The Chicken or the Egg? Infrastructure provision and urban development: A transport perspective. CAMERON MARTYN Associate GTA Consultants Cameron.Martyn@gta.com.au ABSTRACT The timely delivery of transport infrastructure required to support growing populations across Australia is critical to achieving good urban development and Government policy outcomes. The right infrastructure ensures people are well connected, with access to jobs, family, recreation, and services essential to maintain a high standard of living. The level of investment committed to transport infrastructure, usually by Government, means these projects are usually accompanied by a high degree of public and political scrutiny. Careful and well informed planning is required to ensure the right infrastructure is delivered at the appropriate time to provide maximum benefit from the investment and resources committed to the project. AITPM 2011 National Conference 1
1. Infrastructure planning in Australia 1.1 Introduction The timely delivery of transport infrastructure required to support growing populations across Australia is critical to achieving good urban development and Government policy outcomes. The right infrastructure ensures people are well connected, with access to jobs, family, recreation, and services essential to maintain a high standard of living. The level of investment committed to transport infrastructure, usually by Government, means these projects are usually accompanied by a high degree of public and political scrutiny. Careful and well informed planning is required to ensure the right infrastructure is delivered at the appropriate time to provide maximum benefit from the investment and resources committed to the project. This paper aims to: outline the contemporary urban development context as it relates to transport infrastructure requirements and delivery consider the range of transport infrastructure needed to facilitate urban growth explore different scenarios for delivery of transport infrastructure present issues for consideration by transport professionals when planning infrastructure provision 1.2 Government Infrastructure Planning The Australian, State and Territory governments and some agencies develop infrastructure plans that outline infrastructure investment opportunities over the medium term. These plans contain approved projects as well as potential projects, some of which may be delivered as Public Private Partnerships. The plans evolve and are amended based on emerging issues and priorities. 1.2.1 Federal Government Role The statutory body Infrastructure Australia was established under the Infrastructure Australia Act 2008. Infrastructure Australia advises governments, investors and infrastructure owners on a wide range of issues, including: Australia's current and future infrastructure needs mechanisms for financing infrastructure investments, and policy, pricing and regulation and their impacts on investment and on the efficiency of the delivery, operation and use of national infrastructure networks. Infrastructure Australia's focus is on assisting Australian governments to develop a strategic blueprint for unlocking infrastructure bottlenecks and to modernise the nation's economic infrastructure. AITPM 2011 National Conference 2
2. Contemporary urban context The major urban centres in Australia are currently experiencing unprecedented levels of growth due to factors such as migration, urbanisation trends and natural population increase. For example, the most recent population data for Melbourne shows that population increased by 1500 residents per week in the year to June 2010, a total increase of 79,000 per annum. Figure 1 Melbourne Population change 1 The Melbourne 2030 planning update released by the Victorian State Government in December 2008, Melbourne@5million, anticipates a population increase of 1.8million residents by 2036. It is estimated this increase will require the construction of 600,000 new dwellings in the next 20 years, with around half of these to be in established residential areas and the remainder in new growth areas. Significant investment and planning for infrastructure provision is required to service this level of population growth. 2.1 Planning Response Victorian State Government The Victorian State Government s response to the planning requirements associated with such rapid growth is outlined in two key documents: - Melbourne 2030 and the updated Melbourne@5million - The Victorian Transport Plan These documents combined to set out a blueprint for long term planning for the growth and development of Melbourne. It is noted that these planning documents and the policies contained in each were introduced by the previous Labor State Government. The Coalition State Government was elected to power in December 2010 and has indicated an intention to revisit the current Metropolitan AITPM 2011 National Conference 3
