A new report by the Grattan Institute is calling for all major cities in Australia to impose a congestion charge on drivers during peak hours to ease heavy traffic in the CBD.

Key points: A Grattan Institute report is calling for a congestion charge on drivers who travel into the CBD during peak hours

A Grattan Institute report is calling for a congestion charge on drivers who travel into the CBD during peak hours Those who drive into the CBD to work have some of the highest incomes in Australia

Those who drive into the CBD to work have some of the highest incomes in Australia Lead researcher Marion Terrill said the charge should match public transport fees

Lead author and the institute's transport program director, Marion Terrill, said new technology meant the charge was the easiest, cheapest and most effective way to reduce congestion in cities.

What is a congestion charge?

It's exactly what it sounds like — a fee paid by drivers for using heavily congested roads.

The report suggested a cordon should be put around the CBDs of Australia's major cities with drivers paying a nominal fee when they cross the cordon during the peak morning and afternoon period.

The idea is not a new one.

The Melbourne City Council, the Productivity Commission, Infrastructure NSW, and Infrastructure Victoria have all supported the idea.

Ms Terrill said simply building more roads was not helping congestion. ( ABC News: Brendan Esposito )

"For decades, governments have tried to reduce congestion by building new roads, updating existing ones and adding public transport services," Ms Terrill said.

But that's done little to alleviate bumper-to-bumper traffic, she said.

"It's time for a new approach."

The idea behind the charge is that it would encourage people to catch public transport, walk, or ride their bike.

It would mean workers with flexible hours could avoid the charge by changing the time of travel.

That means drivers who do need go into the CBD during peak hour would get there faster.

Is it worth it?

Ms Terrill said cities such as London, Singapore, and Stockholm had seen a "significant reduction in traffic" during peak hour by using a congestion charge.

The report predicted a cordon charge would result in 40 per cent fewer cars on the road during peak hour and a 1 per cent speed increase across a city's entire road network — which was on par with speed increases from major road projects.

Grattan Institute transport and cities program director Marion Terrill has been pushing for a congestion fee for years. ( Supplied: Grattan Institute )

"There would likely be a 16 per cent speed increase on roads in the CBD, less waiting time at intersections and a 20 per cent speed increase on arterial roads coming into the CBD," Ms Terrill said.

Three years ago, Infrastructure Victoria said a road-user fee could reduce the number of trips by 5 per cent, reducing traffic to school-holiday levels.

In response to the Grattan Institute's proposal, Victorian Premier Daniel Andrews said it was not on the state's agenda.

"The best way to ease congestion is to build a public transport network system which can deliver more trains, more often — and we're getting it done," he said in a statement.

"We have no plans and do not support a congestion tax."

What would it look like?

It wouldn't really look like anything.

While the idea of a road-pricing system had been suggested before, Ms Terrill said technological advances meant it was cheaper and easier than ever to execute.

The report predicts a 40 per cent drop in the number of cars on the road under a cordon charge. ( ABC News: Joanna Crothers )

The report suggested a number plate recognition system.

"[It's] like the cameras used as backups on toll roads and red light cameras," Ms Terrill said.

"It's matured as a technology and is used around the world. You don't need the gantry, [cameras] can exist on existing street furniture."

How much would it cost?

While the report did not suggest a price, Ms Terrill said the charge should be similar to the cost of catching public transport.

So, it would cost roughly $5 each way in Melbourne, Brisbane, Adelaide and Perth, and $8 in Sydney.

It was also suggested the cordon would "more than cover its costs of operation" and therefore was a better option than multi-billion-dollar road infrastructure projects.

What is peak hour?

The report did not suggest what was defined as peak hour but Ms Terrill said she imagined the morning peak to be from 8:00am to 9:30am and the afternoon peak to be from 4:00pm to 6:00pm.

"Some people will have to go at 8:00am for whatever reason, some people are more flexible and this encourages the most flexible drivers to be more flexible," she said.

"But those who can't be flexible get a faster trip and a more reliable trip."

Do we even have a congestion problem?

With booming population growth, Australia's congestion problem is getting worse. ( ABC News: Luke Rosen )

The report said Australia's major cities needed to catch up with the likes of New York, London, Stockholm and Singapore.

But are our cities really comparable to the biggest in the world?

While we might not experience the gridlock of New York and London that makes driving in the CBD almost impossible, according to Infrastructure Australia (IA) we do have a congestion problem, and it's getting worse.

A recent report by IA found despite recent investments in transport infrastructure, we were playing "catch up" rather than adding capacity to our roads.

Between 2006 and 2016 Melbourne added close to one million people to its population, Sydney added 800,000 and Brisbane and Perth grew by almost half a million.

Won't it just hit the pockets of low-income earners?

The most obvious criticism about a road charge is that it could hit low-income earners the hardest.

But Ms Terrill said that was a myth.

"The drivers who would pay the charge tend to be doing just fine. People who work in the CBD of Sydney or Melbourne are two to three times more likely to earn six-figure salaries than people across the city as a whole," she said.

Another concern was that people on low incomes were forced to drive to work.

"What we would say is the CBD is very well served by public transport and most people do travel to the CBD via public transport," Ms Terrill said.

The report said in Melbourne, barely a quarter of full-time CBD workers drove to work, and those who did tended to earn 17 per cent more than people using public transport.

In Sydney it was even higher, with people driving to work in the CBD earning 34 per cent more than their public transport counterparts.