Jun 29, 2018

Opinion Piece – ‘Traffic Congestion: The Problem We Can’t Ignore – Business Excellence, the Journal of the Victorian Chamber of Commerce and Industry – Friday, 29 June 2018

If someone told you Australia could boost its economy by $16.5 billion a year, you’d probably assume they had somehow stumbled upon a very big money tree.

But according to the Bureau of Infrastructure, Transport and Regional Economics, $16.5 billion a year is the annual value of lost economic activity caused by traffic congestion in Australian cities.

With the population steadily increasing, our major cities, home to four out of five Australians, are becoming seriously congested.

Commuting times are getting longer. Too many Australians who live in outer suburban areas spend more time in their car travelling to and from work than they spend with their children.

Although Australia has a wide range of challenges in the transport sphere, moving people around our cities is the most immediate.

It cannot be ignored, because it affects so many people’s daily lives and because it as acting as a hand brake on productivity and economic growth.

The problem requires significant and sustained investment in better roads and public transport, whether it is heavy rail, light rail, or busways.

And on that note, the 2018 Federal Budget failed to deliver.

It did not include a single dollar of new investment in infrastructure.

Any funding allocated to new projects was already in the Budget and 85 per cent of that funding won’t be spent before the next election or the election after that.

Victoria in particular continues to be shortchanged.

This financial year, the state is receiving 8 per cent of Federal infrastructure grants, despite being home to a quarter of the population. While Victoria’s share will increase marginally over coming years, the Forward Estimates have it peaking at 18 per cent in 2021-22 – still well short of a fair share.

The Budget did include a promise of $5 billion to construct a rail line to the Melbourne Airport by way of an off-budget equity injection.

Under Budget rules, off-budget projects must be able to make a return to the Budget.

Given that public transport does not generate enough revenue to cover its operating expenses, let alone its capital cost, this approach won’t work for this project.

As the Grattan Institute’s Marion Terrill has noted: “If infrastructure projects are never going to make a commercial return, the Government should stop pretending they will. And if they are worth building at all, the Government should fund them transparently on Budget.’’

Such trickiness does not augur well for the timely delivery of projects that will reduce congestion.

Victoria and the nation can’t afford to wait.

Each year, the economic cost of inaction on infrastructure increases. It is expected to hit $53 billion a year by 2031 unless we act now.

The Federal Government should be partnering with states now to build projects like the Melbourne Metro, Western Sydney Rail, Brisbane’s Cross River Rail and light rail in Adelaide.

Congestion can also be addressed via greater concentration on better planning.

Part of the reason traffic congestion is worsening is that in recent years, jobs growth has shifted from the suburbs to the inner cities.

With inner-city housing prices outside the reach of average income earners, there is a mismatch between where people work – increasingly around central business districts – and where they can afford to live.

While better public transport is critical, governments can also act by seeking to promote job growth in suburban areas.

In part this can be achieved by investing in research precincts around hospitals and universities, just as the new Western Sydney Airport at Badgerys Creek has potential to create tens of thousands of jobs closer to residential areas.

Governments must also consider the possibility of increased housing density, particularly on established public transport corridors.

This presents a real challenge. We must collaborate to ensure that increased population densities do not come at the expense of quality of life.

Governments are happy to accept the higher revenues that come with an increasing population, but they have a duty to invest some of that income to ensure that railways and roads are adequate to meet community needs.

Failure to do so will not only erode the Australian quality of life, but reduce long-term economic growth and job creation.


This piece was first published today in Business Excellence, the journal of the Victorian Chamber of Commerce and Industry: https://bit.ly/2IBunr0