Electronic road pricing: An idea whose time may never come

Tranrpn. Rex.-,4 Rimed m Grear

Vol. ??A,

No.

1, pp. 37-U.

1988

0191.x&7/88

Bnta~n.

0 1988 Pergamon

ELECTRONIC ROAD PRICING: AN IDEA TIME MAY NEVER COME

13.03 + .@I Journals Ltd

WHOSE

SANDFORD E BORINS Faculty of Administrative Studies, York University, 4700 Keele Street, North York, Ontario, Canada (Received 1 July 1986; in revised form 13 May 1987) ABSTRACT-Hong Kong’s experiment with electronic road pricing showed that the technology was completely feasible. However, the government was unable to implement the scheme due to strong opposition from a public that perceived it as an invasion of privacy and a tax increase. This outcome was partly a result of forces unique to Hong Kong’s political culture as well as both strategic and tactical errors made by the Hong Kong government in presenting its proposal. However, the Hong Kong experience also raises serious questions about whether a sophisticated road pricing scheme will ever be acceptable in a democratic urban polity.

INTRODUCXJON For many years, economists have argued that governments should adopt marginal cost pricing for congested roads. To do so would increase economic welfare, measured in terms of consumers’ surplus, and would induce commuters to shift to public transit, thereby reducing the amount of money government would have to invest in road infrastructure (Borins, 1984; Vickrey, 1963; Smeed, et al, 1964). By and large, policy-makers have ignored the economists’ recommendation. Their preferred courses of action have generally been either the second-best approach of favouring the competing public transit mode through subsidies or bus lanes, or crude traffic-restraint mechanisms such as licence restrictions. However, two cities stand out as exceptions: Singapore, which has implemented a very rough-andready marginal cost pricing scheme; and Hong Kong, which has attempted to implement a full-blown marginal cost pricing scheme. In 1975, the government of Singapore began to charge drivers a fee if they entered the central business district (CBD) between 7:30 and lo:15 Ahl. The fees now stand at $2.50 U.S. for passenger cars carrying fewer than four occupants, %.90 U.S. for taxis, and $4.50 U.S. for company cars.+ Drivers are required to display a trip permit on their windshield when driving in the central business district during those hours. Monthly permits may be purchased throughout the city, or drivers may purchase single-trip tickets at govemment kiosks on major approach roads to the CBD. The pricing scheme is enforced by the police, particularly those stationed on the perimeter of the CBD. The fine for failing to have a permit is $23.00 for the first offense, and increases thereafter. The Singapore government estimates that the pricing scheme

initially reduced the traffic level in the CBD during the morning peak by 60%. To some extent, it has displaced traffic to the perimeter of the CBD. In addition, it does not affect traffic leaving the CBD during the evening peak, which is more congested than the morning peak. Of course, population and income growth in Singapore has built traffic back up since 1975, and the government is currently building a mass transit system costing $2.3 billion, which is due to be completed in 1988. The system is being subsidized in that fares are intended to pay only operating costs. (Yee, 1984). In 1985, the Transport Branch of the Government of Hong Kong presented a full-blown marginal cost pricing scheme, known as electronic road pricing, for public discussion. The proposal met with strong public disapproval, and the government decided to delay the introduction of the full scheme indefinitely. This paper will discuss the rationale for, and nature of, the Hong Kong government’s electronic road pricing scheme and the reasons for public opposition to it. As will be seen, when this policy was thrown into the political arena it was viewed in the context of the government’s agenda, which brought to the fore numerous political issues and interests which would indeed surprise the economists who first proposed electronic road pricing for what they thought would be good technical reasons. However, there were other reasons for opposing electronic road pricing which were advanced in Hong Kong and which I expect will be advanced in any other city. Thus, the paper argues that the Hong Kong experience shows that a sophisticated electronic road pricing scheme may be difficult, perhaps even impossible, to introduce in any democratic urban polity. THE ELEaRONIC ROAD PRICING PROPOSAL The background:

tAll costs and revenue estimates will be presented in U.S. dollars, converted at the exchange rate prevailing at the time of writing ($1 U.S. = $7.8 H.K.).

Traffic restraint through taxation

In 1982, the Transport Branch of the Government of Hong Kong felt that the territory was facing an 37

,

38

S.

