduced shortly but it appears doomed in the Upper House.

Revenue SA has also been criticised after revealing that the levy would be recouped retrospectively from July 1, despite the tax not being law yet.

But will the tax solve city congestion problems? For permanent parkers using spaces licensed to a large company, who pay for parking on behalf of their employees, the levy will most likely be passed on directly and immediately to the licensees. For parkers in this category it is expected that the benefits of having a dedicated parking space will outweigh the additional cost.

Casual parkers pay for parking based on length of stay and the fee includes levy and GST. Again, due to the temporary nature of this type of parker, the benefits of city parking will most likely outweigh the inconvenience of switching to public transport.

Early bird parkers are the most vulnerable to the suggested changes. These are normally all day parkers who use their car to go to work and normally pay for parking out of their own pocket. Passing on the full levy increase to this category will most likely result in a certain percentage of parkers switching to a different mode of transport, in the short-term at least.

If it proves to be the case that only one group of parkers changes their behaviour, then recalibrating the balance between cars and public transparent, as the government refers to it, may not do as well as intended.

It is the view of Parking Australia that carefully considering and planning journeys is a behaviour that all motorists should aspire to and integrated solutions which are fair and equitable should be on the political agenda with regard to congestion, personal mobility and transport services, for example:

  • Strategies for locating parking on the periphery of the CBD whereby users are distributed to destination by free public transport
  • Recognition and financial encouragement to potential property developers to design and build car parks as multi-modal transit hubs nodal
  • Multi objective parking reform program which recognises the role parking plays in supporting cultural, commercial, social and religious pursuits against the reality of emerging new life style patterns
  • Consideration to broader based revenue/expenditure streams including GST, vehicle registration, stamp duty, emissions standards could already be covered in governments plans for congestion
  • Examination of road pricing charges which Parking Australia would suggest are revenue neutral as part of a demand management strategy.

Revenue raising through selective business application should only be implemented when there is a well-researched expectation that the intended outcome will be achieved and appropriate accountability is in place to ensure that the essential objectives of parking levies are achieved.

Do parking levies assist in reducing city congestion problems?

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