Reviewing the wider economic benefits (WEBs) of projects. First.
Australia’s major cities are undergoing sustained population growth leading to unprecedented stress on their transport infrastructure. The Australian Bureau of Statistics projects Sydney and Melbourne’s populations could reach eight million people each as early as 2056, followed by Brisbane with five million and Perth with over four million.1
Such significant and sustained growth has meant capacity increases delivered by new transport investments have been almost immediately exhausted.
The Epping-Chatswood rail link in Sydney reached capacity within months of opening. Regional Rail Link in Melbourne is also struggling to meet growing demands in regional cities and peri-urban areas. No doubt you can nominate your local example.
This traditional approach of planning network improvements that respond to changes in demand creates an infrastructure backlog. Incremental investment simply fails to keep pace with population, demographic and economic change.
Shaping rather than responding to demand
There is now growing realisation that a new approach is required, one in which transport planning needs to be coordinated with long-term economic and land use visions so it shapes – rather than responds to – demand.
This approach can deepen the economic and social integration of cities with their surrounding regions, thereby dispersing the benefits of growth more broadly. The problem is that conventional economic assessments are ill suited to capturing the transformative impacts of such an approach.
Assessing the value of travel time savings and reduced congestion is conceptually straight forward. However, calculating the long-term benefits of transport investments in our heavily congested cities is becoming increasingly difficult with traditional transport models. Understanding the transformative impacts of city-shaping transport investment – such as influencing where people live and where businesses locate – is even more challenging. Simply put, they are difficult to predict, attribute and evaluate.
The impact on the spatial patterns of Melbourne of major infrastructure projects such as the Underground Rail Loop, CityLink, EastLink and the Western Ring Road has been colossal. However, the scale of land use impacts was not predicted nor included in the original analysis, and so were not deliberately planned.
Similarly, due to network connectivity improvements, Sydney’s M7 Motorway has economically transformed land used along its corridor for distribution and logistics. Looking to the future, the proposed high-speed rail links along Australia’s east coast have the potential to transform communities on the corridor, influencing industry development, affordable housing, and access to jobs.
Current practice neglects wider economic benefits
Current assessment practices generally exclude robust analysis of the wider, transformative economic value generated by transport projects. The result for Australia has been few transformational, region-shaping projects. This is because transport investments are identified, assessed and justified only by their ability to address current and short-term demand pressures. This leads to a focus on narrowly defined, backward looking congestion targets rather than the potential of a project to achieve an economic or spatial vision.
This shortcoming is compounded by the widespread practice of assessing project options based on the assumption of a single, consistent land use scenario. The impacts of a given project on land use outcomes, particularly transformational outcomes, are largely ignored. The result is an assumption that the long-term development direction of Australia’s capital and key regional cities is fixed rather than something that can be positively influenced through purposeful investment.
The extraordinary cost of delivering transport infrastructure in Australia requires that we seek to do so. Simply addressing an infrastructure gap or bottleneck is insufficient.
A forward-looking approach
What is required is a forward-looking approach which identifies land use, economic and social outcomes for the designated areas before transport infrastructure planning occurs. Related policy and investment should then be shaped in a way that is complementary to these projects. This includes not only land use policy settings but also social housing outcomes, social infrastructure investment, and other facilities or services that benefit from accessibility.
This goes beyond an economics-only approach to an ‘economics plus approach’. That is, economics plus place planning, plus environmental management, plus transport planning, plus urban and social development, and so on.
Unlike the current practices that adopt ‘business as usual’ land use growth scenarios, this dynamic approach proposes to use more complex scenarios. Such scenarios need to capture alternative programme options and assumptions in population growth and land use change. Cost-benefit analysis can then be applied to the outcomes of these scenarios to estimate the direct and wider economic value generated.
Although WEBs have been used in economic assessments for some time, they are seen as ‘below the line’ benefits that supplement the direct economic benefits and are neither accepted as readily nor determined with the same level of confidence, particularly WEBs that are derived from transformative changes.
In the context of the state-shaping projects required to get Australia ahead of the game of its growing population task, the reverse is required. WEBs will be more helpful in assessing economic value than direct economic benefits.
Underestimating the substantial economic value that can be realised through transformational investments creates a risk that our society and economy will be left unsupported – or worse – that our transport networks will be a drag on our economic prospects. Consequently, it is imperative that the WEBs analysis be conducted with high levels of granularity and rigour, and that the relationships between the assets, their impacts and the attendant economic value be transparent.
It’s time to turn business as usual on its head. We should be using the WEBs that can be attributed to often scorned spatial and economic visions to shape our infrastructure projects. Arguing about the marginal economic impacts of addressing another infrastructure deficit is a mere distraction.
1. Australian Bureau of Statistics Population Projections Australia 2006 to 2101: 3222.0: p. 7