E BORN

imminent traffic congestion crisis. Hong Kong’s urban core is the most densely populated area in the world, with almost 4 million people living in the 40 square kilometers surrounding the harbour. The number of registered vehicles had increased from 125,000 in 1971 to 330,000 in 1981, a growth rate of 8.4% per annum. Private automobile registrations had grown at the rate of 13% per annum between 1976 and 1981; since only 17% of the population owned automobiles, continued growth of ownership and usage were expected. By 1981, the number of registered vehicles per kilometer of road space reached 282, the highest in the world. (Scott, 1982, pp. 7-8). In contrast, the Transport Branch calculated that, due to both financial and topographic constraints, it was adding road capacity at a rate of only 3% per annum. With traffic delays increasing sharply, the government felt that immediate action had to be taken. The government’s decision was to restrain traffic growth by means of automobile registration and registration fees were gasoline taxes. Initial doubled to add between 16% and 20% to the price of private cars imported new or used into Hong Kong. Annual licence fees for private cars were trebled, to $275 for cars of less than 1500 cc engine capacity increasing to $830 for cars of over 4500 cc engine capacity. The tax on gasoline was increased from $.08 per litre to %.18 per litre. (Scott, 1982, pp. 21-25). In the speech announcing these measures to Hong Kong’s Legislative Council, Transport Secretary Alan Scott (1982, p. 19) rejected a road pricing scheme like Singapore’s on the basis that it would be “too liable to fraud and evasion in Hong Kong and would require a considerable enforcement commitment.” He described electronic road pricing as “an attractive idea but not yet developed enough to take what would be a considerable economic and enforcement plunge.” As a result of both these measures and the recession of 1982, private car registrations fell dramatically, from 211,000 in 1982 to 170,000 in 1984. The number of commercial vehicles (which did not have licence or ownership fee increases) stayed roughly constant. In addition, some people began to register small trucks and vans as commercial vehicles, thereby escaping the increased taxes. It was found that those hardest hit by the tax increases were the least affluent car owners, who tended not to drive their cars downtown to work. Thus, car use decline most among the Chinese population of the suburban New Territories on the mainland, while it declined much less among those living closer to the CBD. One area where the congestion situation remained serious was on the Cross-Harbour tunnel; as a result, in May 1984 the government imposed a tax which had the effect of increasing the total one-way fare for using the tunnel from $.67 to $1.33 for private cars and from $1.33 to $2.66 for taxis. This 100% increase in fares led to a 10% decrease in tunnel

traffic, and a substantial (Clancy, 1984). Electronic road pricing-The

reduction

in congestion.

design

Decision makers were concerned that the increases in registration fees were inequitable, and the transportation planners were concerned that the increases were ineffective. Aware that the British Transport Ministry had been studying electronic road pricing, the Hong Kong Government in November 1982 invited two British experts to study the feasibility of implementing electronic road pricing in Hong Kong. They quickly concluded that a full-scale road pricing scheme was promising enough to warrant further investigation, and in March 1983 the Hong Kong Government decided to begin a twoyear electronic road pricing experiment. The experiment, which was budgeted to cost $5 million, involved the design and testing of the road pricing hardware, an analysis of traffic demand in order to predict future traffic patterns given various alternative road pricing schemes, and a policy analysis of the alternatives. The principal contractors involved in the experiment were Plessey, which would develop the hardware, and Transpotech, a consulting firm owned by the British government. Transpotech, in conjunction with various transport research groups based in British universities, would develop the software and undertake the analysis. (Government of Hong Kong, 1984, 1985; Dawson and Brown, 1985; Catling and Harbord, 1985). Technologically, electronic road pricing is a combination of three well-known technologies: electronic units to identify individual vehicles, roadside computers linked to a central computer, and computerized accounting and billing for a metered product. Each of the 2,600 cars in the electronic road pricing experiment was fitted with an electronic number plate, a hard plastic box weighing 600 grams, welded underneath the body and containing a code by which the car could be identified. At 18 locations in central Hong Kong sensing loops were buried under the road surface; the loops were connected to roadside computers, which were then connected by telephone lines to a central computer. When a car with an electronic number plate passes over the sensing loops it activates the roadside computer to send a message to the central computer to record the trip. Based on the information stored in the central computer, a bill could be sent to the automobile owner. Sample bills were produced incorporating various levels of detail, from a global bill for monthly usage to one identifying the time and location of every charge. In order to ensure compliance with the scheme, closed circuit cameras were installed at certain roadside computer locations, so that if an automobile passed over the sensing loops but registered either no signal or an invalid signal, the camera could be activated to photograph the auto’s licence plate. The system’s specifications called for performance

39

Electronic road pricing

of at least 99% accuracy; the tests found that 99.7% of all vehicle crossings were accurately recorded and the roadside computers were working more than 99% of the time, regardless of weather conditions. The closed circuit cameras also had no difficulty identifying automobiles. To actually implement the scheme the government would need to put the sensing loops and roadside computers at between 100 and 200 locations leading into the central business district; tolls would be charged during peak periods, and electronic signs at toll sites would indicate the tolls. The Transport Branch indicated that it would take three years to install the hardware necessary for full-scale operation of the scheme. The predicted effects of electronic road pricing

