13 February 2007

Sorting out sprawl

PC and Tom Beard have been engaging in an interesting debate about sprawl and land use regulation. Interesting to me because I have been on both sides of the debate in my career, and now I largely share PC's view.

Tom’s view is that people are not very good at making decisions about things that have long term consequences, which of course raises the question as to whether those with his perspective are any better.

Private sector provision of infrastructure for greenfields developments already exists, it happens for telecommunications and electricity. If water was operated commercially (as it is in Auckland), that can be dealt with also. Roads for these developments are also already paid for. The key question is paying for the extra demand on existing infrastructure. That should be a matter between the utility provider and the property owner.

Tom’s comment that “More homes further away means more cars coming into the city, which means more space taken up by motorways, "bypasses" and carparks, thus impacting on the quality of life of those who've chosen to live close to the city.”

Well hold on. If highways were privatised, these motorways wouldn’t be collectively funded by all motorists, but paid for by those using them. Such tolls would limit sprawl and also make public transport more competitive. In addition, any savvy operator of toll roads would charge a premium at peak times to reduce congestion and make more money – with less congestion, and motorists paying the true costs of road expansion and use at peak times, there will be a limit to what Tom is concerned about. By contrast, almost all of the US has taxpayer (i.e. not road user) subsidised highways which have effectively subsidised motoring to many suburbs. He might look here as to why railways and bus companies (the latter mostly run by local authorities with little interest in service quality) found this so hard to compete with.

Tom also claims that in Wellington, the well off use public transport as much as or more than those on lower incomes. He is correct and there is a very good reason for that. The higher income jobs are concentrated in downtown Wellington and the public transport system was designed so that state servants and council employees could easily get to work. Lower income jobs are in the Hutt, Porirua and the suburbs. It is far more difficult to get to these jobs by public transport, so public transport subsidies in Wellington are about subsidising the middle class and high income earners to get to work in downtown Wellington from their homes in Karori, Khandallah and Kapiti. The Wellington Regional Council trialled subsidising a direct bus from Porirua to Hutt City for commuters, and it was a dismal failure because workers and their jobs were too dispersed for a public transport option to be viable. The target case for mode share in Wellington by the regional council is for public transport to hold its own against growth in total trips for both car and public transport – for commutes. Off peak car traffic continues to grow much faster than public transport, because public transport cannot meet the demand for diverse spontaneous trips with multiple destinations within a reasonable timeframe. Public transport mode share has changed because the costs of motoring have gone up exponentially compared to public transport. The key problem is that too many people want to travel at once, using infrastructure that would remain unused most of the day – like trains and buses. The solution is that all modes should be priced commercially, roads, trains and buses – this can help spread demand more evenly (and raise money to finance more infrastructure if it is financially viable). Note that about two-thirds of Wellington's rail rolling stock sits around depreciating doing nothing for about 20 hours a day, five days a week (24 hours the other two). Efficient? You might argue people do the same with their cars, but the difference is that they pay for that - they are paying for the option of convenience. You pay for the trains whether you use them or not.
Changing the pricing of transport would, in my view, make an enormous difference to how cities function and grow. There are different ways of doing this, but in essence it would involve:

- Replacing fuel taxes and ratepayer funding of roads with tolls that vary according to roads by time and location, so that roads are priced high during congested periods and next to nothing off peak. The money raised would be for maintenance and construction when the construction would generate a return. New roads would be justified financially, not politically (Transmission Gully is the latter), and existing roads would be far better managed. Yes this is congestion charging to put it bluntly, but not as bluntly as Ken Livingstone does it and not to pay for everything but roads.

- The Public Works Act and RMA would be gone, as enablers and inhibitors of transport infrastructure construction. Road building would be easier in some places, harder in others – in cities it might mean more tunnelling.

- Public transport subsidies would cease, and operators would charge what the market could bear. At peak times as tolls would be high, there would be high demand for the alternatives. The road operator would charge for bus stop use (and for bus companies to use roads, including if they wanted to pay for exclusive bus lanes), and may even finance some bus operations if it sees fit. At peak times, it would cost far more to commute than at present, off peak bus and rail companies would charge far less as there would be excess capacity.

- Employers would be allowed to time shift employment, encourage employees to work at home or off site where appropriate in order to reduce transport costs. With transport now charged efficiently, there would be significant incentives to avoid peak tolls/fares.

The result would be less peak time commuting, perhaps less sprawl for those working in congested areas, but with more employment diversifying to more outlying places (where commuting was cheaper/closer to housing). In other words, it may actually deliver what Tom wants – by using economics rather than regulation. It doesn’t talk about underground railways or light rail or any of the other transport fetishes of the left, or indeed big motorways which are the fetish of some on the right – it is about remaining completely neutral and letting users pay for what they use. I happen to be agnostic about transport modes - I used to regularly walk to work (when I could have taken the bus in half the time), I like driving and I like taking some trains. I've also used good bus services, and experienced many bad bus and rail services. You see, I supported the Wellington inner city bypass because it made good sound economic sense, but oppose Transmission Gully because it does the exact opposite.
Tom is right to suggest that there is plenty of potential for different forms of housing, including higher density to be attractive. The fundamental point is whether the market should be skewed by planning restrictions to coerce development to being in that direction - the so called nodes proposed by Auckland planning authorities with the fantasy idea that people would want to live in high rise developments around suburban railway stations. Some people want to live downtown in apartments - good for them - but if you want a house on a quarter acre section why is it anyone else's business, as long as you pay for it and the associated infrastructure?

Imagine that – users pay.


darren said...

As I comment at Not PC.
Here is how they do it in Western Australia.
A booming economy coupled with a low release of building land by the state government forces building land and hence house prices to unaffordable levels.
And the solution- a $300 million liability for the taxpayer.
The mind boggles at such stupidity.
I can only hope NZ Liabour doesnt copy this wheeze.

Libertyscott said...

The Auckland Regional Growth Strategy is based on the same philosophy.