Most transport projects, particularly when it comes to widening motorways or building new ones, derive the vast majority of their estimated ‘benefits’ from the travel time that they will supposedly generate. These “time savings benefits” form the core of most transport cost-benefit analyses that are undertaken – even for public transport projects, where it would seem the biggest apparent benefits of investing money in public transport is to free up traffic movement on the roads.
For example, if we look at the cost-benefit analysis undertaken for the Waterview Connection project (a previous iteration of it, but the benefits will be exactly the same) – there’s a huge amount of estimated ‘time savings benefits’:
Time savings benefits are calculated by working out the amount of time a project would save a particular user, then multiplying that up by the number of users who will benefit. Then a ‘dollar value’ is put on each hour saved (I forget the exact amount). Then you multiply that up by 30 years, apply a discount ratio and voila, you have a big amount of monetary benefit that your project will supposedly create, and therefore it’s justifiable to spend, in the case of the Waterview Connection, almost $2 billion on the project and the associated SH16 widening.
But does that work? Does that really make sense? I know the good old saying that ‘time is money’, but does that apply to all trips? Is there really a monetary benefit to the economy from me being able to get to my friend’s house a few minutes faster on a Sunday afternoon? Is there a benefit to the economy of me being able to get out of bed 10 minutes later that would otherwise be the case, but still get to work on time (if I used this route to get to work).
I can certainly see a monetary benefit in business trips being able to be made quicker and also from it being quicker to shift goods around. But what percentage of trips are actually business trips – as opposed to commuting trips, leisure trips or just general ‘errands’ trips. According to a study done by the ARC back in 2009, in 2041 only a relatively small percentage of trips are business or freight trips – with the biggest number actually being simple ‘errands’ trips. The proportion is fairly similar to what we have today (though future proportions are more important as we build new projects for the future).
But is there really a big benefit to the economy of being able to get your kid to school quicker, or being able to get to the supermarket for shopping a few minutes faster than before?
Certainly, there’s likely to be a ‘quality of life’ improvement that comes from spending less of your life getting from A to B. I’m going to be reluctant in moving from where I live now, because I’m able to get out of bed at 7.45am in the morning and still make it to work on time. There’s a quality of life benefit for me in that sense. Similarly, there’s a quality of life benefit in making many other commuting, or errands, or leisure trips a bit quicker. Nobody really ‘likes’ spending time in traffic congestion: it’s frustrating, it feels like a waste of time and so forth. But does it really adversely affect the economy to the extent that we see numbers like “congestion costs Auckland a billion dollar a year!” being floated around? I must say I’m a bit sceptical – particularly when it’s actually damn near impossible to completely eliminate congestion (so what does the billion dollars actually compare against?)
For many households in Auckland, there’s something else annoying that they have to spend much of their life doing – something which probably has a reasonably significant adverse effect on their quality of life actually. And that is doing the dishes. Fortunately, I live in a house with a dishwasher, and therefore don’t need to waste 20 minutes a day (or as it tended to be, two hours once a week!) on doing the dishes. Not having to do that improves my quality of life quite a lot. I can play around on the computer a bit longer in the evenings, I feel less stressed about life as I don’t have a “I must do the dishes” feeling eating away at the back of my mind and so forth.
So we can readily accept that if all households in Auckland had a dishwasher, the people in those households would have a lot more free time, a lot less stress and so forth. In fact, they would benefit in many of the same ways (and perhaps to an even greater extent) as what transport projects like the Waterview Connection will supposedly provide. Plus, if we estimate that there are around 700,000 households in the Auckland region, that say 40% already have dishwashers and that a new dishwasher costs around $1200, we could buy every remaining household in Auckland a dishwasher for a grand total of just over $500 million. That’s around a quarter of the price of the Waterview Connection!
This may sound like a bit of a silly proposition – to compare the need for transport projects with the need for dishwashers – but it raises a very valid point: what real value are we getting for our transport spend, and what better ways might there be of achieving the same benefits? Perhaps we should subject transport projects to a simple “why not just buy a dishwasher test”? Projects that make good sense, like the CBD Rail Tunnel, clearly pass that test as they are all about encouraging economic agglomeration benefits, improving productivity, generating higher wages and so forth. That may also be true – to some extent – for projects like the Waterview Connection.
If it is true, then why aren’t we measuring that? Why aren’t we measuring the real benefits for the economy instead of time savings benefits, something that could be more cheaply and easily achieved by simply buying households dishwashers?