In June 1985, the Government of Hong Kong (1985) published a 41-page “Results Brief’ on the electronic road pricing scheme which was to be the basis for public consultation. The brief was based on traffic surveys and demand models developed by the Transpotech consultants. It argued that, in the late 80s and early 90s population and income growth would once again create pressure on Hong Kong’s traffic system, despite improvements in public transit and the road system. After rejecting fuel taxes as ineffective in controlling congestion, and parking controls and area licensing schemes like Singapore’s as being too costly to administer, the brief delineated a dichotomous choice: either an intensification of the car ownership restraint already experienced, or the use of electronic road pricing. Traffic models indicated that road pricing for private cars (thus exempting commercial vehicles and taxis) would reduce peak-period traffic by about 20%, while offpeak traffic would increase by 20%. Car ownership restraint would reduce all traffic by 20%. The policy analysis indicated that road pricing would result in a greater reduction of congestion and therefore greater benefits to the community. On the other hand, it would cost the government more and produce less revenue than continued licensing taxes. The position of the Transport Branch was that electronic road pricing was preferable to ownership restraint on grounds of both equity and efficiency. Besides describing the road pricing technology, the report described three possible schemes, going from a very simple one dividing the city up into very few pricing zones to a more complicated one, using a large number of zones and a more complete set of prices. The report calculated the capital cost of installing the system (including the electronic number plates) as $30 million, which turned out to be substantially less than the preliminary estimate of $44 million. Annual operating costs were predicted to be $2.5 million. The report concluded by addressing the issue of privacy, promising that information about automobile movements would be kept securely within the road pricing system’s control centre. The only instances where closed circuit photographs could

be used for another purpose would be the tracking of vehicles attempting to avoid road user fines, stolen cars, or cars used in robberies. (Government of Hong Kong, 1985, pp. 34-35). THE PUBLIC RESPONDS TO ROAD

PRICING

Before discussing the public response to road pricing, some background information about Hong Kong’s political system is necessary. Hong Kong is a British dependent territory, with a political system that could best be described as an “administrative no-party state.” (Harris, 1978, pp. 26-89; Miners, 1981, pp. 63-190). The head of the Hong Kong Government is a Governor appointed by the Queen, on the recommendation of the British Government. He is assisted by an Executive Council and a Legislative Council. The former, which is somewhat similar to a Cabinet and meets in camera, is appointed by the Governor and composed of both senior public servants (mainly British) and citizens (mainly Chinese). The Legislative Council meets in public to enact legislation. Until September 1985, all its members were appointed by the Governor; as of September 1985, 24 of its 56 members are elected, some from geographic and others from functional (e.g., medical, legal) constituencies. (South China Morning Post, 1985). The highest policy-making group within the bureaucracy is known as the Government Secretariat; its Transport Branch was responsible for formulating the electronic road pricing scheme. The heads of the branches of the Government Secretariat are usually members of the Legislative Council. Because the Governor had the power to appoint all the citizen (or “unofficial”) members of the two councils, because there were no direct elections, and because of traditional Chinese apathy towards politics, the Governor and the bureaucracy have had a great degree of control over the policy process. For example, the increased automobile registration fees and gasoline taxes of 1982 were proposed by the head of the Transport Branch, Transport Secretary Alan Scott, accepted by the Executive Council, and then presented to the Legislative Council, where they were speedily enacted. However, the political process involving the electronic road pricing scheme was somewhat different. Following the signing of an agreement between the United Kingdom and the People’s Republic of China concerning Hong Kong’s status after 1997, the Hong Kong Government has attempted to consult “the people” to a much greater degree in the formulation of public policy. The Government’s goal seems to be that of establishing some sort of representative institutions with popular legitimacy so that there will not be a political vacuum when Hong Kong becomes a special autonomous region with the People’s Republic. (Clancy, 1985; Roberts, 1985). One rudimentary form of popular democracy is Hong Kong’s district boards. Nineteen such boards were first established throughout the territory in

