In recent days the Herald “Sideswipe” column has helpfully illustrated some of the core issues around urban sprawl and using travel time savings as a measure of the worth of a transport project. It started with this on Monday:
Good life in the country costs less
OK, so you move out to, say, Whangaparaoa from the North Shore to get a more affordable mortgage. The estimated extra petrol costs ($55 a week) aren’t going to make it more expensive than the difference in mortgage payments. Mike Dennehy explains:
“1. You live close to town and have a $500,000 mortgage. Using Westpac’s online mortgage calculator, repaying a $500,000 mortgage over 20 years at the current rate of 5.6 per cent p.a., your monthly payments are $3468.
“2. You move out of town and get an affordable house at, let’s say, a $300,000 mortgage. Using the same calculator, the monthly repayments are only $2081. The difference looks like this – you will save $320 a week on your mortgage, and pay an extra $55 a week for transport. You’re $265 a week better off, and you’re on the housing ladder. It gets better: the annual difference is $16,640, but you only have to come into work for a maximum of 48 weeks, so the extra travel works out at $2640 a year. You’re better off by a whopping $14,000 a year!”
A reader responded to this on Tuesday with:
“If you live in Whangaparaoa instead of, say, Takapuna, you will spend around 30 minutes extra each way in your car at rush hour. Since in each eight-hour work day most people spend at least a couple of hours doing pretty much nothing (coffee, gossip etc), commuters work an extra day a week, equal to 20 per cent of their salary in lost time/money.”
I do wonder if this particular reader is a transport economist for the NZTA, as this evaluation seems to be straight out of the Economic Evaluation manual. Finally today there are some more responses in today’s Sideswipe, including one from yours truly:
Commuting isn’t equal to cash
“A commuter in Whangaparaoa might spend a lot of time commuting by car, but this isn’t ‘equal’ to 20 per cent of their salary,” says Cam Pitches. “People choose to commute in their own time, not their employers’. A recent NZ Transport Agency survey found that 40 per cent of people actually enjoyed their commute. Common responses identified any time savings would be spent on non-work/non-study activities such as sleeping, more time getting ready for work, eating breakfast, family time, household chores and reading.”
Cheaper doesn’t mean better value
A reader says Mike is right that buying a cheaper house further out will cost you less to pay off, but he is forgetting that at the end of paying off the mortgage, you have a house worth $300,000, not $500,000.
West is best for the commute
Gary lived in Cockle Bay, Howick, for 27 years, but this year he moved west, to Riverhead. “I work in Newmarket and it was 24km to work from Howick. Now I travel 28km to work, but the trip is 20 to 30 minutes quicker because I don’t have to battle traffic on the Pakuranga Highway anymore. I now enjoy the wide open spaces for the same sort of money as a house in Howick. Because of the position of Riverhead and new motorway links, I can head north or south out of Auckland, or go anywhere within Auckland and not have to use the harbour bridge. That alone made the move worthwhile.”
These are quite useful illustrations of how human behaviour contradicts the official way benefits are calculated, as covered in this post. The last is a good example of how increasing capacity of a transport corridor encourages longer distances to be travelled. It is also backs up David Metz’s research which concluded that in spite of billions of pounds being invested in transport in the UK, average commute times have remained largely unchanged for decades. Perhaps it is time we focussed more on the absolute peak carrying capacity of the transport corridors we build too? And favouring transport projects which reduce our reliance on fossil fuels.
Of course the other important issue is how much more productive/relaxed a commuter would be on the 897X from Whangaparaoa, over a commuter in their their car – again a point ignored when travel times are considered to be an economic “bad”.
Hopefully NZTA takes note of their own survey and revisits some of their economic assumptions.