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| Action for Public Transport (N.S.W.) Inc. |
| P O Box K606 | |
| Haymarket NSW 1240 | |
| 24 February 2023 | |
Action for Public Transport (NSW) is a transport advocacy group, which has been active in Sydney since 1974. We promote the interests of beneficiaries of public transport - passengers and the wider community alike. We make the following submission on the document T5 draft distributional and equity effects of transport initiatives released for public consultation in January 2023.
APTNSW is pleased to see distributional impact and equity considerations getting more attention in the ATAP guidelines. The proposed framework for "distributional impact assessment" seems to us to be a better approach than some form of weighting system within the black box of cost-benefit analysis.
The guidelines recommend that the distributional impact assessment be considered in the business case "alongside" a cost-benefit analysis. We reiterate previous arguments that CBA is not fit for purpose in the transport field. The approach taken in the distributional impact assessment may in fact be a better way to approach the entire assessment task.
Before the guidelines are finalised, it is essential in our view that there be much more consultation with bodies with deep knowledge of inequality and transport disadvantage. Bodies like NCOSS, public health agencies, planning institutes, local councils and growth area alliances would probably have some important insights to offer.
The draft suggests at various points that distributional effects "can" matter. We submit that they do matter. Some of the reasons are set out in the draft guidelines (p.28); in short, inequality corrodes societies. Former British PM Margaret Thatcher may have declared that "there is no such thing as society", but we suspect most Australians see themselves as citizens living in a society, not consumers living in an economy.
We doubt that many decision makers have ever been properly aware that CBA judges distributional impact as irrelevant. The method is opaque and unintelligible to almost everyone except the CBA practitioners to whom the guidelines are primarily directed.
APTNSW agrees that the proposed framework for "distributional impact assessment" is a better approach than attempting the fraught task of deciding on a weighting system and then incorporating it within the black box of CBA.
There are a few specific comments we would like to make.
Table 6 (p.20, 4.4) lends itself to plain English propositions that interested parties and decision-makers can understand and discuss. In our view that is far more likely to lead to informed decisions than an opaque mathematical procedure based on assumptions that also reflect value judgments (such as that the aim of governments should be to increase GDP (the "pie"), not to redistribute slices of said pie).
The mapping of indices of relative disadvantage demonstrated in the document is potentially very helpful to readers. A snapshot of the inequitable social and economic outcomes of more than 50 years of underinvestment in public transport can also be seen in the "effective job density" diagrams contained in the T2 guidelines.
On p.1 (at a glance) the guidelines suggests there are two "widely-accepted notions of equity relevant to transport initiatives - vertical and horizontal equity". The discussion of "horizontal equity" appears on p.29 of the guidelines, where it is suggested that this includes "market-based equity". Within that frame of reference, it is said that:
Positive externalities, infrastructure not charged for and subsidies, can be seen as undeserved gifts. Studies are sometimes undertaken that assess whether the amount a group pays in taxes and fees corresponds with the levels of benefit received or the costs incurred to provide those benefits.While such attitudes are not unknown, we do not agree that it is a "widely accepted notion" in Australia, nor for that matter in Europe. The UK is seriously pursuing a "levelling up" agenda that suggests it has had second thoughts about the idea. It might be more accurate to say that "market-based equity" is widely discussed in a particular stream of academic literature and features in US political culture.
The draft guidelines are right to point out (p.30) that the notion of "market equity" conflicts with the pursuit of "vertical equity", which appears to be the aim of the proposed framework. This seems to us to be the appropriate aim in a country that prides itself on its egalitarian traditions and its overriding concern for the "fair go".
The draft guidelines assert (p.8):
Transport projects are generally not a good way to redistribute income, or to meet the primary objectives in another sector (e.g. health). This is usually better done through the tax system and provision of social services, or directing greater resources to education, health, or policing in particular locations.We do not know where this theory springs from, but we contend that it is profoundly wrong. It makes no sense to refuse funding to transport projects that tackle car dependence (known to foster obesity), and then devote more resources to hospitals to deal with the resulting rise in diabetes and other morbidities.
The view of public transport as a "merit good" that need only be "basic" (p.8) is years out of date and misunderstands the role of a strong network of public transport. It also completely ignores the challenge of climate change, which might just be excusable in the case of Musgrave writing in 1957. It is not excusable in 2023. Transport is the second-highest contributor of carbon emissions in Australia.