40

S. F. BORN

the mid-1970s to advise the government concerning public works programmes and to allocate very small environmental, cultural, and recreational budgets. Membership initially consisted of government officials plus citizens appointed by the Governor. In 1982, the government modified the system so that some of the members were to be elected. In addition, the total amount of money given to the boards was increased from $1 million to $3 million, and the government began to consult the boards about a greater variety of issues. (Miners, 1981, pp. 201-203). The boards were consulted about the treaty with China in 1984, though it was clear that the British Government had no intention of modifying the treaty in response to such consultation. However, in the case of electronic road pricing, the Hong Kong Government, rather than enacting legislation in the normal way, chose to consult the district boards first, thus providing a possibility for real public input. The government’s intention to undertake the electronic road pricing experiment was first announced in mid-1983, so it became a public issue from then on. The funding of the experiment itself became a source of controversy. (Taylor, 1985a, 1985~). Because the government’s budgetary situation was tight, the Financial Secretary decided that if the Transport Branch wished to undertake the experiment immediately, it would have to fund its first year by reducing expenditures in another area. The Transport Secretary, Alan Scott, decided to postpone the construction of six foot-bridges designed to replace at-grade street crossings. This decision, news of which soon became public, was seized upon by the opponents of electronic road pricing as evidence that the Transport Branch would jeopardize public safety in order to pursue its road pricing scheme. In its initial stages, electronic road pricing had two vocal enemies: the Hong Kong Automobile ASSOciation, and Mr. Walter M. Sulke, an urban councillor and also the chairman of a firm that imports Mercedes-Benz automobiles. As representatives of private automobile owners, it is not surprising that the Automobile Association would oppose another scheme that would tax automobile owners and possibly reduce the size of the Association’s constituency still further. One indication of the Automobile Association’s opposition to the scheme was that, when its 20,000 members were asked by the government to participate in the experiment, only four agreed to have their cars fitted with electronic number plates. The Automobile Association’s position was that the congestion problem was exaggerated by the government, and that the electronic road pricing technology was untested and likely to fail. In addition, the Association was suspicious that, in the future, the government would use electronic road pricing to tax drivers mercilessly. (Taylor, 1985b). Urban Councillor Sulke was opposed to the scheme primarily because he felt its provisions, including the use of cameras, would constitute an invasion of privacy. (Sulke, 1984, 1985). In addition to these two

most vocal opponents, the Hong Kong Data Processing Managers’ Club also opposed electronic road pricing as being “technically unrealistic, ethically suspect, absurdly expensive, and socially divisive,” (Sourh China Morning Post, 1983). Similarly, the Hong Kong Computer Society and electronic data processing section of the Hong Kong Management Association were both skeptical that the road pricing technology could be protected against either unauthorized use of the data or jamming by motorists. (South China Morning Post, 1984). Two groups that could have been deeply involved in the debate, the taxi owners and the Goods Vehicles Operators Association, chose to keep silent because the Transport Branch, after some initial uncertainty, made it clear to them that e!ectronic road pricing would apply only to private autos. The transport planners did not feel that charging tolls on taxi operations would affect congestion very much, because taxi drivers would probably pay the toll to enter the CBD, and then cruise within it. Furthermore, the taxi drivers’ demonstration against licence fee increases, as discussed below, made the government hesitant to antagonize them again. It was felt that Goods Vehicles were important to Hong Kong’s ongoing commercial activity, and that charging them tolls might hurt Hong Kong’s international competitiveness. (Liu, 1984a, 1984b). In informal discussions, various companies operating fleets of commercial vehicles indicated that, if they were charged, they would economize on the use of the fleet and, in some instances such as courier senice, substitute public transit. (Dawson, 1985). Finally-. the government also proposed to exempt buses. on the argument that they are much more passenger-efficient than private cars. Because all these exemptions were made, for the tax to produce a given reduction in congestion, it had to fall all the more heavily on the private automobile driver. And this fuelled their opposition to the scheme. The electronic road pricing scheme was first discussed in general terms by the district boards in December 1984 and January 1985. The consensus of the boards was doubt and opposition to road pricing, with only 2 of 19 endorsing the scheme. A more serious round of consultation with the district boards was held in early June 1985. The basis for the consultation was the result’s brief and consultation document on electronic road pricing, whose contents were discussed above. In this round, the consensus was overwhelmingly negative. Of the 19 boards, 11 held votes; 9 were opposed to the scheme and the other 2 thought it should be delayed. Eight boards did not vote, but in six of them the majority were opposed to the scheme or felt it should be shelved. Finally, in only two boards the majority was neutral to the scheme. Thus, not one board came out in favour of it. (Leung and Liu, 1985b). Why did this outcome occur? Based on newspaper accounts of the board meetings and observation of two of them, I would attempt to explain the outcome

