Melbourne's ‘congestion levy’ on long-stay off-street car parking spaces
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Brief summary of this reform
Melbourne’s 'congestion levy' is a parking levy that applies to parking spaces used for long-stay parking. However, research suggests that the levy has ambiguous outcomes and would need reform to better achieve its stated goals.
Why should you care?
This is a case of a parking levy that clearly needs improvements. It raises revenue but it is not clear that it changes motorist or parking-owner behavior in helpful ways. This is a reminder that not all parking levies are the same. Poorly designed parking levies may not achieve their stated objectives.
Hamer et al., 2012 conclude: “What is also clear is that a large proportion of those who park and commute to the Melbourne CBD do not pay for parking. Employers cover this as part of wider salary packaging arrangements. This is a signiﬁcant barrier to the effective use of parking pricing as a means of reducing car congestion. To address the issue, policy could either deal directly with employers by targeting employment packaging arrangements or deal directly with the driver using taxation such as a road toll.”
Key actor type
mode shift or TDM
State of Victoria Department of Transport
Is it a model or a warning?
Main parking category
Main parking paradigm shift
taxes and levies
Away from excessive supply AND towards more responsiveness to context/market
Adaptive Parking thrust
Does not fit neatly into this framework/None of the above
Goals of the reform
According to the Congestion Levy Bill 2005 (Vic): "The levy is designed to reduce trafﬁc congestion in Melbourne’s inner city by acting as a ﬁnancial deterrent to drivers who arrive and leave during commuter peak hours and park all day in the city car parks. The levy aims to encourage suburban commuters to use public transport to travel into the city and car park owners/operators to convert long-stay car parking spaces, which will attract the levy, into short stay parking spaces, thereby creating more parking options for shoppers and visitors."
Impetus (what problem, campaign, opportunity or event prompted action?)
It is not clear to me yet what the immediate impetus for this policy was in 2005 or so.
Can you help provide this information?
Detailed description of the reform
According to Hamer et al. 2012: "The congestion levy is a charge that applies to off-street parking spaces within a 15 km2 area of inner Melbourne (‘the levy area’). The Congestion Levy Act 2005 (Vic) provides the legislative basis for the levy and details when the levy is payable.
"The levy applies to all non-exempt, long-stay parking spaces within the levy area. Long-stay parking spaces include all parking spaces in a private off-street car park, and all parking spaces in a public off-street car park that are either: (i) set aside for on-going parking; or (ii) used for parking for at least 4 h, commencing at or before 9.30 am and ending at or after 9.30 am. Thus, in private car parks and reserved spaces in public car parks, it is the supply of the parking space that attracts the levy. By contrast, parking spaces that are offered to the public for use on an hourly or daily basis attract the levy because of their use. The method of charging for casual parking, i.e. a ﬂat fee or an hourly rate, is irrelevant as the criteria are the time of arrival and the length of stay. On-street car parking spaces do not attract the levy."
In 2015 the area to which the levy applies was extended.
In 2019, the levy was AUD1140 per space per year in category 1 area (central business district) and AUD1020 in category 2 area (to the north and south of the CBD).
According to Taylor 2020, spending of income from the levy 'is not visible or local or clearly tied to transport improvement'. The income is mostly absorbed into general revenue.
Image credit: Gracchus250, CC BY-SA 4.0 < via Wikimedia Commons
Results or impacts
It is not clear whether the levy has reduced congestion or led to any shift away from community by car.
Hamer et al. 2012 found that (to some extent) the levy had been passed on to short term parking users in commercial garages, rather than discouraging long-term parkers (commuters) or reducing the supply of parking spaces.
The design of the system is also thought to actually discourage workplace parking fees.
Sources and acknowledgements
Hamer, P., Young, W., & Currie, G. (2012). Do long stay parkers pay the Melbourne congestion levy?. Transport Policy, 21, 71-84.
State Revenue Office Victoria "Car Parks: A congestion levy applies to off-street private and public car parking spaces in inner Melbourne".
Elizabeth Taylor (May 2018) City of Melbourne Transport Strategy Refresh Background paper – Car Parking,
Elizabeth J. Taylor (2020) "Australia: Melbourne" in Dorina Pojani, Jonathan Corcoran, Neil Sipe and Iderlina Mateo-Babiano (eds.) Parking: An International Perspective, 1st Edition. Elsevier.
23 Mar 2021