Transport economics congestion freeway
The dodgy economics of congestion busting

The economic justification of many big road improvement projects is based on dodgy economics, according to the nation’s top transport economics authority.

The Bureau of Infrastructure, Transport & Regional Economics (BITRE) says in a new report that the road user benefits in state and federal road projects can be significantly over-estimated.

Travel time cost savings – often cited by politicians as the rational for freeway widenings, bridges, by-passes and the like – have been the major economic rationale for many massive road projects.

BITRE has found that the calculations of these so called savings are riddled with errors.

Mostly, inaccurate traffic forecasts and methodology errors were responsible for the exaggerated road user benefits.

This scandalous misallocation of taxpayers’ money is of great interest to bike riders, who are in a never-ending battle to get just a few crumbs from the transport infrastructure table to build desperately needed bike routes.

Cost Benefit Analysis (CBA) can be, and often is, applied to bike infrastructure projects. The techniques are proven, the results trusted, and the benefits usually come in positive, and way ahead of those typically in a “congestion busting” road project.

Now we are learning that CBA for road projects is often nonsense: the travel time costs benefits are illusory, based on traffic forecasts that are closer to fantasy than science.

This racket is stealing public resources that should be flowing to the most valuable bike, public transport and freight projects.

CBA is meant to be used to rank and prioritise transport projects so that the those with the most benefits and the best payoff for the community get built first.

But it has been corrupted by politics, and too many public servants, consultants, and industry players are standing on the sidelines looking on rather than looking after the best interest of the nation.

BITRE has recommended that many more projects are economically evaluated after completion so that the dodgy economics of the CBA used to justify many projects can be exposed.

The research report, dense with geeky economics, is here.