Economic Costs of Road Congestion in Australia and how to reduce it : Part I

Commuters from outer suburbs of Sydney and Melbourne spend 41% of their commute stuck in traffic, equivalent to ~77 hours/year These delays are roughly two full working weeks per year per driver. Without major action congestion and associated costs are expected to double by 2030

Traffic congestion is a persistent issue in urban areas worldwide, with far-reaching economic consequences. As cities grow and vehicle ownership increases, the strain on transportation infrastructure intensifies, leading to longer travel times, increased fuel consumption, and reduced productivity. The data in Figure 1 show the congestion problem is worldwide.

Figure 1 Ten highest traffic delay times by city

Understanding the economic costs of traffic congestion and identifying its sources is essential for policymakers, urban planners, and citizens alike. In the USA congestion costs in 2024 were estimated at $200 billion (US ) Report: Cost of Congestion to Hit $200B in 2025 | Informed Infrastructure) and for the UK it was $9.8 billion (US).

Estimates of road congestion in Australia at $13.8 Billion (US) for 2024 exceed the cost of the United Kingdom, with Brisbane (Brisbane a world-leading city in traffic delays? )  and Melbourne ( wins unenviable title of Australia’s most congested city)  (being listed globally as the 10^th and 21^st most congested cities globally in 2024 (Traffic Congestion: Info, Projects & Resources | iMOVE Australia)  Without major infrastructure changes, this cost is projected to more than double by 2030, reaching $27.6  (US) billion  (Traffic Congestion: Info, Projects & Resources | iMOVE Australia)/

Road Congestion in Australia’s Major Cities

Table 1 sets out congestion by city by average hours lost per driver annually. In terms of INRIX rankings, Brisbane, rated 10th globally most congested city in the world. Melbourne (although having higher average hours in rated by INRIX} is lower at 21^st globally with Sydney rated 45^th.. By contrast Perth does not figure in the top 100 ranked globally

Table 1 Congestion by  Australian City-Road Congestion overview (2025)

Source INRIX Global Traffic Scoreboard 2025

The data in table 1 suggests that congestion, thought present across the country is mainly an East Coast problem.

Types of Economic Costs from Traffic Congestion

Lost Productivity The major economic impacts of traffic congestion are the loss of productive time. Commuters stuck in traffic spend hours that could otherwise be used for work or leisure. In the U.S. alone, congestion cost the economy nearly $87 billion in 2018, primarily due to lost productivity (Traffic congestion cost the US economy nearly $87 billion in 2018 | World Economic Forum

Increased Fuel Consumption. Vehicles idling in traffic consume more fuel, leading to higher transportation costs for individuals and businesses. (PDF) Measuring the Economic costs of traffic congestion

Environmental Costs Congestion contributes to higher emissions of greenhouse gases and air pollutants. The economic cost of environmental degradation includes healthcare expenses due to pollution-related illnesses and the long-term impact of climate change.( Chart: Congestion Costs U.S. Cities Billions Every Year | Statista)

Vehicle Operating Costs Stop-and-go traffic leads to more frequent braking and acceleration, which increases wear and tear on vehicles.

Public Health and Safety Congestion can delay emergency services, increasing the risk of fatalities in critical situations. Additionally, the stress and frustration associated with traffic can contribute to mental health issues and road rage incidents.

Reduced Economic Competitiveness Cities with severe congestion may become less attractive to businesses and investors. Efficient transportation is a key factor in economic development,

Causes of Road congestion in Australia

Road Design and Infrastructure Limitations

Many Australian cities were designed with car travel in mind, leading to wide roads and sprawling suburbs but limited capacity for high-volume traffic. Bottlenecks at key intersections, outdated traffic signal systems, and insufficient lane capacity contribute to congestion, especially during peak hours.

Infrastructure projects often lag behind population growth due to long planning cycles, funding constraints, and political delays. Even when new roads are built, they can induce demand—encouraging more people to drive, which eventually leads to renewed congestion.

Behavioural and Cultural Factors

Australian culture places a high value on car ownership and independence, which contributes to high rates of vehicle use. Many commuters prefer driving over public transport due to perceived convenience, comfort, and flexibility. Additionally, flexible work arrangements and school schedules mean that traffic is not confined to traditional peak hours, spreading congestion throughout the day.

Parking availability and low fuel costs (relative to some other countries) also incentivize car use, while carpooling and ridesharing remain underutilized.

Freight and Commercial Traffic

Australia’s economy relies heavily on road freight, especially for transporting goods between cities and regions. The increasing volume of commercial vehicles on urban roads adds to congestion, particularly during business hours. Delivery trucks, construction vehicles, and service vans often compete for space with private cars, slowing traffic flow.

Conclusion

Road congestion in Australia is a multifaceted issue driven by demographic trends, infrastructure shortcomings, urban planning decisions, and cultural preferences. Addressing it requires a coordinated approach involving investment in public transport, smarter urban design, traffic management technologies, and behavioural change initiatives. Without significant intervention, congestion will continue to impose economic, environmental, and social costs on Australian cities. Part 2 of this blog discusses ways to reduce traffic congestion.