BITRE road spending doubts
Bureau questions the veracity of road infrastructure planning
THE BUREAU OF INFRASTRUCTURE, TRANSPORT AND REGIONAL ECONOMICS (BITRE) has questioned the veracity of road infrastructure planning for 12 projects worth more than $1 billion and cast doubt on the systems used for billions of dollars more.
With eye-watering amounts of cash focused on new roads nationally, not least on trucking’s fuel tax, the report, Ex-post Economic Evaluation of National Road
Investment Projects, takes governments to task over the state of cost-benefit analysis approaches used to justify them.
“Cost-benefit analysis (CBA) has long been the preferred way to assess transport infrastructure investment projects in Australia,” BITRE states in its executive summary. “However, CBA, as applied in practice, is prone to errors.
“Available evidence suggests that there is much room for improvement in the quality of practical Australian road CBAs if they are to be used as an effective tool for option ranking and project prioritisation.”
Based on the case study results of what it admits is a small sample, BITRE observes: • The net present value (NPV) was over-estimated by significant margins in most of the selected case study projects. • Over-estimation in NPV was largely caused by over-estimation of road user benefits, with errors in travel time cost saving estimates accounting for 60 per cent of the total absolute variation between the NPV from the ex-ante CBA and that from the ex-post CBA • Inaccurate traffic forecasts and
methodology errors were mostly responsible for the overestimated road user benefits • There was no systematic evidence of cost overruns for the projects selected for expost review. The situation is not new and the report notes Austroads raised the CBA issue is 2011. BITRE is also critical of the lack of peer reviews of CBAs, traffic forecasting errors and the plausibility of base case for projects. Base cases are said to suffer from: • Over-estimation of travel time cost
savings • Inappropriate speed-flow curves • Vehicle operating cost saving errors • Safety benefit estimates shortfalls.
On safety benefits, the report explicitly notes crash information was below what is needed for proper decision making.
“Crash analysis was hampered by lack of good data and analysis,” the report says.
“Until crash data and analysis are significantly improved, there may be a case for using model default rates for both the base and project cases, as these are subject to less uncertainty.”
The review looks at road investment projects on the National Land Transport Network in 2005–2007 and in 2014–2016.
The Australian Trucking Association (ATA) reacted with concern at the findings.
“The trucking industry is being over-charged for our use of the road network ... there’s no guarantee that those funds will be spent efficiently,” ATA policy officer Samuel Marks says.