The economic cost of traffic congestion in cities is estimated to cost the Australian economy $20.4 billion per annum by 2020. But what can really be done about it?

A new report by the Victorian Auditor-General, Managing traffic congestion, argues governments need to think harder about ways to deal with congestion. It argues there’s too much attention given to increasing the supply of road space as a way of tackling congestion and not enough to managing demand.

The age-old approach of building new freeways to expand capacity has long been discredited. The additional road capacity gets eaten up in peak periods by induced demand. The same goes for new public transport infrastructure. Spare road capacity released when drivers shift to public transport is likewise soon filled by induced demand.

Some argue public transport should be made so good that hardly anyone needs to drive. They haven’t looked at the roads leading into the city of New York — despite a high standard of public transport and dense land uses, large parts of the city’s major road system suffer from extreme traffic congestion in peak periods.

The problem for Australia’s cities is that public transport is expensive to construct and is likely to take decades to make a serious dent in the level of car use.

Even with a massive and unprecedented program of infrastructure investment and supportive policies, the independent inquiry into a long-term public transport plan for Sydney estimated public transport’s share of all trips in the city would only increase from 16% to 25% by 2040. The rail plan released earlier this month by Public Transport Victoria envisages only a handful of new rail lines would be built in Melbourne over the next 20-30 years. And that was before Opposition Leader Tony Abbott said he wouldn’t fund urban public transport if he won the September 14 election.

One of the new lines proposed by PTV is the 12-kilometre Rowville rail line. As I’ve noted before, the recent feasibility study done by PTV estimated it would only increase rail’s mode share from 12.6% to 12.7% by 2046. The line is likely to cost at least $2 billion.

Although it doesn’t suppress traffic congestion, increasing the capacity of freeways and public transport nevertheless permits more people to travel in peak periods. That’s a real benefit. Freeways also provide significantly faster travel in off-peak periods.

But whether it’s freeways or public transport infrastructure, cities can’t build their way out of traffic congestion. Our cities desperately need more investment in public transport infrastructure for other reasons, but it won’t eliminate traffic congestion.

The way to address congestion is to increase significantly the cost of motoring in peak periods. We need to do what we do to manage any other very scarce resource — charge motorists for using road space.