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Transport Spending: what’s the point?

As a country we spend a lot of money on transport, at three levels: central government, local government and personally. In the 2012 budget, around $3.8 billion of expenditure on transport by central government was proposed. Further to that, transport is generally the biggest item of expenditure for local government – the Auckland Council spends over half its money (more than half your rates bill) on transport each year. Plus we obviously spend a lot of money ourselves: paying for petrol, buying cars, fixing cars, registering and warranting cars, paying for parking, paying for insurance, bus fares and so forth.

Obviously at an individual level we pay because we need to get around. Plus we need stuff to get around as well, so that we can get that stuff ourselves. I’m not going to go into the amount we pay for transport individually much in this post – except perhaps to point out that transport costs that are worn by individuals clearly varies and the impact of different transport decisions we make, especially different funding priorities, has an impact on the amount we may need to pay at an individual level. For example, if the public transport system is good enough for one member of a family to rely on for every day commuting, then maybe that family only needs to own one car instead of two (or three) – and therefore they avoid the need for a massive expense in owning, fueling and maintaining that car.

So why do we spend a heap of money (by my reckoning, only social development, health and education would be funded more by central government) on transport? At a high level, it’s so that we can achieve benefits to society that cannot be achieve if there was no public agency managing the revenue collection, planning and implementation of transport improvements (though crazy libertarians will always disagree with this). Each government of the day tends to outline what its broad goals are at a general level, with policies designed to help achieve those goals. The current government wants to focus mostly on boosting the country’s economic performance and productivity. The Auckland Council wants to make Auckland the world’s most liveable city.

Where it becomes really interesting is the next step down – how does transport policy and spending help to actually achieve these broad levels goals? This obviously requires specifying a number of transport goals that contribute to achieving the over-arching vision – whether it be the government’s vision or the Council’s vision. The government thinks that spending big money on reducing traffic congestion on the roading network – particularly parts of the network that are busy freight routes (or, by the look of it, busy during holiday weekends) will make a huge difference to economic performance. The Council’s vision also focuses on reducing congestion, but suggests that this is likely to be best achieved through the creation of an outstanding public transport system and better integration of the transport system.

Occasionally, the two visions conflict – something which doesn’t please the government at all:

Given the cost and the forecast increase in congestion, despite this substantial investment there are fundamental questions over value for money and whether the right mix and timing of projects has been chosen to address forecast travel patterns. A priority for the Auckland Council, potential funders and infrastructure users is to reconsider the proposed projects and undertake the strategic review to determine whether individually, and as a package, they are the right projects to address the long-term transport challenges facing Auckland.

This view is consistent with the official Government response to the Auckland Council, released in July, which noted “… the Government also remains to be convinced that the programme as a whole represents the right mix of projects and will provide value for money. To improve the prospects for alignment on transport policy, the Government encourages the Council to review the proposed projects to ensure the transport strategy is optimised to address forecast congestion under the likely land use pattern”.

I actually strongly agree the Council needs to undertake such a piece of work, but the outcomes of the review might end up being the complete opposite of what the government thinks – the removal of a large number of pointless and eye-wateringly expensive roading projects.

But all of these plans are based on an assumption that reducing traffic congestion will actually lead to better economic growth and/or better liveability. Those are actually assumptions worth testing – as did an article in Atlantic Cities a few months back, which looked at the link between congestion and economic performance. The results will surprise some:The article explains the relationship, which actually shows that per capita GDP is higher where there’s more congestion:

…regional GDP and traffic congestion are tied to a common moderating variable – the presence of a vibrant, economically-productive city. And as city economies grow, so too does the demand for travel. People travel for work and meetings, for shopping and recreation. They produce and demand goods and services, which further increases travel demand. And when the streets become congested and driving inconvenient, people move to more accessible areas, rebuild at higher densities, travel shorter distances, and shift travel modes.

Stated another way, people adapt to congested environments. Because cities provide greater access to job opportunities than do rural areas, as well as wages that are more than 30 percent higher than their non-metropolitan counterparts they have a powerful economic incentive to do so.

Economic development is also intricately related to the density of employment – agglomeration benefits as they are commonly known. Putting more people in close proximity will inevitably lead to more congestion, but the negatives of that congestion (if there actually are any) are seemingly more than outweighed by the benefits of density.

