Thursday, 16 April 2015

Capital Metro & East West Link: Transport infrastructure too important to be left to political parties

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There is little doubt that adequate funding and provision of efficient transport infrastructure is one of Australia's most pressing policy problems.

But the cancellation of the contract to build Victoria's East West Link by the Victorian Labor Government has set a precedent for the ACT Liberals' to threaten to do the same with the Capital Metro project if they are elected next year.

That is not to say that either project should go ahead regardless. Indeed, the Productivity Commission's recent inquiry into public infrastructure suggested that we are in need of an urgent and major overhaul of the "processes for assessing and developing public infrastructure projects".

Maybe this overhaul should include the removal of important infrastructure decision-making from day-to-day politics. After all, this approach works with various statutory authorities and commissions that already function independently of government. Indeed, a more pragmatic, "Quango" approach to the funding and provision of transport infrastructure might just be the silver bullet that gets our transport infrastructure out of its rut.

Almost any economics textbook will tell you that "productivity is the key determinant of living standards". But most approaches to improving productivity "tend to boil down to... calls for a policy to cut the wages of low income employees". This is often despite growth in labour productivity with the majority of recent decline registering in other elements of multifactor productivity measures.

According to BITRE, there is "Australian evidence that well targeted investments in transport infrastructure result in productivity increases that benefit many other industries". The Harper Review suggests that road pricing will help. It might even be good for the bush.

In addition to the OECD, many interest groups see road pricing as a policy priority. Some research even suggests that Australians are ready for road pricing. But will our politicians be bold enough to break the status quo?

It is much easier for command economies to deploy transport infrastructure. Last week while travelling on Hong Kong's MTR, it struck me that the higher standard of living provided by efficient mass transit systems might be worth the investment, regardless of one's ideological position. Maybe a middle way between command and liberal democratic approaches exists.

The free market does not have all the answers, but clearly it can work. For example, Australia's airports are profitable, even if service levels have not improved. But quality of service is a market function. Frequent international travellers will know that Sydney Airport is the worst for service, and smart travellers will fly out and back through Brisbane Airport where the queues are shorter and the service is better. For now. But why can't our other transport networks be profitable, too?

When I travel by train to Sydney, I find myself getting plenty of work done because the trip takes 4 hours. A high-speed train would be perfect, but that has been on the cards for years. Will it ever happen if left to electoral politics? Would a high-speed train prove profitable? Even if it is deemed to be a good thing, it may not happen for years to come. It may be counter-intuitive, but road pricing might just encourage improvements in our rail networks.

In many ways, electoral politics leads to the avoidance of hard decisions. Implementing the GST was an important but very difficult political decision, but few would disagree that, in hindsight, the GST was a no-brainer. Indeed, Australia's economy is all the better for the GST and most of us have forgotten the drama concerning Fightback! and birthday cakes.

Will it take a "never ever" statement to bring about road pricing? Can we afford to wait that long? Why is it that the Australian Government is prepared to invest in infrastructure in Vietnam using PPPs and other modern approaches to mitigating risk, while at home investment in infrastructure focuses on roads built as public goods?

To be parochial, will Capital Metro fix Canberra's public transport problems? Should it be all about cost? Public-private partnerships (PPPs), when set up appropriately, can help shift some of the risk to the private sector, but again, when caught up in electoral politics, such arrangements have often proven to be "disliked" by citizens.

Attempts have been made to move infrastructure decision-making away from day-to-day politics with bodies such as Infrastructure Australia, Infrastructure Partnerships Australia, and Infrastructure NSW. But that hasn't stopped politicians from deciding the types of infrastructure to receive federal funding. Of course, spending is a big policy lever just waiting to be pulled, often at the expense of State government priorities.

To be fair, State and Territory governments can take advantage of the federal government's Asset Recycling Initiative, which will be used to partly fund Capital Metro. And light rail in Canberra won't happen if it doesn't happen now.

It makes sense that light rail should be built first on a busy route, and Action's Red Rapid service along the Gungahlin-Civic route runs about every 15 minutes and has proven to be popular with commuters. Replacing this route with light rail might free up buses for other under-serviced areas, and it would certainly prove popular with developers. But how the buses run in the ACT is not only about servicing the needs of commuters - often it, too, is caught up in day-to-day politics.

Nevertheless, the ACT Liberals have a point. Why should so much money be invested in light rail when there are so many other infrastructure priorities for the ACT? Will the investment in Capital Metro help commuters, or will it just enhance the property investment for those situated along the route?

Given that Action bus services from Gungahlin to Civic are already very good, it is difficult to see how Capital Metro will help commuters elsewhere in the ACT. Unless of course Capital Metro's network is rapidly expanded once the initial investment is made.

But given the nature of day-to-day politics, for the foreseeable future at least, important decisions about transport infrastructure are likely to remain key electoral policy levers for political parties. Maybe it is time we took a lesson from the command economies and got on with the job of building the most appropriate transport infrastructure to ensure we can continue to improve and maintain our current standard of living. That is, after all, the whole point.

But as they say, the road to hell is paved with good intentions. Let's hope our political representatives lead us down the right road (or rail, or route).

Creative Commons License Except where indicated otherwise, Le Flâneur Politique by Michael de Percy is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 2.5 Australia License. Based on a work at politicalscience.com.au. Background image ©Depositphotos.com/ @redshinestudio