Congestion, rent seekers and the future of Melbourne

Most transport experts agree that building extra capacity into congested roads has limited benefit. Congestion constrains growth in peak periods. Once road capacity is increased the number of peak period trips will increase until congestion limits further growth.

Currently an extra lane of traffic is being built onto to the Monash Westgate freeway at a cost of $1 billion. It was initially suggested that full capacity will be reached within two decades. The RACV now claims that it will fill within five years. The abject failure of building road space to relieve peak hour congestion is highlighted by this example.

This demonstrates that increasing road capacity does not simply meet existing growth; it generates and induces more vehicle trips in peak periods. The implications of this for transport planning are:

1. Generating new demand for the road reduces the congestion reduction benefit of the new roads
   
2. The externalities associated with increased traffic such as down stream congestion, pollution, accidents and other environmental costs increase
   
3. Additional trips occur with increased capacity as people shift time, route or transfer from public transport.
   

The evidence also suggests that parts of Melbourne are getting increased modal shift from cars to more sustainable transport like public transport, walking and cycling.

The 2006 Census reveals that in inner Melbourne jobs are up by 30,000 from 2001, yet there are nearly 5,000 fewer car trips to work. Public transport is booming while walking and cycling have doubled. For those Melbournians who work in the CBD car use is also down 5 percent and now comprises only 27.5 percent of journey to work trips.

However political and business leaders are telling us that while our economic prosperity is increasing, car use and congestion means that we must build new roads. In inner Melbourne this is a complete myth.

The 2006 Census demonstrates an unprecedented growth in sustainable transport and its dominance in inner and central Melbourne. There are various drivers for this shift. The high cost of fuel, car park levy, new public transport rolling stock, traffic calming measures, better bicycle lanes and so on. It is the desired aim of public policy in Victoria and should be celebrated.

And yet we are told that congestion can only be solved by building more roads. In particular the road lobby and investment bankers have been arguing for a number of years that Melbourne needs a new East West tunnel and road link.

Such a tunnel would not have traffic bypassing the inner city. It would mainly function to funnel traffic into inner and central Melbourne. This is projection that all the analysts have made looking at current origin and destination patterns of existing traffic.

It is an analysis shared by one of the main proponents of the tunnel – Macquarie Bank.


This is not a recipe for less congestion but more - generating further downstream congestion in inner Melbourne.

If an increasing number of commuters are choosing to abandon their cars for sustainable modes of transport, why would any Government want to build a new freeway system into inner Melbourne?

The answer is the influence of the road and investment bank lobby. An eastern tunnel is not a new idea. Jeff Kennett proposed a link between the Eastern Freeway and the Tullamarine freeway in 1999. After a major study by Vicroads and the Department of Infrastructure, it was rejected because there was so little demand for such a link. However the proposal did not die.

The idea didn’t go away it became grander. It would become a road link from the eastern freeway to the western ring road, it would provide greater access to the CBD and inner Melbourne and it would demand further inner city road construction to relieve congestion caused by new exit ramps onto congested streets.

Would be road operators and Macquarie Bank have spent years working on convincing politicians and public and private officials that an East West link as a Public Private Partnership (PPP) was a no lose proposition. It would ease congestion, create jobs, it would be privately built and owned and it would be paid for by tolls. Melbourne City Council, Committee for Melbourne, VECCI, RACV, and Australian Workers Union amongst others became proponents.

At various times the support from these groups has faltered with both the City of Melbourne and the Committee of Melbourne having reconsidered their earlier support. However the work of the freeway proponents has functioned like an echo chamber. It assumes that if enough influential people whispered their support and said it was such a great thing eventually it would return onto the public agenda. That is exactly what has happened.

Perhaps the most tireless advocate of an East West tunnel has been Rob Dunlop an executive Director of Macquarie Bank. In 2000 he was appointed onto the Premier’s Infrastructure Planning Council, which was to identify Victoria’s infrastructure, needs for the next 20 years. The IPC identified the need for an alternative to the Westgate Bridge. He continued his advocacy work even when the Department of Infrastructure in 2003 rejected the utility of a tunnel link.

In 2005 Robert Dunlop released the East West tunnel proposal on behalf of VECCI. He said the east-west link was "realistic". Mr. Dunlop said the link would "kill two birds with one stone" by relieving traffic congestion in the inner north and providing an alternative to the West Gate link from east to west.

The proposal for an East West link presents us with a public policy contradiction. We have State Government policy, which wants to reduce car trips and increase the use of walking, cycling and public transport. At the same time there is a proposal to build another freeway link and increase inner city road space.

Constructing an east west link will funnel traffic into inner Melbourne. Funneling traffic is why the private sector wants to invest. They don’t care what happens to the roads they don’t own. What they will be concerned is how much volume can they get through their tunnel. Since most traffic is traveling towards the central city they will provide that access.

Such a PPP will invariable involve government making agreements with private owners over the life of the contract – 30 or 40 years. If we look at similar projects in Australia and around the world these contracts invariably have some “no compete” clauses, which limit governments from expanding nearby roads or public transport alternatives.

Currently inner Melbourne is experiencing unprecedented job growth while commuter car use is down and walking, cycling and public transport are booming. These welcome shifts pose a real issue about how we plan the future. Do we want to build a new inner city freeway – regardless of escalating fuel costs, increasing greenhouse emissions and the increasing cost of unfettered car use – or do we plan for scenarios that are more sustainable and preserve the livability of our city?