Well what about Council’s assertion that reducing congestion will lead to improved liveability? Well just yesterday Mercer released their 2012 list of the world’s most liveable cities - with Auckland doing really well at number three (for the fourth year running). Let’s take a look at the top 10:

  1. Vienna
  2. Zurich
  3. Auckland
  4. Munich
  5. Vancouver
  6. Dusseldorf
  7. Frankfurt
  8. Geneva
  9. Copenhagen
  10. Berne & Sydney

The bulk of these cites are dense European cities, which generally have quite a lot of congestion due to their limited road network in the inner areas (although obviously they tend to have pretty good transport choices). Other cities that do well include Vancouver, which decided to not build any motorways in its inner areas, and Copenhagen which is famous for being the world’s best city for cycling.

Perhaps what I’m really getting at with this post is highlighting that perhaps we’re focusing on the wrong thing in trying to achieve the ultimate goals of investing in transport? In both achieving stronger economic growth and better liveability, what if relieving congestion actually doesn’t help much? What if it actually undermines our efforts? What if it uses up a whole heap of money that could be better used on transport interventions which actually would assist in achieving the high level visions of both Central Government and Auckland Council (like encouraging greater employment densities or encouraging greater transport choices or reducing the amount of money we need to personally spend on transport so we can spend it more usefully elsewhere)?

For some reason an assumption has been made that reducing congestion will magically result in these strategic outcomes and therefore we need to focus on transport spending almost exclusively on the reduction of congestion. Well I’m calling bullshit on that assumption. And as there’s billions of dollars at stake here, we need to do better, quickly.

32 comments to Transport Spending: what’s the point?

  • The government’s position is worse than you describe because even if reducing congestion did automatically lead to a more productive city there is no certainty that their means to achieve the congestion reduction, building more motorways, actually achieves this. Because this imbalance in investment supports more motorway journeys and a more dispersed city the more likely outcome is simply more driving, less agglomeration, and lower productivity.

    So in practice because the Council versus the government views boil down to only investing in motorways and dispersal versus investing in Transit, place quality, mode choice, intensity, as well as (fewer) big roads it is not simply an argument between more economic growth versus increased liveability. But between poor growth (gov) and more growth (Council).

  • JR

    3B for a CRL when the entire 7km northwest link cost under 1.5b and a completed metro-centre (Westgate) cost under 1b. Not to mention the fact that 3000 new jobs are proposed at Westgate upon completion.. . How you can justify such extreme costs of a CRL?

    Note the Hobsonville point ferry service offers a direct route to the city. Again, at such little cost compared with rail. Remember, the contour of Auckland’s landscape plays a huge part that includes navigating; hills, harbours, estuaries, native trees etc. The opportunity cost to rail is just so massive, im just scratching the surface here. Cars will always dominate Auckland because the city isn’t everything, If want to visit the beach, go shopping, jump off the sky-tower, visit my nana… I NEED A CAR!

    OPPORTUNITY COST!

    • Harry McDonald

      Funny – cars used not to dominate Auckland and why is Auckland so very different to all those other cities on the list? They have it wrong and Auckland is right?
      How do you propose to use your car when the roads are completely congested? I don’t have a car and I go to (or near) a beach every weekend, go shopping and pass by the Skytower; I would never go into a place that makes its money off people’s misery. And I most certainly don’t need a car to visit my grandmother as she’s in Belfast.
      Since getting rid of my car, I have more money and my stress levels are down. I still drive occasionally when I hire a car.
      Oh and 3 billion (and it is not that much btw) is chickenfeed compared to 10 billion on Joyce’s RONs (roads of no signifigance).

    • Duncan

      JR, yes the CRL is expensive, but without it, Aucklands CBD will completely bottleneck within the next 20 years we can’t keep flooding the city with buses. The CRL also opens up the entire rail network plus is a basis for rail to the north shore, whether it is normal or light rail. Look at the cities that spend money on urban sprawl and motorways they STILL have traffic problems no matter how many roads they build. The best cities in the world, have a basic motorway structure, which we will soon, then have invested in public transport networks that work and thrive. Let alone the days of cheap oil are gone, roads will be built for the rich, as gas prices will soon start pushing families to the brink.
      It’s short sighted thinking that got Auckland into this mess. It’s up to us to get us out of it, and start planning for the future.

      • Feijoa

        Correction: we will have more than a basic motorway system soon. I’d say developed being north/south double redundant once the western ring route is complete.

        I guess we’re missing any form of tolls to manage and recover peak costs. And we do a poor job of managing pollution and impact of noise. Oh and no bus lanes. Ah, that is kind of basic in the primitive sense of the word!

