drivers of small diesel cars and other vehicles weighing up to ten tonnes will pay 10 per cent more.

Heavy truck operators will pay 3 per cent to 6 per cent more, but there will be no increase for truck trailers.

Road Transport Forum chief executive Tony Friedlander denied that meant the trucking industry would be subsidised by other road users.

Take the proposed Waterview motorway extension, for example. Treasury and Ministry of Transport officials have worked out that for every dollar spent on the $2.8bn motorway connection between Mt Roskill and Waterview, the economy will receive $1.15 worth of benefits.

In the business case document now being considered by Cabinet, officials point out that “full tunnel” option means that the benefits are only a little in excess of their costs. Some above ground options might save up to $200m from the construction cost, but these have higher social and environmental costs, and also involve the loss of park land and a significant number of houses.

Considering the billions of dollars at stake, one would hope that the economic benefits and costs of the various options are as accurate and as realistic as possible. So are they? Well, no, actually.

Since the 1960s it has been standard practice for the majority of roading economic benefits to be derived from travel time savings that road users can expect to enjoy. For the Waterview extension, maximum travel time savings of 15 minutes are expected. By placing a dollar value on each road user’s time, this equates to $2.6bn worth of claimed benefits.

The reality, however, is quite different. In the long run, an individual’s travel time savings are replaced by longer trips as travel patterns change. Commuters utilise the increased roading capacity by travelling further distances to work and leisure destinations. Eventually, the average amount of time individuals spend in traffic remains unchanged.

This is backed up by recent research from the UK based Centre for Transport Studies. By analysing the outcomes of nationwide travel surveys, their study found that average travel times in the UK have held constant at around an hour a day since the 1970s, despite expenditure of £100bn on roads over the last 20 years in the UK.

Of course it could be argued that had it not been for this massive investment, then average travel times would be much higher than they are currently. However, the study points out that there were marked swings in expenditure over the 20 year period, and hence new capacity becoming available. Throughout all of this, average travel times remained steady.

Here in New Zealand there are no comparable studies, but similar results have been documented in the Netherlands and the United States.

It would seem that promised travel time savings never eventuate in the long term, yet the myth of travel time savings also permeates into other areas. For Waterview, $690m of benefits are attributed to “reductions in frustration due to traffic congestion over and above the benefits gained from travel time savings.” How mental health benefits like this are quantified is not fully explained.

Vehicle operating cost savings of $40m are also claimed, the logic being that faster cars consume less petrol per kilometre. However, there is no evidence at all that households are spending any less on transport as a result of the completion of roading projects in recent years. The most recent Household Economic Survey in 2007 suggests transport constitutes 14% of expenditure for the average household, but no data is available to cover the subsequent period of high petrol prices.

It would seem that the long term benefits of increased road capacity come not from travel time savings, but rather from the increased choice of destinations for road users. Businesses also benefit from a greater catchment area of potential employees. For the Waterview extension, these “agglomeration” benefits could be as much as $607m, but this is still well short of the almost $3bn cost of the project.

An alternative method of estimating economic benefits is based on the user-pays principle. Transport officials have calculated that if the Waterview motorway extension was tolled at $2, then just 50% of motorists, or about 75,000 vehicles a day would consider it economically worthwhile to use the route instead of the existing alternative local roading network. It also follows that if Waterview were to operate as a private toll road, hapless investors would stand to lose about a billion dollars over a 30 year time frame.

A substantial economic risk also exists due to volatile oil prices. Petrol and diesel prices could well return to the record levels seen last year, yet the probability of this occurring does not feature in any economic assessment for Waterview or any other roading project currently on the drawing board.

Right now Cabinet Ministers must decide which one of twelve different options for the Waterview motorway extension makes economic sense. The only honest answer is that none of them do.

