On the weekend the state government announced the "NorthConnex": another tolled motorway for Sydney. This one will cost $3 billion. That's small relative to the $11 billion WestConnex, but hardly small change. Some people think motorways are a bad idea because they induce more traffic, others think it is folly to invest billions of dollars in roadways when car travel is plateauing or falling in developed countries. Personally, I'm not opposed to motorways provided that:
- They have a benefit/cost ratio significantly above one
- The assumptions underlying the cost/benefit study are reasonable (there are many ways to game these things)
And this brings me to my main issue with these motorway proposals: there is no publicly available cost/benefit study for either of them. In a sane world, before we agreed to investing billions of dollars in infrastructure, the case for doing so would be publicly laid out. But it isn't, and the politicians are doing society two great disservices by their failure to do this: firstly, they may be wasting our money on ill-conceived projects; and secondly, they are entrenching a culture of opaqueness in the handling of public funds. This second point is especially important in NSW given our terrible record on corruption: if politicians can spend billions of dollars without the accountability of a public cost/benefit study, there will always be the potential for politicians to approve dud projects for a kickback, or a position on the board of a road construction or motorway operating company on retirement. Just so I am clear, I am not claiming that the WestConnex and NorthConnex motorways are going ahead due to corruption, I am simply pointing out that there are no publicly available cost/benefit studies, and we are being asked to trust the politicians and motorway companies without proof. This is no way to run major infrastructure investment.
My second peeve about these projects is that both of them are relying, to a significant degree, on tolls to fund them. This is a bad idea because funding a motorway this way lowers the benefit/cost ratio. This is easy to show mathematically, but is intuitively explained as follows:
- The motorway operator has an incentive to maximize cost-recovery/revenue, and the toll that does this is not the same as the toll that maximizes public benefit.
- Tolling individual links in a road network causes perverse outcomes: witness the Cross-City tunnel, which is tolled, and under-utilised, while the equivalent untolled surface route is still congested.