    • It ain’t $3bn – did you get that figure from Gerry? The cost of the tunnel is 1.8bn, covered in earlier posts.

    • The Hobsonville ferry adds capacity for, wait for it… 120 trips an hour to the transport system. From a single point to a single point. The CRL will add capacity of approximately 15,000 trips an hour to the transport system, and link together all the lines and stations on the network. So from fifty points to forty-nine other points.

      • Really only 15k trips per hour? At 750ish passengers per six-car EMU set for 20 trains per hour, that’s not even double Britomart’s current theoretical capacity of 24 trains per hour. I would’ve thought it’d be more like 20k additional trips, or possibly even more if you do some really fancy projections of advanced running patterns out into the future involving service loops between the south and west, and south and east, that aren’t possible with Britomart as a dead-end. Plus, if we account for the real service frequency that we’re getting out of Britomart, which is lower than the theoretical maximum, it’ll definitely be higher.

        One six-car set every two minutes in each direction is 45k passengers. That’s a possibility with the CRL, though it’ll be quite a long time before Auckland needs to even consider such high levels of service.

        • Nick R

          15k trips an hour to city stations. It could support 100k more trips around the network with double the frequency.
          And ‘only’ 15k is still more people an hour added to the CBD than the three motorways together currently supply.

          30 trains an hour per direction is unrealistic, the tunnel itself could technically carry that with advanced signalling, but the network couldn’t support it.

          • So it’s 100k more trips “to the transport system”, which was what you originally said. That sounds more accurate.

            I know we are a long way away from 60tph, but the CRL does make it a possibility whereas the current network design could never achieve that, no matter what else was done with signals and things.

  • The CRL is expensive due to the tough geography and constrained corridor that it is in however the benefits it provides are huge. See my post from this morning on the economists talking about the agglomeration benefits delivered from having larger and denser employment in the city centre, not all jobs are equal. In the regional context, 3000 jobs at Westgate is nothing.

    If by the northwest link you are referring to the western ring route then the actual costs is about $4b when you include the projects already completed or still needed after Waterview is finished.

    As for some of your other points, you don’t need a car to go shopping, jump off the sky-tower and potentially depending on her location visit your nana. Cars are useful but that is partly because we have invested so much in roads to make them so. PT will be just as useful if we start investing properly in it.

  • sjac

    Correlation does not imply causation, remember. Just because a city has more cars stuck on a motorway, does not mean that it will have a higher GDP per capita.

    • Deserthead

      Exactly. If it did then we could easily improve our economy by removing all subsidised bus and train services, watch the motorways clog up and have GDP go through the roof. Unfortunately it doesn’t work like that. You wanna try driving through downtown Nairobi during business hours

    • Mr Anderson

      Yes the Atlantic Cities article highlights that it is unlikely that congestion causes higher GDP per capita. But what I think is more interesting is that congestion doesn’t seem to be holding back economic growth. Correlation may not imply causation but it does suggest that the assumed causation from congestion to poorer economic growth is bullshit.

      • Doc

        I agree, just because I have a graph here that says that more people where sun glasses on sunny day doesn’t mean that wearing glasses makes it sunny, but it does suggest that the assumed causation that having a bright sunny day makes people wear glasses is bullshit.

  • Dave

    The Joyce/Brownlee/Key national-led transport policy is taking us further into the mire, not out of it. We are heading 180° in the wrong direction and unfortunately most kiwis are too blind to see it.

  • LucyJH

    Being a pedant I looked it up. Did you know that actually we spend more on Health, Education, Social Development, the IRD and Treasury than Transport? I was shocked by this actually… I can see why we would spend a lot on IRD because, after all, they basically collect all of the income that the government gets – so worth a bit of investment. But Treasury? Really? What do they do that justifies that level of expenditure? Or is there something I’m missing in that – are our debt payments is counted as Treasury expenditure or something like that?

    • Peter M

      Yeah debt interest is probably Treasury and I think that Working For Families counts as IRD expenditure, or maybe its KiwiBank contributions and/or student loan interest write-offs.

    • obi

      “are our debt payments is counted as Treasury expenditure or something like that?”

      I’m pretty certain that is the case. There is a debt management group in Treasury.

    • We absolutely do not spend more on IRD than on transport. IRD’s operating budget for FY2012 was less than $700m according to their annual report, and they spent only another $98m on capital purchases. We might spend more through IRD, but that’s not the same thing.

      It’ll be the same with Treasury; a very high expenditure but most is an on-behalf-of arrangement rather than Treasury’s operations. Treasury’s department budget for FY2012 was $107m.

