Is $340 million a good price for cancelling a road?

The Victorian government today cancelled the contract for a road, and agreed to pay the winning bidder $340 million for their trouble. Is that a good deal?

Prima facie, $340 million seems a lot.

Despite that the reaction to the deal has been positive, with people describing the deal as a good one.

I remember writing a piece back in September, joking that the compensation could be as much as $500 million!

“I can imagine Lend Lease and the infrastructure minister sitting in a room right now, amending the cancellation provisions. $100 million? Why not $500 million? … We rely on their good citizenship not to do so. A flimsy protection indeed.

At that stage a payout of several hundred million dollars seemed ludicrous. The reason it now doesn’t is due to a psychological effect called framing.

Framing is why restaurants put a $50 steak on their menu, why apartment developers put a $2 million penthouse atop their building, and why TV marketing channels say their $9.99 item is a $20 item at 50 per cent off.

In each case, the context of a higher price makes the smaller sum you are about to pay more palatable. Some excellent work on framing has been done by Nobel winning economist Daniel Kahneman.

The former state government, by including in the contract a kill clause providing for a payout of over $1 billion, made the eventual payout look small.

$340 million could pay for a lot of trams
$340 million could pay for a lot of trams

If we try to analyse the $340 million payout without $1 billion ringing in our ears, how does it seem?

The Sydney metro cost the NSW government $130 million to cancel. But that’s a different kettle of fish. They got further down the track, including buying up property.

Melbourne’s contracts existed for only a month before the government changed and the future of the project was put at risk. If the consortium spent a third of a billion dollars in that month I am impressed at their efficiency.  If they spent it after the election, I am shocked at their boldness.

As for bid costs? One failed bidder, Leighton was reimbursed $12 million. In the Sydney Metro, one bidder spent $22 million and described that as “really big.”

So the $340 million dollars is probably not all costs. More likely, most is compensation – probably dressed up as costs plus a “fair markup”.

The reason it is not called compensation is that suits both sides. Labor leader Daniel Andrews looks like a master negotiator, and the companies – at risk of seeming to be blackmailing the state – look reasonable.

bike freeway
The Eastern Freeway running smoothly.

We should be angry at paying so much. The payout goes straight to the consortium’s bottom line. The longer the project ran, the higher the chance that the consortium made a loss. Cutting out early guarantees that won’t happen. Despite the high volume whining, this outcome has its upsides for the consortium – it banks a profit and puts its engineers onto another project.

Is this good bargaining by the state Government? I don’t know. The consortium seemed to have a great legal position. But the state government actually holds a pretty big stick. They could whisper that companies involved in demanding compensation will never win a bid in this state again unless they pull their heads in. Hopefully they bargained hard, but we shall never know.

Emphasising that these public monies have been wasted – ultimately our money that we paid in GST – is not an exercise in blaming the current government.

Their efforts – however imperfect – are absolutely glowing examples of good policy compared to the previous administration’s deliberate sabotaging of the state of Victoria. Including the kill clause is a stain on their legacy that should be remembered for a long time, and they must bear the blame for the size of today’s compensation package.

Could plans London didn’t use be put to work in Melbourne?

This tweet came up in my feed a couple of days ago, with the accompanying pictures.

bridges london ramps londonThe man who tweeted them, Brent Toderian, is a big name in urbanism, based in Vancouver. Of course he is horrified by the way roads and cars dominate the skylines.

But I saw something in these pictures that redeemed them. I think they are possibly quite smart.

The use of apartment buildings as props for very high freeways was the main aspect that caught my eye. It would not be feasible to drop a road on top of existing buildings. But it may work where you take an existing road, build apartment buildings in its space, and then put the road on top of them.

In talking about this plan, I’m especially thinking of Hoddle Street, which is Melbourne’s Achille’s heel. A north-south road near the city that is choked with traffic almost all the time, it has been the subject of countless studies into how to improve it, with little permanent improvement..

traffic

What might work is an idea from left-field, like that illustrated by Sir Charles above.

