State Highway Traffic Levels Falling

If one was to read through the “Government Policy Statement” for transport you would be convinced that our state highway system was bursting at the seams. As I have mentioned previously, the Government Policy Statement rips money out of just about every other area of transport funding in order to put around another billion dollars into funding state highways over the next three years. The GPS justifies this by saying:

A key component of the GPS that supports economic growth and productivity is to maintain investment in new and improved State highway infrastructure at 33 to 34 percent of the total fund over the ten-year horizon of the GPS. Based on current forecasts this will provide approximately $10.7 billion over the next ten years for State highway activity. The State highway network represents only 11.6 percent of the total road network, yet accounts for almost half of all kilometres driven each year by New Zealanders. The network links New Zealand’s town and cities and provides access to key transport hubs such as ports and airports. The heavy use of the State highway network highlights its importance for moving freight and people.

To embark on a logical thinking exercise, one would imagine that the area you are concentrating all this funding on must have some significant short-comings and also must be growing particularly quickly in terms of its popularity. Whilst it may well be true there are significant short-comings in the existing state highway system, I don’t think they’re particularly more obvious than short-comings in other parts of the transportation network. For example, if you were to ask people in Auckland whether the motorways or the rail network is in a ‘better state’, I can imagine most people would say the motorways. So we come to the second reason why it would make sense to put a lot of money into funding state highways – that they’re becoming more popular.

This is critical really, as transport funding – particularly for new projects and not just maintenance costs (for roads) or operational costs (for public transport) – is about the future. You don’t embark on a transport project to provide for how things were 10 years ago, you do a project to provide for how things will be in the future. Therefore, it’s important to look at what’s increasing and what’s decreasing – so you have a better idea about what’s going to be happening in the future. This is where the May 2009 Traffic Volumes Monthly Report by NZTA is very interesting indeed.

Straight off, one would expect in a recession that traffic volumes would not exactly be increasing at a fast rate, and the figures clearly spell that out to us: In May 2009, compared with May 2008, the monthly average daily traffic (MADT) for all vehicles had reduced by 1.6 percent; and the MADT for heavy vehicles also had a drop of 10.3 percent. So traffic volumes are definitely falling at the moment, and that’s particularly the case for heavy vehicles. I guess lower economic activity means less stuff having to be shifted around which means less heavy traffic – so that makes sense. For all traffic, perhaps fewer people are working and those that work on the road are driving less, so the drop by 1.6% makes some sense.

It’s the longer term trends that I find more interesting – what’s been happening over the last few years:

If we have a look at this information graphed, it shows some quite interesting trends. The most obvious is that heavy traffic has grown at a faster rate than all traffic over the past 20 years. I guess the neglect of our railway system has contributed to more and more freight traveling by truck, while economic growth and generally the fact that we have “more stuff” has also contributed to this rise. The next interesting thing is that over the past few years ‘all vehicles’ has really tapered off and was actually starting to decrease, while at the same time heavy traffic was still increasing. I do put this down to increasing petrol prices over the past few years: as higher prices will generally just be passed on by freight-movers to the consumer, whereas people just driving their cars around will take shorter trips, fewer trips or just not travel at all. This is clearly obvious in the statistics for the past few years – where petrol prices began to significantly increase from around 2005 onwards, the same time that vehicle growth seems to have stopped.

So last year it’s pretty obvious to see the effect of higher petrol prices – with general vehicle numbers falling quite significantly and heavy vehicle numbers staying pretty level. Carrying forward those figure into this year, it’s obviously still less than halfway through 2009 so I’m not sure what the final figures will show, but the figures above indicating a 1.6% fall in general traffic and a whopping 10% fall in heavy vehicle traffic show that the trends of the last few years are definitely not abating just because petrol is no longer $2 a litre or more. The diagram below shows how May 2009 compares with May 2008 across the six NZTA regions of New Zealand. Auckland and Northland make up region one:

And to give us some idea about how much the recession is hurting the trucking business, let’s have a look at heavy vehicle traffic levels for May 2009 versus May 2008: What all of these figures clearly show, in my opinion, are the following points:

1. General traffic levels are highly influenced by petrol prices
2. Heavy traffic levels are less influenced by petrol prices, but more influenced by economic activity
3. Due to rising petrol prices, general traffic levels stopped their long-term increase in around 2005 and have been steady or declining ever since
4. Heavy traffic levels were fairly immune to petrol price rises right through until 2008, which was a ‘flat’ year. The economic recession in 2009 is leading to significant reductions in heavy vehicle numbers

All in all, the most critical piece of information to take out of these statistics is simply that we are not driving more. Since 2005 the country has grown in population and has also increased in its economic productivity (although some of that growth is now being eaten away) but our traffic levels simply haven’t been increasing. I put this down to rising fuel costs, while in cities like Auckland I guess that (marginally) improved public transport can also take a bit of the credit for these reduced numbers.

So I ask Steven Joyce, quite seriously, why are we spending $10.7 billion on building more state highways over the next decade when our use of them is stable or declining?

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