The passing of Australia's Climate Change Act last September requires agencies to align their processes with Australia's international commitment to averting dangerous temperature rises. Cost-benefit analysis rests on asking a sample of people how much they would be "willing to pay" for an action that reduces emissions. It then sets that figure off against time savings for motorists, as if that were of equal importance to preserving a liveable planet. This does not strike APTNSW as remotely aligned with our climate change commitments.
Table 3 on p. 17 seems to relate to a road proposal, because it appears to say that the only user benefits are for residents in the first three income quintiles (there are no user benefits for income quintiles 0% to 20% and 20% to 40%, nor for young adults or older people). Then again, it might mean something completely different.
Table 4 (p.19) is said to use information about trip attractors and amenities "likely to be used by impacted social groups". Is it not the case that this depends on whether they can get there, and what is being decided at the end of the assessment is whether that will be made either possible or easier?
Page 19 refers to "Tables 3, 4, and 5 above". Table 5 is below, not above.
Table 5 also seems to relate to a road proposal (it specifies motorcyclists and young male drivers) but it is confusing. Does the road have no footpath, accounting for the lack of user benefits for pedestrians? Does it prohibit cyclists, accounting for the lack of user benefits for cyclists?
Table 7 (p. 22) refers in the qualitative statements to "Income quintile 1", "Income quintile 2" etc but the headings use a range, and do not specify what number relates to which range. It is for instance not clear whether quintile 4 refers to the 20% to 40% column (reading from right to left) or the 60% to 80% quintile (reading from left to right).
Table 8 on p.23 appears to treat children and young people as the same, but we would suggest that children are not able to use (unchartered) public transport alone whereas young people certainly can. Perhaps this is intended to signify that both are "non-driver" groups?
Table 9 seems to be a bit out of date to us; it gives two options for mobility: car or "alternative and non-motorised modes". We suggest ATAP might also look at more recent indices such as liveability indices.
The recommendation that distributional impacts should be addressed "alongside" CBA raises some interesting questions. The same recommendation is made for the consideration of "wider economic benefits" in the ATAP T3 Guidelines.
There remains a danger that in practice the cost benefit ratio is given primacy, despite its lack of attention to distributional effects, or wider economic benefits. The guidelines (p.8) tilt the field by recommending that:
Where an option is presented on distributional impact or equity grounds, the decision-maker should be advised of the efficiency cost (in terms of loss of net benefits compared to the option with the greatest net benefits or with the base case).Infrastructure Australia published a report in 2018 Outer Urban Public Transport: Improving accessibility in lower-density areas documenting serious transport disadvantage. It predicted (p.4) that business cases are unlikely to "justify" the provision of rail or even regular route bus services in these areas, where it said the bulk of Australia's additional population will be settled.
So far as we know, ATAP guidelines have never advised CBA practitioners to warn decision makers that rejecting projects in these areas involved sacrificing equity (although they seem to have figured that out for themselves). This leads us to reiterate our objection to the use of CBA, which we submit is not fit for purpose in this field.
The draft guidelines and the proposed framework bear directly on the question of inequality in Australia. This is a matter of such importance that these guidelines need to be brought to the attention of a much wider audience than the "CBA practitioners" they primarily address.
APTNSW suggests that much more consultation with bodies with deep knowledge of inequality and disadvantage should be undertaken. The circulation list needs to include bodies like NCOSS, public health agencies, planning institutes, local councils and growth area alliances. It may be that a public advertisement calling for submissions is in order.
Even if critical issues such as distributional effects are introduced in some form of assessment table, there is a danger that BCRs will continue to have a dominant role it does not deserve. APTNSW contends that CBA has proven to be deeply flawed as a tool for making sound decisions about transport. It is also our view that cost-benefit analysis is poorly aligned with the need to reduce carbon emissions from the transport sector.
As we have argued before, the quest for a single number pointing unerringly to the best option was fundamentally misconceived. There is no such number and there never can be, alluring though the notion may be. It is time to think again.
APTNSW thanks ATAP for the opportunity to comment on this important document. We are pleased to see ATAP's influential advice about the assessment of transport proposals becoming more sensitive to critical issues overlooked in conventional cost-benefit analysis. We hope broader consultation will lead to a much wider range of perspectives being reflected in the final version.