Here are the upsides I see.

1. Urban infill.

If you take Hoddle Street and fill it with high rises that support a freeway, you get a quick bump in inner city density. Furthermore, the land belongs to the government, so they ought to be able to actually make profit on the property development.

2. Better street level traffic.

The street level near Hoddle Street is a horror story. It’s very unpleasant to walk on because of the traffic – noise, fumes, and on the occasional place where they can build up a bit of speed, the fear you’re going to be killed. The houses along Hoddle Street look cheap and poorly maintained – there is obviously a price discount for being on the road. There is very little retail and not a single cafe or shop with outdoor seating on its whole length.

If the roadway was way up in the air, (and a couple of the many many traffic lanes were retained for a more normal scale street), the street level might be a bit more comfortable for actual use. Cyclists could use Hoddle Street again. Shops might open up.

3. Better amenity because the elevation is so high.

The complaint about elevated roads is the same as the complaint about freeway overpasses. They leave dark empty spaces that are a blight on the urban environment. But if you put the road high enough up in the air, the sense of being closed in will disappear. Even better, if the supports for the freeway are not just concrete pillars but actual apartment buildings, the passive surveillance of these areas would be much better.

I would imagine that top-floor apartments, right under the roadway, would be less attractive as they would get less sun and more rumbles from above. But if they had balconies on the sides the road does not extend, there is no reason they could not be full of light.

The shadow from the entire structure will be vast over a wider area than a smaller freeway, but by having it so high, there will be no single space that is permanently shadowed and unattractive for licit activity.

The obvious downside is the ramping. The illustration shows a six storey building, which would be about 20 metres tall. To descend 20 vertical metres a car needs 120 metres of ramp,( the preferred gradient for public car park ramps is 1:6.)

That would probably have to circle around the building to descend, as per the pictures.. And I’m not convinced the value of the apartments encircled by those exits would be so high. Still, not every building would be an exit, and some exits could ramp away from the buildings.

A more complete set of things being proposed by Sir Charles Bressey 80 years ago can be found here. Nb. I do not agree with turning Trafalgar Square into a multi-storey parking garage. 

The best way to fix Australia’s road and rail might be out of left-field.

Australia has a problem with Infrastructure. We keep building the wrong things.

We spend a huge amount of time developing proposals that have benefit cost ratios less than one. Then, for want of alternative proposals, we turn those proposals into reality.

There are many reasons for this – politicians serving certain electorates, powerful lobby groups, bias to action, and inability to fix infrastructure through pricing .

But part of the problem is a lack of options. We build the East-West tunnel in Melbourne because it is the only idea that’s been properly developed and discussed. We put Sydney’s new airport at Badgery’s Creek because it’s the one location that has been kicked around for years. We plan a light rail line up the middle of Canberra, because that concept has been publicly flogged since Burley Griffin.

To find one great infrastructure plan, you need to discard 99 good infrastructure plans. But Australia doesn’t have 99 to throw away.

There’s a lot of talk about developing a “pipeline” of infrastructure ideas. But politicians are very risk averse, and big infrastructure companies don’t want to waste money on business plans. So our pipeline is the diameter of a carpet python, with a couple of big lumps where it has been fed an approved mega-project.

Computers could do this part.

Infrastructure Australia was set up by the Rudd government to try to help develop a pipeline of ideas, and independently test them. But it only has a few staff, and its leader was recently fired by the Abbott Government. Just as that was happening, he took a stand, publicly saying ”Entrenched truculent bureaucracies have impeded progress… It has been heard that some good ideas cannot go ahead because they would set ‘precedents’. Among other things, this implies knowledge of, but unwillingness to address, widespread deficiencies. Such wilful attitudes test the patience of our elected masters, industry, and the public.”

Even with this courageous bureaucrat in charge, the old Infrastructure Australia was unable to renew the infrastructure planning system. With his blood all over the carpet, the new Infrastructure Australia is cowed.