planning framework to supersede the previous Labor Government s Melbourne 2030 and Melbourne@5million planning policy documents. There has currently been no indication on the content or timeframe for the delivery of this updated urban planning framework. The Coalition Government has also committed to establishing an independent Public Transport Development Authority to plan, co-ordinate and manage Victoria s public transport system, along with a new Urban Renewal Authority to facilitate urban renewal in areas close to central Melbourne that traditionally had an industrial base but can accommodate change. The Government has not released any indication on timeframes for the development of these Authorities. Until new policy documentation is released by the Coalition State Government, the Melbourne@5million and Victorian Transport Plan remain as current policy. 2.1.1 Melbourne @ 5million Melbourne@5million was released in December 2008 by the State Government as an update to the Melbourne 2030 planning policy. This updated document was required to address higher than expected population growth since Melbourne 2030 was released in 2002, and focussed on delivering 2 : i A more compact city Designation of six new Central Activities Districts with CBD-like functions. Employment corridors to improve accessibility to jobs and services and reduce congestion on the transport network. Established areas to accommodate 53 per cent of new dwellings. ii Better management of growth Growth areas to accommodate 47 per cent of new dwellings. Investigation areas in the north and west, with a small proportion in the south east, for potential extensions to the growth areas. More efficient use of greenfield land with a target of 15 dwellings per hectare. Amendment to the operation of the growth areas infrastructure contribution and the removal of the requirement for the contribution from land included in the Urban Growth Boundary prior to 2005. The objectives set out in Melbourne@5million are reliant on significant investment in new infrastructure to enable both existing and new suburban areas to accommodate the increase in population and deliver equality of services and access to all residents. 2.1.2 Victorian Transport Plan The Victorian Transport Plan was released in 2008 by the State Government to set out a strategic direction for the delivery of transport projects over a 30 year timeframe. The plan sets out how transport infrastructure will shape Victoria for the 21st century and proposes six priorities for action 3 : i. Shaping Victoria - Linking jobs, services and homes. ii. Linking rural, regional and metro Victoria - Strengthening the connections between regional, rural and metropolitan Victoria so all parts of the State share in prosperity. AITPM 2011 National Conference 4
iii. Creating a Metro System - Taking practical steps to increase the frequency, reliability and safety of trains and trams, and move towards a Metro System. iv. Moving around Melbourne - Linking our communities by closing gaps, reducing congestion and improving safety on the road network. v. Taking practical steps for a Sustainable Future - Moving towards a sustainable and lower emissions transport system to support a greener Victoria. vi. Strengthening Victoria s and Australia s economy - New links to drive jobs, economic growth and build Victoria s prosperity. In order to realise these key priorities, more than $38 billion in projects and initiatives has been proposed, including: New trains, new tracks More trams and buses Regional Rail Link, Multi-billion dollar upgrade to major regional transport infrastructure Truck Action Plan. Completing the missing link in Melbourne s ring road Peninsula Link Rail extensions to provide more transport choice in growth areas, Bus upgrades Principal Freight Network Outer suburban roads - $1.9 billion to improve links to Melbourne s newest communities. Regional roads - $1.2 billion package to drive investment in regional Victoria to support 2.2 Summary The Victorian State Government response to contemporary urban development and population growth issues relies heavily upon the timely provision of appropriate infrastructure to support policy objectives and desirable urban outcomes for Melbourne. The relationship between urban development and infrastructure is explored further in Section 3 below. 3. Urban Development Infrastructure 3.1 Transport and Land Use Integration Integration of transport and land use is a key urban development principle. Government policy aims for connected and accessible regions based on an integrated transport system that is planned and managed to support more compact urban growth and efficient travel; connect people, places, goods and services; and promote public transport use, walking and cycling. AITPM 2011 National Conference 5
Transport planning professionals are judged on their ability to plan, coordinate and deliver regional infrastructure and services in a timely manner to support the regional settlement pattern and desired community outcomes. The ideal urban environment is considered to be a compact urban structure of well-planned communities, supported by a network of accessible and convenient centres and transit corridors linking residential areas to employment locations establishes the context for achieving a consolidated urban settlement pattern. Infrastructure delivery is an integral part of the triple bottom line assessment of successful urban development, which looks to provide a transport system that supports the lifestyle enjoyed by residents and visitors, enhances economic vitality and protects the natural environment. 3.2 Summary of Infrastructure Planning Trends Within Victorian State planning, there are several key trends emerging that reinforce the important links between infrastructure investment and achieving a range of Government policy initiatives, such as: i. Several billion dollars of State and Federal Government investment in infrastructure expected to deliver wider urban development outcomes ii. New legislation to mandate land use and transport integration in Victoria (Transport Integration Act 2010) iii. iv. Large budget projects (multi-billion $ RRL, Eastlink) Government infrastructure projects considered a catalyst for high multiples of private sector investment ie $1 in public sector investment = aim for $10 private sector investment v. Announcement of $500m Regional Infrastructure Development Funding in May 2011 Budget 4. Transport infrastructure requirements Table 1 Infrastructure Considerations AITPM 2011 National Conference 6
