Parking fees enrage locals. Again.

Wellington City Council is considering lifting parking fees again because it thinks people are holding on to the spaces too long. The local paper disapproves, as does David Farrar. Now, I’m no expert on the local politics and they may be quite right that this is just a revenue raising measure, despite the council’s position that it’s about turning over parks more quickly. But let’s take the council seriously for a minute and consider whether it is so obviously stupid.

First, there’s nothing wrong with a local government body raising funds for the services it provides. It needs to do that but the question is how it does it. Rates are the most common revenue raising tool, but are not a particularly efficient one since they don’t correct any market problems. Now, parking obviously has an implicit price so it makes sense to raise some revenue from parking fees by setting the price optimally. That allows either lower rates or more service provision, depending upon electors’/ratepayers’/councillors’ (delete as you like) preferences.

DPF and the Dom Post contend that parking times are already optimal because they’re controlled by time limits in addition to the charges. However, there’s no reason to believe that the upper time limit is the optimal stay from a social viewpoint. In fact, if the council has done a good job setting the limits and charges, the average stay should be shorter than the upper limit. If it weren’t, then people who REALLY need to use the park for a long time wouldn’t be able to and there would be a huge deadweight loss. So it is quite plausible that the optimal parking fee is higher than the current level, although we’d need some empirics to figure out if that’s actually the case. Hopefully WCC have done the number crunching on that one.

Finally, stores in Wellington are complaining that the high parking fees deter shoppers, who can drive half an hour to another town and find free parking. If that’s true then Wellington City Council is really transferring benefits from the shop owners in Wellington central to the people who want to park but can’t find a spot. It’s not necessarily wrong, but it does favour one group over another. I can only imagine the uproar if they were pricing the parks down to favour local businesses over consumers! Oh, wait…