Even if it makes our political leaders uncomfortable, Australia desperately needs a truly independent infrastructure development and analysis capacity. But how?

I think the answer is not a bureaucracy. I think the answer is by using technology. The same technology that has helped humanity create the biggest encyclopaedia in history and a hugely detailed map of the entire world.

A Wiki.

Imagine a website where you can start a page for any infrastructure project you might dream of.

  • You want to extend a train line by a few kilometres? Start a page with a description and a map.
  • You want a helicopter pad installed at the local sports ground? Start a page with a project description and a map.
  • You want to build a very fast train between Melbourne and Brisbane? Start a page with a project description and a map.

Each page would be able to be edited by absolutely anybody. There would be a section for environmental impacts, a section for cost estimates, a section for estimating time for planning and building, a section for land-use changes and implications, a section for creating a cost-benefit analysis.

flinders st w bikeMost pages would be the hare-brained schemes of the lone wolves of suburbia. The pages would be underdone and silly. But by asking the community to rate each page, the better ideas would attract contributions from a range of talented people and rise out of the muck.

This could bring unforeseen solutions out of obscurity.

For example, when I was writing about the ridiculousness of the state government’s plan to put a new railway station in South Melbourne, right on top of an existing tram stop and miles from the new development it ostensibly serves, I found in the depths of the internet forums the suggestion that the problem could be solved better with a train line that runs from north-east to south-west.

Fisherman’s Bend should be on a new line from Merri (Northcote) to Newport (Wydham Vale – Mernda line).”

This idea may have a cost-benefit analysis ten times better than all the existing plans. But how would we know? There is a choke-point for shining light on new ideas, and its name is the Department of Transport. Risk-averse and slow-moving, DoT can only be expected to properly consider a few ideas that it thinks the government is interested in.

Choosing between a big group of well-developed projects that each have a range of intriguing benefits and positive cost-benefit analyses is going to be difficult, politically. But it’s a better problem than the one we have now, which is a small group of infrastructure plans that mainly look like wastes of money. (I refer here to Melbourne’s East-West tunnel and airport rail, but an honourable mention should go to the plan for a very fast train up the east coast)

If you want to find one project with a cost benefit analysis good enough to build, you need to look at 100 or 1000 projects across the country. The current pipeline is starved of proposals, so it is no wonder the infrastructure policy space is so sickly and anaemic.

train pic b and w

PROBLEMS:

1. The majority of analyses on the wiki would be defective. But the community should privilege the ideas that have the most potential and these should attract rational people to contribute. I expect projects will be submitted with wild underestimates of their cost, and there will be a push by more rational people to actually use cost estimates that reflect realistic Australian pricing. On the ‘discussion’ pages  I imagine there would be fierce argument about why it is we can’t have projects delivered at the prices that apply in China, America, etc. Projects with decent estimated benefits should be most willing to use realistic pricing.

2. Monorails and personal rapid transit. It’s going to be hard to keep really wild ideas out of there, but perhaps that’s the point.

3. Splintering into too many pieces. Every little change in a proposed plan (should this freeway have an exit here or here?) would potentially lead to a new page being created, with a new set of costs, environmental impacts, etc, etc. Conventions and rules may need to be developed to guide when a change is big enough to warrant a whole new entry. But wikis are good at developing cultures and rules that make them effective.

4. The whole thing would be at risk of being ignored if there was no suggestion governments would at least look at it. The project would be a really great thing to seed with some official resources, for example, freely available mapping software for wiki users to use, some models for doing traffic and demand forecasting, recommended ranges for cost per kilometre of roads, bike lanes, tram lines etc. I’d like to see it hosted at infra.wiki.gov.au to give it a sense of official imprimatur and encourage involvement. Perhaps the government could loose a few bureaucrats or pay a few infrastructure experts to play with the wiki to get it started, anonymously having them make edits and bring in a bit of rigour.

So, is this a good idea or a mad one? Is there some aspect of wikis I have overlooked or some problem I’ve not foreseen? Leave a comment below or hit me up on Twitter!

