RoNS: just a giant subsidy for the trucking industry?

The recent debate in parliament over the economic justification behind the “Roads of National (party) Significance” (RoNS) prompted me to delve a little further into how these roads, which suck up a HUGE amount of the expenditure on transport over the next decade (over half the money NZTA will be spending on state highways across the entire country from memory will go into these seven roads), are being economically justified. Let’s have a look at what the NZTA website says:

Roads and economic growth

As a small, sparsely populated country distant from world markets, New Zealand relies on a robust transport network to move people, goods and services safely and efficiently.

Infrastructure development is one of the Government’s key planks for economic growth. A key departure from road planning in the past is that the RoNS projects represent a ‘lead infrastructure’ approach. This means the Government is investing in infrastructure now to encourage future economic growth rather than wait until the strain on the network becomes a handbrake on progress.

Around 92 per cent (by weight) of all freight within New Zealand is moved by road. An efficient freight industry with access to cost effective transport is vital to the competitiveness of New Zealand businesses.

Industries that are critical to New Zealand’s economy such as dairy processing, forestry and tourism are the key beneficiaries of better roads. With less time and money spent transporting goods, more investment can be made in productive assets and increasing wages which continue to fuel economic expansion.

The RoNS projects deliver much more than faster, safer, lower cost freight links. Perhaps to an even greater degree these roading improvements will deliver agglomeration benefits to businesses. Agglomeration refers to the benefits businesses gain when they are located near each other or when the costs of interaction between them is reduced resulting in increased productivity. For example, through improved transport links businesses will gain access to a wider talent pool, specialist suppliers, knowledge and skills.

As you may have noticed, I’ve underlined the parts of this justification which relate to the freight industry – which means the trucking industry as we’re talking about roads here. It is interesting to note that dairy processing and forestry are, historically, two industries that are well suited to having their products shifted around by rail, but let’s ignore that for the time being.

Another interesting aspect of what’s outlined above is the last paragraph, especially where it talks about “agglomeration benefits”, and the benefits of businesses locating near each other – in other words the gains of increased accessibility between different businesses and also between people and where they want to go. The odd thing is that massive investment in roading infrastructure, especially in “quasi-urban/rural” areas where many of the RoNS are located (Puhoi-Wellsford, Tauranga Eastern Motorway, Kapiti Coast, Christchurch outskirts etc.), generally leads to people and businesses locating further and further away from each other – as I explained in this post. It would be rather ironic if this RoNS project was actually undermining the improved accessibility that it’s actually trying to generate.

Drilling down to an example of a road of national significance – the Puhoi-Wellsford “holiday highway” – it’s once again interesting to look at the justification for this project on the project page of the NZTA website:

Project purpose

The Puhoi to Wellsford road of national significance runs approximately 38km through the Rodney district north of Auckland on State Highway 1. The project aims to improve the state highway network from Puhoi in the south to the north of Wellsford, following on from completion of the Northern Gateway Toll Road in 2009. Existing and anticipated future regional growth will provide opportunities for economic and social development in Northland and the Rodney district.

Benefits

The road of national significance Puhoi to Wellsford has a strategic role looking at connecting Auckland and Northland regions and looking to future regional growth as well as improving the safety of the route and making journey times more reliable.

The objectives for the project are:

To enhance inter regional and national economic growth and productivity
To improve movement of freight and people between Auckland and Northland
To improve the connectivity between the growth areas in the northern Rodney area
To improve the reliability of the transport network through a more robust and safer road between Auckland and Northland.

Other benefits include reducing congestion during peak periods, and improving economic development and tourism opportunities in Northland.

Once again I have highlighted those benefits which appear to mainly cater for the trucking industry. I must say it’s also quite bizarre to have the project largely justified on supposedly “woolly” benefits like enhancing inter-regional economic growth (exactly how’s it going to do that?) and providing opportunities for economic and social development in Northland and the Rodney District (how’s a 10 minute time saving really going to change their world?) ‘Benefit’ number three, improving the connectivity of growth areas in the northern Rodney area, is basically translated as “encouraging unsustainable urban sprawl” and seems to work in direct contradiction to Auckland’s general urban growth management strategies.

There are similarly worded purported benefits for all the other RoNS, either relying on some magic linkage between roading investment and economic growth (remember the OECD report says the opposite when it comes to spending on motorways) or being more honest and saying that it’s basically a huge subsidy from all roads users to the trucking industry so that trucks can get around the country a bit faster. While I’m sure being able to shift stuff around easier and quicker is probably a good thing, I really do wonder whether it makes a huge difference, particularly whether it’s worth the billions upon billions of dollars we’re set to pour into these RoNS over the next decade.