Infrastructure

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GUEST OBSERVER
The global focus on US President Donald Trump has largely been on his inflammatory rhetoric and relative inexperience. A less substantive body of commentary has considered his policy platform, including his economic policies.
Among the most prominent of these policies is a commitment to:
… [r]efocus government spending on American infrastructure and away from the Obama-Clinton globalisation agenda.
Trump is not the first to identify increased infrastructure as a strategic economic imperative. Across the globe governments are turning to infrastructure as an instrument of economic policy.
Australia has since 2007 operated an infrastructure agency to prioritise and plan infrastructure provision at the national scale. The UK, New Zealand and Canada have also established national infrastructure planning agencies.
In Australia, this “infrastructure turn” has eclipsed metropolitan planning as a means of intervening in cities.
Among global political and economic institutions, infrastructure has risen to prominence as a priority for national intervention and trans-national co-operation. Many agencies have called for increased spending on infrastructure.
The World Economic Forum, for example, has lamented that while estimated global demand for infrastructure exceeds US$3.7 trillion in investment value, only US$2.7 trillion is being provided. This leaves a US$1 trillion “infrastructure gap”.
The APEC Forum in 2013 established a multi-year plan on infrastructure development and investment. The G20 has established the Global Infrastructure Hub and the Global Infrastructure Connectivity Alliance to help with infrastructure investment. The World Bank helped set up the Global Infrastructure Facility in 2015.
What is driving this shift?
The reasons for the new focus on infrastructure are debatable. Four explanations offer possible insight.
First, at a simple material level, the focus on infrastructure reflects rapid urbanisation at the global scale. Millions more urban residents need water, energy, transport and telecommunications. But urbanisation does not in itself demand infrastructure.
A more systemic explanation is the use of infrastructure as a “spatial fix” for the contradictions of urban capitalism. At its most basic level, the agglomeration of economic activity in cities creates resource and congestion problems, which impede economic growth.
Capitalist economies seek to “fix” these problems with infrastructure investment that overcomes spatial frictions on flows of people, water, waste, energy and information. Under conditions of increasing urban complexity, infrastructure megaprojects appear more comprehensible and immediate “solutions” to urban problems than previous fixes using metropolitan spatial planning.
A further explanation is that infrastructure is being used as a sink for excess low-cost capital within the global economy. Such capital is otherwise unable to find sufficient destinations for productive investment.
Under such conditions, capital “switches” from productive investment into investment in the built environment. Infrastructure is the major component of this.
Finally, sustained weakness in the global economy has reduced the attractiveness of productive investment as a source of profit in favour of rents. We can thus observe the systematic emergence of “infrastructure rents” in the global economy – rentiers capture monopolies on particular infrastructure types.
Of these four explanations, the first is the most commonly presented. Yet it has perhaps the weakest explanatory power.
Critiquing the global infrastructure push
For critical urban social scientists, the global infrastructure turn poses a number of conceptual and methodological issues.
The first question is to test whether it’s specifically different from other forms of urban investment.
Cities have long been sites of physical building, including major developments and facilities. Yet the practices of global infrastructure involve mobilising capital, governments, information and production at a massive new scale via major international institutions and may be viewed as a distinctive urban phenomenon.
A second question is to understand how infrastructure has become a discourse in global policy. Global agencies almost universally view infrastructure as a beneficial phenomenon to be promoted. How this began and has been promulgated deserves greater investigation.
A third question is how infrastructure has become a field of specialist knowledge in its own right. And what implications does this have for understanding the role of infrastructure?
Infrastructure projects have developed their own language of financial appraisal, technical design and social and environmental impact. This then hampers democratic scrutiny of these projects.
The democratic problem
Finally, the politics of infrastructure demand attention. Infrastructure is often a site of political contestation, yet many infrastructure decision-making processes attenuate or repress democratic participation. The role of the state is often placed in tension, especially when private motivations drive infrastructure development.
There is a lack of transparency of interests – in terms of who benefits, both legally and surreptitiously, and who is affected or disadvantaged by infrastructure development. This is a clear problem that deserves greater investigation.
Large infrastructure projects have long fascinated politicians, governments and publics. Trump demonstrates the persistence of this fascination. Many view the need for infrastructure as an inevitable consequence of an increasingly urban world.
Yet the global turn towards infrastructure needs to be critically appraised beyond the utopian engineering rhetoric. We need to understand its causes and motivations, especially within the structural crisis of global capitalism and the efforts to resolve it.
We must also be attentive to the problematic aspects of the global infrastructure turn. The deployment of trillions of dollars in infrastructure investment necessarily demands clear democratic transparency and accountability. This applies not only to the money spent but to the effects on cities, societies, polities and the environment.
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Jago Dodson is professor of Urban Policy and Director, Centre for Urban Research, RMIT University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/jago-dodson-2359" target="_blank">here</a>.
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Making sense of the global infrastructure turn: Jago Dodson

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EXPERT OBSERVER<img src="https://counter.theconversation.edu.au/content/76866/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
A new roadmap for Australia’s electricity networks outlines a national plan to keep the lights on, make sure bills are affordable, and decarbonise our electricity industry by mid-century.
The plan, by CSIRO and Energy Networks Australia, sets out measures that could save households A$414 a year on average, by generating their own electricity through “distributed” technologies such as solar panels and batteries. It envisages that Australia could save a total of A$101 billion by 2050, while also bringing net greenhouse emissions to zero.
As described in an earlier draft report last December, Australia’s electricity networks can be transformed to give millions of customers more choice and control over their energy, while also meeting Australia’s international climate change commitments.
The roadmap calls for a coordinated approach, but how will that play out in practice?
<a href="https://www.propertyobserver.com.au/images/2017/05/05/Screen%20Shot%202017-05-05%20at%2012.53.50%20PM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/05/05/Screen%20Shot%202017-05-05%20at%2012.53.50%20PM.png" alt="">
Regional analysis
While it is a national plan, each state and territory will play its own distinct role.