Thanks to a most excellent book that I own, called “Asphalt Nation: how the automobile took over America and how we can take it back“, by Jane Holtz Kay, we can see the argument for cars over public transport start to unravel. Not only in terms of the environmental and social impact of cars – but in their economic inefficiency, striking at the very heart of those who promote roads-centric policies. It’s a book that Steven Joyce, Minister of Transport, should definitely read. It is written from an American perspective, but pretty much everything can be applied to New Zealand as we’re definitely one of the most auto-oriented countries in the world, particularly in the case of Auckland. An interesting quote on page 128 looks at the overall cost to individuals of transportation:

While the Japanese walk, bike and pay three times our gas tax, we pull mere pennies from our pockets at the pump and then subsidise the car. The Japanese pay 9 percent of their gross national product for transport; the United States pays 15 to 19 percent. Europe does better too. By paying a truthful $5 a gallon, plus three to five times what the United States pays in visible car-based fees, the Japanese and Europeans have an awareness of costs. The consciousness makes them decrease their driving and curbs cars in cities. It encourages a more compact land use policy and hence promotes four to eight times as much public transport. The reverse obviously holds: Americans pay less for gas and little for tolls and user fees – and this freewheeling policy encourages them to use almost five times as much gas per capita as residents of European cities and ten times as much as those in typical Asian ones; to drive infinitely more, undercut mass transit, build more roads, buy more costly cars, pay more in personal and social fees, and spend more for maintenance.

Substitute America for Auckland and just about the exact same thing could be said. It is true that we pay higher petrol taxes in New Zealand than Americans do, so our cars do pay their own way much more. However, it’s still fascinating to see that Americans spend twice as much of their GDP on transport as Europeans and Asians. Not particularly efficient if you ask me.

David Aschauer, an economist from Bates College, has some interesting facts when one looks as the economic productivity of public transport versus roads building. This is particularly significant at the moment, where investment in transport (read: roads) is being highlighted by the government as one of the ways in which they hope to minimise the recession through economic stimulus.
Spending on public transportation has twice the capacity to improve productivity as does highway spending. A nickel spent on mass transit carries at least twice the impact of a nickel spent on roads. A billion dollars invested in mass transit produces seven thousand more US jobs than does the same amount spent on road construction. A ten years $100 billion increase in such transit investment would enhance worker output five times as much as if made in roads.

Aschauer concludes that “public transportation spending carries more potential to stimulate long-run economic growth than does highway spending.” The reasons for this are obvious, that public transport creates many long-term jobs for bus and train drivers, for those maintaining stations and so forth. Roads construction is very capital intensive, but not actually that labour intensive, so therefore not a particularly efficient way to provide jobs and real economic stimulus.

If one looks at the economic costs of private transportation at a more personal level, its inefficiency becomes even more super obvious. Page 130 of “Asphalt Nation” looks into that further:
In terms of personal use, as well as GDP, the American family spends around 20 percent of its annual income on transportation, plus hidden costs. The Japanese spend only 9 percent, despite having more expensive cars, while Europeans spend a scant 7 percent. While Americans take only 5 percent of their trips on foot, Europeans and Japanese take 20 to 50 percent of their trips on foot and garage their pricey cars. In land costs our highways often steal almost half the space in our cities, Japanese roads one-quarter. In the fifteen most congested US cities alone, our car-bound transportation system adds about $7.6 billion to the price of goods.

I think the main point to take here is that the true costs of an auto-dependent society remain somewhat hidden, or are accepted because we all pay for them individually (rather than paying taxes to subsidise public transport). Contrary to what Libertarians would love you to believe, just because something it paid for through taxation rather than user-pays does not make it more efficient or cheaper. Ironically, if you look at all the hidden subisides the car receives, it actually appears as though auto-dependent societies pay more individually for transport and also pay more through their taxes for transport, when compared with countries that have a more balanced transport infrastructure like Japan.

The provision of parking in a particularly interesting one, especially if we look at who really pays for “free” parking. I will devote a whole post in the future to parking, but Asphalt Nation has some interesting stats which are worth mentioning.
Parking, 95 percent seemingly free to the driver, is, in fact, a drain, adding more than $600 to a home and $1200 to an apartment. For the 85 million employees given apparently free parking spaces, worth $1000 apiece, it amounts to an $85 billion lure.
This is the kind of stuff the roads lobby just doesn’t tell you.