Picking the right transport project
Well-targeted spending can boost jobs and productivity. But we must do a better job of choosing wisely, writes Dan Bidois.
You may have noticed a new train service from Hamilton to Auckland recently. I was dumbfounded when I heard the service, which takes 21⁄2 hours from Hamilton to Auckland Central, came at a cost of $100 million to taxpayers.
There are sadly many similar examples of poorly thought-out transport projects. Getting good value from our transport spending matters for a variety of reasons, whether it be improving our economy, enhancing mental wellbeing, or reducing emissions.
Improving transport spending is also key to turning around New Zealand’s woeful labour productivity performance over the past 40 years. Poor transport infrastructure holds our economy back from delivering productivity gains and improved prosperity. The reason is simple: time sitting in traffic is nonproductive, as are long waiting times for infrequent public transport. We rank 46th in the world on measures of infrastructure, according to the World Economic Forum in 2019.
This poor performance stems from a lack of sustained investment in transport since the late 1980s. Rough estimates suggest New Zealand has under-invested in transport by $37 billion over that period, or about a billion each year. Delays and cost blowouts on key projects such as Transmission Gully are further reasons for our poor performance.
However, more funding and better delivery will have limited impact if we choose the wrong transport projects to begin with, or sequence them poorly. So how do we improve the way our transport projects are chosen and sequenced? Here are three ways we can achieve this.
First, we should mandate public consultation for the evaluation of
infrastructure needs and priorities
In the commercial world, the customer is always right. As such, customer surveys form a valuable part of the process for any new product development or improved service offering. The same principle should apply to choosing transport projects. Waka Kotahi NZ Transport Agency should regularly survey the public to help refine transport needs and prioritise projects.
Waka Kotahi consultation is generally done too late in the process, when projects have been chosen and broadly scoped, leaving the public with a say in only cosmetic aspects – for example, the colour of a bridge, or the type of trees
that will be planted – rather than a say on which projects go ahead and which do not.
The majority of OECD countries mandate consultation for the evaluation of infrastructure needs, and to help prioritise projects. New Zealand does not. Doing so would stop taxpayer money being wasted on projects that ultimately do not solve a real transport need.
Second, we should improve the use of cost-benefit analysis to ensure value for money in every project.
We need to strengthen the use of cost-benefit analysis (CBA) within business cases to better assess transport projects. It is important to remember that not all costs or benefits of a project are about cash. Doing so would improve public debate and decision-making around which projects to pursue and which ones to reconsider.
CBAs should be conducted before committing to projects, rather than retrospectively. Waka Kotahi’s business cases read more like glossy marketing documents justifying an already chosen project than detailing a robust assessment of a project’s total lifetime costs and benefits.
CBAs need to be published so that the media, Opposition MPs and the wider public can scrutinise such proposals. Currently, critical information from CBAs is usually withheld from official information releases on the grounds of ‘‘commercial sensitivity’’.
Third, we need a bipartisan approach to transport projects.
We need to take the politics out of transport project planning and prioritisation. My observations are that politicians can be too quick to arrive at a transport solution before they have fully understood it. They, too, need to consult communities, businesses, and other stakeholders to ensure they mandate credible transport projects.
Having a long-term national strategy for transport will help, but without clear political accountability for delivering that strategy such efforts may be in vain. The newly established Infrastructure Commission has a remit to set such a strategy, which is good. However, it lacks the teeth required to hold a government to account for transport advice it disagrees with.
World-class transport infrastructure has the potential to contribute to greater job creation, enhanced wellbeing, reduced emissions, and improved productivity. But not all transport projects are created equal, so choosing wisely what we build should be our focus, before when and how quickly we do it.
Poor transport infrastructure holds our economy back from delivering productivity gains and improved prosperity.