Each faces different circumstances in terms of electricity demand growth, renewable resources, state renewable energy policies, and the age and fuel mix of their existing electricity infrastructure.
The full report outlines what each state and territory can expect.
New South Wales
The renewable electricity generation share in NSW is expected increase steadily to 28 percent by 2030. Thereafter, new generation capacity building is expected to accelerate to fill the gap left by more rapid coal capacity retirement.
NSW’s rooftop solar panel capacity will increase by more than 400 percent by 2030, with more than 6,000 megawatt hours in small-scale battery storage. These changes will be driven largely by falling costs, which will encourage wider customer adoption and the use of larger system sizes.
NSW customers will become a significant player in Australia’s overall energy system, with the capacity of the state’s rooftop solar panels projected to exceed 11,000MW by 2030 - more than the state’s coal-fired capacity today.
Queensland
Similarly to NSW, were the lack of coal plant retirement to be the main driver, Queensland’s renewable electricity share would lag other states at only 12% by 2030, with more rapid transformation occurring in the period between 2030 and 2050. However, state government renewable energy schemes could modify this outcome.
Queensland will see a huge increase in rooftop solar panels, of more than 500 percent by 2030. By then, it is also forecast to have more than 10,000MWh of small-scale battery storage capacity – the equivalent of 760,000 residential battery storage systems. That will rise to the equivalent of more than 2 million household battery systems by 2050.
High levels of rooftop solar and other distributed generation will create challenges for Queensland’s electricity network. There is the potential for “reverse flow” (where local generation exceeds consumption) in many parts of the Queensland power system within 15 years.
Victoria
Victoria is assumed to meet its target of 40 percent renewable share of generation by 2025 and maintain that share for next 15 years before investment accelerates again in the 2040s.
Victoria is also set for a 500% increase in rooftop solar panels by 2030, and more than 6,000MWh in small-scale battery storage. These batteries would represent the equivalent of 440,000 residential battery storage systems installed by 2030, and more than 1 million by 2050.
South Australia
South Australia has the second highest share of renewables of all states at around 40 percent and is expected to steadily improve that position until other states accelerate their own building programs in the 2030s.
South Australia’s rooftop solar panels will increase by more than 300 percent by 2030, with 4,000MWh of small-scale battery storage.
While South Australia already leads the nation in the installation of new large-scale renewable generation and is set to become a leading installer of large-scale battery capacity, small-scale renewables and batteries will also play an important part in its future energy mix, as in other states.
SA will lead the way in large-scale solar installation, although rooftop solar is where the real nationwide growth will be. AAP Image/Lyon Solar
Western Australia
WA’s rooftop solar power capacity will triple by 2030, combined with a forecast 2,000MWh of small-scale battery storage.
More than 40 percent of the states’s electricity is projected to come from renewable sources by 2030, as is the case in South Australia today.
Tasmania
Tasmania is the leading renewable generation state and its hydro generation and storage capacity could support grid stability in the broader National Energy Market into the future.
Residential battery storage would play a small but significant role in supporting the energy transformation in Tasmania. More than 1,000MWh in onsite battery capacity could be installed in Tasmania by 2030, and more than 2,000MWh by 2050.
Paul Graham is chief economist, CSIRO energy, CSIRO and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/paul-graham-1898" target="_blank">here</a>.
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The solar panel and battery revolution: how will your state measure up?

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GUEST OBSERVER
Infrastructure Australia’s latest report, Australian Infrastructure Plan, is a substantial contribution to better infrastructure planning.
For our cities, it cogently argues for more compact settlement patterns and transport pricing reform. However, it has some substantial weaknesses.
<h2>Integrating land use and transport priorities</h2>
The report’s discussion about the need for more compact cities is impressive but falls into the same trap as the state governments it criticises for failing to adequately integrate land use development directions and transport priorities.
The Infrastructure Priority List is rather light on initiatives that will support development of Australia’s four largest cities as more compact cities, rather than just cities with a compact core.
For example, while many public transport projects are included, these are mainly rail projects focused on feeding central business districts. These are worthy projects that will improve services and promote agglomeration economies. However, they deal with only part of the overall public transport needs for development of more compact cities.
The report clearly recognises that higher-frequency public transport services will be needed more broadly across our cities. It includes some rail projects for growth areas and bus rapid transport in some locations. It does not focus sufficiently, however, on public transport, walking and cycling projects that will help the middle suburbs achieve their potential.
These are the areas where much more employment and residential development needs to take place if our cities are to become more compact. Supportive infrastructure, particularly public transport and active transport, is central to this goal.
Another illustration of the failure to adequately integrate land use and transport thinking is the discussion of servicing the outskirts of our cities.
A major reason these areas have infrastructure and service delivery problems is that their development densities are too low. Yet I found no reference to the need to increase densities in outer urban areas. This would help with issues such as the need to improve public transport services and associated cost-recovery rates.
<h2>Urban governance</h2>
There is useful discussion in the plan on governance matters but also a significant hole.
International conversations about cities currently emphasise the importance of someone being able to “speak for the city” and of cities having more financial autonomy. These matters are important for cities to have the resources to perform their roles more effectively and be more accountable for their performance.
The plan looks at the need to reform local government, as well as project planning and delivery arrangements, but does not consider the central governance question: “who speaks for our cities?”. This is a challenge that is fundamental to our cities' common difficulties of sustaining long-term land use transport plans.
The apparent answer is “state governments” at present, but the recent Sydney introduction of a Greater Sydney Commission is a very innovative step to strengthen partnerships between the state and local governments at city-wide level. This move is recognition that the right answer needs to be wider than simply the state government. New governance arrangements should have figured more prominently in the report.
 
On funding, the report cites London on a number of occasions. There is no better city to use as a model, given that its population is about what Sydney and Melbourne can expect in 40 years – and that nobody does it better. London has already resolved the problem of “who speaks for the city”.
