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It would surprise most Melburnians to learn that 65% of Melbourne workers drive to work or ride as a passenger in a vehicle. There are an estimated 4.8 million registered vehicles in Victoria — more than one for every person aged over 18 years. Australia is the seventh highest ranking country in the world based on the number of vehicles per head of the population. Nationwide, around 87% of all private trips in urban areas are by car – we love our cars and we love driving them! Most of us wouldn’t think twice before getting behind the wheel in the morning, particularly if we haven’t had our morning latté. But if we pause to consider the cost of our commute on others, we might reconsider the ‘need’ to drive.
Australia spends around $38 billion on the road system and road trauma each year, but only collects $35 billion from motorists— that’s a $3 billion shortfall that has to be funded by all tax payers. And that’s before the non-monetary costs of driving are considered.
Our analysis shows that every kilometre we drive imposes 58 cents in costs to society. We may pay for our car (its maintenance and fuel, plus some taxes and registration that go part-way towards maintaining existing roads and building new ones), but we don’t pay for the impact of our car’s use on pollution, noise, traffic congestion, accidents, reduced health outcomes from sedentary behaviour, land use costs, or even the full costs of road maintenance.
So many hidden costs mean commuters are not encouraged to make better economic, social or environmental choices. A recent survey of Victorian drivers highlighted that a third of drivers chose to drive when they could have used alternate modes of transport, and a quarter of drivers said they chose to drive during peak periods even when they didn’t need to.
Continued underinvestment in transport infrastructure also distorts commuting patterns, as the cost of road maintenance or new road projects shifts to future generations, with current commuters not seeing the true cost of their choice to drive.
Surely it’s those on the city’s fringe doing most of the driving? After all, the famed inner city hipster and their forebears, the Middle Aged Male In Lycra (MAMIL), are often seen riding round the city on bicycles that cost more than a small car. However, the data suggests otherwise. Many inner city and middle ring residents are just as quick to reach for the car keys over their Myki. Residents in the inner east and inner south have a similar annual fuel bill to those in Melbourne’s outer suburbs. Given the inner suburbs’ comparatively better access to amenities and public transport – this result raises questions about our preferences and choices.
Figure 1 – Average annual household fuel spend, 2016
Figure 2 – Average yearly fuel spend across Greater Melbourne’s Regions
The city’s car dependence is evident in the balance of space in the CBD. We dedicate so much space to cars although many more trips in and around the CBD are made by other modes of transport including walking, cycling and the train or tram network. Private cars account for just 36 percent of all trips in and around the City of Melbourne, yet they are allocated nearly 60 percent of the available space.
To illustrate the potential benefits of mode shifting from driving to public or active transport, we compared the full cost of a daily commute from Coburg, a suburb 11 kilometres north of Melbourne’s CBD, across three transport modes: driving, cycling, and catching a train. While motorists do pay for some of the costs of their journey, the share they don’t pay remains far higher than for other modes. When the costs to both the user and society are priced in, driving is substantially costlier than both cycling and catching the train – driving is 1.7 times more costly to society than catching the train, and 19 times more costly than cycling!
When all the hidden costs are considered, driving is the most expensive mode of transport— the same conclusion drawn in cities across the world. While some within the city may need to drive, including those who work in the transport sector, the elderly or those with disability, radical changes to policy and commuting habits are required to ensure the sustainability of our transport network into the future. This is not to say that cars will not play an important transport role across our country, particularly in the regions and rural areas, but if Melbourne is to accommodate its projected 8 million people comfortably, then we must be more considerate – and cost effective – commuters in our large metropolitan cities.
Faster uptake of innovative technologies such as driverless cars, ride sharing services, zero emissions vehicles, urban densification or a significant change in travel patterns away from the car, could see a significant reshaping of the costs of transport.
So, next time you pull up at the traffic lights next to a cyclist, consider handing them a cheque and thanking them for reducing congestion, taking a burden off the public health system and placing less wear and tear on the road. While you’re at it, hand one to the nearest pedestrian and ask yourself, ‘Was this trip worth it?’
Deloitte is proud to be involved in the conversation about Victoria’s future and sharing our thinking on how we can maintain excellent liveability while growing our population. We’re excited to lead a discussion with businesses, individuals and governments on the things we need to get right to make that happen in each of the key sectors of the Victorian economy during the next phase of our project. We look forward to hearing from you and your community on what we need to start, what we must stop and the things we should continue to make Victoria the very best it can be #itshappeningvictoria
To find out more please visit www.deloitte.com/au/itshappening
ABS Census 2016
ABS Motor vehicle census— Cat. 9309.0, 2017
International Organization of Motor Vehicle Manufacturers. (2018). Vehicles in use, by country and type 2004-2015, Retrieved http://www.oica.net/category/vehicles-in-use/
BITRE, 2016, https://bitre.gov.au/publications/2015/is_074.aspx
Public Transport Users Association, 6 May 2018, Myth: motorists pay more in taxes and fees than is spent on roads, https://www.ptua.org.au/myths/petroltax/
Deloitte Access Economic analysis of public costs of driving in Melbourne.
Infrastructure Victoria, 2018, Five year focus: Immediate actions to tackle congestion
City of Melbourne. (2018). City Space, https://participate.melbourne.vic.gov.au/transportstrategy/cityspace
David Somek is the Co-author of this Blog post.
Dr Daniel Terrill is Lead Partner for Deloitte’s Agribusiness client service group and leader of the agricultural and environmental economics teams of Deloitte Access Economics. He is an economist with a unique blend of professional and lived experience in agriculture and environmental management. He comes from a livestock and broad acre cropping background from a family farm in Victoria. Dr Terrill received his PhD from The University of Melbourne, where he researched policy solutions to improved collective environmental outcomes from farming land. He has over 15 years of experience as a microeconomist, where much of his work is at the intersection of agriculture and the environment, particularly addressing the challenge of feeding growing populations more sustainably.