A recent report for Infrastructure Australia confirms what many suspect – some transport infrastructure projects should be shelved. Yet IA refuses to reassess any transport projects, including those it knows or should know are wrong.
Covid-19 has changed the world of transport irrevocably. There are substantial fears about remaining ‘Covid safe’ while travelling, especially on public transport, and central city areas are less attractive as places to work or live, to name just a few. As a result:
- Public transport use is substantially down;
- Traffic on major roads is substantially down, although it may return to pre-Covid levels;
- Local transport methods such as cycling have substantially increased;
- Home deliveries and so on have also increased.
With such major changes in the air, it should be obvious to all that transport infrastructure policy must change and adapt to the new world. Yet there is little sign of that occurring at any level of government. Quite the contrary. Governments are ploughing on with pet projects as if nothing has changed, claiming mega-projects are needed more than ever to ‘create jobs’ – despite major infrastructure being capital, not labour, intensive.
The supposed independent adviser on infrastructure, Infrastructure Australia, adds to this air of unreality by claiming that infrastructure is the key to economic recovery. Yet such claims are quite at odds with a report it recently published.
That report, by respected firm LEK, confirms the suspicions of many outside the infrastructure club. As noted above, demand for transport has declined and changed, and the changes are expected to continue after the pandemic.
While the report did not discuss policy implications of these and the substantial downward revisions in projections for population and economic growth, several stand out:
- Transport projects must be reassessed;
- New projects must allow flexibility and scalability;
- Urban road charging must be introduced to reduce the deleterious effects of road use e.g. road wear and tear, congestion, emissions.
I argued more than six months ago that the pandemic would fundamentally change Australia’s transport needs – the movement of people and goods. The Grattan Institute agreed.
Another reason to reassess transport projects is that Australia doesn’t do enough on areas that are key contributors to social cohesion and economic resilience, including health and education. Significant spending is required at precisely the time that Australia is facing a vastly tougher budgetary situation. It seems obvious that transport projects should drop down the list of government spending priorities.
While the health effects of the pandemic have not been as severe in Australia as elsewhere – or as severe as forecast – the effects of anti-Covid restrictions on the economy and lifestyles have been profound. Covid fear is also a powerful driver of behaviour and will have an enduring effect on transport patterns.
Reassessment of projects
Given the substantially lower forecasts of usage, all major project proposals – and projects that are under way – need to be reassessed. Lower usage translates to lower benefits, which renders uneconomic at least some projects. Many projects will be a larger drain on the public purse because user revenues will be lower.
These reassessments must be conducted in public to ensure public confidence and accountability. If projects were to be robustly assessed, no doubt many would be redesigned, deferred or cancelled.
Unfortunately, Infrastructure Australia has not done this, nor has it seen fit to revise project assessments – including those it knows or should know are wrong.
The single revision to Infrastructure Australia’s game plan is that it will now assess only those projects whose direct outlays exceed $250 million – up from $100 million. That meaningless gesture has gone largely unremarked.
Flexibility and scalability
The expected trend of more work and living taking place in suburbs and regions reinforces what should be the basic tenet for transport policy: infrastructure must be interoperable (usable by a variety of vehicles). The need is greatest in rail.
Yet governments have seen fit to ignore this in Australia’s two biggest cities.
Sydney Metro, for example, is designed to prevent interoperability by, for example, having tunnels that are too small for other Sydney trains, and a route that precludes further railways being constructed through the CBD-global arc. This will cause an economic and social disaster far greater than did the other breaks of rail gauge – in the 19th century.
In Melbourne, plans for the airport railway preclude sensible options for improved rail services to such regional cities as Geelong, Ballarat and Bendigo. Regional rail options are far more attractive and likely to be vastly more affordable than the nonsensical proposed suburban ‘loop’, which is destined to be another white elephant.
There remains the abject failure of the Commonwealth – over successive administrations – to advance interoperability for national road and rail routes.
Instead, federal governments have resorted to handing out money to the pet projects of favoured state premiers, resorting to ‘nation-building’ cliches to excuse such hand-outs. In many cases such funding has driven cohesion in national transport backwards.