Electronic road pricing in terms of both the arguments that were raised publicly at the meetings, and the “hidden agenda,” which was not raised, but which many observers and participants privately agreed was important. Let us consider the publicly-advanced arguments first. Some district board members felt that the study’s results were not credible, because the government was overestimating the future population of Hong Kong and/or the effect electronic road pricing would have on congestion. Concerns were alSO expressed that the technology would not work. The fact that the increases in licence fees had led to a reduction in congestion from 1982 levels led many board members to feel that there was no immediate danger of a congestion crisis, so that the introduction of electronic road pricing could be postponed. (Li, 1985). Other members argued that the road pricing scheme would break down in the future when cars from the People’s Republic of China, without electronic licence plates, began to enter the territory. A great deal of concern was expressed about the question of invasion of privacy. In its consultation document, the Transport Branch offered numerous safeguards to ensure that road usage data would be kept confidential, but they were still not seen as an acceptable solution. (Government of Hong Kong, 1985, pp. 34-35). Another tactic the government used to make the scheme more palatable was to promise to reduce license fees by an amount commensurate with toll revenues, so that, on balance, the scheme would be revenue-neutral. District board representatives were frankly skeptical that the Government would do that. (Hong Kong Standard, 1984). In terms of the hidden agenda, a number of factors are significant. The Government did not seem to have very much credibility; the reports, presentations at board meetings, and promises to reduce licence fees commensurate with tolls and to keep the road usage data confidential did not seem to convince many of the district board members. To some degree, what was going on was an exercise in political “muscle-flexing.” This was the first time the government seriously consulted with the district boards, and members wanted the public to perceive that they were taking their responsibilities seriously, rather than acting like government lackeys. The fact that consultation on the treaty with the People’s Republic, a much more important issue, was clearly not being taken seriously by the government contributed to this need to strike the appropriately tough-minded political posture on this issue. Finally, it might also be suggested that the board members, most of whom probably own automobiles, were acting in terms of their personal interests, narrowly defined. As a result of the June 1985 consultation exercise, it was clear that the Hong Kong Transport Branch could not sell electronic road pricing to the local politicians or the public. The Government has backed off its proposal for full-scale electronic road pricing. Now the Transport Branch is planning to introduce

41

electronic road pricing on an optional basis to collect tolls in the Lion Rock Tunnel in the New Territories. Vehicles whose owners chose to acquire electronic licence plates will be able to use two special lanes, thereby avoiding congestion at tunnel entrances. The Transport Advisory Committee, a citizen’s advisory group, has endorsed the latest proposal and the Transport Branch is trying to persuade operators of large vehicle fleets (buses, minibuses, and taxis) to support it as well. The advantage of this proposal for the Transport Branch is that it will keep electronic road pricing alive, so that it would be easier to implement the technology on a wider scale in the future. (Liu, 1985; Chiu, 1985). THE LESSONS OF THE HONG KONG EXPERIMENT

One can propose three possible hypotheses as to why the Hong Kong government found it unable to implement electronic road pricing. One is that the political agenda in Hong Kong was such that electronic road pricing was perceived negatively because of other political concerns at the time. A second hypothesis is that the Transport Branch of the Hong Kong Government Secretariat made tactical errors in introducing electronic road pricing; had they been more skillful, perhaps they might have been successful. A third hypothesis is that electronic road pricing, whatever its merits in terms of economic efficiency, will be unpopular in any city, so that if there is a democratic process, it will always be voted down, either by a municipal council or by the people themselves if a referendum is held. The consultants who advised on the Hong Kong Government feel that the first hypothesis explains why electronic road pricing was rejected in Hong Kong, and are thus optimistic that it will be adopted sometime, somewhere. (Dawson, 1986). If the first and/or the second hypothesis were true, and the third were not, one might still be optimistic that electronic road pricing will be adopted sometime, somewhere. My interpretation of the Hong Kong case is that, while the first two hypotheses are useful in explaining the outcome, there is sufficient evidence consistent with the third hypothesis that I am skeptical about the future of electronic road pricing. The key issue on Hong Kong’s political agenda now and until 1997 will be that of how to prepare for the Colony’s future as a special autonomous zone within the People’s Republic of China. In this context, British authority appears to have an ever-weakening legitimacy in the eyes of the Chinese population. There had always been a great deal of cynicism about the motives of the British Government and, following the signing of the treaty, that cynicism has deepened. The British Government now feels that a major priority is to establish a democratic political structures that will be in place when the People’s Republic takes over. Similarly, the Chinese citizens seem to be more willing than in the past to play a larger role in the government. However, the Chinese

