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The benefits and beneficiaries of urban tollroad expansion

3 March 2017
From our ‘Thinking outside the box’ series
Does Sydney need more private tollroads? Or should the focus be on expanding rail freight, planning for local jobs, reforming road pricing, and investing in more efficient and productive transport systems? Christopher Standen provides his thoughts.

After a nine-month investigation into the WestConnex tollroad, the Auditor-General has found the Commonwealth Government committed billions of taxpayers’ money to the scheme without appropriate advice. He also indicated that the funding did not provide value for money for taxpayers, and did not protect the government’s financial interests. These findings raise the question: if the scheme is a bad deal for taxpayers, then exactly whom does it benefit?

Like the proposed Melbourne Western Distributor and Perth Freight Link, WestConnex is essentially a road freight project, which aims to improve freight productivity between the port and industrial areas. However, the $17bn cost is largely being funded by ordinary motorists, with new tolls soon to be introduced on the existing M4 and M5. The M5 toll is set to reach $14 a day in 2020, when tolling begins on the M5 East, and $27 a day in 2026, when the M5 West cashback scheme ends. Effectively, suburban motorists will be paying for an inner-city freight project.

Of course, a major beneficiary will be the road freight industry, because the new tolls will clear traffic from freight routes. The M5 East will carry less traffic than it does today, after tolling begins in 2020. Which begs the question: why not simply use pricing to improve traffic?

Another beneficiary will be the future private owner. It will inherit an asset with above-inflation toll increases guaranteed until 2060. It will also be granted the toll concession for the existing M5 West from 2026.

The state economy will benefit, in the short-term at least. Spending $17bn on any infrastructure, useful or not, will usually stimulate the economy. However, there’s no clear evidence urban motorway expansion helps long-term economic growth in cities with developed road networks. On the contrary, it facilitates inefficient urban sprawl, and there are few on-going jobs – even toll collection is automated now.

For commuters and tradespeople, the new tolls will clear traffic from existing motorways, and the new tunnels will bypass traffic signals. Those who can afford the tolls should be able to drive into the inner-city faster than today, but will emerge into heavier traffic jams. For those unable or unwilling to pay, driving times will increase significantly. Rail will remain the fastest option for many trips.

Unfortunately, very few commuters will get to enjoy these shorter driving times. A three-lane motorway can handle maybe 14,000 commuters in the morning peak. That’s 0.4% of Sydney’s working age population. In contrast, a single railway can transport ten times as many into the heart of a city, at a much lower cost.

To encourage motorists to use the new M4 East toll tunnel, the parallel Parramatta Road is being narrowed to four lanes. This is being touted as an urban renewal opportunity – though the remaining traffic lanes will still be congested, and there are plans for high-speed bus lanes right next to footpaths.

WestConnex is being sold to the public as a “congestion buster”, though any congestion relief will be mostly down to the new tolls, and is unlikely to last. Many un-tolled roads will become more congested, due to toll-avoidance and induced demand. The reality is, there can never be enough road space for us all to drive wherever and whenever we want in free-flowing traffic. Congestion is a fact of modern city life.

Some overseas cities have given up trying to “bust” congestion. They focus instead on improving access to jobs, and making people’s travel time more enjoyable, healthy and productive. Is it the Australian Dream to drive along a dark, monotonous tunnel day after day, inhaling truck fumes?

Proponents of the scheme claim it will take trucks off suburban streets. However, by increasing the competitive advantage of road freight over rail, WestConnex may result in more trucks overall on the road network. During peak times, truck operators will pay to use it. However, they may avoid the tolls at other times, meaning more trucks on suburban streets off-peak, and at night.

They also suggest it’s the ”missing link” in the road network. Yet Sydney already has an extensive and high-capacity road network. You can reach everywhere in the city by road. There are no “missing links”. There’s already a motorway connecting the port and western Sydney (M5), and an under-utilised freight railway.

Transport planning isn’t simply a matter of drawing lines on maps. We aim to improve access for people, goods and services in an efficient, fair and resilient way. The best role for motorways in this framework is moving traffic around populated areas – not dumping it into congested city centres.

Despite construction on Stage 2 having commenced, there are doubts the scheme will ever be completed. Stage 3 is currently unfunded, and the plan to raise the estimated $7bn cost by privatising Stages 1 and 2 assumes very optimistic toll revenue forecasts. The NSW Government will also have to commit to those significant toll increases on the M4 and M5, losing votes in marginal western Sydney electorates. Further cost increases can’t be ruled out. It’s hard to see Stage 3 going ahead without massive additional taxpayer subsidy.

Does Sydney need more private tollroads? Or should the focus be on expanding rail freight, planning for local jobs close to residential areas, reforming road pricing, and investing in more efficient and productive transport systems?

Christopher Standen is a Senior Tutor at the University of Sydney Business School.

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