The price of a good or service is the cost to bring it to market, plus
the producer's profit. A price increase is the inflationary pressure on
inputs, and supply/demand market behaviour.
I thought of this basic economic theory while wondering why parking on city roads is so expensive, more so than private garages.
About six months ago parking in the city, at least in Claremont, a suburb in Cape Town, increased 27% from R2.20 to R2.80 per 15 minutes, or R11.20 for one hour. By comparison, Warwick Square charges R10 for 1 hour, R12 for 2 and, on a decreasing scale, up to R50 for 8 hours, the maximum. This is typical of private garages and includes secure, undercover parking, which the city's is not.
City parking bays are on existing roads built decades ago and paid for and maintained by taxpayers and, indirectly, motor licence fees. Private garages, often multi-storey structures requiring huge capital outlay and technical expertise, are paid for by investors and maintained out of parking fees. They still make a profit, but their fees are about half that of the city's. Some garages even have the first 30 minutes free.
How is it possible private garages, with all their benefits, are cheaper than the city's?
For the city, parking revenue is passive income - it's a by-product of infrastructure constructed entirely for a different, more important purpose. Roads, where the bulk of city parking is located - the other is at community facilities, also built for another purpose - is economic infrastructure and a public good. Except for tolled roads, a highly contentious matter, public goods by definition are community assets not required to make a profit.
There are only two explanations for the excessive pricing of city parking and the last price increase that was about five times above the inflation rate: the city is price gouging and the cost of collection - in this case the contract between concessionaire Numque 20 CC and the city - is taking up a larger and larger portion of revenues.
One of the major objections to Gauteng's e-tolls and Sanral's proposed N1 and N2 tolling, which the city fought, was the cost of collection took an unreasonably high portion of tolls collected - I think a figure of about 50% was cited, which the city said is irrational. (I would like to know what it is for city parking.).
The city's transport department has effectively "tolled" city roads to an extraordinary degree - the cost is twice the private sector for a far better service - and are tolling ratepayers, who often have no choice than to use their cars, for parking on roads and land they already paid for multiple times over.
If the high price and inflationary increases for city parking is primarily to ensure contractors like Numque get their desired profit - the raison d'etre of unreasonably high fees - then, like e-tolls, the system is flawed and exploitative.
Philip Bam of the Greater Cape Town Civic Alliance says taxes are impoverishing us. Yes and under the DA too private contractors are profiting from ("capturing"?) infrastructure our taxes paid for many times over. Parking on city land must be a nominal sum, say R1.50 for 15 minutes, because the asset has already been paid for, to discourage long-term parking and to pay for the collection, but not to profit from it.
I want to know the city's justification for this one, especially after their hypocritical complaint about tolling.
I thought of this basic economic theory while wondering why parking on city roads is so expensive, more so than private garages.
About six months ago parking in the city, at least in Claremont, a suburb in Cape Town, increased 27% from R2.20 to R2.80 per 15 minutes, or R11.20 for one hour. By comparison, Warwick Square charges R10 for 1 hour, R12 for 2 and, on a decreasing scale, up to R50 for 8 hours, the maximum. This is typical of private garages and includes secure, undercover parking, which the city's is not.
City parking bays are on existing roads built decades ago and paid for and maintained by taxpayers and, indirectly, motor licence fees. Private garages, often multi-storey structures requiring huge capital outlay and technical expertise, are paid for by investors and maintained out of parking fees. They still make a profit, but their fees are about half that of the city's. Some garages even have the first 30 minutes free.
How is it possible private garages, with all their benefits, are cheaper than the city's?
For the city, parking revenue is passive income - it's a by-product of infrastructure constructed entirely for a different, more important purpose. Roads, where the bulk of city parking is located - the other is at community facilities, also built for another purpose - is economic infrastructure and a public good. Except for tolled roads, a highly contentious matter, public goods by definition are community assets not required to make a profit.
There are only two explanations for the excessive pricing of city parking and the last price increase that was about five times above the inflation rate: the city is price gouging and the cost of collection - in this case the contract between concessionaire Numque 20 CC and the city - is taking up a larger and larger portion of revenues.
One of the major objections to Gauteng's e-tolls and Sanral's proposed N1 and N2 tolling, which the city fought, was the cost of collection took an unreasonably high portion of tolls collected - I think a figure of about 50% was cited, which the city said is irrational. (I would like to know what it is for city parking.).
The city's transport department has effectively "tolled" city roads to an extraordinary degree - the cost is twice the private sector for a far better service - and are tolling ratepayers, who often have no choice than to use their cars, for parking on roads and land they already paid for multiple times over.
If the high price and inflationary increases for city parking is primarily to ensure contractors like Numque get their desired profit - the raison d'etre of unreasonably high fees - then, like e-tolls, the system is flawed and exploitative.
Philip Bam of the Greater Cape Town Civic Alliance says taxes are impoverishing us. Yes and under the DA too private contractors are profiting from ("capturing"?) infrastructure our taxes paid for many times over. Parking on city land must be a nominal sum, say R1.50 for 15 minutes, because the asset has already been paid for, to discourage long-term parking and to pay for the collection, but not to profit from it.
I want to know the city's justification for this one, especially after their hypocritical complaint about tolling.
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