The Victorian Government’s Competitive Neutrality Policy is to ensure that significant government and council businesses compete fairly in the market. For Competitive Neutrality Policy to be applicable:
- a council activity must be a business
- the business must be significant
- the benefits of applying the rules must outweigh the costs
- applying the rules must be in the public interest
Yarra’s Revenue and Rating Plan offers examples of services that can be considered as significant businesses that should comply with Competitive Neutrality Policy, and Yarra’s Pricing Policy provides guidance on how fees and charges should be set.
An example of a significant business activity is the provision of parking services. Consider two off-street parking areas near Bridge Road. The southern one is private, and charges $15 per day, while the northern one is operated by council, and charges $20 per day. The car parks are of comparable size, with comparable pricing, which in our opinion indicates that the service is a significant business activity that should (and does) comply with competitive neutrality.
The problem is with how council prices on-street parking. When a driver nears their destination, they face a choice between two competing options; park on-street or off-street. Approximately 3/4 of council’s 47,000 on-street parking bays are offered for free, which is clearly below the market rate. Even worse, although some of the free parking is signposted as time limited, e.g. four hour (4P), in effect it is free all-day parking because people set a timer on their phone and then swap the position of their vehicle.
Streets Alive Yarra’s view is that:
- the provision of on-street parking services is a significant business
- the benefits of applying Competitive Neutrality Policy outweighs the costs
- applying Competitive Neutrality Policy is in the public interest
Business activity
Four factors are considered to determine whether an activity is a business. If the answer to each question is ‘yes’ then the activity is considered a business.
- Do the activities result in the sale of a good or provision of a service?
- Are the costs of providing the goods or services of the entity predominantly met by users?
- Is there an actual or potential competitor?
- Do the managers of the activity have a degree of independence in producing or supplying the good or service and the price at which it is provided?
Sale of a good or provision of a service
Yes, council provision of on-street parking is clearly the provision of a service, namely a parking service, i.e. a place to store a motor vehicle for a period of time. If council did not provide the service, people would be forced to source the service from a commercial provider, i.e. a nearby private off-street parking space. At some locations, any person can store their motor vehicle for a restricted period of time in exchange for paying an hourly or daily fee, this is called metered parking. At some locations, eligible persons can store their motor vehicle for an unrestricted period of time in exchange for paying an annual fee, this is called permit parking.
Costs met by users
Yes, the costs of providing the parking service are met by users, clearly and individually identifiable people, who are identified via the unique number plate of the motor vehicle.
Actual or potential competitor
Yes, private off-street parking spaces exist throughout Yarra, as they do throughout greater Melbourne. At the moment, potential competitors are prevented from starting up in many locations because they are forced to compete against the free service offered by council.
Degree of independence
Yes, council has an independent ability to determine how much kerb space to allocated to the provision of parking services, whether those spaces are available for a short or a long time, and what fee to levy.
Overall
The answer to all four questions is ‘yes’, so the provision of on-street parking is considered a ‘business’.
Significant business activity
Two factors are used to determine whether the business is significant:
- the size of the relevant business activity in relation to the size of the relevant market
- the influence or competitive impact of the business activity in the relevant market
Size of the activity
The City of Yarra dominates the market for the provision of parking services in the municipality, via its 47,000 on-street parking bays that are spread throughout the area. A conservative estimate is that council controls more than double the number of private off-street bays offered by commercial operators across the municipality. Thus, the size of the relevant business activity is significant.
Influence of the activity
The City of Yarra offers nearly 3/4 of its parking bays for use at no cost. This price point is far below the threshold of commercial viability for private operators. Even nominally time restricted bays, such as 2P or 4P, can be used for free all-day parking, simply by setting a timer and moving the car to another bay in the same street. Thus, the City of Yarra has a competitive impact in the market.
Data on market pricing
Data on market pricing is available from websites offering parking services, such as parkhound.com.au, or by visiting off-street car parks. The City of Yarra published their benchmark for daily parking as $20 per day, refer to the Council Meeting Agenda for 16 June 2026, page 13.