 

The Sydney Harbour Bridge was a bad mistake.

There are lessons in Australia’s history we can learn from. One of them is the screw-up that is Sydney.

sydney

Sydney was well-placed to become the London of Australia. A prime location, settled first, the early seat of power. It had it all. But while London remains by far the wealthiest and biggest city in the UK, Sydney is on-track to be overtaken by Melbourne in population.

Source:
Source: SMH

If Melbourne overtakes Sydney, it won’t be the first time. Sydney had a 40-year headstart and yet lost its lead in the 19th century. At that stage the reason was the Gold Rush. Sydney got its lead back when a financial crisis hit in the 1890s.

Sources: various, but consider this a rough approximation.
Sources: various, but consider this a rough approximation.

If Sydney is overtaken by Melbourne in population, you can’t blame the Sydney-siders. They work hard, but they’re behind the eight-ball. The problem is the harbour.

If you think of it as public space, it’s lovely to look at and nice to use. But if you think of it as distance, is it smart to put so much of it right in the middle of your city? Do you really want so much distance between inner-city suburbs? Wouldn’t it be better to have a network of streets?

I contend that the harbour creates a massive problem in the middle of Sydney. The CBD is unable to connect properly into adjacent suburbs because they are a ferry-ride away.

That explains articles like this: “Why is Sydney’s CBD growing slower than Melbourne’s?”

There is plenty of evidence to suggest that connectivity is absolutely crucial to how cities work. It is no coincidence that the areas best connected to lots of other productive areas are also the most productive and expensive real estate.

Source Grattan INstitute
Source: Grattan Institute

Sydney has more than one major business cluster. The city competes with North Sydney and Parramatta.

But I’d argue that’s a sign of weakness, not of strength. Of course every city has suburban centres, but powerhouses like New York and London aren’t confused about where might be the centre of power, or the best spot to locate a business. Sydney’s situation whispers: this city is too big to really be one functional city. But globally-speaking, Sydney is not even that big, population wise.

So, the harbour in the middle could be part of the problem. But the harbour became the centre of Sydney only when a bridge was built that made the north shore more accessible. You can see the population develop in this video and the north only really takes off after 1932, when the final rivet was painted.

The smart move would have been to densely fill in the area to the south, intensively, before building to the north.

We’ve all played computer games where you have to build certain things in a certain order. If you build too many of the wrong thing too early, you get out of whack, run out of gold and you can’t beat the game. I’d argue that’s what Sydney did.

The Bridge was built using  £6.25 million of public money. That represented about 2 per cent of NSW’s GDP at the time. For comparison, 2 per cent of GDP now would be about $10 billion. (sources: 1, 2)

Despite using tolls to pay it off, the debt lingered until 1988.

The opportunity cost? Not just the proper development of contiguous land areas, but also what that money might have bought if spent differently. When the rest of the world was building world class public transport systems, Sydney let theirs go.

There is a common trope that argues the Sydney Harbour Bridge would not have passed any sort of cost-benefit analysis. This is generally used as part of an argument against cost-benefit analysis, with the assumption being that the Sydney Harbour Bridge is good. Of course it has a lot of value now, in tourism terms. But in 1932, when it opened, tourism was a rather minor part of the economy. (It’s worth noting that the Bridge was built against the advice of the government’s infrastructure adviser, which recommended a cheaper tunnel.)

If Sydney didn’t build the bridge, the city might have simply left the harbour as a boundary on the north. Of course some people would have chosen to live there still, but probably fewer. There’s plenty of space to the south that could have become very desirable had the economic centre of the city not been shifted north by the “coat-hanger”.

sydney map

But building the bridge was not the end of Sydney’s attempts to link north and south. With booming northern suburbs and an incipient northern CBD, it threw good money after bad with years of very expensive ferries and then the construction of a tunnel opened in 1992. The Bridge may soon need to be replaced, due to rust.

But forget the money. I’m arguing that the bridge moved the harbour from the north to the middle of Sydney, and that hurt.

