Grattan Institute fundamentally misunderstand what public transport is for

City living in a world planned by economists

Show me a city planned and built by an economist. Somewhere, this shining example of cost benefit success has transformed peoples lives for the better. All services provided by the government from schools, health, sewage, parks and public transport are run at a profit. I'm sure it exists, outside of the game Simcity or an economists spreadsheet. I just need someone to tell me where it is.

Today the Grattan Institute released its 'Road to Riches: Putting politics ahead of growth' report. It attacks the Capital Metro light rail project and makes two claims on its second page that don't bear scrutiny: "Canberra’s light rail, now being built, is likely to provide no more benefits than bus rapid transit but cost more than twice as much.". The environmental, societal and economic benefits of light rail are well proven, and LRT will not cost twice as much. The basis of the Grattan Institute claim is faulty.

In its 'Case Study' on page 42 The author adopts the classic economist strategy of ignoring the benefits that make a transport project beneficial, to prove somehow that it 'costs' money. Even worse than blind ideology is wilful dismissal of evidence that doesn't conform to the authors chosen agenda.

Complete text of Grattan Institutes analysis

The missing data that the Grattan Institute choose to ignore to 'prove' their case is the April 2012 report by URS called 'City to Gungahlin Transit Corridor: concept Design Report'. Page 13 of this report breaks down the costs of BRT and LRT. The problem with this breakdown is an assumption that no buses will need to be purchased. In the costs table under 'Vehicles and Depots', the BRT column has no figure. None at all. Will a directly comparable BRT system require no new vehicles or infrastructure? Of course not.

If there are no new vehicles being purchased, then where is this 360 million dollars going? It isn't adding capacity to Canberras public transport network. It is building roads. Effectively, we would be spending (not investing) 360 million dollars for zero return. We get no extra public transport capacity whatsoever. Half the cost of light rail with no benefit at all.

The first stage of Capital Metro will procure 14 light rail vehicles. Each vehicle has a passenger capacity of 220. If ACTION ran articulated buses (with a 100 passenger capacity) solely on this route under a BRT model, they would need to purchase at least 30 new buses. At 800,000 dollars per articulated bus, that is a minimum of 24 million dollars of new buses, and several million more for depot facilities. It is a well known transport fact that light rail vehicles are cheaper over the longer term because although more expensive upfront, they are in service decades longer than a bus, and have far less costs to service and maintain.

URS understand this. Even factoring in a fictional cost of zero for thirty new buses, they conclude on page 54 that:
"The estimated capital costs for these two options are $300 – $360 million for BRT and $700 – $860 million for LRT. The higher LRT capital cost is attributed to additional costs such as track, electrical, a new LRT depot, and new light rail vehicles. Additional costs for LRT also come from the larger and more complex stops/stations required. A triple bottom line evaluation undertaken of these options, comparing their social, economic and environmental impacts to the ‘do-nothing’ scenario has shown LRT to provide higher benefits due to its higher social benefits."

Concluding on page 55:
"Overall the study shows that there are significant opportunities to improve the corridor with the implementation of either BRT or LRT, and potentially additional benefits if the corridor were to be extended in the future.
BRT is a cost-effective option, whilst LRT generates the best overall outcome for Canberra."

The full Capital Metro business case from October 2014 also provides evidence that light rail will provide a positive economic return of 1.2. This business case is also ignored by the Grattan Instiute. The author selectively quotes a figure from an earlier report that conforms with the aim of their study, ignoring a later report that does not. I'm not sure how reliable and trustworthy analysis can be when confirmation bias by the author excludes evidence disproving primary contentions of the authors hypothesis.

The Grattan Institute fundamentally misunderstand what public transport is meant to do for society. It does not always exist to make a profit (although it is always great when it does), but it does exist to provide a service to the public. We pay taxes and rates so that the government will aggregate our common wealth and provide services that provide a public benefit. Healthcare, education, painting lines on roads. All sorts of services that would never return a profit, or would even be performed unless we paid for it through governments we elect and fund.

Capital Metro Stage One is a public transport solution for Gungahlin residents, a first stage for an all of Canberra future transport technology (as we grow we will need it), a catalyst for urban renewal, a catalyst to redevelop Northbourne Avenue into a worthy entrance to our Nations Capital, and a long term economic productivity booster. Not just through the immediate job creation though construction, but the longer term economic activity that Transit Oriented Development is proven to attract.

In politics making decisions for the future is the hardest task. Short sighted populist decisions are easy, making the hard ones, making the tough calls for a better future is a risk. In 2012 the ACT Government took that risk and chose the best overall outcome for Canberra by going to an election with light rail for Canberra as a policy. They were returned for another term by the electorate and are implementing the long term plans that will benefit Canberra for decades.

For more frequent updates on Capital Metro and light rail related news, please visit our Facebook page 'Light Rail for Canberra'.