April 23, 2014
Source: Sydney Morning Herald
Author: Matt Wade
Sydney could pay a high price for its lousy public transport.
As cities across the world wrestle with globalisation and the advance of technology, effective mass transit systems are proving valuable. Fast-growing knowledge industries are clustering together rather than spreading out. Individuals, businesses, cities and nations stand to gain from this process which economists call “agglomeration”. Knowledge workers rely heavily on face-to-face communication in order to share information, generate ideas and cut deals. So agglomeration fosters innovation. It also offers deeper labour markets which improve job matching and enhance skills. This results in higher productivity.
The challenge for Sydney is this far-reaching economic trend suits cities with good public transport better than those with new freeways. Quality public transport facilitates the all-important agglomeration of high-value activity.
“The knowledge economy is increasingly a public-transport driven economy,” says Tim Williams, the chief executive of advocacy group the Committee for Sydney. “It’s not really about roads.”
Sydney’s economy has fundamentally shifted in a generation. Back in 1990, manufacturing made the biggest contribution to Sydney’s economic output. Now the financial services sector accounts for more than double the share of manufacturing. Even the professional services sector – which includes lawyers, accountants and engineers – contributes more to the city’s output than manufacturing these days.
But the rise of these high-value service industries has left Sydney with an unfortunate mismatch: a knowledge economy without the transport system to go with it.
The economic forces stoking demand for Sydney’s knowledge-intensive firms have been at work across the globe. In his recent book, The New Geography of Jobs, economist Enrico Moretti showed that over the past three decades, the economic success of American cities has been increasingly defined by the number of highly educated workers. Cities that lack the dynamic knowledge industries which attract well-educated workers are losing ground.
Moretti also discovered that knowledge workers, such as scientists and software engineers, create a lot of extra employment. He analysed data on 9 million workers across 320 urban areas in the US and found each new “innovation job” in a city created five additional jobs. That extra employment didn’t just accrue to professionals, but also to non-professionals, such as waiters, hairdressers, baristas and personal trainers. Moretti concluded the best way for a city to generate jobs, is to attract and nurture innovative companies which hire highly educated workers.
That’s where public transport comes in. It’s much more difficult for knowledge industries to thrive in cities with poor public transport. Even the routines of knowledge workers are more suited to mass transit than private road transport.
“The culture of knowledge workers is to get onto public transport and use their iPads,” Williams says. “Public transport fits with their working style much more than driving in a car for an hour and a half before they can start work.”
While public transport use in Sydney has risen marginally over the past decade, the last census showed seven out of ten employees in the metropolitan area still drive to work. Cities like Sydney, in which hundreds of thousands of workers make long commutes by car, are less likely to become innovation hubs. The lack of an effective, city-wide mass transit system threatens to stunt Sydney’s knowledge industries, which are the life-blood of the city’s economy.
The Premier Mike Baird can point to improvements in Sydney’s public transport. The inner-west light rail has been extended, the heavy rail network will grow by about 33 kilometres once the new south-west and north-west rail links are finished and an eastern suburbs light rail has been announced.
But even after those projects are complete, the public-transport system will be woefully inadequate for a city dependent on knowledge-intensive industries. When international consulting firm PricewaterhouseCoopers assessed the transport and infrastructure of 27 major cities in 2012, Sydney was ranked fourth-last behind several cities with much lower average incomes including Istanbul, Mumbai and Shanghai.
Some economists argue the best option to upgrade Sydney’s mass transit system would be to fund a major public-transport construction program with government borrowings. But the aversion to public debt, which now pervades Australian politics, makes that option unlikely.
Baird won’t be getting any help from the federal government either – it says urban public transport is best left to the states. A spokesman for Transport Minister Warren Truss put it this way: “The Australian government takes the view that state and territory governments have more than a century’s experience at managing urban public transport and are best placed to continue to do so and be accountable for its performance.”
But there is a potential game changer on the horizon. Privatising the state’s electricity poles and wires would raise tens of billions which could be used to transform the city’s public-transport network. That would take courage, tenacity and vision rarely seen in NSW politics. But it may be Sydney’s only hope to get a public-transport system to match its knowledge economy.
Read the full article here.