Under the mayor’s leadership, London is pursuing greater financial autonomy. The city is using measures such as value capture quite aggressively to increase its financial autonomy. The plan discusses value capture to an extent, but it needs a stronger focus on this as a great funding opportunity for more autonomous and accountable cities.
<h2>Externalities and pricing reform</h2>
From a public transport perspective, the weak treatment of externalities is the biggest problem in the plan.
There is much discussion of congestion and recognition of potential issues of social disadvantage, but not much systematic recognition of other externalities of cities, particularly transport externalities. The assumption seems to be, for example, that:
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agglomeration economies (or wider economic benefits more broadly) will be recognised somehow and dealt with at an appropriate time in some way;
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greenhouse gas emissions will be dealt with by whatever Australia decides to do to meet its international obligations;
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air pollution externalities will be met by vehicle emission standards; and
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accident and health externalities do not exist or are not important.
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This provides scant comfort for the pricing reform the plan proposes. Road pricing reform is about more than recovering infrastructure costs and making motorists aware of congestion costs.
It is about improving the efficient allocation of scarce resources by making road users (and public transport users) more accountable for all the net external costs attributable to their travel choices. This includes (for example) the air pollution costs that remain after emission standards are applied, the accident costs not covered by insurance, rising health costs from a lack of exercise linked to motor vehicle dependence, and the costs of greenhouse gas emissions.
The report should have been much stronger on all the externalities involved in all modes of transport being internalised within reformed transport pricing arrangements.
The plan cites evidence that Australia’s urban public transport cost-recovery rates are low by comparison with similar cities elsewhere. If road pricing reform is implemented and includes a wide range of external costs, the case for increasing these cost-recovery rates is defensible, on two conditions:
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measures are in place to support particular disadvantaged groups (which could be through government funding of targeted fare concessions); and
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external benefits of public transport (for example, agglomeration economies) are recognised as warranting cost-recovery rates that are less than 100%.
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<h2>Road funding model</h2>
The discussion about reforming the road funding model is hard to evaluate because the treatment of external costs of vehicle use is too vague.
If those costs were all internalised, as they should be for more efficient asset use, then it would be a mistake to hypothecate all the revenue in the road funding model to roads. The payments for air pollution damage, health and accident costs, for example, would need to be separated and be available for other uses that help lower such external costs.
More broadly, the process of determining road infrastructure priorities should not be ultimately devolved to the board of a road funding entity. It should be subject to an integrated process of planning land use and transport, to which that board contributes. Elected politicians ought to remain the ultimate decision-makers on major works.
<h2>Infrastructure planning vs integrated planning</h2>
The plan’s discussion about long-term infrastructure planning being “an opportunity to improve the value of community engagement” needs to provide more clarity about just what this means.
If long-term integrated land use transport planning had been undertaken more effectively in Australian cities, we would not need separate infrastructure agencies at federal and state levels.
If the report is suggesting community consultation on strategic infrastructure planning that is separate to what should be happening around long-term land use transport plans, which are becoming increasingly broad in international best-practice cities, then we will have very confused communities.
The long-term process of planning integrated land use transport should be where strategic consultation takes place. Infrastructure would be one of the matters subject to consultation and infrastructure priorities one output from the planning process.
The fundamental discussion point needs to be what we want our cities to be like in 30 to 40 years' time. Transport and other infrastructure discussions and priorities should be placed in the context of creating those cities.
<h2>The market’s role in public transport</h2>
The plan argues for more competition in the delivery of public transport services.
The cost savings it cites are essentially from settings where a private operator replaces a public operator (the greater the savings, the more bloated the initial public operator). International experience is that subsequent rounds of market testing, once a private provider is in place, deliver few savings.
Furthermore, recent research by David Hensher, from the Institute of Transport and Logistics Studies at University of Sydney, suggests that if you have an efficient private operator operating under a negotiated performance-based contract, this will be as efficient as a tendered outcome. The report does not seem to be aware of these important nuances.
<h2>Improving the policy debate</h2>
Infrastructure Australia has done much to raise the quality of debate about infrastructure planning and delivery. Its Australian Infrastructure Plan continues this contribution.
However, so far as our cities are concerned, the effectiveness of the plan will be compromised unless Infrastructure Australia walks the walk in terms of land use transport integration. It needs to align its priorities much more comprehensively with its well-framed land use development directions, and take a broader perspective on pricing reform and associated funding and governance matters.
This is about better integration and delivery in the broadest sense.
John Stanley is adjunct professor, Institute of Transport and Logistics Studies, The Business School, University of Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/john-stanley-115" target="_blank">here</a>.
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Australian infrastructure plan has some way to go to give our cities what they need

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GUEST OBSERVER
Value capture secures some of the benefits delivered by public investment to offset the costs of provision. The notion has been around in various forms for a while, but recently gained steam. Prime Minister’s Malcolm Turnbull’s Smart Cities Plan touts value capture as a way to better distribute “the costs and benefits in publicly funded infrastructure to facilitate a project that may not otherwise occur”.
But there’s a lot of confusion about what value capture actually means and how it might operate in Australia.
<h2>What is ‘value capture’?</h2>
Public investment in a new rail line or motorway can generate huge increases in surrounding land values. In part the increase derives from improved accessibility for existing residents and businesses. High windfalls also arise once land has been rezoned to capitalise on higher development opportunities generated by the new infrastructure.
Since public investments and decisions are intended to maximise community benefit, it seems unfair and inefficient that some private landowners profit immensely from the process while others gain little or may even be disadvantaged.
Value capture mechanisms seek to rectify this by clawing back at least some of the increased business revenue or land value. These funds are then allocated towards the initial costs of infrastructure provision. In the case of a planning change, land value uplift can also help ensure that affordable housing for low income groups is included in new development.
