June 2, 2021
By Remco Derksen and Pepijn van Wijmen
Our cities are booming, and as a result our mobility system is becoming more and more congested. In the Randstad metropolitan area alone, some 550,000 new homes will be built in the next 15 to 20 years. Whereas previously the main challenge was mobility between cities, this has now shifted to mobility in and around cities. The enormous increase in traffic can no longer be absorbed, and adding roads and railways is a finite strategy. Any infrastructure we add just generates more traffic and fills up again in no time, as evidenced by the traffic jam records set before the pandemic. It doesn’t matter how many extra lanes we build – the real bottleneck is the time it takes during rush hour to get on the highway from Utrecht Science Park or the Zuidas business district in Amsterdam.
If we want to keep our cities accessible in the long term, we will have to invest in them. This is something that’s already happening: urban mobility is improving and cities are becoming cleaner and healthier. Examples of recent efforts include investments in cycling infrastructure, new forms of mobility, and high-quality regional public transport systems like RandstadRail in Zuid-Holland and the North-South metro line in Amsterdam. There are plenty of plans for the metropolitan regions, but they will cost some €20 billion over the next twenty years – that’s €1 billion a year. And that’s a big problem, because there’s no money for these projects.
They have not been included in the national budget for the next several years, and cities and provinces don’t have any extra money lying around either. The Infrafonds, which pays part of the Netherlands’ infrastructure costs, has already been earmarked until 2030 for ongoing projects on the main road and railway networks. In recent decades, we had access to €1.75 billion per year from natural gas revenues, but that’s a source we can no longer rely on. Increasing the national budget might seem like an easy fix, but other policy areas, such as education, healthcare, and pensions, also have claims to stake. So to ensure sustainable accessibility, we will have to look for alternative sources of funding.
In our current system, the government pays for our accessibility. That’s fine as long as we have sufficient available funds thanks to tax and gas revenues. But when those resources start to dry up and we’re unable – or unwilling – to reallocate more taxpayer money, we will have to rethink this system. The challenges posed by growth are offset by the financial benefits: sales revenues from new homes and other real estate, growing municipal funds, a more profitable public transport sector, and higher parking revenues.
There are a number of examples from other countries where – besides investments in spatial quality and facilities – additional revenues are spent on improving sustainable accessibility. London and Stockholm, for instance, have introduced congestion charges: urban toll systems that reduce private car use and stimulate public transport use and investment. France and the United States also offer good examples. In some regions of France, there’s an accessibility tax (versement transport) for businesses with large numbers of employees. In the United States, revenues from real estate appreciation are used to invest in accessibility.
But the Netherlands also has its fair share of high-potential alternative funding sources. Here are some of the most promising ones:
Over the next twenty years, 550,000 new homes will be built in the Randstad. A remittance of €5,000 per new home would yield over €2.5 billion. This could be implemented in the form of a flat fee or by linking the remittance to a lower parking norm, which would also increase the project developer’s earning capacity.
This can be done on an area-by-area basis. In areas where an infrastructure investment would have a positive effect on property values, this increase in value can – for a period of ten years, for instance – be skimmed off via property taxes. An alternative would be an accessibility levy: a simple payment per dwelling or business premises, comparable to the current sewage levy or TV and internet connection charges. If this levy were to be set at €75 per household annually, the yield would be somewhere in the area of €2.5 billion.
This is a direct way of investing in better accessibility. At the moment, parking revenues are still very low in many places, and there are significant regional differences. The parking policy pursued by the City of Amsterdam for the past several years generates approximately €100 million in annual revenue. There are growth opportunities in many other municipalities that can be capitalized immediately, but regional agreements will be necessary.
A simple way to generate revenue would be to increase ticket prices and use this money to invest in a better product. Dutch Railways already makes a distinction between peak and off-peak travel, and this could be extended to all public transport, with higher prices on busy routes and/or specific fees for new lines. For example, part of the investment needed to extend the North-South metro line to Schiphol could be recouped by increasing the ticket price for trips to and from the airport by €1.
The government is a shareholder in companies such as Dutch Railways, Amsterdam Schiphol Airport and the Port of Rotterdam, which pay a total of €177 million in dividends each year. Part of this money could be used to invest in the infrastructure that these companies benefit from. Municipalities could set aside money each year from their growing municipal funds as a result of population growth. Some of these funds could be earmarked for their spatial agendas, which include accessibility. The provinces could raise the surcharge on motor vehicle tax.
This is a politically sensitive solution, but we’d be remiss not to mention it. The accessibility problems are greatest in the Netherlands’ large urban regions, and in the adjacent areas. This is especially true for the Randstad, which includes the Amsterdam, Rotterdam-The Hague, and Utrecht metropolitan regions. An access charge for the ring roads and the entry and exit roads of these cities would provide additional income. This money could then be invested in better accessibility, analogous to London and Stockholm. Accessibility solutions could include high-quality P+R sites on the outskirts of the cities and fast public transport and cycle connections for travel to and from the city centers.
When choosing alternative sources of funding, it’s important to consider who will end up footing the bill, and why this would be justified. Higher taxes for motorists in order to invest in public transport requires more explanation than, for instance, the skimming off of value increases as a result of improved accessibility.
Many of the above measures have been the subject of discussion for some time now, and there has been no shortage of research into these alternative forms of funding. But talk is cheap – it’s time to take action! By putting these new methods into practice, tailored to individual areas, cities, and regions, we’ll learn what works and what doesn’t. This also calls for bold policy choices, new PPP arrangements and, above all, courage, daring, and perseverance. Because if we keep doing what we’ve been doing, we’ll keep getting what we’ve been getting: new traffic jam records and overcrowded trains. Instead, let’s invest in sustainable accessibility and implement tried-and-tested solutions from around the world. Words will only get us so far – it’s our actions that count. Who’s with us?
This publication is part of the series Rebels in Rail