42

S. F. BORINS

politicians now feel a need to diminish the legitimacy of the British bureaucratic structures in order to increase the legitimacy of their representative institutions. Thus, it is quite logical for Chinese politicians to express cynicism about British motives or promises. Muscle-flexing can be seen as an appropriate stance to convince the citizenry that the British bureaucracy really doesn’t have Hong Kong’s best interests at heart. Electronic road pricing, which raises emotional issues such as privacy, social control, and the credibility of government promises, lent itself very well to exploitation by politicians whose ultimate interest is to de-legitimize bureaucratic rule in order to create a new political order. (Chung, 1985). The second hypothesis, governmental tactical errors, also has some appeal. I would suggest that the government made a number of fairly serious tactical errors, which are in some sense the result of an overall strategic problem. The strategic problem is that the Transport Branch did not fit its implementation strategy to the changed political climate of Hong Kong after 1984. The Transport Branch did attempt to sell road pricing, primarily by means of its documents which argued the merits of road pricing, by distributing a videotape about road pricing, and by attempting publicly to refute the critics of road pricing. The government’s campaign was led for most of the period by Alan Scott, with assistance provided by Michael Clancy, one of the Transport Branch’s four Principal Assistant Secretaries. Scott had served in the Hong Kong government in a number of capacities before becoming the first Transport Secretary in September 1981. (Prior to that, Transport had been amalgamated with the Environmental Secretariat.) Scott is a man who is quick to understand and identify problems, and forthright in his efforts to undertake initiatives to solve them. He developed a reputation of being blunt and somewhat paternalistic, and was thought of by many as a typical colonial civil servant who, in a no-nonsense way, told the colonials what was in their best interest. Electronic road pricing was seen as Scott’s personal priority, and the air of controversy that surrounded the issue was at least partially due to the air of controversy that surrounded the man. (Leung and Liu, 1985a). One particular issue which harmed Scott was the increase in taxi licence fees which the government mandated in early 1984. In this instance, the Finance Branch and Transport Branch were at loggerheads. Finance wanted to increase the number of taxi licences, which were sold for about $26,000 each, so as to increase revenue, which it felt was greatly needed. The Transport Branch wanted to issue far fewer licences, so as to decrease congestion. The Finance Branch agreed to a reduction in the rate of issuing taxi licences when the Transport Branch agreed to raise taxi licence fees, so that the net revenues from taxis would stay constant. Of course, it was the responsibility of the Transport Branch, and Mr. Scott in particular, to introduce this policy. When the pol-

icy was introduced, the taxi drivers responded with forceful opposition, including a protest demonstration that involved blocking traffic in parts of the territory. Ultimately, the government agreed to increase licence fees less than initially planned. The unfortunate consequence for Scott was that his image as a paternalistic public servant and the author of unpopular policies was strengthened. Of course, it was transferred to his handling of the electronic road pricing scheme. In March 198.5, Scott was promoted to the newly-created post of Deputy Chief Secretary of the Hong Kong Cabinet Secretariat; he was replaced as Transport Secretary by the more laconic Ian Macpherson. The Transport Branch’s efforts to sell electronic road pricing were insufficiently vigorous. In part, this came about from the “administrative no-party state” political culture, which for many years gave senior public servants responsibilities comparable to those held by politicians but which until recently did not really require public servants to act like politicians. Thus, Scott and Clancy made some efforts to put their policy forward, but not as much effort as a politician who was committed to such a policy would have made. (Leung and Liu, 1985b). For instance, they might have tried to run a more aggressive advertising campaign. In another instance, they gave the City and New Territories Administration the responsibility of determining the order in which the District Boards would be consulted. The Administration happened to choose a central city board (Wanchai) which voted unanimous opposition to the scheme. A more political approach would be to go first to boards, such as those in the suburban New Territories which could have been expected to give the scheme a more favourable hearing, so as to build public support. (Clancy, 1985). The Transport Branch’s glossy bilingual consultation document (see page 39) did not make as strong a case for electronic road pricing as it could have. The document dealt with the distribution of costs and benefits, the critical political issue, by showing monthly charges that would be paid by various representative drivers, but then noting that they would be offset by reductions in annual licence fees. (Government of Hong Kong, 1985, p. 11). A stronger case could have been made by showing the net benefits to various examples of transport system users, in particular after commensurate license fee reductions were made. This data was available, and subsequently published in the academic literature by one of the consultants. (Harrison, 1986). Furthermore, the Transport Branch erred in limiting the amount of information concerning electronic road pricing which it chose to make public. The consultation document simply summarized the consultants’ work, but does not make the work itself available for discussion and criticism. The only response that the Transport could make to the criticism that its results were based on inappropriate assumptions was on the order of “trust us, our assumptions