This whole argument rests on the idea – coming back into fashion – that infrastructure is “city-shaping.”  That means you oughtn’t merely provide for existing demand, you should understand what you provide will shape future demand.

Bodies of water are city-shaping. They are often part of cities because of the history of water transport, but now hurt urban connectivity. For example, Oakland remains the very poor cousin of San Francisco.

Even rivers seem to have an impact.

London has lots of bridges but the wealth and the productivity is overwhelmingly on one side of the Thames. It required Manhattan house prices to reach many millions before Brooklyn got any buzz, and Shanghai only developed the far side of the Huangpu in the last 20 years.

By this logic, curvy rivers would be especially bad because they divide the city more. In that respect, Tokyo is better off than Brisbane, because the Sumida River flies like an arrow compared to the meandering Brisbane River. (There is evidence that a single bridge built in Brisbane recently has had a big influence on where people live.)

I’d be very interested to see a meta-analysis of whether, in the last 50 years, the value of having a river has turned from positive to negative in terms of a city’s economic growth. The impediments a big river would create to city connectivity are likely to be significant, especially where bridges are in short supply.

All this is very interesting, but we can’t go back and unbuild the Sydney Harbour Bridge. So what’s the point?

The point is we can learn a valuable lesson. Don’t spend valuable taxpayer resources providing infrastructure that will “shape” your city in the wrong way.

Infrastructure is extremely durable. Every mis-spent dollar will spend centuries choking your city. If it accidentally facilitates growth in hard-to-access places, or encourages inefficient kinds of transport use, infrastructure spending can be the enemy of a good city.

Listen up, Melbourne
Listen up, Melbourne.

 

“Tearing up the contracts” for the road tunnel means there is an actual difference between the political parties. Wow!

The state opposition here in Victoria has just announced it will cancel the contracts for an $8 billion tunnel if it wins the election in November. (While it’s true there’s often a big traffic jam on the road in question, the tunnel fails both cost-benefit analysis and any assessment of what sort of infrastructure the city will need in the future).

THE POLITICS

Deciding to cancel the contract is a bold call, and I suspect, the result of intensive polling. Of course, the government saw this coming, and has a strong line of attack running, calling opposition leader Daniel Andrews an economic “vandal.”

In pledging to cancel the contract, Andrews leaves open the question of what he might do instead, and he doesn’t seem to have much of an answer.

Of course Labor doesn’t want to make new giant policy pledges, before the election. The end of the road project would mean, however, that some money becomes free.

 

Labor still has as part of its election platform the construction of a major rail tunnel – “Melbourne Metro”. Both parties are pretending these two mega-projects are not alternatives, with the coalition government pretending to progress the rail project alongside its favourite road. But realistically, the expense and trouble means the projects are an either/or. Cancelling the road contract is an essential input to building the rail project, it’s just that Labor can’t really admit it.

Assuming the “vandal, Naysayer” tags don’t stick, and the lack of a clearly defined alternative doesn’t hurt Andrews much, I think this is smart politics. Voters like a clear choice and the sniff of real leadership.

The seats that would benefit from the tunnel are mainly Liberal strongholds, and I think if Labor focuses on talking about health and education for the rest of the campaign (and especially if Tony Abbott pops his head up) Labor will win the election.

THE ECONOMICS

Promising to tear up the contracts, before they’ve been signed, is a big risk on the part of Labor. I can imagine Lend Lease and the infrastructure minister sitting in a room right now, amending the cancellation provisions. $100 million? Why not $500 million? Protecting the project and/or hamstringing Labor could both be achieved in the stroke of a pen.

We rely on their good citizenship not to do so. A flimsy protection indeed.

Of course there should be some cancellation provision. A lot of money has already been spent on this project. But from an economy-wide perspective those are sunk costs and we ought to ignore them.

