Parking has peaked in CBD

By Shane Scanlan

Car parking has peaked in central Melbourne and is now in decline.

The amount of on-street and off-street parking is shrinking, with implications for residents, retailers and the City of Melbourne, which has traditionally relied on parking as a primary source of revenue.

The council’s finance chair Cr Stephen Mayne says the council has accepted the “peak parking” phenomenon and is comfortable looking for alternative revenue sources.

“Up until now, we’ve had a defensive approach to parking revenue,” Cr Mayne said.

  “But we need to accept that on-street parking is often the least productive use of road space.”

Cr Mayne said a higher economic yields were possible for the city as a whole by utilising road space for moving traffic – whether it be cars, tram or cycle traffic.

He says that, while businesses are rightly concerned to ensuring spaces for customers, the council should have removed more on-street parking during its recent installation of dedicated cycle paths in LaTrobe St.

City of Melbourne figures show that 400 on-street car spaces have been removed within the CBD since 2007.

“This loss of spaces is due to the cumulative effect of tram, bicycle and road safety works, car share spaces and tree planting programs impacting on on-street parking spaces,” a council spokesperson said.

Off-street parking is shrinking too, as a consequence of State Government policy settings which has resulted in CBD land becoming too valuable to be used for merely parking cars.

Both the state’s relaxed attitude to height control and its harsh congestion tax on parking are contributing to the decline of off-street parking.

A recent example of this can be seen in LaTrobe St opposite Melbourne Central where the 689-space multi-storey public car park is being replaced by an 85-storey, 1208 unit apartment tower with just 362 private car spaces.

Council figures show that nearly 1800 off-street public car spaces were lost between 2008 and 2012. 

Current figures are expected later this year. Private spaces are being squeezed too. 

In the past, inner-city developers were penalised if they did not provide enough parking with residential developments. 

Today, the opposite is true. 

They are discouraged from providing too much parking. 

Of course, developers are not arguing – given the higher prices they can leverage from a square metre of apartment space, compared with car parking.

And diminishing relative supply is pushing the cost of car spaces to record levels, with reports of CBD spaces changing hands for more than $100,000.

The state’s congestion tax is taking its toll too.  According to Cr Mayne, the council is handing Spring St nearly $1 million per year – more than 20 per cent of its profits – from its Queen Victoria Market parking revenue.

He says the tax is another factor that artificially discriminates against commercial activity within the CBD in favour of residential development.

Cr Mayne said he advocated the sale of the council’s seven-level car park behind the Melbourne Club in Little Collins St.

Writing in Crikey late last year, Cr Mayne said: “But Melbourne has now hit ‘peak parking’ such that ongoing total gross revenues of about $100 million a year is not regarded as sustainable into the future as more and more street space in Australia’s fastest-growing municipality will need to be turned over to pedestrians, cyclists and the world’s biggest tram network.”

Council annual reports show a declining capacity to raise revenue from parking fines, which Cr Mayne attributes to increased compliance as well as fewer on-street spaces.

In 2013, the council budgeted to collect nearly $51 million in fines, but only managed to bank $43 million. 

Last year, the figure dropped to just $40 million. Parking fees, on the other hand, were up last year to $46.7 million – but this was a direct reflection of a significant hike in charges.

The figure is now expected to stagnate as the council does not intend to increase the cost of parking over the next three years.

In its first quarter 2015 figures reported to council in December, the city collected more parking fees than it expected, but said this was due to temporarily collecting more from construction zone parking meters and an increase in what it charges to tow vehicles from clearways. 

Its parking fine revenue was also up 2.3 per cent but this was not expected to be sustained during the entire financial year.

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