Urban road charging
In principle, road use charges (per km rate) aim to reduce the deleterious effects of road use – including congestion, local and greenhouse emissions, accidents, loss of amenity, and wear and tear on roads. Most of these effects occur in urban areas.
The imperatives for direct road charging have never been more important than in the Covid world. The decline in public transport, and the growth in local freight deliveries, augurs badly for reducing transport’s contribution to greenhouse emissions.
For years Dr Mike Keating, Luke Fraser and I have pointed to an enormous excess of road spending over road-related revenues – the opposite to what should be.
Road use is heavily subsidised. The latest official figures show road spending in Australia – in 2018-19 – has outstripped revenues by more than $6 billion. In today’s dollars, deficits over the previous decade totalled $34 billion. For those wondering why Australia has too many cars: look no further than this spending to the detriment of spending on public transport.
Recovery of the direct financial costs of road building – excluding major costs such as congestion, accident and pollution costs – fell from about 124% at the start of the millennium to just 79% in 2018-19.
As pointed out previously, the culprit is spending on roads. Road revenues – fuel excise, registration fees, stamp duty and so on – actually increased in real terms by 3% over the previous five years and 10% over the decade.
But road spending in real terms has soared. While spending in 2018-19 dropped by 2%, this is on the back of increases of 14% and 9% in the two previous years. Real spending increased by 14% over the previous five years and 20% over the decade – substantially faster than population growth.
Meanwhile, calls get louder for the immediate introduction of road user charging. But what most proponents of such charging don’t tell you is that they are asking motorists and truckers to pay about 25% more than they currently do for road use. Such an option is unacceptable to any Government or community.
The way forward, for the essential introduction of road user charging, is to slash road spending by stopping uneconomic and unwarranted mega projects.
Yet ‘independent’ infrastructure advisers religiously avoid an honest reappraisal of projects, and instead do their bit for our fool’s paradise by promoting the lie that transport infrastructure can lead a Covid recovery.
John Austen is a happily retired former senior official of Infrastructure Australia living in Western Sydney. Details are at thejadebeagle.com.
Comments
12 responses to “Fool’s paradise: ‘independent’ advisers promote lie that transport infrastructure can lead a Covid recovery”
John, I’m sorry but Australian electors profoundly disagree with you. They prefer to drive rather than be forced to use public transport. And they want our roads to enable them to drive efficiently.
Just a micro-example: Lismore City Council has abandoned its historic responsibility for reconstructing local roads; it has transferred it to the State Government. Even before the recent rains, the number and depth of potholes has never been higher. Neither has Lismorians’ resentment.
The NSW Government could not give a shit about reconstructing Lismore’s roads. Even Janelle Saffin MP (Labor) is structurally unable to break through this political obstruction. Indeed, the next Coalition candidate will promise to ‘fix our roads’ and will win (if the Coalition Government is returned) simply on the back of that elemental promise. And this development some one year out from our local government elections!
John: politicians have to note how ordinary people feel. You do not face their constraint.
Mr Lowe: thanks.
Many electors do disagree with slashing road spending.
However, in my experience much of that feeling arises from false beliefs – for example, that road users more than pay their way. Over recent years road lobby groups and bureaucracies have lied and misled the public about that – campaign style, at least every Federal budge. The purpose is to advance mega projects. Ordinary people have been manipulated by (some of) ‘the experts’.
Electors feelings are reinforced daily by direct observations of some of the innumerable examples of micro road problems that can, and should, be fixed. Like you infer re Lismore.
Yet once people understand the factual situation – that aggregate spending exceeds revenue by many billions each year – many agree road spending should be cut and redirected towards road upkeep instead of mega projects.
So, my purpose in this post was to provide a factual basis for views, rather than confirm well-known but misinformed feelings. The factual basis includes:
a. Australia spends far too much on roads, at least compared with revenue collected from road use;
b. correction of (a) involves either or both of: more road revenues (e.g higher petrol prices, registration) / lower road spending;
c. assuming electors don’t want to pay 25% more in such revenues to unconstrained monopoly road agencies, the preference in (b) would be to lower spending – mainly discretionary spending – which involves the mega projects;
d. the economic and social merit of much discretionary spending is in grave doubt, some assessments (where conducted) are wrong/have been invalidated, there are widespread methodological flaws. The lack of transparency means basic errors go unchecked. Assessments need to be done in public forums, not behind closed doors.
