Summary

From an economic perspective, traffic fines serve to provide an incentive to drivers to obey road rules. But the incentives provided are different for different people. For a driver earning a million dollars per year a $150 traffic fine is of little consequence. For a low income earner it can be a serious setback. It can lead to financial stress for those at the margin, resulting in unpaid bills, loss of insurance and other financial problems. In 2014 a 22-year old Aboriginal woman died after she was held in custody because she was unable to pay $1000 in fines in Western Australia.

A better approach is to fine people in accordance with their income. Such systems are in place in many countries in Northern Europe. This is an effective way to make sure that the incentive-structure is the same for everyone and also makes the system fairer.

This paper assesses how Australian traffic fines would change if we adopted a system based on the one operating in Finland. Under the Finnish system each offence incurs a number of ‘day fines’. The monetary value of each driver’s day fine is derived from their income.