<h2>How does value capture work?</h2>
The PM’s Smart Cities Plan doesn’t offer much detail as to how a value capture model would operate in Australia. Several different approaches are used overseas, but their potential transferability is unclear.
Transit value capture is used in Hong Kong and Japan to fund railway lines and new town development. This is a project-based approach which packages investment in railway and housing development together. Commercial holdings along the railway line deliver an ongoing revenue stream as does long term investment in residential development. In Hong Kong, a significant program of public rental and subsidised home ownership has also been delivered as part of this model.
Project-based transit value depends on access to large swathes of low cost land (in Hong Kong the government retains land ownership, so the land component is essentially free). It also depends on ongoing residential and commercial investment along the new route over time, which in turn assumes buoyant economic growth. When the Japanese economy stagnated, the potential for railway operators to self-finance their projects did too.
Tax Increment Financing (TIF) is used widely in the US to finance new transit and urban renewal projects. The model draws on anticipated increases in business revenue or rents in areas where incremental value uplift will occur. A portion of the increase is captured via a special property tax which is then allocated to repay the debt.
Australian local governments can also introduce special purpose levies to fund specific items through property taxes or rates. The Gold Coast light rail project for instance, was partly financed via the council’s annual transport levy (now around $111). However, since the levy applies to all ratepayers, rather than confined to areas where direct value uplift occurred, this doesn’t represent value capture in the strict sense of the term.
Value capture through the planning process is another approach. Unlike development contributions, which in Australia are used to internalise the costs of servicing a particular project (like roads, carparks, or footpaths), so they aren’t borne by existing ratepayers, value capture focuses on the benefits (often called “betterment” or “planning gain”) accruing from public investment or planning decisions.
One way of capturing value created through public investment or planning is to levy the charge on the first property transaction (ie. land sale) following the change. Another is to add an additional levy to existing contributions paid by developers.
The NSW government’s foreshadowed “Special Infrastructure Contribution” for new residential development along the Parramatta Rd light rail corridor ($200 per metre of gross floor area) is a recent example.
While this amounts to around $20,000 an apartment (at most about 3% of current sales prices), industry lobby group the Urban Taskforce claim the levy will discourage development and hurt home buyers. That’s cheeky since house prices are set by the market – which in the case of a light rail corridor will rise by much more than 3%. Ultimately the Taskforce worries that value capture places “an unfair burden on particular sectors of society” by which they presumably mean landowners and developers.
<h2>What would need to happen to extend value capture models in Australia?</h2>
Besides the politics, a number of issues must be addressed if value capture is to be extended in Australia. First, calculating value uplift is complex. Often land prices rise well in anticipation of investment or a planning change, so robust framework for value capture should be in place well before such speculation might occur.
Second, value capture should not discourage development or make land acquisition more expensive. This means close attention to project viability when setting capture requirements. Third, robust mechanisms for collection through either the planning process, as an ongoing property tax, or when land is sold, are needed.
Finally, although the current conversation focuses on transport, over time there will be pressure to fund other socially beneficial infrastructure. Two obvious candidates are schools, which also improve land values, or affordable housing, which is often lost when land values rise.
However fuzzy current conversations about value capture may be, the Commonwealth’s new interest in cities and the need to support more affordable homes near public transport, is welcome. So too the recognition that public investment and policy changes in urban and regional areas generate enormous value, which can and should be shared more widely.
Nicole Gurran is professor - Urban and Regional Planning, University of Sydney and author for The Conversation. She can be contacted <a href="https://theconversation.com/profiles/nicole-gurran-759" target="_blank">here</a>.
Stewart Lawler is lecturer in Property and Built Environment, University of Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/stewart-lawler-262628" target="_blank">here</a>.
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What is ‘value capture’ and what does it mean for cities?

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GUEST OBSERVER
One of the startling facts about the Brexit vote was the deep division between the city of London and the rest of the country.
There was clearly a sense that change was working to the advantage of the urban elites, and often to the detriment of people who lived outside those privileged areas.
The recent Australian election reveals some of the same division but within the major cities rather than between city and the regions. Inner-city areas voted quite differently to the suburbs.
The fight over Melbourne’s East-West Link road project played out in those terms. The plan was heavily opposed by inner-city residents who had access to good public transport (trams, trains, buses, bicycles etc) and supported by residents of the suburbs who wanted improved cross-city road transport. The inner-city elite won.
We now have a similar but more egregious case evolving in Melbourne. The state government is supporting the construction of a project called the Western Distributor. It is basically a plan to improve the flow of goods in and out of the Port of Melbourne (which is in the CBD). This provides a significant benefit to the people of the western suburbs – that is, to the poorer half of the city.
There are two advantages to the city’s west. It will dramatically reduce the number of trucks passing along suburban streets and it will reduce travel times from the west to the north of the city. The government’s evaluation is that it will:
… take 22,000 vehicles including 6,000 trucks off the West Gate Bridge daily, remove up to 6,000 trucks from local streets in the inner west, improving amenity, air quality and safety … [and] reduce serious injury crashes by 20 percent.
The Victorian government promotes the benefits of the Western Distributor Project.
There is also a broad economic advantage to Victoria as a result of better logistics flows. Melbourne is a major container port and improvements to the movement of freight produce advantages for all Victorians: the project will “cut travel time to the port by up to 50%, and deliver an annual A$35 million saving to the freight industry”.
Opposition based on self-interest
The inner city is opposed to the project. The grounds put forward are revealing. City of Melbourne Greens councillor Cathy Oke said:
No city in the world is encouraging cars into the CBD so I can’t see how this project is a winner for our liveability status.
The state Greens MP for inner-city Melbourne, Ellen Sandell, makes the same argument:
No modern, global city is trying to bring more cars into its CBD. We should be investing even more in public transport, cycling and pedestrian infrastructure and ways to get trucks off streets in the west – not new freeways that bring cars into the city.
