“Transport decisions are about values”: Australia shows the limitations of cost-benefit analysis

The Gold Coast light rail. Image: David Ansen/Flickr/creative commons.

Growing the economy – not city planning – has become the Australian government’s main rationale for building urban transport infrastructure. Soon after becoming prime minister in September 2015, Malcolm Turnbull declared: “I will be an infrastructure prime minister”.

Subsequently, his government’s focus seems to be largely on infrastructure projects – including urban transport infrastructure – “which drive … growth and jobs”.

Transport infrastructure is seen as a facilitator of growth and competitiveness in our cities. This is where much of Australia’s economic growth is generated. But, while important, promoting economic growth is not transport’s only major function.

Increasingly divorced from city planning

Until recently, it was generally accepted that urban transport and land development needed to be planned in an integrated way, having regard to what city future was desired. Transport infrastructure investment would then help to achieve that city future.

While city planning was once a “tool for correcting and avoiding market failure”, it is now much more about promoting economic growth by providing certainty for the development industry and reducing regulation.

Under this increasingly dominant view, city planning (by governments) is seen as a generally distorting influence on property markets. Regulation is a “transaction cost”.

Major urban transport investment is increasingly divorced from achieving broader city planning objectives. This includes equitable access to services and facilities.

For example, there is a disconnect between the TransApex major road program and urban planning in southeast Queensland. This program of four major road projects in Brisbane aimed to improve cross-city travel and keep the economy strong. However, TransApex was at odds with the southeast Queensland regional plan’s aim of promoting sustainability and reducing car dependency.

Cost-benefit analysis is preferred

Instead of an integrated city planning approach, governments are increasingly basing transport investment decisions on cost-benefit analyses.

Cost-benefit analysis for transport projects involves weighing up the costs (construction and operating costs) and benefits (travel time savings, vehicle operating cost savings, crash cost savings and wider economic benefits). If the dollar value of the benefits exceeds the costs, the project is considered justified.

It has recently been suggested that all transport projects where benefits exceed costs by some margin should be built, apparently with little regard to the effects of those projects on city planning.

The significant limitations of cost-benefit analyses are well documented. It is particularly troubling that, for transport projects, these analyses rely on a flawed assumption that motorists aim to minimise generalised costs.

Cost-benefit analyses also provide limited guidance in deciding which projects advance broader city planning objectives.


Transport decisions are about values

Decisions about transport investments are really about what kind of future city we desire.

These are decisions about values as much as they are about economics. American philosopher Michael Sandel is concerned that conversations about the future are largely framed in technocratic (often economic) terms. This leaves public discourse “hollowed out”.

The social equity effects of transport investment are not usually taken into account. The public investment of about A$1bn in the Gold Coast light rail disproportionately benefits residents, landowners and businesses close to the stations. Other Gold Coast residents – including many disadvantaged people – have to drive or make do with a relatively low-quality bus service.

With cities now urged to market themselves, “flagship” projects like the light rail are valued as means of giving cities an advantage in a world of footloose businesses and investors. These projects are considered important for growing the economy.

The Gold Coast light rail is an 18-year public-private partnership (PPP). PPP contracts frequently include “non-compete” clauses (no new competition with the PPP infrastructure). These can constrain future city planning decisions, however desirable they may be.

Splintered development is poor planning

The influence of cost-benefit analysis, city marketing and PPPs works against an integrated approach to land use and transport planning.

This situation can be described as “splintered” infrastructure development and raises questions about its impacts on the achievement of broader city planning objectives. While individual infrastructure investments with a positive benefit-cost ratio may help grow the economy, the idea that this will trickle down to better social or environmental outcomes for city residents is problematic.

It doesn’t have to be like this. One policy proposal for Adelaide offers examples of how transport and land use can be better integrated to support an overall city vision.

New transport infrastructure will clearly be needed in Australia’s growing capital cities just to maintain current levels of accessibility. There will be plenty of scope for Turnbull to leave a legacy of transport infrastructure that not only helps grow the economy but also supports integrated city planning.The Conversation

Brian Feeney is an urban planning researcher at The University of Queensland.

This article was originally published on The Conversation. Read the original article.

 
 
 
 

Two east London boroughs are planning to tax nightlife to fund the clean up. Will it work?

A Shoreditch rave, 2013. Image: Getty.

No-one likes cleaning up after a party, but someone’s got to do it. On a city-wide scale, that job falls to the local authority. But that still leaves the question: who pays?

In east London, the number of bars and clubs has increased dramatically in recent years. The thriving club scene has come with benefits – but also a price tag for the morning clean-up and cost of policing. The boroughs of Hackney and Tower Hamlets are now looking to nightlife venues to cover these costs.

Back in 2012, councils were given powers to introduce ‘late night levies’: essentially a tax on all the licensed venues that open between midnight and 6am. The amount venues are expected to pay is based on the premises’ rateable value. Seventy per cent of any money raised goes to the police and the council keeps the rest.

Few councils took up the offer. Four years after the legislation was introduced, only eight local authorities had introduced a levy, including Southampton, Nottingham, and Cheltenham. Three of the levies were in the capital, including Camden and Islington. The most lucrative was in the City of London, where £420,000 was raised in the 2015-16 financial year.

Even in places where levies have been introduced, they haven’t always had the desired effect. Nottingham adopted a late night levy in November 2014. Last year, it emerged that the tax had raised £150,000 less than expected in its first year. Only a few months before, Cheltenham scrapped its levy after it similarly failed to meet expectations.


Last year, the House of Lords committee published its review of the 2003 Licensing Act. The committee found that “hardly any respondents believed that late night levies were currently working as they should be” – and councils reported that the obligation to pass revenues from the levy to the police had made the tax unappealing. Concluding its findings on the late night levy, the committee said: “We believe on balance that it has failed to achieve its objectives, and should be abolished.”

As might be expected of a nightlife tax, late night levies are also vociferously opposed by the hospitality industry. Commenting on the proposed levy in Tower Hamlets, Brigid Simmonds, chief executive at the British Beer and Pub Association, said: “A levy would represent a damaging new tax – it is the wrong approach. The focus should be on partnership working, with the police and local business, to address any issues in the night time economy.”

Nevertheless, boroughs in east London are pressing ahead with their plans. Tower Hamlets was recently forced to restart a consultation on its late night levy after a first attempt was the subject of a successful legal challenge by the Association of Licensed Multiple Retailers (ALMR). Kate Nicholls, chief executive at the ALMR, said:

“We will continue to oppose these measures wherever they are considered in any part of the UK and will urge local authorities’ to work with businesses, not against them, to find solutions to any issues they may have.”

Meanwhile, Hackney council intends to introduce a levy after a consultation which revealed 52 per cents of respondents were in favour of the plans. Announcing the consultation in February, licensing chair Emma Plouviez said:

“With ever-shrinking budgets, we need to find a way to ensure the our nightlife can continue to operate safely, so we’re considering looking to these businesses for a contribution towards making sure their customers can enjoy a safe night out and their neighbours and surrounding community doesn’t suffer.”

With budgets stretched, it’s inevitable that councils will seek to take advantage of any source of income they can. Nevertheless, earlier examples of the late night levy suggest this nightlife tax is unlikely to prove as lucrative as is hoped. Even if it does, should we expect nightlife venues to plug the gap left by public sector cuts?