Benefits outweigh the costs
Following a determination by a government agency that an activity is “significant”, it should consider the expected benefits and costs of introducing an appropriate competitive neutrality measure. The decision to implement any specific competitive neutrality measure depends, in the first instance, on the expected benefits outweighing the expected costs. The CPA only requires governments to implement competitive neutrality measures “to the extent that the benefits to be realised from implementation outweigh the costs.”
Benefits
Application of competitive neutrality, i.e. charging the market price for parking, would deliver benefits to residents and ratepayers:
- additional revenue that could be reinvested in the municipality as increased capital expenditure or improved services
- improved amenity via a decrease in traffic congestion, traffic noise, and air pollution
- reduction in carbon emissions from transport, owing to some people changing to walking, biking, or public transport instead of paying the daily fee
For example, if the City of Yarra charged a fee to park all-day, the number of on-street parking bays occupied by commuters on a typical business day might reduce from 2/3 to 1/3 of Yarra’s 47,000 bays. If those 1/3 were used for 250 days each year (5 business days per week for 50 weeks), and the daily fee was $20 then the revenue would be $78 million per year (1/3 x 47,000 x 250 x $20 = $78 million), equivalent to 30% of Yarra’s $260 million annual budget, i.e. the benefits are clearly material.
Application of competitive neutrality, i.e. charging the market price for parking, would deliver benefits of:
- increased market contestability, i.e. competition in the market for the provision of parking services, i.e. if private off-street parking spaces aren’t competing against ‘free’, they are able to start up, offer their services, and compete in a functioning market
- improved performance of the council service provider, i.e. incentivising council to provide a clean street and footpath to attract people to park and walk to their destination
- improved clarification of non-commercial objectives, such as how much kerbside space to allocate to on-street parking at the expense of wider footpaths, trees, or bike lanes
Costs
Application of competitive neutrality, i.e. charging the market price for parking, would deliver costs to commuters who drive into the City of Yarra each day. By definition, those costs would align with the market rate.
The City of Yarra is well served by public transport, as shown by the state government’s Car Parking Requirement Map, based on the local Public Transport Accessibility Level. That map shows that half of Yarra is so well served by public transport, new developments are not required to provide any off-street parking. Also, most of the remaining half of Yarra is so well served the state has reduced the minimum car parking requirements.
Overall
Overall, we contend that if competitive neutrality is applied to the pricing of on-street parking, the benefits will outweigh the costs.
Public interest test
In some cases a significant business activity operates in part to achieve social, environmental and other policy objectives.
Where the implementation of fully cost-reflective pricing or other competitive neutrality measures may compromise other public policy objectives, the government entity should conduct a public interest test to demonstrate the case for not implementing the measure.
https://www.vic.gov.au/competitive-neutrality
Social policy objectives
Council has social policy objectives, as documented in Yarra’s Social Justice Charter. Pricing on-street parking at market rates aligns with that policy because:
- residents on low incomes, e.g. concession card holders, are eligible to receive a free residential parking permit
- residents on low incomes will benefit from the additional or improved services that can be funded by the new revenue
Environmental policy objectives
Council has environmental policy objectives, as documented in Yarra’s Council Plan and Climate Emergency Plan. Pricing on-street parking at market rates aligns with that policy because it acts to decrease:
- traffic noise
- toxic air pollution from motor vehicles
- carbon emissions from transport
Impact on commuters
If on-street parking is charged at market rates, commuters will still be able to access their jobs. Commuters who prefer to drive and park will still be able to do so, and access will be improved because some other commuters will change from driving to walking, biking or public transport, thereby reducing both peak-hour traffic congestion and all-day parking congestion.
Impact on shoppers
If on-street parking is charged at market rates, access for shoppers to local traders via free 2P parking will be improved because fewer bays will be occupied by commuters parking all-day. For shoppers who need to park longer than two hours, extended parking will be more readily available, for a reasonable fee, without the stress of needing to move the car or risk a fine.