These are clearly selfish propositions. Inner-city residents do not want any more cars in the city regardless of the benefits that might accrue to other residents of Melbourne, and regardless of any broader economic benefits for the city and the state. The fact that the people of the west are poorer, have worse public transport, worse health outcomes and high levels of unemployment, is seen as unimportant.
A recipe for social divisions
These are the sort of elite positions that created Brexit and the broader political unhappiness in Europe and the US. If the inner-city residents are going to be this selfish, then we can expect to see some political response from the suburbs.
The inner city is spoilt. Inner-city residents have free trams in Melbourne, paid for by people in the suburbs. Inner-city residents have all of the Melbourne arts precincts and all of the cultural venues, also all subsidised by people in the suburbs. The inner city also has all of the major sporting venues, again all subsidised by the suburbs.
If we are to avoid the rise of populist concerns seen in other countries, the inner-city elite need to change its attitude. Rather than dividing the society by rejecting change that might hurt rich inner-city dwellers a little but provide substantial benefits for the rest of the city, these sorts of changes need to be considered fairly and discussed reasonably.
Residents in inner-city Melbourne (and inner-city Sydney and Brisbane too) have lower unemployment, higher pay and much better cultural amenity than people in the suburbs. Fairness requires some change and better support for the poorer parts of the city, not the richer parts.
Governments need to respond too by reducing the subsidies to the inner city. Even some clearer presentation of the state budgets to separate out the impact of spending on a geographical basis would help. Let us start spreading the benefits more widely.
Rodney Maddock is vice chancellor's fellow at Victoria University and Adjunct Professor of Economics, Monash University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/rodney-maddock-107543" target="_blank">here</a>.
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Inner-city bias: the suburbs need a fair go

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GUEST OBSERVER
A new report, commissioned by the Australian Automobile Association and compiled by SGS Economics and Planning, has estimated transport costs for a typical household in Australia’s capital cities.
The calculations factored in public transport spending and car costs such as registration, fuel, insurance and tolls.
In a media release accompanying the report, the Australian Automobile Association said that “the average Australian family is spending up to $22,000 every year to get around.”
Is that accurate?
<h2>Checking the source</h2>
The Conversation asked SGS Economics and Planning and the Australian Automobile Association to clarify several aspects of their calculations. You can read their full response here.
The SGS Economics and Planning full report explains in detail the assumptions that underpin their snapshot of transport costs for a typical household in Australia’s capital cities.
Their hypothetical household in each capital city featured a couple in their 30s with children. The adults were employed, lived in a detached house and had two cars, which were driven 15,000 and 10,000 kilometres per year. The car that drives 10,000 kilometres per year is assumed to be ten years old and owned outright. The car that drives 15,000 kilometres per year is assumed to be less than three years old, purchased new and financed with a car loan. In addition, one member of the household is assumed to travel by public transport into the CBD and home again, five days a week.
In each city, the hypothetical household is assumed to live in middle to outer ring suburbs, with a relatively high population density, good access to public transport, and – in the case of the Sydney, Melbourne and Brisbane householders – use toll roads to access the CBD.
These assumptions and estimates contained in the report appear valid to me. Overall, the report seems to be a reasonable attempt to deconstruct transportation costs. Assumptions about both cars being used for more than 10,000 kilometres per year while one person commutes daily via public transport could be questioned, but this would only make a difference at the margins.
<h2>Report finds national average annual transport cost is closer to $17,000</h2>
The Australian Automobile Association said the report “reveals the average Australian family is spending up to $22,000 every year to get around” – but the key phrase there is up to.
The authors of the report looked at two consecutive quarters of transport data – Q1 of 2016 (quarter one, January to March) and Q2 of 2016 (quarter two, April to June). The report found that:
Annualised figures reveal a total transport cost for Q2 of $21,791 in Sydney, while the annual cost for Hobart is $7,691 less, at $14,100.
So the figure of $22,000 relates to Sydney, not the national average. The higher costs in Sydney relate to tolls, registration and compulsory third party insurance, the report said.
In fact, the researchers estimated that the national average transport cost for the second quarter of 2016 is around $323.36 a week, or an annual national average of $16,814.72, as shown in this table from the report:
<h4><a href="/images/2016/08/29/image-20160822-30370-cazbbd.png" target="_blank">Click to enlarge</a></h4>
<img src="/images/2016/08/29/image-20160822-30370-cazbbd.png" alt="">
 
Household total weekly transport costs, Transport Affordability Index: August 2016. Transport Affordability Index: August 2016, SGS Economics and Planning.
So the Australian Automobile Association’s assertion that the report reveals the average Australian family is spending up to $22,000 every year to get around is correct – but just remember that’s the upper end of the estimates range detailed in the report, as this chart shows:
<h4><a href="https://62e528761d0685343e1c-f3d1b99a743ffa4142d9d7f1978d9686.ssl.cf2.rackcdn.com/files/134905/area14mp/image-20160822-30403-176wdv4.png" style="font-size: 1em;"></a></h4>
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<h4><a href="/images/2016/08/29/image-20160822-30403-176wdv4.png" target="_blank">Click to enlarge</a></h4>
<img src="/images/2016/08/29/image-20160822-30403-176wdv4.png" alt="">
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Household total weekly transport costs SGS Economics and Planning 
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The report found that the national average annual spend on transport is closer to $16,814 or $17,000 if you round up.
<h2>Checking the numbers against other sources</h2>
The report’s estimate of roughly $17,000 in annual household transport costs for the national average is higher than transport cost estimates produced by the Australian Bureau of Statistics.
But it’s not uncommon for different economic models to produce different results – it all depends on what assumptions you factor into the modelling.
The last Household Expenditure Survey, conducted by the Australian Bureau of Statistics in 2009-2010, indicated that Australians spent an average of $193 per week on transport expenses. After adjusting for inflation, that is the equivalent of $221 per week in 2016, or $11,531 per year.
