Research 350 - NZ Transport Agency

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ECONOMIC DEVELOPMENT BENEFITS OF TRANSPORT INVESTMENT real GDP and the current account deficit, are of questionable relevance. A transport project could benefit society greatly and yet increase the current account deficit. • Transport projects can generate positive environmental externalities, but they are often difficult to measure. Claims that CBAs omit benefits from other ‘positive externalities’ should be treated with caution. AE.2 Comments The paper includes a wealth of source material and takes a sceptical view of claims regarding additional benefits above and beyond those measured by traditional transport SCBAs’. Some key issues have since been the study of further research by bodies such as Austroads (e.g. Value of Freight Travel Time). Another issue is the extent to which the observations apply to the New Zealand context. While there are many similarities there are also clear differences between the two countries economies and appraisal practices. 128
APPENDIX F Appendix F: Linkages Between Transport Infrastructure and Economic Growth (O’Fallon, C., Paper presented to the Towards Sustainable Land Transport Conference, Wellington, New Zealand, 2004) AF.1 Synopsis This paper summarises and reviews past evidence for a linkage between transport investment and economic growth with reference to a New Zealand context. Studies reviewed include those prepared by Allen Consulting Group (2004), SACTRA (1999) and the European Conference of Ministers of Transport (March 2001). Of particular note is the reference to the work of ACG’s (2004) work: Benefits of Investing in New Zealand’s Road Infrastructure: A Report for the New Zealand Automobile Association. This points out that the methodology used by ACG (i.e. adding the results of a traditional SCBA to the output of a national model) could involve a substantial amount of double counting. Reference is also made to the above studies findings on regional impacts. It is noted that, in general, such findings are inconclusive and that transport investment may or may not result in regional development (e.g. SACTRA, European Conference of Ministers). Thus a distribution between areas rather than national economic growth may result from transport investment. The basic conclusion echoes Banister and Berechman’s findings that in developed economies transport investment, on its own, will not result in economic growth, but is rather dependent on more important underlying conditions. Further, it is argued that savings in travel time may not contribute to greater labour productivity (and hence economic growth) as workers may choose to spend the time saved for increased leisure or social activities. In terms of a New Zealand context, it is argued that transport, on its own, cannot be relied on to facilitate regional development and that there is a significant risk that benefits in improved transport in a less developed region could flow to more developed regions. A further point, made in the context of recent (Dec. 2003) plans to ease congestion within an already developed region (Auckland), is that much of the consequent growth will be at the expense of other regions. The displacement of resources from these regions to Auckland will ensure that any national economic growth will be marginal and will take place over a long period, as the national transport network is configured. AF.2 Comments The paper is highly sceptical of the alleged benefits of investment in transport infrastructure. Many of the technical points appear to be valid, such as the critique of the ACG approach. However the case may be somewhat overstated. For example, it is unlikely that transport projects will only result in an inter-regional transfer of economic activity and the extent to which workers substitute leisure time for work time 129
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Research 350 - NZ Transport Agency

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