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Transport is an increasing burden for New Zealanders

One of the fundamental reasons why we think Auckland needs to transform its transport system by focusing on the modes that have missed out so much attention over the last 60 years (public transport, walking and cycling) is because our current car dependency is incredibly expensive. Not only is it a burden on ratepayers and taxpayers in the future – with our crazy $68 billion roading bonanza – but also a transport system where seemingly every household needs to own, maintain and operate two or more cars is actually incredibly expensive for them. And therefore, for the whole country in aggregate.

Statistics New Zealand’s recent release of the 2013 Household Economic Survey contains a lot of information about what people spend their money on each week. At a broad level, transport seems to have had the greatest increase in per household expenditure from 2010 to 2013:

transport-household-expenditure

Digging into the details a bit more and taking the data back to 2007 reveals some interested trends. The biggest increases are in the Private transport and supplies sector of which petrol makes up about 60%. Passenger transport is the only category to consistently increase however that also includes air travel which makes up more than half of the figure so it isn’t all public transport.

Household Economic Survey - Transport

An average of ~$160 per household per week on transport related activities seems like a lot. As a proportion of household income, transport rose from 12.9% to 14.2% between 2010 and 2013:

expenditure-typesTypically cities that are more car dependent have higher transport costs per household – meaning that providing better transport options so households don’t need to own that second car or don’t need to drive so far each week (therefore saving on petrol) can have a huge impact on their household budgets and financial wellbeing.

Unfortunately, none of these effects really seem to be captured by our current cost-benefit analysis process – perhaps because it fundamentally assumes that people are ‘willing’ to pay for these costs because they are the private cost of transport. That kind of misses the point though – which overall is that Auckland’s car dependency means households need to more money on transport than they might otherwise want to. In aggregate this really hurts Auckland’s social and economic wellbeing because it means we can’t afford to spend as much on housing, food and many other more fun areas of expenditure than simply getting around.

22 comments to Transport is an increasing burden for New Zealanders

  • Kent Lundberg

    Where do I exchange my time travel savings for dollars?

    • MFD

      The issue is more one of how rather than where:

      be self-employed
      charge clients by the hour
      have few restrictions on working hours.

      For me time spent travelling to or from a client is time spent destroying wealth and not creating it.

      • V Lee

        Travel time is just another cost in a business like your’s, no different from buying tools etc. Just set your prices accordingly, basic business practice. A direct cost like you have is, and will only ever be, the case for very few people.

        You are lucky, very few people get such a generous taxpayer and ratepayer subsidy (roading) of their business costs.

        • MFD

          “Travel time is just another cost”.
          It’s an opportunity cost but not a cost to my accountant or the IRD. A hint is the units of measurement. It’s very different from buying tools. More tools can translate into increased productivity. More travel time generally translates into decreased productivity.

          “very few people get such a generous taxpayer and ratepayer subsidy (roading) of their business costs”
          How very presumptuous of you. These days I average a total of around 15 minutes a day on uncongested local roads. Having so little time involved in travel enables 55 to 70 hours per week of billable (ie productive) work with the associated tax and GST contributions thus generated. (I could ride a bicycle instead of driving but, safety considerations aside, it would add around 4 hours a week to the travel time and hence less earning time so a bad productivity outcome and an opportunity cost).

          Wherein lies the “generous subsidy”?

          • V Lee

            It is a cost just like any other. The only difference is that you have chosen to account for it differently. More tools do translate into increase productivity – because you spend less time doing each task. Less travel also translates into more productivity – because you spend more time doing tasks and less time travelling. The difference is only in your mind. You chose to not think of travel as being “work time”. In reality travelling to a job is part of the job – there is no objective reason to discount this cost or treat it differently.

            As for the subsidy – it is the billions spent on roads that enable you to spend only “15 minutes a day on uncongested local roads”, otherwise you would be spending “2 hours a day on very congested local roads”. In your case, it is perhaps it is not quite as generous as I thought as you clearly don’t have to travel far at all each day. I did get the sense from you post that you were spending much longer on travel. Others in similar businesses where travel is part of the job would be getting a much bigger subsidy – as they will be travelling much further and gaining much larger time (cost) savings on the back of the taxpayer/ratepayer.

  • NCD

    I believe that Bill English in a moment of clarity said that we can’t get rich as a nation by selling houses to each other. Same goes for cars and related services. Weird that a government that puts economic performance at the top of the list doesn’t seem to care.
    The other point is that the effect is being cushioned by our strong NZ dollar. World of pain should that reverse….

    • Waspman

      They may say they put economic performance at the top of their list but the last 5 years have proven otherwise. I really don’t think they have a clue frankly.

