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Infrastructure

Apr 27, 2017

Is this (suburban) motorway a good idea?

The Andrews Government's decision to build Melbourne's North East Link lacks transparency and analysis, but the idea of suburban motorways shouldn't be dismissed out of hand

Possible route options for the North East Link between Metropolitan Ring Road and Eastern Freeway/Eastlink (source: The Age)

Victoria’s Premier, Daniel Andrews, announced yesterday there’ll be $100 million in next month’s budget to start planning the promised North East Link motorway. The Premier emphasised the project will complete the “missing link” in Melbourne’s metropolitan ring road, running from Greensborough in the north-east to the Eastern Freeway/Eastlink in the south-east. It’s expected to take around ten years to complete, create more than 5,000 direct jobs, and cost up to $10 billion. It will be funded by a mixture of government contributions and tolls.

The key benefits, the Premier says, will be “more jobs, and less congestion in the north, east, and south”. Roads Minister Luke Donnellan added: “when we complete the ring road, you’ll be able to drive from Ringwood to Tullamarine without stopping at a single traffic light.” The RACV says it will improve freight movement across the metropolitan area.

Apart from the instinctive appeal of the “missing link” meme, the Government is relying heavily on the recommendation of Infrastructure Victoria, the independent “umpire” established by the Andrews Government in 2015. The organisation identified the North East Link as the next highest priority infrastructure project for Victoria. As I noted here, its preliminary analysis puts the benefit-cost ratio at 1.2 – 1.7, or 1.7 – 2.4 when Wider Economic Benefits (WEBs) are included.

Naturally there’s plenty of concern at the idea of another big motorway concurrent with the Government’s recent commitment to the West Gate Tunnel project. Memories of the East West Link debacle are still fresh too. Opponents believe the project will enable car-dependence; won’t reduce congestion; will increase emissions; will take funding away from public transport; and is bound to have a major impact on the environment. Some argue a public transport option would be a better solution for the region.

I think it’s appalling the Government has committed to a project of this scale without releasing to the public for prior debate a much more detailed analysis than Infrastructure Victoria was able to undertake within the limited timeframe it had available. This will inevitably be a case of developing a business case to support a decision already taken on limited evidence. I know that’s not unusual in our political culture and I know there’s bipartisan political support for the North East Link, but this is huge project and has the potential to be very controversial.

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Despite the Premier’s claims, the project won’t do much in the medium term to reduce peak-hour road congestion. That’s due to the well-established phenomenon of induced demand. Yet governments still want to build motorways even while they’re also, as in the case of the Andrews Government, building major rail projects. So, is there a case for the North East Link? Are all motorway projects inherently bad? I want to revisit some points I made last year, when I argued there are some other aspects to consider in assessing the warrant for the North East Link (see Is this motorway obviously a really stupid idea? and Does the impact on trains kill the case for this road?).

While it will eventually congest, the North East Link will nevertheless reduce travel times significantly in non-peak periods i.e. during the day, at night, and on weekends. That’s especially important for freight movements. More trips are made off-peak than in the two peaks combined. The Eastern Freeway opened nearly 40 years ago and still provides uncongested travel in non-peak periods even after connection to Eastlink.

It will also provide a big increase in the number of vehicles that could travel across the region in peak periods, albeit eventually at congested speeds. Expanding capacity is an important consideration given Melbourne’s population is projected to double by around 2050.

A large proportion of the capital cost will be paid by motorists via tolls. Tolling will moderate growth in peak period use compared to an unpriced road. Tolling is aimed at maximising revenue so it isn’t as effective at managing congestion as pricing, but the option is open to the government to design (or negotiate) a tariff that focusses on demand management.

The motorway will reduce the social costs of crashes and improve the amenity of suburbs like Rosanna that currently experience high levels of traffic and truck movements. Notwithstanding the inevitability of congestion on the new motorway, it’s likely it will offer faster peak-period trips than maintaining the status quo.

Public transport isn’t a plausible alternative to the North East Link in this location. It’s an orbital motorway and it’s in the suburbs, between Ringwood and Greensborough, where car use dominates; 74% of weekday trips in Melbourne’s middle ring suburbs and 81% in the outer suburbs are currently made by car. Travel is mostly from dispersed origins to dispersed destinations and accordingly favours private travel by car (and, if it were safer, by bicycle).

