East-West Link Hoddle Street overpass

Yesterday The Age ran with an apparently shocking new development in the ongoing saga of the Victorian Government’s proposed East-West Link motorway, Secret case for Link revealed.

A Cabinet-in-Confidence report obtained by the paper shows “the financial case for the east-west link hinges on a prediction that toll road use will jump over the next 30 years because of rising wealth and shrinking petrol and CBD parking price rises”.

The paper says the business case for the Link makes the “controversial assumption” that:

  • drivers’ willingness to use toll roads will increase by 1.4% p.a. due to rising incomes;
  • the rate of increase in the cost of running a car will fall from the current 2% p.a. in real terms to 0.5% p.a. by 2041; and
  • the rate of increase in the cost of inner city parking, which is currently increasing at 4% p.a. in real terms, will fall to 0.5% by 2041.

According to The Age, the report indicates the methodology “has not been used in any of the Transport Department’s other public transport projects or program modelling to date.” Rather than use its own “in house” transport model, the Government outsourced the modelling to “Brisbane-based company Veitch Lister”.

The paper says this makes scrutiny difficult and, moreover, cites a source who claims there’d been internal concerns within the roads bureaucracy that:

the government had been prepared to use “garbage” assumptions to make the project appear to stack up, accusing it of manipulating modelling to produce a favourable result.

The comments on the on-line version of the article are overwhelmingly critical of the Government. One commenter takes aim at Veitch Lister, implying the firm was behind the disastrous traffic projections for high-profile motorway failures in Brisbane.

Like many others, I’m sceptical about the East-West Link given the Government’s refusal to make the business case available publicly. But while I haven’t seen the report The Age has obtained (it isn’t making it public), it’s not obvious to me that the issues raised by the paper are in themselves matters of serious concern.

The idea that the value of travel time goes up as incomes rise isn’t some sneaky, underhanded practice as The Age seems to imply. It’s why we’ve gone from walking, to trains, to cars, to planes. In fact, it’s a standard assumption in traffic modelling.

The Department of Transport in the UK suggests modellers should increase the value of travel time by 80% of the increase in real average weekly incomes (i.e. elasticity of 0.8)). Guidelines issued by the US Department of Transportation suggest modellers use an elasticity of 1.0.

The idea that the rate of increase in motoring costs might moderate over the long term isn’t remarkable either. While I might quibble with the precise numbers, the report apparently still assumes the cost will increase in real terms each year.

The lower figure doesn’t apply until 2041, more than 25 years away and we’re told nothing about the trajectory over the period. The reduction in the rate of increase presumably reflects the ample evidence that motorists respond to higher petrol costs by, for example, shifting to smaller cars or more efficient travel patterns e.g. trip chaining.

This isn’t an “out there” assumption. In fact it’s more pessimistic than that adopted in the Phase 2 High Speed Rail Study which says (Appendix 5A, Economic, social and environmental appraisal):

Under all oil price scenarios, even those with major increases, the real costs in car travel are expected to decrease relative to the costs today over the long term. This is driven by the assumptions on improved fuel efficiency for private vehicles.

There are different views on where the price of oil might go in the future and how it might affect behaviour (e.g. see Has “peak gasoline” been and gone?) but the position taken by the report isn’t unusual or deceptive.

I can’t comment on the exact numbers in relation to the reduction in the rate of increase in inner city parking costs either, but again I note that it’s assumed the cost will nevertheless increase in real terms each year. Once more, the smaller figure applies at 2041 and there’s no information provided on the shape of the curve over the period – does it fall off quickly or slowly?

The idea that the growth in parking costs might moderate is in any event a plausible one and warrants serious consideration. The mode share of public transport in the centre of the city is increasing for a number of reasons and should help to moderate the rate at which the cost of parking increases.

The Age has previously dissed Veitch Lister (see Who got the facts wrong on traffic forecasts?) but I think retaining them to do the traffic forecasting for the East-West Link is a smart move (they aren’t doing the economic evaluation). They’ve got specialist modelling expertise in toll roads. As I understand it, the ability of the Government’s in-house model to forecast demand on toll roads is relatively crude in comparison.

Importantly, Veitch Lister market themselves as the firm who provides realistic traffic forecasts. Contrary to the claim by the commenter in The Age, they didn’t do the modelling for the promoters of Brisbane’s failed Clem 7 tunnel or the failed Airport Link. In fact the firm released a rival forecast for Airport Link (as a marketing exercise) that proved considerably more accurate than the numbers the promoter relied on (1).

Stories like The Age’s tend to be accepted uncritically because they fit with the existing mood of scepticism about the East-West Link. But despite the breathless way its framed, the story doesn’t support the implication of dubious practices and assumptions. Further, we know nothing of the credibility or motivation of the paper’s source, and we don’t get to evaluate the report The Age relies on.

That doesn’t mean the East-West Link is a good project or that there aren’t other problems we don’t know about (after all, we haven’t seen the real business case). Nor does it mean the Government isn’t above being “creative” with how it presents technical information publicly (e.g. see Is there actually a sensible case for the East-West Link? and Do the numbers on the East-West Link add up?).

In this instance though, the criticisms implied by The Age aren’t convincing. I’ll remain sceptical of the East-West Link until the Government provides persuasive evidence that it’s a sensible project. But I’m not playing politics, so I’m not going to accept uncritically any and everything the media dishes up simply because it happens to “fit” my view on an issue.

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  1. For the record, I have no business or personal relationship with Veitch Lister.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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