Included in the ABS survey’s definition of transport costs is motor vehicle purchase, fuel, registration, insurance, parts, public transport fares and several other expenses.
In their response to The Conversation, SGS Economics and Planning said the discrepancy was partly because the ABS' Household Expenditure Survey:
"includes figures on transport costs from a range of households, from couple families with kids in the outer suburbs to inner-city singles who rarely drive to regional pensioners… We chose to focus on couple families with children and the costs they are likely to face as they are the most common family type in Australia… Couples with children are likely to have higher transport costs than other family types such as singles, single parents or couples without children, as they are larger and more likely to be working."
You can read more of their response <a href="https://theconversation.com/full-response-from-sgs-economics-and-planning-64308" target="_blank">here</a>.
The ABS data treats the major part of a car purchase as an asset (i.e. is not included in expenses related to travel), so if you treat household motor vehicles as a cost rather than an asset you can get a number that approaches the annual figure in the recent SGS Economics and Planning report.
The report assumes regular toll road usage in the capital cities, which, of course, doesn’t apply to all of us. And it also makes the debatable assumption that one member of the household uses public transport regularly while another member uses toll roads with similar regularity.
Naturally, the biggest contributor to overall costs may be how expensive your car or cars are (and, thus, any associated repayments), the level of which is largely at the discretion of the household.
<h2>Verdict</h2>
Overall, the SGS Economics and Planning report appears to be a reasonable attempt to deconstruct transportation costs, but is specific to a particular type of household within each city rather than all households who travel.
The Australian Automobile Association’s statement that the report “reveals the average Australian family is spending up to $22,000 every year to get around” is technically accurate, thanks to the inclusion of the qualifier “up to”.
However, it is worth noting that the $22,000 figure (which applies to a typical Sydney family) represents the highest end of the range of estimates contained in the report.
The report found that the national average annual spend on transport is closer to around $17,000, which is higher than transport cost estimates produced by the ABS in the past. 
Review
I agree with this FactCheck and its conclusion.
The really important missing cost is the time lost to travel, especially when it is over one hour per day. Marchetti’s constant, a concept based on the research of Italian physicist Cesare Marchetti, posits that anything more than an hour of travel time per day is problematic.
It would be interesting to compare options than the hypothetical “average Australian household” example given in the report. For example, both the dollar costs and time costs in Australia could be reduced by having one fewer car for the average family, and living in a location that allows that option to become viable.
My own research suggests that many cities around the world are increasingly opting for greater investment in public transport and higher density urban redevelopment, rather than building housing on the fringes of cities where houses cost less but transport costs are huge. – Peter Newman
Matthew Beck is senior lecturer in Infrastructure Management, University of Sydney an author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/matthew-beck-90705" target="_blank">here</a>.
 
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Does the average Australian family spend up to $22,000 every year on transport?

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GUEST OBSERVER
Long-term privatisation contracts, most of them closed to scrutiny, lock urban infrastructure into 20th-century formats unsuited for a climate-threatened planet.
The privatisation of urban infrastructure in Australia is an ironic story. The vehicles of urban infrastructure – the utilities and the state-owned enterprises – were so central to the life of cities that they became perfect entities for private sell-off. We now live with the consequences of the sell-off.
The utilities flourished in Australia as a nation-building exercise following the second world war. The Bretton Woods agreements entrenched Keynesian fiscal behaviours across the Western world.
The utilities thrived on the willingness of governments to raise capital for public works. They were also central to the development of state capacity and the assembly of a career-based professional public service. As part of the social compact, the public accepted reasonable user pricing for the availability of water, energy, public transport and telecommunications services.
Hence, the utilities and the state-owned enterprises led the roll-out of urban infrastructure in the second half of the 20th century. This roll-out shaped the nature of Australian urban life, its format and flows.
But then fiscal crisis of the state descended in the 1970s and 1980s. The sell-off of public assets was seen worldwide as a solution to state indebtedness. Arguments that private enterprise could deliver infrastructure services more efficiently added impetus.
A wholesale transformation
Few governments resisted the sell-off urge. Australian governments, state and federal, participated in the sell-off, though in a stuttering manner. Through time, however, the change has been substantial.
Abbott and Cohen calculate that the output of state-owned enterprises in Australia in 1989-90 accounted for 7% of GDP, 9% of total employment, and 14% of gross fixed capital expenditure.
By 2011-12, the output of state-owned enterprises had fallen to 1.3% of GDP. Their gross fixed capital expenditure contributed only 1.8% of the nation’s total. The authors estimate that proceeds from privatisations in Australia since 1987 total around A$194 billion (in constant year 2000 dollars).
The sell-off commercialised and privatised a raft of assets: electricity generation and transmission, gas distribution, airports, ports and telecommunication. New assets went straight to private hands: motorways, public transport, renewable energy generation, and freight handling.
The shedding of public responsibility for infrastructure meant public investment in Australia as a share of GDP fell from more than 5% in the mid-1980s to well below 3 percent by the end of the 1990s.
What’s in it for investors?
There is much to understand about the sell-off. Here I focus only on why private investors are willing to pay extraordinary prices to acquire urban infrastructure assets.
The attraction of investing in an urban infrastructure asset comes from the infrastructure services being embedded in the daily flows of people, water, energy and information throughout a city. The flows of a city are remarkably ordered in terms of volume, direction and timing.
How a city operates is dependent on the co-existence of decisions by infrastructure operators and users. The operators decide how and when services will be available. Households and firms decide what they will be doing across a 24-hour day and therefore how and when they will use the infrastructure services on offer.
Thus, the efficiency of infrastructure provision comes from the predictability of the flows of a city. These in turn come from a historical patterning and sequencing of behaviours by householders and firms as they read off and conform to each other’s movements.
An example is the relatively sympathetic structuring and sequencing of work hours and school hours. This ensures that public transport facilities are utilised more efficiently in peak hours, while the hours that parents and children spend together are made more convenient.