There are big environmental risks as this is a sensitive area, but it doesn’t follow that it must necessarily be a disaster. It’s non-negotiable that most of the route will be in tunnel so many of the risks can be managed. The scale and location of interchanges is likely to be critical.

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In looking at a distinctively suburban road project like this one, it’s important to understand the great majority of Melburnians don’t live in the inner city or even the inner suburbs where road projects like the East West Link and West Gate Tunnel are proposed. And the great majority don’t work in the CBD where the standard of public transport is high and cars have limited utility.

Most Melburnians – existing and future – live and work in the low-density middle and outer ring suburbs where travel by car is much, much faster and more convenient than public transport could ever hope to be. The average car trip in Melbourne’s outer suburbs takes 29 minutes; that’s much quicker than the average 48 minute public transport trip in even the relatively well-endowed inner ring suburbs (e.g. see Will simply building more public transport seriously suppress car use?).

So it’s vital to take a reasoned view of suburban road projects. There’s definitely a need for better public transport in the suburbs, but it won’t replace significant numbers of private vehicle trips; cars aren’t about to go away or, in the absence of comprehensive road pricing, become uncompetitive relative to other modes.

Apart from the dismaying lack of transparency and analysis, I think the biggest issue will be how the detailed design of the road evolves, particularly in response to environmental concerns. There’s potential for construction costs to increase and thereby compromise the benefit-cost ratio.

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10 thoughts on “Is this (suburban) motorway a good idea?

  1. MrsB

    If you lived or even drove through the north east even once per week, you would not question the need for this road. I drove through Heidelberg today and there was traffic banked back down Rosanna Rd for over a kilometre (could have been more), and all of it trying to get to the Eastern Fwy. Because there’s no better way! The suburbs are being destroyed and public transport (much as I agree with the idealogy) will NOT solve the problem. There’s no public transport that will take you from Greensborough to Frankston that’s comparable with a car. But at least with a proper ring road, that car will not be driving through what should be relatively quiet suburbs.
    (I have a friend who lives on Rosanna Rd – it’s a nightmare, they can’t afford to move, because the traffic has made their house worth too little to afford to buy anything else, and their lives have been destroyed by the traffic. When they bought there, it was so quiet, the kids could play on the streets)

    1. MrsB

      Oh and you should keep in mind that the benefit of projects like this cannot be measured simply by costs alone.

  2. Ian Fraser

    Alan
    I think it’s worthwhile people understanding some basic arithmetic on this, and I don’t have intimate knowledge of the project at all, but have a career built on modelling of complex project financings. There are simple benchmark methods one can follow, such as:
    * Project cost: $10 billion is the latest promulgated figure, though I think I originally saw $5bn somewhere
    * Daily Traffic projected: 100,000 [to me maybe that was an over-statement, based on the AADT I’ve seen for the Eastern Fwy, but you would know better]
    * Transurban listed stock running yield bumped up for Opex & MaintEx allowances – say 6.5% to 7.5% [higher if interest rates go up]
    TOLL NEEDED (per average vehicle) allowing 10% GST equals (as minimum):
    [10,000,000,000 x 6.5% x 110%] / [100,000 x 365]= $19.60

    This assumes there is no Flag Fall element to the toll rate as is planned for Sydney’s WestConnex, because otherwise we would need to know the number of trip entries and exits or the average trip length and not just AADT.

    It is also an average per vehicle, and before any government subsidy.
    If we very simplistically assumed a 3.0 times multiple for HCV’s with Trucks being 10% of traffic, the car toll reduces by 20% from the above – that is,
    [90% +10% x 3] x Car Toll = Average Vehicle Toll

    This only brings us down to $16.30 for cars which would be $49 for trucks, and remembering that this is a full length toll [I don’t have a distance measure to break it down to compare with Sydney’s WestLink M7 even for a per Km rate, as ether are presently 3 possible routes according to what I’ve just read and the distances for them are not quoted – but both WestLink M7 and WestConnex are circa 40c per km or more].

    Of course, for toll rates like this, which are something like double those of CityLink, one would then have to examine the elasticity of road choice against price of use. Hence a likelihood that tolls would have to be set so much lower and large government subsidies be put in, as a consequence.

    CONCLUSION: At $10 bn the road will not pay its way, and will need large government subsidies, so are there other ways to spend that subsidy money that will give a better long term return for taxpayers?

