by Julie Anne Genter
No one could say that Greece’s heavy spending on motorways directly caused their default crisis. I’m certainly not saying that.
There were many factors at play, though certainly borrowing to pay for projects that were not the best at reducing transport costs certainly didn’t help.
From 2000 to 2006 alone Greece spent nearly half of its European Development aid on transport, and most of that on motorways.
During that time the international oil price more than doubled. By 2008 it had doubled again.
There is little doubt that when fuel prices increase much faster than inflation (and the fuel efficiency of vehicles), the economy takes a hit. This is because transport isn’t an economic activity in and of itself. It is necessary for economic activity to take place, and if the cost goes up, that eats into any profit margins.
So, what is the Greek lesson for us?
Quite simply that fancy new motorways are not up to the heroic task of creating economic growth, especially given the current oil price situation.
Of course, the National Government and all the pro-Roads of National Significance (RoNS) acolytes repeat a familiar mantra that these projects have been chosen because they “are linked to New Zealand’s economic prosperity”.
From the NZTA website:
Infrastructure development is one of the Government’s key planks for economic growth. A key departure from road planning in the past is that the RoNS projects represent a ‘lead infrastructure’ approach. This means the Government is investing in infrastructure now to encourage future economic growth rather than wait until the strain on the network becomes a handbrake on progress.
We have seen a 50+ page RoNS communication strategy from the NZTA that specifies statements about economic growth and productivity as “key messages”. However, no amount of OIA requests or oral questions has found any underlying analysis or evidence that significant economic productivity will be created by the RoNS.
While National MPs and business lobby groups may ardently believe that a few higher standard highways are worth $12 billion (75% of the spending on new infrastructure over the next decade), the international evidence from transport planning suggests that new motorways are the least effective way (PDF) to achieve the critical aim of moving more people and freight at lower cost. There are steeply diminishing returns from duplicating or replacing an existing link in a road network.
The RoNS are being rushed ahead over this decade to prove that this Government is “getting on with it”. But this decade is likely to be the least opportune to throw billions at a few big motorway projects. Traffic volumes on state highways have been stagnant for over 5 years, oil prices are high, and the fleet is not becoming any more fuel efficient as most households & businesses don’t have the cash (or credit) to buy new vehicles.
It’s the perfect time to catch up on investment transport projects that will actually substantially reduce costs to households and business, while simultaneously reducing peak hour congestion. For a fraction of the RoNS budget, we could massively increase public transport, walking and cycling, and still have plenty left over to look after our existing roads. Rail freight and coastal shipping deserve a whole lot more attention as well.
In addition to building a lot of motorways, Greece also invested a lesser amount in urban transport and rail. Gerry Brownlee tried to claim the latter were responsible for its default. The test of the effectiveness of the investment must be in the use now, though, and it is the motorways in Greece that are nearly empty.
If we continue down the RoNS path, we may well be in the Greek situation of having a number of flash motorways that won’t get much use, and that can’t be a good outcome from a massive infrastructure investment. Ordinary New Zealanders may well have to look to the Greek people to find a cheaper way of getting around.