The companies that are selected to build the tunnels will seek sympathy. They will talk a lot about all the investments they have made – hiring people, doing mapping, buying diggers, etc. But we should not listen too closely:

  1. Until just this week there were two bidders in the running for the project. Each of them faced a chance of missing out even if the project went ahead.
  2. The prospect of the project being cancelled was obvious. I bet they haven’t actually made a dedicated unilateral investment in this project for months. Anything they have bought will probably be able to be sold or moved to other projects.
  3. Generous contract cancellation provisions arguably makes this money for jam. When you start building a project, there’s risk of making a loss. When it gets cancelled before you begin, any compensation is pure profit.

The real impact of this cancellation will be felt in future projects. Political parties will have similar incentives to infrastructure companies. Both have incentives to prevent the opposition cancelling the contracts.

If Lend Lease offers Labor a contract for the rail tunnel that includes a slightly lower total cost but enormous contract cancellation provisions, Labor will leap at the chance to protect their project from the whims of future administrations.

There’s game theory at work, and this might be the last chance we have to cost-effectively vote out a project of this kind.

Trevors in Traffic: a PR strategy for congestion charging.

Congestion charging is, I think, an urgent public policy priority. But it is wildly unpopular. This post is going to look at how we can change the way people view congestion charging.

1. The Problem:

Congestion charging makes people very angry. Charging to use a road is widely regarded as “unfair” and it doesn’t seem to matter that society charges for lots of other necessities, including food and water.

Here is a tiny selection of comments from a really terrific recent article on the causes of traffic jams:

“Not only do voters not want to pay congestion fees because they’re now paying for something that was free, they also understand that they’re basically being punished for going to work. What if you make a low wage and already making ends meet, and now, you have to shell out an extra $X a month just to get to work? No, congestion fees won’t work.” – gfish3000

 

“The politicians, who don’t really care about serving the public, will get extra (congestion fee) $$ for NOT doing their job, namely, providing an infrastructure (roads) for us to go about our business.” – Force Meow

 

“The other thing is that making use of an automobile more difficult hurts the poor the most. I have a problem with that.” – Tim Johnson

These objections fall into two main categories: 1. congestion charging hurts the poor, and 2. congestion charging lines someone’s pockets.

These arguments may or may not be true, but refuting them isn’t the goal. Changing the dialogue is.

Here’s one comment I quite liked:

“soccer mom making me late for dinner so she can take snowflake to ballet practice can foot the bill” – Bob Dobalina

There’s some feeling there. Some hatred. Something we can use.

The reason congestion pricing is so unpopular is people imagine it applying to themselves. It’s only if you imagine it applying to others that you see benefits.

A PR campaign for congestion pricing would show the real reasons for a traffic jam, like this:

TRAFFIC JAM REASONS

This would help drive home the point that a lot of trips are low value, and so even a small congestion charge would be effective in deterring them. Survey data on whether peak hour trips could easily be delayed would underpin such a campaign.

I can imagine a TV ad where a stressed driver is stuck in traffic. A counter clicks up the congestion charge from $0 to $1 in 10¢ increments and the cars around gradually disappear, leaving our busy mum to get home from work speedily.

Promoting the understanding of congestion charging is complex. People need to grasp the reasons for it. When they think about annoying traffic, it is probably easiest to call to mind times when they really must get to their destination, as on a trip to work. We assume everyone is equally frustrated. But commuting does not even account for half of trips.

“Commuting to work constitutes approximately 16% of all person trips and 19% of all person miles of travel. For roadway travel, commuting constitutes 28% of household vehicle miles of travel and, for transit systems, 39% of all transit passenger miles of travel.” (US DATA)

The case for congestion charging needs to be built from the very beginning. That means seeding the (true) idea that the road is full of people that needn’t be on it.

Much like the terrific 1980s behaviour change advertisements featuring Wallies with Water, we could have Trevors in Traffic – people who drive across town at peak hour to go to their beach house, or to listen to some drive-time radio, who get in the way of everyone else.

I remember reading about a behaviour change campaign to get kids to wash their hands. Rather than starting with facts about soap, they started with an ad that dramatised germ transfer. Everything the main character touched after leaving the bathroom turned green. Understanding the problem (even in a stylised way) came first.