  • I can’t say I’m really convinced that Auckland’s congestion is all that bad for a city of its size.

  • Annie Lamb

    Yep gotta agree, whats the point? Need to rethink how to cut up the pie rather than focusing on growing the pie. What are transport investments that collectively will result in a programme of services and infrastructure that deliver as many benefits as possible. The likely removal of the 5 platforms of the LTMA to be replaced with the pathetically vague effectively, efficiently and safely will be a real blow to any attempt to deliver a transport programme that genuinely delivers value for money. It is only when we prioritise investments that deliver on things such as the economy and the environment, and safety and health, that we will start to get greater value for money. ESsentially AT have the the same approach to investmnet as the engineers of the 1950′s. They might couch it all in terms of one system, and multimodal.. but the balance of investment is likely to be even more pro roading than what it was then. There has been little real analysis of whether this approach has been effectiven.. and there is increasing evidence that the link between economic growth and transport investment is sat best very very site specific and at worst a myth that doesnt hold up to closer scrutiny.

    • The main change I would like to see in transport spending analysis is an end to the current fantasy that transport investment decisions don’t shape places. They do, almost more than any other decisions we can make [as opposed to those we can't, like natural geography]. So we need to turn the questions around and ask ; what kind of place do we want, will be most successful, and then invest in the infrastructure to achieve that.

  • Doc

    I’ve noticed in quite a few posts people suggest that Vancouver decided not to have any motorways near their CBD, I’m just wondering what Vancouver this is that people are talking about.

    I note that the one in Canada has the Trans-Canadian Highway quite some distance from the CBD but then they have 4 other highways that are about the standard of capacity, if not greater, of our motorway feeding directly into the CBD. So I guess this is not the Vancouver people are talking about, the Vancouver in the US seems to have a similar number of highways near the CBD as well.

    • Kent Lundberg

      A highway is not the same as a motorway (freeway).

    • Peter M

      There are no freeway standard roads in the City of Vancouver. Clearly there are some big bridges coming into Vancouver’s CBD.

      Hmmmm… Doc, you sound a lot like someone we’ve tried to ban from this blog for trolling.

    • Doc

      Looking at the map we can see two 6 six lane grade separated routes, one eight lane separated route, and then a plethora of ramps serving the various 4 & 6 lane (full time) at grade approach roads. Auckland is not too different except for the fact that our eastern leg is Tamaki Drive which is only a part time 4-lane road,

      What is interesting however is that the connection from their north shore to their CBD is a 3 lane tidal flow bridge, whilst their other north / south crossing for non-CBD trips is well off to the west. This is actually not too different to what NZTA is planning for when they make the new crossing in that the CBD based traffic will be on a crossing of their own. Using the Vancouver example it would seem the central 4 lanes of the existing bridge is all Auckland would need for north / south CBD related traffic.

    • Doc

      Woops, I meant their north south route for non-CBD traffic is to the east.

      Also their big roads only go to the CBD, whereas our motorway goes through the CBD giving greater penetration. This gives them good road access to the CBD without promoting those roads to be treated as through routes as you would inevitably need to go through the crawl of CBD streets. It’s a good example of a choke in a road network to avoid inducing unwanted demand.

  • Doc

    In this case there is very little difference other than name, both are grade separated with no mid-block access. SH18 for example is called the “Upper Harbour Highway” however it’s no different to the southern motorway.

    If we were to measure things by name only we could just rename our motorways as highways and then the said problems of motorways would be swept aside. That’s not how things work however.

  • Luke C

    Those roads entering Vancouver CBD are clearly not motorways. They are short grade separated sections of road, see Granville Bridge, Cambie St and West Georgia St.
    In Auckland can be seen to be similar to Ian Mckinnon Drive or Fanshawe St. They are clearly not motorways as the don’t link into long sections of road, will note they have regular sets of traffic lights are either end. 2 of them are simply bridges with motorway style intersections at either end, and the viaducts around West Georiga St just seem like an expensive over engineered mess. There is no similarity to Auckland at all. The city is not a moat surrounded by motorways.

    If Auckland was similar Western Link route would have been built 40 years ago, and been main route north. Harbour Bridge would of stayed at 4 lanes, NW motorway would stop at Pt Chev, and Southern would stop at Greenlane, and there would be no CBD moat.
    Note are the are 0 motorways in Vancouver City apart from the small section of the Trans Canada Highway in the north eastern corner.

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