Transport Mode Infrastructure required Costs Timeframe Considerations trains land stations and interchanges Heavy Rail tracks signals bridges grade separation electrification and structure storage areas $10m - $1bn + Long project lead in and delivery timeframes, often spanning political election cycles. Expectation/requirement from funding providers for a wider range of benefits to meet cost-benefit ratio and triple bottom line assessment criteria. Heavy infrastructure, high cost, longer construction timeframes, higher risk profile, more significant political commitment. Extensive corridor requirements land acquisition IT and communication systems Passenger information systems Operation and maintenance trams Light Rail land tracks stops and interchanges electricity connection and structures storage areas separation from road traffic $10m - $100m+ Long project lead in and delivery timeframes, often spanning political election cycles. Infrastructure requirement substantial, disruption to road network, long construction timeframes Road space requirements, impact on car parking and local business opposition Land acquisition Passenger Information Systems Operation and maintenance buses Bus bus Stops bus lanes bus priority measures signals, dedicated infrastructure Passenger Information systems $1m - $10m+ Can be delivered relatively quickly (new buses) but major infrastructure (interchanges) projects can be measured in months/years. Infrastructure requirements and cost commitment not as high, ie Smartbus scheme, Doncaster Rapid Transit Road space requirements, impact on parking and local business opposition Operation and maintenance Road Road structure Land Intersections and interchanges Signals Operation and maintenance $1m - $1bn+ Long project lead in and delivery timeframes, often spanning political election cycles. Access for private vehicles, freight, Public Transport, active travel Connections to regional freight and road networks Connections to the arterial road network Parking provision AITPM 2011 National Conference 7
Active Transport (cycling/walking) dedicated paths and road space end of trip facilities priority measures $10,000 - $10m+ Can be delivered quickly but major projects (cycleways) will take longer. Easier to retro-fit, less cost commitment, faster delivery, less construction risk Less effective for mass transit requirements AITPM 2011 National Conference 8
5. Timing of Infrastructure Provision An infrastructure project usually required significant upfront investment. If the flow of benefits does not materialise until later than expected, the provider may incur a large (opportunity) cost in resources tied up unnecessarily. Similarly, excessive delay in provision of infrastructure may prevent the realisation of considerable net benefits which may have resulted from more immediate investment. Included below is a brief analysis of the advantages and disadvantages of infrastructure delivery being undertaken at different project stages. 5.1 Pre-development provision Table 2 Pre-development provision assessment Advantages Lower cost Less disruption to services, urban activity Flexibility for construction access to site Encourage developer commitment Less project construction risk Attractive to prospective residents, private sector investment Disadvantages Time lag between infrastructure provision and full use Political risk Cost to public of funding while infrastructure not fully utilised Risk that development will never require level of infrastructure provided Less accuracy in estimates of level, type and timeframe for development Difficult to justify spend and priority over other projects The benefits to developing transport infrastructure prior to urban development are generally realised only when the urban growth is experienced, and therefore are subject to risks inherent in development cycles and private sector investment. It would be considered a very high political risk to commit public sector funding to transport infrastructure delivery in order to enable an urban development project that was not guaranteed to proceed. Developer commitment and timing play a central part in any infrastructure funding decisions. There may also be issues with political commitment beyond election cycles and the need for a unilateral agreement across political parties. This can be achieved for large investments, but is generally a slower and more onerous funding process. Although there are undoubtedly benefits in early delivery of transport infrastructure, planners must consider how to prove a case relating to the costs of a missed opportunity cost if the project is delayed until after development has commenced. In the case where benefits must be quantified, methods of calculating these may not be subjective and not universally accepted. In the case of seeking funding for public transport infrastructure, the preparation of a business case for consideration by Government Treasury departments will be assessed against all other current funding and project priorities. Therefore, it can be difficult to justify a decision to spend for future benefits that may not be realised for several years when more pressing needs may exist. AITPM 2011 National Conference 9