If you can make people believe that a share of traffic doesn’t deserve to be on the road, they will be more open to hearing about a solution.

Building more roads will not solve congestion. It only moves congestion around. A scheme that targets the actual problem is an urgent priority before we waste more time and effort building bridges and tunnels.

How much should we spend to get cycling up to 5 per cent of trips?

Melbourne’s weather is poor. It rains often. The city is huge – 100 km from edge to edge – and vast swathes of it are covered in the kind of densely packed contour lines that make cyclists legs tremble.

In winter, Melbourne’s cycling community shrinks by over a third.

Image

On days like today I suspect the number of cyclists is far smaller.

Image

In short, Melbourne will never be the sort of city where 50 per cent of trips are possible by bike. Cycling (and walking) will never ever do the “heavy lifting” in our transport mix. That role will always be split between public transport and private motorised transport.

At the moment, the mode share split between these three is:

Image
Source: 2011 census

And the trends are these:

Cycling is growing fast, more than doubling in eight years.:

Image
Source: VicRoads

Public transport growth has been its highest in sixty years, with train travel accounting for most of the increase:

Image
Source: PTV

And vehicle kilometres have surged on freeways, while not increasing on arterial roads.

Image
Source: VicRoads

Expenditure on specific infrastructure looks like this:

Nationwide, spending on cycling is $112.8 million. Spending on roads is over 100 times more, at $18 billion.

Image
Source: BITRE

The data is tough to aggregate, but one estimate is that roads get four times the investment of public transport.

All the modes are growing. How do we decide what the data means? And why not let the market decide what modes live or die?

The answer to the second question is that transport is going to be a centrally planned space until we can charge users per kilometre.

Public roads built to accommodate cars push the whole investment process into the world of “second-best.” If subsidising roads is a given, subsidising public transport can be efficient. Subsidising public transport makes policy makers wonder if there are other, cheaper ways to move people around, like bikes.

So if we’re going to be centrally planning our transport mix, we must ask: do we like the current 78/17/5 mix?

I’d argue we should not. I’d argue we should be aiming to grow the share of modes that have fewer negative externalities and greater returns to scale.

I’d hazard a guess that for Melbourne, 10 per cent share evenly split between walking and bike, 30 per cent for public transport, and 60 per cent for cars would be optimal.

Does that mean we should start spending 10 per cent of infrastructure funding on active modes, 30 per cent on public transport and 60 per cent on cars?

Only if we want to move very very slowly.

Image

Infrastructure lasts a long time. That means the stock of existing infrastructure is the single biggest determinant of infrastructure in five years time. Marginal changes in expenditure rates affect outcomes only very gently. If we want to effect change, we need to tip the scales massively in favour of the modes we want to grow, in the short term.

That means that announcements like $650,000 for changes to a cycling bridge in Melbourne’s west should not be cause for widespread congratulation.

In the short term, we could probably usefully spend 60 per cent of the transport infrastructure budget on public transport and 15 per cent on active modes. If we did that for a few years, we would move swiftly towards the outcomes we want, before returning to a “maintenance” split, where expenditure is based on usage.

Spending even $500 million a year on bicycle infrastructure might seem like a lot when the recent budget has been around $30 million. But when you look at what passes for “bicycle infrastructure” and imagine replacing it with global quality bicycle infrastructure, it would be a drop in the ocean.

Image
“Bike boxes” were the sine qua non of Melbourne bicycle infrastructure innovation just a few years ago.

I don’t imagine gold-plated bicycle infrastructure should go everywhere. Far from it. Cycling infrastructure should be optimised in the areas where cycling can thrive, likely to be areas that already see some bicycle traffic. Fixing missing links, creating Copenhagen lanes on major on-road routes, plus widening and lighting off-street bicycle paths would be the top three priorities.

If we want to increase the share of some modes, we need to be bold about throwing money at them, and not be afraid to acknowledge that such a move comes at the expense of other modes.