    A bit of water maybe to flow under this particular bridge for Daniel Andrews’ administration yet, according to me quick computations – and I have probably not been anywhere near as conservative as Transurban would be in similar circumstances particularly if interest rates normalise before they get a chance to consider the case.

  3. Socrates

    BTW, lest my mentioning London or Paris seem unfair, Melbourne is already the same land area, and certain to exceed six million people within the life of this road. We need to get serious about a rapid transit network, and urban containment.

  4. Socrates

    While it is not appropriate to always question motorways reflexively, this one sounds many of the same alarm bells. No modelling released, “freight benefits” in a residential area(?), and a huge cost. The benefits are based on a broken analytical model that assumes land use remains the same with these projects. It does not. This road will only encourage Melbourne to sprawl out more, choking the corridor within a decade at current growth rates. There is also no evidence such freeways generate any WEBs, except in ports or industrial areas. WEBs occur from concentrating employment, and this road will spread it out. This road is in neither.

    And what of the alterntaives? Were any considered? WA is building an 8km tunnelled heavy rail line for $2 billion. For ten billion $ we could build at least 40km of heavy rail line. Forget the environmental and social arguments. This sort of project should be opposed on economic grounds alone. The job argument is a furphy because it ignores the alternatives. 5000 jobs for $10 billion? That is $2 million per job! The Productivity Commission inquiry clearly showed that public transport spending generates more jobs for the same money.

    I spent the first half of my career planning freeways but I have greatly lost faith in the industry, public and private. The failed toll roads should have led to reform but they haven’t. They have simply changed the nature of the scam. These projects are not to benefits motorists, they are to benefit road builders.

    Alan I appreciate you are trying to be balanced, but criticising this road is not a road versus PT thing. It is a bad type of road. Talk of missing links should be left to anthropologists. Anyone who thinks these ring roads can ever stay uncongested should be forced to take a drive on the London M26 or Paris Peripherique… or the Melbourne Western Ring Road. The concept does not work, yet road builders still try to spruik it, to generate more work for themselves. At this stage it is as credible as the trickle down effect.

  5. Robert Moore

    Will a new road lead to development of any of the existing centres in the NE into CBDs or employment hubs? Can’t see any good reason to cater for the existing dispersed origin/dispersed destination scenario you say operates now.

  6. Flynn

    It has merit. I do deliveries around these outer edges of Melbourne, they’re quickly filling up with more dense suburbs – the longer the government waits to put the infrastructure in place to service them, the more it’s gonna cost everyone.

    1. Jacob HSR

      Government should think about deliveries. Have a digital database of number plates that are used to deliver goods (updated annually) – the number plates on delivery vans and utes.

      And allow them to park on city streets for free. The delivery guy will not park his van and leave it there all day – he has deliveries to do! He will leave the parking spot as soon as he is done delivering the goods.

      Shopping mall staff should be required to take goods from delivery vans and deliver them into the appropriate shops. That is what happens at Coles HQ. A van would come in and drop of a parcel at the back, Coles warehouse staff would take the parcel and give it to the appropriate person while the van is back on the road again. Surely a more efficient way of doing things.

  7. Aidan Stanger

    There are few bridges across the Yarra, so there’s very little connectivity between NE and SE Melbourne. I don’t know why you think more analysis is needed. What else do you think could be done to increase connectivity between those regions? The only rail based alternative I can think of involves reopening the Fairfield to East Camberwell line – and whatever the merits of that, I don’t think it would connect those regions anywhere near as effectively as this road.

    I’m surprised it would directly impact rail passenger numbers on lines other than Hurstbridge. Is it because these regions are so badly connected that some of the potential users are resorting to taking the train into the CBD and out again?

    And would the tunnelled section really be “most of the route”? Obviously the environmentally sensitive bit in the middle would have to be entirely in tunnel, but couldn’t the rest be achieved far more cheaply just by upgrading Greensborough Road and Bulleen Road?

    1. Alan Davies

      I’d like to see more analysis of the traffic impact on the Link itself and on existing roads; of the environmental and social impact, esp the interchanges; and of the cost of construction. The latter is a key reason the East West Link’s BC ratio is sub unity.

      Infrastructure Victoria estimated the Link would reduce train boarding by 25,000 per day – see Does the impact on trains kill the case for this road?

      The scope for negative environmental impacts depends on which route is chosen. The option of upgrading existing roads might not work operationally or politically.