  • SteveC

    and of course “cheap” housing on the periphery is really going to bring down those transport costs, isn’t it

    • Frank E

      Well in a more dispersed city overall housing prices are going to be cheaper but transport costs do increase. The american poster boy cities for Urbanist growth (Portland, Seattle, Vancouver etc.) all have significantly higher home prices than the poster boy sprawl cities (Houston, Dallas, Atlanta). I’m not sure if transport prices are actually cheaper in Urbanist cities, I’ll have to check that out.

      • Frank McRae

        It is true that Portland, Seattle, and Vancouver have significantly higher house prices but there are two other important factors which contribute to these higher prices:

        – All of those Pacific cities have geography (water and mountains) which constrains land for housing.
        - They are much more pleasant places to live than the hostile climate of the sun belt. Edward Glaeser found (somewhat obviously) that the attractiveness of a city, including climate and natural setting , contributes to house prices.

        So it is a not an equal comparison.

        • Max

          Also, there could be an effect that a more pleasant city, where you don’t get stuck in traffic just to get to work, simply attracts more people, including well-heeled international professionals. That can also drive up house prices, but it is arguably a problem of success.

          One that you’d rather have than the problems of, say, Chicago, where housing is dirt cheap, because of an exodus of both industry and population.

  • Waspman

    This issue has been rehashed over the years however it will only work when we have a government committed to alternatives and along with that when PT is faster or at least not too much different time wise and the price is attractive. Until then the car is king because of the other personal benefits it gives. Having said that a decent walkway/cycle-way over the Harbour Bridge would make a big difference.

    Another looming problem to add to this (non transport though it is) is the cost of housing. The speculation that drives our market and the byproduct of rent is sucking the lifeblood out of Auckland. It will get rather grim when interest rates rise, as they always do, and people with mortgages due to be paid off sometime in their 80′s but who are offsetting this and are reliant on capital gain, get crunched. Nouriel Roubini’s comments outlined in the Herald this week was an interesting if not unsurprising likely vision of things to come.

  • JohnP

    You make some interesting points but I am not sure the data supports your claim that cars result in us having less to spend on other things. If you go back to the data (Table 9) shows a breakdown by region. If you compare Auckland with All NZ you will see we spend more in every category except clothing and footwear ($0.20 less), and household contents and service ($1.80 pw less). The key statistic is that we spend more in total ($142.40 pw).

  • donna

    This is worse than it looks. The table above shows average household spending rising by 9% between 2010-2013. The median wage increased by 7%. The table above does not include expenditure on housing, which for many families (notably renters) has increased in this period. So what we are seeing is increased expenditure on transport crowding out expenditure on other necessities including utilities and food.
    The Auckland Council is now contemplating adding to these transportation costs to pay for their $68 billion (mostly) roading programme. Yet another reason to demand a rethink of Auckland’s transport spending priorities.

    • conan

      “The table above does not include expenditure on housing”

      The cost of that would be under the heading ‘Housing and Household utilities’.

    • John Polkinghorne

      Yup, housing is included where Conan says. I agree that higher transport costs have put pressure on other areas of spending – to get the full picture, though, I think it’s worth going further back than 2009/10. I’ll do that at some point :-)

      • donna

        Yeah, duh.
        The point remains that transport spending is still crowding out other expenditure at a time when the median income is rising at a slower rate than expenditure.

  • Do these household cost figures also include the amount of taxes and rates used to fund public transport services and infrastructure?

    • Steve D

      Mostly: petrol excise tax and road user charges are included in “Transport”, and local body rates, either directly or passed on as a component of rent are under “Housing and Household Utilities”. These are the main taxes used to fund transport. Some transport spending (a share of Auckland’s rail electrification) comes from general revenues, and that’s not included.

    • Steve D

      Oh, and “Transport” also includes money spent on public transport fares.

    • Steve D

      And last but not least: those rates also cover some roading costs, off-steet residential parking is part of “Housing” as well, and the cost of so-called “free” parking is baked into the costs of other goods in most categories. The cost of free parking if you have it at work is reflected in lower take-home pay, so not in the chart at all.

  • Malcolm M

    Interesting that in both Melbourne and Sydney, developers are seeking middle ring suburbs with with good rail services for apartment developments, because the market is demanding locations where a family can live with one or no cars. But away from rail access, investment interest is much lower.

    http://theage.domain.com.au/real-estate-news/suburbcreep-has-its-rewards-20131205-2ysg1.html

    The market puts a premium of rail over bus, presumably because neither Sydney nor Melbourne have good bus priority.

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