This Australian startup is about to trial a system that could see drivers being charged for every kilometre they drive on the road

Traffic at a gridlock in Sydney, Australia. Photo: Cameron Spencer/ Getty Images.

Getting motorists to pay their road taxes by the kilometre sounds crazy.

But that’s exactly what a new Australian start-up – which has been shortlisted for the world’s second-richest economics prize after the Nobel – is trying to do.

Clearways, founded by University of NSW engineering adjunct professor Jamye Harrison and former NSW transport ministry policy director Russell King, is trying to convince government that drivers can be sold on direct road user charging.

The team is proposing a six-month trial with 50,000 drivers to test whether drivers would “buy” into a system in which they are financially rewarded for avoiding peak hours, staying home or using public transport.

Mr Harrison, a former head of Deloittes’ transport practice, argues the system won’t hurt the federal budget, which relies on more than $15 billion a year from fuel excise, and could even kill off congestion in major cities within a decade.

It’s a bold claim based on the idea that if governments continue to let voters believe that driving on roads is “free” there will always be traffic jams.

Using technology that would tap into a car’s existing on-board diagnostic system to record distances and roads travelled, drivers would be able to opt out of paying fuel excise – which has risen to 40.1 cents per litre this year.

“Rather than the government creating a new tax to charge everyone for use of the road, we thought about how we could design a product that drivers actually wanted to buy,” said Mr Harrison.

Clearways is working to sign up counterparties that would provide benefits to drivers, such as insurers, telecommunications firms, and roadside assistance providers.

“You will never pay more than what you would through fuel excise,” said Mr Harrison. “But if you can change behaviour – work at home, catch a bus – you’ll see benefits.”

Encouraging behavioural change – even small shifts – can have major impacts on congestion. Mr Harrison pointed to research that shows about 20 per cent of people who drive during the morning peak have flexibility about when they drive.

“By getting just a quarter of the people who say that they can drive at a different time to avoid the peak, we can have school holiday traffic levels every day.”

Clearways is among a growing number of businesses and policy makers trying to crack the political and economic challenges of introducing transport’s equivalent of the holy grail; road-user charging.

While user-pay models have taken over almost every facet of modern life, charging directly for roads remain a sacred cow, including privacy concerns and politicians’ fears over how voters will react in volatile long-distance commuter electorates ringing major cities.

But there are also growing risks from a “do-nothing approach”. Car buyers’ growing preference for ever-more efficient vehicles and the accelerating trend towards electric motors will ultimately undermine the current system of government fuel excise collections. One solution will be even larger hikes in excise.

Sydney-based Clearway’s proposal for encouraging government’s to adopt a voluntary pay-as-you-drive system was this month chosen as one of five finalists for the 2017 Wolfson Economics Prize, a first for a non-UK entrant.

This article was originally published on the Australian Financial Review. Read the original here, or follow the AFR on Facebook.

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