AAA television advertisement - Demand Better Roads

The Australian Automobile Association (AAA), which claims 7 million members via its state auto clubs, yesterday called on Australian governments to spend $100 billion on better transport infrastructure.

The AAA published a priority list of five transport projects in each State (there’re only four in South Australia and one in the Northern Territory). These are regional as well as urban projects.

Although the program is titled Demand Better Roads and the headline is ‘What motorists want’, three of the thirty proposed projects are urban public transport improvements.

They don’t rank highly though – Melbourne’s Metro rail tunnel and Brisbane’s Cross River Rail are ranked third (of five) in their respective states and Perth’s proposed light rail system is ranked fifth. There are no public transport projects proposed for NSW or other States.

The AAA ranks $16-$18 billion of road projects in Victoria and $17.7 billion in Qld ahead of the rail projects. Given the scarcity of public sector capital, that leaves little room for realistically funding public transport – this is clearly a roads program, as advertised.

This ‘roads only’ agenda is similar to the Leader of the Opposition’s recent statement that an Abbott government would provide Commonwealth funding for urban roads but not urban public transport. It seems to be part of a growing push for more investment in city freeways.

The AAA’s key rationale for dramatically increased road funding is threefold: to deliver improved road safety; to reduce urban congestion; and to build a better economy. These assertions aren’t straightforward.

There’s a lot of emphasis on the lower accident rates of freeways, doubtless because everyone can relate to better safety. The AAA estimates road accidents cost the Australian economy $27 billion each and every year.

The implication is the proposed program would seriously reduce this cost. That’s a gross exaggeration – even if all the proposed roads were built, the impact on national accidents would be important but small.

New urban freeways don’t solve congestion – they increase capacity, but they soon get congested again due to induced demand.

The AAA is on firmer ground with its claim of economic benefits. Intra-urban freight, for example, is almost entirely done by trucks and vans. But the economic benefits of new freeways depend on the project.

I’m not familiar enough with the projects in other states to comment on them, but in Victoria’s case the Benefit-Cost Ratio for the East-West Link freeway (the AAAs No. 1 priority for Victoria) is almost certainly negative. On the other hand, the BCR for the Melbourne Metro rail project is positive.

The problem with a ‘roads only’ approach is it ignores the recent strong growth in public transport patronage in most cities. It also ignores structural changes in the economy driving greater demand for employment density, especially in the central city.

The argument in support of the Melbourne Metro is that the continuing growth of the CBD can’t be sustained unless the capacity of the rail system – which is approaching its limits – is increased. There’s more at stake than just reducing travel times.

There’s no doubt cars are important in our cities and will be a fact of urban life for many years yet. At present they account for around 90% of all motorised travel across Australia’s capital cities. It’s higher in Sydney and Melbourne and lower in the other capitals.

Moreover the great bulk of destinations and dwellings are in dispersed suburban locations that are far easier to serve by car than public transport. Employment and education are the prime markets for transit but most jobs and schools are dispersed too.

But governments don’t have to build new freeways. Peak period congestion can and should be moderated by congestion pricing i.e. if a trip isn’t worth paying for, travellers won’t make it.

Freeways get congested because, unlike other basic services like power, water and public transport, motorists don’t “see” the cost they’re imposing on other road users. As with any scarce commodity, demand that’s underpriced will exceed capacity.

Obviating or delaying the need for new freeways would free up public capital for investing in other purposes, such as worthwhile public transport projects (I say ‘worthwhile’ because public transport investment is at least as prone to boondoggles as roads).

But congestion pricing is politically difficult, so it makes sense to understand better why there’s an apparent push towards investment in roads and away from public transport.

In part it’s probably ideological. In his 2009 book Battlelines, Tony Abbott says (p 174):

For too long, policymakers have ranked motorists just above heavy drinkers or smokers as social pariahs….They’re citizens going to work, doing the shopping, taking the kids to school…

They underestimate the sense of mastery that many people gain from their car. The humblest person is a king in his own car….For people whose lives otherwise run largely at the beck and call of others, that’s no small freedom

But that’s not the only or even the main reason. There are structural factors too.

Unlike roads, public transport relies on the public sector for all its capital funding. Moreover, since it only meets circa one third of its operating costs, it imposes a significant ongoing cost on state budgets. (fn 1)

Also, as noted above, the vast bulk of travel in Australian cities is done by car. Indeed, a recent ABS survey found only a third of adult Melburnians say they use public transport at least once a month. There are simply a lot more car users than public transport users.

In what appears to be an emerging new political climate, making the case for more investment in public transport can’t rely solely on standard arguments that in some instances might not even be seen as legitimate by those holding the purse strings.

Part of the new thinking has to embrace congestion pricing and ways that public transport can generate more revenue.


(fn 1) The exception is airport rail lines, although both the Sydney and Brisbane privately funded lines experienced initial financial difficulties