The embeddedness of infrastructure into city life means that revenue streams from user fees for infrastructure services are highly predictable and stable. And because transport, water and energy supply is usually monopolised, the householder has little choice but to continue as a consumer of an infrastructure service.
The books of a utility or state-owned enterprise, then, represent a discrete set of households well trained to pay their monthly bills. This is precisely the type of revenue stream that pension, insurance and sovereign wealth funds seek when faced with the peculiar problem of having surplus cash to lock away for at least the next two decades.
What did we lose in the sell-off?
Perhaps it was clever to have solved a government debt problem in Australia back in the day through a sell-off of assets to a new class of long-term investor. But as a consequence we have lost other things.
Infrastructure as a planning tool to shape our cities is one. Revenue streams to subsidise needy customers or supply to remote locations is another.
And, critically, we have lost the opportunity for the state to revamp energy, water and transport systems to allow for innovative supply and demand formats – such as distributed electricity supply networks – that are more appropriate to a climate-threatened planet.
Long-term privatisation contracts, most of them closed to scrutiny, lock urban infrastructure provision into 20th-century formats.
The difficult task now will be their unlocking.
 
Phillip O'Neill is Director of the Centre for Western Sydney at Western Sydney University and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/phillip-oneill-125643" target="_blank">here</a>.
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Living with the legacy of the great infrastructure sell-off: Phillip O'Neill

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GUEST OBSERVER
Large transport infrastructure projects, which can cost billions of dollars, are major drivers of the economy, and political flagships.
They have significant impacts on health and wellbeing. Yet our research finds these impacts are not as well considered in the project assessment phase as they should be.
A recent Lancet series is the culmination of knowledge linking transport and health. For example, it recommends reducing reliance on private cars and enhancing opportunities for walking, cycling and public transport use. It argues this will improve health both by reducing air and noise pollution, and by promoting physical activity, community connectedness and better access to goods and services, particularly for the socio-economically disadvantaged.
Each transport project’s environmental assessment thus presents a crucial opportunity within the mandated planning process to consider health. This is also when the wider community can engage with the design of projects. The main output of this process, the environmental impact statement (EIS), is available for public scrutiny and comment prior to final project approval. 
<h2>A health check on assessments</h2>
We recently compared the inclusion of health issues in four major transport project assessments. Three involved motorways (WestConnex M4 East and NorthConnex in New South Wales and the 2010 Darlington Upgrade in South Australia) and the fourth the Sydney CBD and South East Light Rail. We did this by first applying a “health audit” to each EIS, then interviewing a range of stakeholders. 
The road assessments emphasised risks from air quality and noise, concluding these were minimal. Indeed, each project was predicted to improve air quality and, by extension, health. 
When health was assessed, human health risk assessment was the method used, which we judged to be of good quality. The 2010 Darlington upgrade was the only road project not to include health data explicitly in its calculations. 
The light rail EIS referred mainly to the connection of the project to health facilities, with some reference to noise and dust in construction. This statement’s chapter on social impacts, in which health featured strongly, reflects the tone of the recent Lancet report, albeit with less detail. It considered wider health benefits of the project, including better access to health facilities and employment opportunities, improved road safety, opportunities for walking and cycling, better air quality and enhanced social interaction. 
Of the four environmental impact statements, WestConnex M4 East had the most detailed coverage of mental health issues, mostly related to property acquisition. Despite this, there was limited detail in the health chapter when compared to other issues like air and noise risks. Mitigation measures were limited to the provision of phone counselling services. 
The EIS for each of the other projects lacked assessment of mental health impacts due to construction and operation. 
As outlined above, evidence that links transport and health advocates for access to a mix of transport options, giving people opportunities to walk, cycle and use public transport. The importance of this mix was excluded from the project and parameters set for the two NSW motorway projects. 
While the EIS for each of NorthConnex and WestConnex acknowledged the need for multi-modal transport options, their provision was described as being outside the project’s parameters. It wasn’t clear how or when this was being done elsewhere, only that it was not the proponent’s responsibility and not within the scope of the EIS.
This mix of options was minimal in the 2010 Darlington report we analysed. However, the most recent 2016 iteration of this project design appears to emphasise walking and cycling facilities, with a recent announcement of a rail link adjacent to the motorway.
<h2>Why were health impacts neglected?</h2>
Stakeholder interviews were held with project co-ordinators, consultants, the health department and affected community members for the NSW-based projects. We were unable to conduct interviews for the Darlington case due to changing and uncertain project parameters at the time of the research. 
Informants stressed the importance of the requirements issued to proponents by the state Department of Planning and Infrastructure. Health featured in these requirements, largely on the advice of the state Ministry of Health. 
These requirements focused on environmental health risks, particularly concerning air quality. This corresponded to historical community concerns about motorway impacts. 
Despite an overall consensus that health was an important issue, there was little appetite for comprehensive consideration of broader health impacts, such as those advocated by evidence-based research. Crucially, as reported in the environmental impact statements and confirmed through stakeholder interviews, the design of each project reflects prior financial and strategic decisions. The purpose of the EIS is focused on minimising these risks within those existing design parameters. 
Supporting the considerations behind the light rail, there was reference to the cost savings from the health benefits associated with public transport use. This suggests that health was part of that project’s preceding business case. For the motorway projects, however, our research suggests these early decision points failed to comprehensively consider health impacts. 
If health is to be comprehensively included in the environmental impact statement, it is clear that it needs to be considered much earlier on when the decisions are made on the parameters of the project. Our findings suggest the design of these projects – from business case to assessment – lags well behind the evidence surrounding transport and health. 
The community can be confident that these assessment processes were conducted thoroughly within their set purpose. But the bar for considering the full range of health impacts needs to be raised. This will ensure communities are aware of the long-term impacts of infrastructure provision, and that opportunities to promote and protect health through transport are maximised.