Aligned with state government policy
The state government imposes a congestion levy on private off-street parking in the inner city, including across most of Yarra. The intent of the levy is to decrease traffic congestion in the levy area by discouraging commuters from driving via an increase in the cost to park. Thus, council application of competitive neutrality to the pricing of on-street parking would align with state government policy, and can be concluded to be in the public interest.
Overall
Overall, we contend that applying competitive neutrality to the pricing of on-street parking is in the public interest.
Reasonably practicable solution
Modern parking management systems are readily available, meaning that it is reasonably practicable for council to implement competitively neutral pricing across the municipality. For example, council can easily:
- designate all on-street parking bays in the municipality as ‘Metered Parking’, with exceptions for disabled, car share, medical, or loading bays, with parking tickets available for purchase via a smartphone app, and each street defined as a separate parking ‘zone’
- exempt vehicles with residential or business parking permits from the requirement to purchase a ticket at the meter, for bays located within 100 metres of that home or business
- limit sales of ‘all-day’ parking tickets to e.g. 1/3 of the bays in each zone, and limit sales of ‘2P free, then pay by the hour’ parking tickets to e.g. 1/3 of the bays in each zone, with hourly and daily pricing benchmarked to commercial operators located nearby
Parking “before and after” if we covered Yarra with metered parking. Image credits: Streets Alive Yarra.
Council response
Streets Alive Yarra has asked both the City of Yarra and the neighbouring City of Stonnington whether they will apply competitive neutrality to the pricing of on-street parking.
I write in response to your email to the Mayor dated 27 October 2022 discussing Council’s competitive neutrality obligations. You are correct in noting Council’s obligations in this regard, and that Council is required to apply the principles in relation to significant businesses it operates…I note the content of your submission regarding the provision of on-street parking. Council has not determined that the regulation of street parking constitutes a significant business, and does not believe that on street parking is comparable with off-street parking areas. To my knowledge, there is no Council that has concluded that street parking is a significant business for the purposes of National Competition Policy.
Response from the City of Yarra 24 November 2022
Your email regarding competitive neutrality has been passed on to me for response. While I appreciate the view that the management of on-street car parking bears a similarity to the provision of parking in dedicated parking areas off-street, the two things are quite different in reality. I do not believe that on-street parking is directly comparable to privately provided off-street parking in the way that the National Competition Policy requires.
On-street parking is disbursed across the municipality, rather than concentrated in areas of demand. Parking, by its nature, is used by drivers seeking to park close to their destination – it is the location of the spaces that has the greatest impact on their use. While a small number of on Stonnington street parking spaces are located near to privately provided off-street parking facilities, the overwhelming majority of them are not. It is also of note that the majority of privately provided parking in Stonnington is provided free of charge. In order for on-street parking to be considered a significant business, it needs to be a business activity, it needs to be operating in a private market, and it needs to have a material influence or competitive impact in that market. I do not believe that on street parking satisfies any of these tests.
In direct answer to your question – no, I do not believe that Council’s enforcement of the Road Safety Road Rules 2017, application of on-street parking restrictions or provision of parking permits is subject to competitive neutrality principles.
Response from the City of Stonnington 14 August 2026
Owing to circumstance, the same Officer provided both responses, because they were working at Yarra in 2022 and at Stonnington in 2026. In our view, as described above on this web page, on-street parking satisfies all the tests to be classed as a significant business that must comply with competitive neutrality provisions. In addition, we believe that the Officer’s argument is weak because it is circular:
Conclusion
Streets Alive Yarra’s view is that:
- the provision of on-street parking services is a significant business
- the benefits of applying Competitive Neutrality Policy outweighs the costs
- applying Competitive Neutrality Policy is in the public interest
We urge Council to:
- review Competitive Neutrality Policy as part of the upcoming Kerbside and Parking Management Strategy
- determine that on-street parking should be priced at market rates, in accordance with Yarra’s Pricing Policy
- implement market pricing as soon as practicable
- reinvest the additional revenue to deliver increased capital expenditure and improved services