What is the economic importance of public transport?

What do we know about the economic importance of public transport?

A recent discussion paper from the Tourism and Transport Forum and PWC, Better Public Transport, Better Productivity: The Economic Return on Public Transport Investment, offers some useful data.

First, how much Australians use public transport depends very much on where they live and work.  About 70% of journeys to work in the Sydney CBD occur on public transport; in North Sydney it is over 50%.  This reflects good public transport connectivity into the CBD; and the fact that congestion and parking costs make the use of a car to commute to a CBD job unattractive.

By contrast, those commuting to jobs in the suburbs are much less likely to use public transport.  In the outer suburbs of Perth, for example, over 80% of trips to work are by car.

Secondly, over the last thirty years or so there have been a couple of clear trends.  What is called the ‘annual passenger task’ (measured in ‘passenger kilometres’, where if one passenger is carried one kilometre that represents one passenger kilometre) has risen steadily for bus, and for heavy rail it has more than doubled since 1980.  At the same time, on a per person basis private car usage (calculated as annual private vehicle kilometres per person) reached a peak around 2004, and has declined a little since then.  (Because population continues to rise, total car usage continues to rise.)

The third and perhaps most important finding of this discussion paper concerns the economic importance of new public transport infrastructure, with a case study of the Chatswood to Epping rail link in Sydney.  This was announced in 2003 and opened in 2009, with new stations at North Ryde, Macquarie Park and Macquarie University.  The TTF paper points out that the total economic output of Macquarie Park rose from $4,684 million in 2002 to $9,113 in 2013 and argues that the rail connectivity was a major factor in attracting new business activity to the area.

I was interested to read this analysis because I was a senior executive at Optus between 2000 and 2008 – and during that period Optus moved into a new custom built corporate campus at Macquarie Park, where more than 6,000 people were employed.   The company went through a very thorough process of considering new locations around Sydney, reaching a decision in 2004.  The final choice of Macquarie Park was heavily influenced by the fact that there was soon to be rail connectivity.   This is a good example of the way that a new rail line attracted new economic activity to an area.

As the Turnbull Government considers future transport infrastructure projects, we are very conscious of how such projects, if wisely chosen, can stimulate growth and economic activity.  That is true both for public transport infrastructure and for road infrastructure – and Prime Minister Turnbull has said that we will consider new projects on their merits, rather than having a rule which favours one mode of transport or another.   What we will look at carefully, however, is the economic impact of a proposed project – and as the TTF paper highlights, that can be very significant.