Patrick Harris is senior research fellow, University of Sydney and can be contacted <a href="https://theconversation.com/profiles/patrick-harris-102775" target="_blank">here</a>.
Emily Riley is research assistant , University of Sydney and can be contacted <a href="https://theconversation.com/profiles/emily-riley-315794" target="_blank">here</a>.
<a href="https://theconversation.com/profiles/jennifer-kent-13822" rel="author">Jennifer Kent</a> is research fellow, University of Sydney and can be contacted <a href="https://theconversation.com/profiles/jennifer-kent-13822" target="_blank">here</a>.
All are authors for The Conversation.
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Why transport projects aren’t as good for your health as they could be

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GUEST OBSERVER
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The unsolicited proposal for the development of the Martin Place metro station demonstrates the innovation that can come from the private sector. 
Macquarie Bank’s proposal to fund a new metro station by developing two commercial towers linked by retail arcades is good news for Sydney.
The tax payers do not have to fund the new station as a result of the development opportunities on adjacent sites.
The Martin Place station development follows a similar approach for the renewal of Wynyard station by Brookfield who own adjacent sites to Wynyard. In both cases it is the private sector that has come up with world class designs for the station infrastructure as well as for adjacent tall commercial buildings. 
Both of the new station proposals also include major retail outlets to activate the transport concourses which uses private sector expertise in making bustling public spaces.
Sydney is developing an extensive underground pedestrian network that still connects to natural light through the station redevelopments. This dry pedestrian network will be the perfect route for commuters during future wet weather like the current heavy rain that Sydney is going through.
The Urban Taskforce encourages the NSW Government to use the unsolicited proposal process in other locations where private sector innovation can deliver quality public domain outcomes.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI">here</a>.
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Private sector innovation provides quality public outcomes for Martin Place Metro

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GUEST OBSERVER
The change to foreign ownership of Australian companies and critical infrastructure continues with the takeover offer for rail and ports operator Asciano from Brookfield Infrastructure Partners, a Bermuda-based company listed on the New York and Toronto stock exchanges.
The offer, which values Asciano at US$9 billion, is a part cash (75%) and part scrip (25%) bid. While it has the blessing of the Asciano board, the offer is yet to be approved by both the Australian Competition and Consumer Commission and Foreign Investment Review Board.
Australians appear relatively unconcerned about major transfers of ownership such as these - yet it is at odds with the assiduous strategies of larger economies such as the United States and China, to secure their supply chains.
Asciano was a spinoff of the Toll Group, formed in 2007. It has a rail division, Pacific National, acquired by Toll from the federal government-owned National Rail Corporation in 2002, and a port and logistics division, Patrick Terminals and Logistics.
Patrick is a long-established Australian company. It was originally started by the owner of coastal trading vessels before morphing into a number of other shipping and stevedoring companies. Although known for its role in the 1998 waterfront dispute, it has since become a leader in the stevedoring sector. It was acquired by Toll in 2006.
The Brookfield name is not completely unknown in Australia. The company already owns Brookfield Rail – a 5,500 km rail network in Western Australia – and the Dalrymple Bay Coal Terminal in Queensland.
Brookfield’s interest in Asciano is partly driven by a goal of positioning itself for the mooted sale of the federal government-owned Australian Rail Track Corporation, the owners of 8,500 kilometres of critical rail track across Australia.
If the Asciano sale goes ahead, approximately 95% of all Australian containerised imports and exports will be handled by foreign-owned companies including Dubai Ports World (based in the United Arab Emirates), Hutchinson Port Holdings (based in Hong Kong) and International Container Terminal Services Inc. (based in the Philippines), with only the Adelaide container terminal still in Australian hands.
On the other hand, a potential benefit for Australia is that Brookfield has indicated it will utilise Patrick’s world-leading expertise in automation across stevedoring operations it owns in other countries.
The general public may not be fully aware of the extent and ramifications of this shift in ownership in businesses critical to Australian trade. The main driver for overseas owners is to maximise return on the considerable investment they have made to acquire the assets, with in some instances, applying creative means of getting around Australian laws and regulations. For example, the recent Senate Committee inquiry into tax avoidance highlights just one of the issues, that of tax avoidance by overseas companies operating in Australia.
Many countries are grappling with how to manage the increase in foreign ownership, but in some cases public opposition has prevented a takeover going ahead. In 2006, a number of North American container terminals and logistic centres were up for sale but Dubai Ports World, one of the bidders whose ownership is concentrated in the Middle East, was ultimately excluded from the process due to the public’s fear that such a sale would compromise port security.
The US is also fiercely protective of its coastal shipping regime where all coastal cargo in North America has to be shipped by American owned and crewed vessels. This is in stark contrast to the current Australian coastal trading policy where increasing amounts of cargo on the Australian coast are being carried by foreign flagged and crewed vessels.
China is taking the security of their supply chains even further. Chinese companies, with the help of the government, are in the process of acquiring interests in ports and port-related businesses in the Indo-Pacific, East Africa and the Mediterranean along the shipping routes from China to Europe, the so-called “Maritime Silk Road”.
This project is part of the “One Belt, One Road” policy, which is an undertaking to secure China’s supply lines to and from Europe. It also includes a land-based route the “Silk Road Economic Belt”, which more or less runs along the centuries old former Silk Road and is developed to allow China’s landlocked western provinces to access the markets of Southeast Asia and the Middle East. The other aim of this initiative (backed by a US$40 billion fund) is to shape China’s regional periphery by exercising economic, cultural and political influence.
Australia could learn something from other economies – to carefully assess the long-term harms and benefits of allowing the sale of critical assets.
Peter van Duyn is maritime logistics expert, Institute for Supply Chain and Logistics at Victoria University and author for The Conversation. You can contact him <a href="https://theconversation.com/profiles/peter-van-duyn-22412" target="_blank">here.</a>
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