Politicians are, and should be, interested in how ordinary people feel. Yet, in my view they have a role in be leading, rather than merely following, their communities. Their pandering to community feelings that are based on – and leave untouched or even amplify – falsehoods does not meet my expectations. Transport policy is not the only field where this creates problems.
And whether or not I face their constraints does not affect the above.
Cheers
Politician controled and destroying our countries.
Thank you, John for your article and to the other person for the links. The BITRE link to their Infrastructure Statistics shows that all up, Australia’s three levels of government spent A$28.5 billion on roads in 2018-19, much exceeding combined net fuel excise ($11.6 bn) and vehicle registration fees ($7.4bn) of $19 billion in 2018-19. Highway subsidisation of heavy truck operations goes back to 1954 when the Privy Council in London found in favour of Hughes and Vale. If one accepts New Zealand distance based charges for heavy trucks are user pays, then six axle semitrailer and 9 axle B Double operations have a hidden subsidy of $2 billion per year.
When the pollies award contracts to their donors ….
Sports Rorts, anyone?
Whatever happened to the ‘Multiplier’?
It seems to me that the problem is a lack of long term planning taking ALL transport issues into account. Typical planning is focussed on the 3/4 year parliamentary cycles. Few politicians seem to have the nous or the interest of looking beyond their own short re-election period.
Furthermore, transport planning must be by definition dynamic as pointed out by the author.
Finally, much of the transport planning is influenced by developers (through our corrupting processes of donations) who will naturally push those plans that are in their best interest (and which are not necessarily those of the nation).
It seems nigh impossible to have a capable public service to use its expertise as it is so utterly politicised.
Hence, I am afraid that Australia will remain a planning backwater, as it already is in many other areas (Internet speeds, fuel specifications, renewables planning, deforestation, electric vehicles, etc).
Roads and their usage are a good example of the problem of misplaced government expenditure that occurs when employment/contractor empires with powerful lobbies are allowed to grow willy-nilly by the incompetent and corrupt leadership of elected representatives. The government and the governed need elected representatives to provide a mechanism of feedback between them, but decisions should be made, with their input, by a hierarchy of expertise. The big decisions should be made by people who are smarter than the representatives, more disinterested, better at predicting the future, and better at assessing what will or won’t work.
And then get diselected!
Try running for Parliament, Richard.
Reducing unwanted infrastructure spending would mean fewer opportunities for Gladys to model her hard hat and hi-viz. Clearly it will not happen. Given their long term nature, white elephant infrastructure projects will manifest themselves when the proponents are long gone. Do we really need another rail line to convey workers to the CBD from Parramatta when Parramatta is the second city and there is unused capacity in the opposite direction?
Very interesting and important article. But the links don’t work – just take you back to this article.
Mr Bain: apologies. Here is a list:
Earlier post: https://publish.pearlsandirritations.com/john-austen-transport-infrastructure-in-a-covid-world/
Grattan Institute: https://publish.pearlsandirritations.com/the-dos-and-donts-of-fiscal-stimulus-in-australia/
Infrastructure for Covid recovery: https://www.infrastructureaustralia.gov.au/listing/media-release/infrastructure-australia-advise-covid-19-recovery.
LEK report: https://www.infrastructureaustralia.gov.au/publications/Infrastructure-beyond-COVID
Assessments that are wrong: https://publish.pearlsandirritations.com/john-austen-placating-the-infrastructure-club/
Revision of $100m threshold: https://infrastructuremagazine.com.au/2020/12/14/change-in-infrastructure-australias-business-case-evaluation-process/
Sydney Metro: https://publish.pearlsandirritations.com/john-austen-sydney-metro-developments/
Tullamarine line: https://bigbuild.vic.gov.au/projects/melbourne-airport-rail Melbourne loop: https://suburbanrailloop.vic.gov.au/en
Warnings of road fiscal deficit: https://publish.pearlsandirritations.com/john-austen-another-year-of-record-waste-on-roads/
Official figures for 2018-19:
https://www.bitre.gov.au/publications/2020/australian-infrastructure-statistics-yearbook-2020.
Regards