Electronic road pricing and our methodology are appropriate.” Without making the material explicit, it is hard to see how the critics could have been disarmed. Given the political situation at the time, refusing to make information available simply reinforced the Transport Branch’s paternalistic image. This refusal to make the planning information available is at odds with the standard practice now in the United Kingdom, Canada, and the United States of making available to the public technical planning documents which underly policy decisions. In the transport area, the instance that most readily comes to mind is the Third London Airport. The question that arises is why the British public servants who administer Hong Kong would treat its public differently than the British public. These considerations suggest that the Hong Kong Government had some bad luck, but should also share some of the responsibility because it failed to argue its case for electronic road pricing as strenuously or as forthrightly as possible. The final hypothesis concerning the failure of the Hong Kong Government to implement electronic road pricing is one which conflicts with the other two, namely that, regardless of how skillfully a government presents the case for electronic road pricing, it will inevitably fail because it is an intrinsically unpopular policy in any democratic urban polity.? The political process in any city will evaluate electronic road pricing from three standpoints: the distribution of its costs and benefits, the ease of implementation, and its impact upon the fundamentally noneconomic value of privacy. Let us consider each of these both for Hong Kong and for other cities. One can argue that a key factor favouring the adoption of electronic road pricing in Hong Kong is that the 80% of the population who do not have automobiles would have unequivocally benefitted from the reduction in congestion. Furthermore, the concommitant reduction of automobile licence fees would respond to their aspirations of eventually owning cars. This situation is significantly different from the case in North America and Europe, where a much higher percentage own a car and drive to work and would therefore have to incur visible out-ofpocket costs in order to receive possible benefits in the less tangible form of ti?ne-savings. Indeed, the literature on the distributional effects of road pricing shows that where there is a high rate of vehicle ownership it would be regressive because costs would fall most heavily upon lower-income drivers who would be forced to change from road to public transit. (Richardson, 1977; Layard, 1977). Furthermore, one can expect drivers’ opposition to be expressed both by an interest group such as the automobile associations and by municipal politicians.

tsingapore, the city which has ment road pricing, has a democratic

form of government.

gone farthest to implebut very authoritarian

43

Another distributional problem that the Hong Kong case demonstrated is that well-organized interest groups, such as taxis and commercial vehicle owners, will exert political pressure to be exempted from paying road user fees, thus becoming quite literally free riders. The consequence is that the burden of the policy then falls more heavily on private car owners, which will increase their opposition to the scheme because it will then be seen as inequitable. A second political problem with electronic road pricing is that, even though the technology has now been proven, it would still take longer to put in place than other forms of traffic restraint (such as increased licence and/or parking fees, access controls on freeways, the establishment of separate lanes for buses and car pools, and random restrictions on cars entering the CBD on the basis of licence plate numbers). The dynamics of traffic flows are such that traffic slows down dramaticaily just before capacity is reached. Thus, as the case of Hong Kong showed, the public perceives a congestion crisis as happening almost overnight, so that decision makers are forced to take immediate action. Thus, they would prefer measures that could be implemented more quickly and explained more easily than electronic road pricing. Thirdly, electronic road pricing intrinsically involves two types of surveillance, the monitoring of a vehicle’s movements and the photographing of licence plates (the latter to ensure compliance). The consultants to the Hong Kong Government recount that they put a great deal of effort into demonstrating to the skeptical how the technology would work. (Dawson, 1986). However, they were not able to neutralize fear of this inescapable “big brother” aspect of electronic road pricing. Why should we expect the result to be any different in societies which place great value on individual privacy, such as the United States, the Commonwealth, and western Europe? Thus, just as electronic road pricing was difficult to introduce in Hong Kong for these political factors, it will also be difficult to introduce in other democratic urban polities. Granted, there were two factors specific to Hong Kong: the nature of the political agenda and the government’s tactical errors. But even if the agenda is more favourable to electronic road pricing and even if the government can avoid the tactical errors made by the Hong Kong Government, the forces opposing electronic road pricing may still be so strong that they will prevail. At the current time, numerous European capitals are facing traffic congestion crises. (Fraser, 1986; Tagliabue, 1987). It will be very interesting to see whether they turn to electronic road pricing or to traffic restraint. Bergen, Norway has implemented a very crude cordon pricing scheme around the entire city. Rome, Athens, and London have chosen various traffic restraint schemes, such as extensive use of one-way roads (London) or random limitations

S. F. BORN

4-I

on when cars can enter the CBD (Athens). The Hong Kong experiment has shown the rest of the world that the hardware can readily be designed for electronic road pricing. However, overcoming the political implementation problems is much more difficult. If they cannot be overcome, then electronic road pricing may forever sit unused on the economist’s shelf. Acknowledgements-The

research assistance of Patricia Dexter andGwilym Roberts, the comments of Elfed Roberts, the cooperation of Michael Clancy (then of the Transport Branch of the Hong Kong Government Secretariat), and the financial support of the Faculty of Administrative Studies of York University and the Social Sciences and Humanities Research Council of Canada are all gratefully acknowledged. An earlier version of this paper was presented at the Fourth World Conference on Transport Research, Vancouver, Canada, May 13, 1986.

