One important lesson from economics is that problems are most efficiently solved by setting prices right rather than by regulations mandating particular actions. So it is with the problem identified by Brisbane residents of being parked out of suburban streets by residents and visitors of new apartment blocks. Labor’s lord mayoral candidate Rod Harding has proposed that developers should be required to include more car parks in their apartment developments, but this has been strongly and rightly criticised by both the Property Council of Australia, for the increase in property development costs that would result, and by Rail Back on Track, for not addressing the underlying problems leading to the shortage of parking. I was very happy that Robert Dow from Rail Back on Track referred to the issue of pricing in his comments on the Harding proposal reported in the Brisbane Times:
“If people are having issues with cars parking in their street, there are obvious solutions: fix the bus network, issue residential parking permits or charge cars for the privilege to park on the street.”
Robert Dow has economists on his side regarding the charging of cars for parking on the street. Appropriate pricing of on-street parking would recognise on-street parking spots are not free. They are Council assets with an opportunity cost and should generate a rate of return. Appropriate pricing would help resolve the shortage of spots by sending the right signals to residents, visitors and developers. Parking charges would naturally regulate the demand for parking spots in several ways, such as by discouraging some people from traveling to busy precincts in cars and encouraging them to take public transport instead, and by discouraging visitors from staying for too long. Also, by demonstrating a clear revenue stream from parking in an area, on-street parking charges may encourage private sector car parks to be developed.
The high cost of free parking was nicely articulated in an excellent 1997 article by UCLA’s Donald Shoup, which should be required reading for anyone involved in the car parking policy debate: