Thanks, Finland. That’s a mighty fine idea

0 0 November 07, 2024 Edit this post

A report calls for fairer speeding fines based on the Finland system where fines are proportional with income.

Finland has a minimum fine amount, but also takes into account a driver’s income and whether they have dependents.

This is a more equitable system but makes the headlines sometimes when really large fines are issued to wealthy people.

In June last year a businessman was fined 121,000 Euros (close to $200,000 Australian dollars) when he was caught driving at 82km/h in a 50km/h speed zone.

He also had his driver's licence suspended for 10 days.

The man had previously received two large fines for speeding.

Finland has been using this system since its introduction way back in 1921.

The report by think tank The Australia Institute argues that flat-rate fines are inherently regressive.

That's because they represent a small portion of income for wealthy people, but a large portion for low-income earners.

"For a driver earning a million dollars per year a $150 traffic fine is of little consequence.

"For low-income earners, it can lead to a vicious circle of financial stress, unpaid bills, and/or the loss of their driving licence.

"Such a loss can be catastrophic for people who rely on driving for their work."

The report says that making traffic fines proportional to driver incomes would be a fairer system.

With the cost of living already pushing many Australians into financial difficulties, traffic fines can force low-income earners into choosing between paying fines and essential spending.

By contrast, traffic fines are a minor annoyance for Australia’s high-income earners.

If a proportional system was introduced, a driver in NSW in the highest income bracket with the average number of dependents would pay $471 instead of $181 for speeding up to 9km/h.

However, a driver in the lowest income bracket would pay just $32.

For example, if a driver in the highest income bracket exceeded the speed limit by more than 10km/h on Macpherson Sreet in the exclusive Sydney suburb of Mosman (as has happened), their fine would almost triple to $889.

The report reveals Australian states and territories are already moving in this direction.

In NSW there is already a Centrelink discount.

In 2020, NSW introduced a 50 per cent discount on some fines for people on government benefits.

A proportional system would see average speeding fines decrease in every state and territory for low income earners, while people in higher income bracket would see their speeding fines increase.

“For a person on a low income, speeding fines can be crippling,” Australia Institute research manager and report co-author, Alice Grundy, said.

“Having a billionaire pay the same $200 speeding fine as a low-income earner is unfair.

“Proportional speeding fines are more equitable because they ensure the size of the fine is set based on a driver’s income.

“Australia’s regressive speeding fine system effectively criminalises poverty.”

Financial Counselling Victoria executive officer Zyl Hovenga-Wauchope said:

“In the land of the ‘fair go’ it is manifestly unfair that speeding fines are levied at a flat rate.

“While they are basically a mosquito bite for the wealthy, they can be earth shattering for the poor.

“This important report demonstrates that there is another way; we can do better. A proportional fines system is an important step in making a fairer Australia for all.

Established in 1994, the Australia Institute is a public policy think tank based in Canberra, with offices also in Hobart and Adelaide.

It has carried out research into a broad range of economic, social, and environmental issues.

The Institute takes a bipartisan approach to research, but has been described as a "progressive" or "left-leaning" think-tank.

Australia Institute reports in 2006 and 2015 have shown there are alternatives to this fixed value system.

The whole report makes for interesting reading.