5.2 Post-development provision Table 3 Post-development provision assessment Advantages More certainty on requirement and type of infrastructure Infrastructure fully utilised from date of delivery Easier to justify spend Certainty that private sector investment will occur Prioritising project more straightforward Disadvantages Higher construction costs More disruption to services and urban activity Less construction flexibility Higher construction risk Harder to attract investment without commitment up front The justification of investment decisions based on existing demand is a more traditional approach to the delivery of transport infrastructure. This approach lessens political and planning risk through simplifying forecasting of the type, function and demand for transport infrastructure. For example, whilst it is relatively straightforward to anticipate the number of additional traffic movements generated by a greenfield development onto a transport network, it is significantly more difficult to determine the take up of a new tram line or advantages of a new train station within a growth area or existing urban environment. In such cases, it may seem more appealing to wait for public pressure to provide additional public transport services to ensure latent demand exists before moving to meet such a demand. It is more straightforward to develop a business case for investment at this stage, due to less risk and uncertainty in the planning process. However, delivery of new transport infrastructure into an existing system, such as extending a tram line within an existing road corridor, also offers less flexibility for construction access and space requirements, additional disruption to existing services and potentially higher delivery costs. 6. Example Projects Below are four brief examples of different scenarios for transport infrastructure delivery (based on real projects) and some important issues that need to be considered around each. 6.1 Existing Activity Centre Transport Interchange Upgrade/Retrofit Upgrade and refurbishment of existing bus interchange within an activity centre to facilitate urban development and better access to transport, enhanced interchange with other transport modes. Issues: i. Difficulty and cost of rebuilding in existing active facility above operating shopping centre and rail station ii. Relocation of interchange iii. Retaining access during construction iv. Space required on local streets to relocate v. Facilities required for relocation vi. Traffic disruption vii. Working with existing lease arrangements. AITPM 2011 National Conference 10
6.2 Inner urban brownfields development Major brownfield site intended for mixed use and residential development within existing urban area experiencing rapid expansion and population growth. Issues: i. How to develop and link into existing arterial network and a major ring road ii. Restrictions on access due to existing road network nearing operational capacity iii. Costs to developer of upgrade to road network due to amount of traffic generated iv. Who pays, who benefits? When to deliver road upgrades? v. What happens if other local sites develop and take up additional capacity provided before the site is fully developed? 6.3 Growth Area Rail Provision of a new rail station on an existing rail line within a proposed activity centre, in a greenfields growth area on the urban fringe. Issues: i. Greenfields development no latent demand for public transport provision ii. Desire to sink rail line for better urban development, connectivity, and amenity outcomes for the proposed activity centre iii. Opportunity to do this now at lower cost but how to provide justification to funding providers iv. If left to after development = higher project cost, construction risk, disruption, track occupations v. If delivered now = possibility of public backlash in relation to Government funding priorities, political risk 6.4 Growth Area Road link Selection of a corridor for the provision of major roading infrastructure to enable development of an urban growth area and to function as a freight link. Issues: i. Local authority and community objection to the need for infrastructure justified through Regional Planning Policy ii. Predominantly through traffic and freight link how to sell to affected local community. iii. Impact of existing infrastructure (incl social) in determining link location. Infrastructure that is developed early can influence or restrict options for future infrastructure provision. iv. Preservation of a corridor for motorway and development implications of this impact on local investment, positive and negative. v. Timing of property acquisition required, need for political commitment across levels of Government. AITPM 2011 National Conference 11
7. Project Evaluation and Funding The timing of infrastructure provision is dependent upon funding availability and the formulation of a compelling case for investment. This evaluation process is undertaken within both private and public sector project environments, with assessment criteria and weighting of certain factors fundamental to the eventual funding decision. It is this weighting of investment decision factors that holds the key to determining the timing and staging of infrastructure provision. Therefore, careful consideration must be given to triple bottom line assessments and selection of the ultimate determinants in the process. 7.1 Government Processes Public sector investment decisions are ultimately determined by a State or Federal Treasury department, with business cases prepared to support a bid for project funding. The evaluation process is based on a determinant of need through multi-criteria analysis of triple bottom line factors, which is often then translated into a score to enable ranking against other project bids. Projects can then be prioritised for delivery. The public sector process also has a political component, where projects may be bumped up the priority list for funding depending upon a Government s desire to deliver election promises, the location in a safe or marginal seat, public opinion and pressure, or an evaluation of the political gain that may be gained through delivery of a certain project over another that may have ranked more highly. The public sector process is committed to consideration of triple bottom line components, and must consider elements such as public benefit and community concerns. This may be seen as compromising investment decisions from a purely economic standpoint, but is essential in delivery of socially and environmentally appropriate sustainable development. 