REFERENCES Borins S. (1984) The economic effects of nonoptimal pricing and investment policies for substitutable transport facilities. Canadian J. Econ. 17, 80-99. Catling I. and Harbord B. (1985) Electronic road pricing in Hong Kong: 2. The technology. Traffic Eng. Control 26, 608-617.

Chiu K. (1985) Use of ERP in tunnels supported. Sourh China Morning Post. October 31, 1985, p. 14. Chung C. (1985) Talks on ERP test maturity of DBs. Hong Kong Standard. June 10, 1985, p. 4. Clancy M. (1984) Interview with Michael Clancy, Principal Assistant Secretary for Transport. November 2, 1984. Clancy M. (1985) Interview with Michael Clancy. June 13, 1985. Dawson J. (1985) Interview with John Dawson, ERP Project Director, Transpotech Ltd. June 10, 1985. Dawson J. (1986) Electronic road pricing in Hong Kong: 4. Conclusion. Traffic Eng. Control 27, 79-83. Dawson J. and Brown F. (1985) Electronic road pricing in Hong Kong: 1. A fair way to go. Trufic Eng. Control 26, 522-530.

Fraser J. (1986) Auto clogging of the arterials evident in capitals of Europe. Toronto Globe and Mail. October 31, 1986. p. 8. Government of Hong Kong (1984) A Fair Way to Go. Government Printer, Hong Kong. Government of Hong Kong (1985) EIecrronic Road Pricing Scheme: Results Brief and Consulration Document.

Gov-

ernment Printer, Hong Kong. Harris P. (1978) Hong Kong: A Study in Bureaucratic Politics. Heinemann, Hong Kong. Harrison B. (1986) Electronic road pricing in Hong Kong: 3. Estimating and evaluating the effects. Traffic Eng. Control 27. 13-19. Hong Kong Stundard (1984) Plans are that with introduc-

tion Of ERP annual licence fees will be reduced by half. Hong Kong Standard. November 23, 198-t.

Layard R. (1977) The distributional effects of congestion taxes. Economica 44, 297-304. Leung M. and Liu L. (1985a) Make or brake time: Boards asked to give green light to traffic plan. South China Morning Post, May 27, 1985. Leung M. and Liu L. (1985b) Democratic dilemma: GOVernment caught at the cross-roads. South China Morning Post. June 15, 1985, p. 5. Li F. (1985) ERP to let more cars on the road. South China Morning Post. May 28, 1985. Liu L. (1984a) Controversial ERP plan may cover taxis too. Hong Kong Standard. May 13, 1984. Liu L. (1984b) All vehicles will have electronic number plates if full system installed. Hong Kong Scundard. November 23, 1984. Liu L. (1985) Advisers want ERP shelved: Partial tunnel scheme proposed. South China Morning Post. October 30, 1985, p. 1. Miners N. (1981) The Government and Politics of Hong Kong. Oxford. Hong Kong. Richardson H. (1977) A note on the distributional effects of road pricing. J. ‘Transport Econ. Policy 11, 82-85. Roberts E. (1985) Interview with Professor E. Roberts. Political Science Department, Hong Kong University: June 7, 1985. Scott A. (1982) Speech in the Hong Kong Legislative Council. May 5, 1982. South China Morning Post (1983) ERP expensive, divisive, suspect: Speech to City Lions Club of Hong Kong. Sourh China Morning Post. December 7, 1983. South China Morning Post (1984) Hi-tech boffins give ERP the thumbs-down. South China Morning Posr. January 15, 1984. South China Morning Post (1985) First step to democracy: Narrow margins for Legco winners. South China Morning Post. September 27, 1985, p. 1. Smeed R. et al. (1964) Road Pricing: The Economic and Technical Possibilities HMSO publication 55-411, London. Sulke W. (1984) Come clean, Mr. Scott. Letter to the Sourh China Morning Post. August 30, 1984. Sulke W. (1985) ERP, or the evil revenue proposal revealed. Speech to the Rotary Club of Hong Kong. June 4, 1985. Tagliabue J. (1987) Cars face rush-hour ban in central Rome. The New York Times. February 22. 1987, p. 6. Taylor P. (1985a) Personally speaking: ERP blackmail. Hong Kong Motorist. January 1985, p. 2. Taylor P. (1985b) Electronic road pricing: Fair or unfair? Speech to the Central Hong Kong Lions Club. February 8, 1985. Taylor P. (1985c) Interview with P. Taylor, Executive Director, Hong Kong Automobile Association. June 11, 1985. Vickrey W. (1963) Pricing in urban and suburban transport. Amer. Econ. Rev. 53, 452-465. Yee J. (1984) Interview with J. Yee, Public Works Departmknt, Government of Singapore. September 27,1984.