Recently, to shrug off blame for the Wellington region’s contraction in employment per capita, the government has taken to blaming the city council’s opposition to roading.
As I have mentioned before, National has big plans to spend billions (perhaps as much as $5 billion, if we include the $2.4 billion interest on the private loan for Transmission Gully) on a grade separated four-lane highway from the airport to Otaki. It’s ridiculous to blame the Wellington City Council for holding this project up as the process is already moving as fast as it possibly could, thanks to the EPA rubber stamping process set up by National.
Steven Joyce, supposedly the economic development minister, has a particular obsession with the idea that duplicating or replacing an existing road link will have transformational economic benefits for Wellington.
This truly is, to use a term Joyce is fond of, voodoo economics.
Let’s consider why: how might building motorways create jobs?
There’s the direct impact of the people brought in to move earth, design and construct the roads. But by all accounts, building new highways is one of the worst job creators, at somewhere between $500,000 – $1,000,000 per job created. The reason for this is simple – building roads is capital intensive. Most of the money spent goes on land acquisition, big machines, and materials – not labour.
It would make a lot more sense to create jobs through home insulation, public transport services (which are much more labour intensive), even road maintenance creates more jobs per dollar spent.
But of course, the government couldn’t possibly be building the roads just to directly create jobs. Oh no, Joyce has previously mocked the very idea of building anything just to create construction jobs… the government is building a “modern 21st century road” because it will enable productivity benefits.
My question is – what productivity gains can we get from building a duplicate highway? The research shows that expanding an existing highway system has diminishing marginal returns, because there is already access.
The current philosophy of economic evaluation of transport infrastructure assumes that by reducing travel time, we increase access for businesses and freight, and we save precious minutes on journeys.
It is questionable whether adding up minutes of tens of thousands of commuter journeys would actually translate into economic benefit. There was never any empirical evidence to support the theory. In fact, despite people travelling at higher speeds in private vehicles, the past few decades hasn’t seen an overall reduction in travel times – people are simply travelling further than before.
The changes in land use that result from people travelling further are generally not productivity gains, they are a transfer. It’s a zero sum. Land towards the centre becomes less intensively used, while people take the benefit of cheaper land at the outskirts. Overall infrastructure costs associate with this sprawl are more expensive, as are overall transport costs to the economy (households and business need to spend more money importing vehicles and fuel.) Induced development is not a productivity gain and it costs us more for a given amount of economic activity.
If we wanted to save people time so they could be more productive, buying them labour saving devices, like dishwashers, may be more effective than building new motorways. (NB, I am not advocating this policy!)
If anything, Joyce’s treatment will be worse than the disease. Projects like the Kapiti Expressway and the Basin Reserve flyover will actually make Wellington’s situation worse, in several ways. Firstly, it will destroy some of the urban and coastal amenity that makes Wellington an attractive place to live. Secondly, it will undermine the investment in commuter rail, walking and cycling, by making it relatively cheaper and easier to drive. Of course, the total result will be higher car dependence, which means more money being spent on imported vehicles and fuel, and less on goods and services provided by Wellington businesses.
The smartest way to support Wellington’s economy is to make investments that substantially reduce the overall costs of transport to the economy – this means making walking, cycling, and public transport the priority. This would probably result in greater time savings for road trips than a new highway funneling more cars into choke-points. Investing in rail freight and coastal shipping will also reduce fuel costs and vulnerability.
Real economic development requires taking steps to support our manufacturers, investing in training and education, and thinking outside the box. I’m happy to report a lot of truly creative and productive activity is already happening in Wellington, at places like Enspiral and the Sustainability Trust. It may not be on the government’s radar, but it gives me great hope that Wellington has a smart, green future.
Let’s just hope National’s motorway madness can be stopped before it does irreparable damage to the coolest little capital.