7.2 Private Sector Funding Whilst infrastructure investment decisions made within a private sector context follow a similar evaluation process to the public sector model, it is likely that return on investment and economic factors may be given a greater weighting in the ultimate decision. However, that is not to imply that private sector organisations do not take triple bottom line factors into consideration in the decision making process. Indeed, decisions may be influenced by such factors as public perception of the organisation, being good corporate citizens or following industry best practice charters and leading on environmental and social issues. Private sector funding may often need to compete with international supply and demand for capital, and therefore consider a very wide range of alternative investment opportunities and decisions. Governments can have a strong influence on the flow of private capital into infrastructure through legislative and tax incentives, Public Private Partnerships (PPP s), or decreasing investment risk in other ways. 7.3 Investment Decisions Infrastructure investment decisions can be influenced by a range of factors in both the public and AITPM 2011 National Conference 12
private sector funding environment. Although it would generally be expected that private sector evaluation is more strongly influenced by economic factors, and public sector by a wider range of social, environmental and community benefit, this may not always be the case. The appropriate timing of infrastructure provision is influenced by the evaluation process and the components to which the greatest weighting or influence is based. Due to the costs and complexities involved with preparation of funding bids for large infrastructure projects, a business case may often only be prepared once there is certainty that a funding allocation is available and the chance of a successful outcome is strong. Therefore, a decision on the appropriate investment timing is likely to be made prior to the preparation of a business case. This is an important consideration when contemplating the most effective methods of influencing decision makers. 8. What does it all mean? 8.1 Approach to Infrastructure Provision The approach to transport infrastructure planning and delivery will ultimately be based on number of factors, including: Infrastructure project type Investment requirements and funding methods Public sector funding environment Governmental policy objectives Specific urban context Political context and election cycles Triple bottom line benefits of investment The transport professional must have at their disposal the correct tools to assess the impact of infrastructure delivery at different stages of a project, and the ability to make a judgement on the most appropriate time for transport infrastructure to be planned and delivered. A wide range of data is required to make such an assessment, on factors such as growth projections, travel behaviour, origin-destination, vehicle ownership, socio-economic trends, fuel prices and public transport patronage models. Although the current methods of justifying transport infrastructure delivery are generally reacting to public demand, a more proactive stance may carry significant cost and ease of delivery especially in greenfield growth areas. However, the difficulties in upgrading or retrofitting existing systems to meet urban growth and settlement patterns, in particular costs and other issues associated with land acquisition and service disruption, can impact upon the successful realisation of Government policy objectives within these growth areas. 8.2 Future Considerations for infrastructure planning There are a number of issues for transport professionals to consider when planning for transport infrastructure investment and delivery, including: Quantifying the benefits of the timing of infrastructure delivery AITPM 2011 National Conference 13
Seeking bi-partisan political agreement for early funding of major infrastructure Considering the most appropriate time to try and influence the decision making process Techniques required for building a convincing case for early infrastructure delivery Undertaking a full assessment or disclosure of costs of later infrastructure delivery, including service disruption and potential facility relocation, temporary works, construction access, risk and timeframes Different delivery models for investment PPP s, developer infrastructure contributions, Federal Government funding through Infrastructure Australia The requirements for transport infrastructure to meet investment decisions based on triple bottom line analysis not just transport outcomes The risks and costs of retro-fitting transport infrastructure into existing facilities Methods for assessing private sector investment decisions based around availability of transport infrastructure AITPM 2011 National Conference 14
References 1) Melbourne 2030: a planning update Melbourne@5million, State Government of Victoria, December 2008 2) Melbourne 2030: a planning update Melbourne@5million, State Government of Victoria, December 2008 3) The Victorian Transport Plan, State Government of Victoria, 2008. AITPM 2011 National Conference 15