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Linking the Illawarra. Improving the Region's Transport

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Linking the Illawarra. Improving the Region's Transport LINKING THE ILLAWARRA Improving the region’s transport connectivity Thinking business Disclaimer This report has been prepared by PricewaterhouseCoopers (PwC) at the request of the Illawarra Business Chamber (IBC) in our capacity as advisors in accordance with the Terms of Reference and the Terms and Conditions contained in the Consultant Agreement between the IBC and PwC. The information, statements, statistics and commentary (together the ‘Information’) contained in this report have been prepared by PwC from publicly available material and from discussions held with the IBC. PwC may in their absolute discretion, but without being under any obligation to do so, update, amend or supplement this document. PwC have based this report on information received or obtained, on the basis that such information is accurate and, where it is represented by the client and other stakeholders as such, complete. The Information contained in this report has not been subject to an Audit. The Information must not be relied on by third parties, copied, reproduced, distributed, or used, in whole or in part, for any purpose other than detailed in our Consultant Agreement without the written permission of the IBC and PwC.1 Illawarra Business Chamber 1 Liability limited by a scheme approved under Professional Standards Legislation Illawarra Business Chamber PwC i Foreword A recent survey of members of the Illawarra Business Chamber (IBC) found that over 95% of businesses want to see better transport links to Sydney. Inefficiencies in transport links drive up the costs of doing business in the Illawarra and compromise future opportunities for market expansion. There are strong concerns that without effective planning and action now to address this issue, the projected expansion in the passenger and freight movement task over the next 20 years will see the transport and logistics costs for business increase significantly. High quality transport connectivity is critical to the movement of people to work and hence to a productive labour market. For the Illawarra which is transitioning to a more knowledge intensive and service based economy this relationship between connectivity and efficient labour market functioning increases in importance. It is clear that ensuring ongoing improvements in the Illawarra’s transport infrastructure is critical to supporting the projected service sector and knowledge based growth of the regional economy. This study assesses the transport connectivity between the Illawarra and Sydney by identifying the existing challenges and showing how connectivity and economic outcomes relate to benchmark regions identified in NSW, Victoria, Queensland and internationally. Uniquely, this study develops an evidence base analysis of what the problem is that needs to be solved – rather than justifying a specific road or rail project as the solution. By assessing the network coverage and service quality this study finds that the Illawarra has the lowest transport connectivity, scoring 25 – 30% lower than the Australian benchmark regions. This is driven by: materially lower overall connectivity between the Illawarra and Sydney than that between the Australian benchmark regions and their respective proximate major metropolitan centre; inadequate cover of the rail freight network; and the topographical constraints of the main freight corridor which increases the cost of moving freight. Given the Illawarra is the third largest economy in NSW, with strong labour market links as both an employment generator for surrounding regions and also supplying skilled workers for the Greater Sydney area, the scale of potential benefits from improving the transport connectivity is significant. This study shows that improved connectivity across the Illawarra network to match the level of its benchmark peers alone would reduce travel and freight costs by at least $150 million per annum in addition to broader benefits from enabling greater access to employment opportunities, increasing population and creating additional business and trade opportunities. Improving transport connectivity internally and externally to the region is not only important to helping the economy diversify towards knowledge and service-based sectors, but is also one of the key tools for addressing the low labour force participation rate and average household incomes experienced in the Illawarra. This report found that in “examples in other vehicle-dependent economies in transition have shown that low levels of connectivity can negatively affect these indicators where they are seen to act as a barrier to connecting the ‘right people with the right jobs in the right places.’” This study highlights some significant transport connectivity deficiencies and articulates some challenges and opportunities in improving the transport connectivity of the Illawarra. On behalf of Illawarra businesses, I wish to acknowledge the work of PricewaterhouseCoopers, the Illawarra Business Chamber and the NSW Business Chamber in conducting and investing in this important piece of research. The NSW Government, regional and local stakeholders all need to work together to identify priorities and solutions to capture the potential benefits of improved transport connectivity in order to ensure the future growth and prosperity of the Illawarra. Sue Baker-Finch President, Illawarra Business Chamber Illawarra Business Chamber PwC ii Executive summary Executive summary Members of the Illawarra Business Chamber (IBC) continue to voice concerns that the cost and time taken to move people and goods is currently too high. The Chamber considers that addressing these concerns should be a priority. Connectivity is a key facet of regional competitiveness. For instance, the Grattan Institute’s Productive Cities report suggests that ‘connectivity is crucial to efficient labour market functioning and will increase in importance as the economy becomes more knowledge intensive.’2 Although manufacturing historically has accounted for the highest proportion of output, recent growth of the Illawarra region is strongly focused on service-based industries. As such, improving the transport connectivity of the Illawarra is central to supporting its future growth given, the importance of transport connectivity to these sectors. The size of the Illawarra’s economy underscores the relevance of this investigation for NSW: the region produced $16.5 billion of output in 2012-13, which accounts for 3.5% of the NSW economy.3 However, both the labour force participation rate and average household incomes in the Illawarra are clearly below those in the benchmark regions. It would be difficult to attribute this performance wholly to the relatively low level of connectivity. However, examples in other vehicle-dependent economies in transition have shown that low levels of connectivity can negatively affect these indicators where they are seen to act as a barrier to connecting the ‘right people with the right jobs in the right places’ Message 1: Accessing jobs and trading opportunities in Sydney already costs Illawarra residents and businesses around half a billion dollars a year. Without action, the time and out of pocket costs are expected to increase to at least $690 million pa by 2031. This study develops an evidence base which assesses the transport connectivity between the Illawarra region and Sydney. Connectivity is defined in terms of road and rail network coverage and service quality, for both freight and passenger transport tasks. A range of indicators are used to qualitatively rate (and convert to a numerical score between 1 and 5) to compare overall connectivity in and to/from the Illawarra region. The results of the assessment are summarised below. 2 Grattan Institute 2013, Productive cities: Opportunity in a changing economy, May, Carlton, Victoria, p.41. 3 PwC GEM analysis Illawarra Business Chamber PwC iii Executive summary Table ES 1: Illawarra connectivity scores C0nnectivity attribute External Internal Total Wollongong Wollongong Wollongong Wollongong Wollongong Wollongong Wollongong Wollongong Wollongong Shellharbour Shellharbour Shellharbour Sydney CBD Sutherland Ingleburn Sydney CBD Bowral Nowra Origin-Destination Road coverage 4.1 3.0 4.0 3.9 4.0 3.3 3.8 3.7 Rail coverage 5.0 5.0 3.0 3.0 1.0 1.0 3.0 Freight rail coverage 1.0 1.0 Network Coverage 4.6 2.0 4.5 3.5 3.5 2.2 2.4 2.6 Road speed (passenger) 2.0 1.0 1.0 1.0 2.0 3.0 2.0 1.7 Road speed (freight) 2.0 2.0 Public transport speed 3.0 3.0 2.0 3.0 4.0 2.0 2.8 Public transport quality 4.3 4.3 3.0 2.8 2.0 2.5 3.1 Service Quality 3.1 1.5 2.8 2.0 2.6 3.0 2.2 2.2 Weighted Scores 2.9 1.8 2.7 2.1 2.4 2.1 1.8 2.4 Source: PwC analysis and estimates Message 2: Our assessment of the Illawarra’s connectivity reveals strengths and weaknesses. While the region is served by a reasonably comprehensive road and rail network, the low speeds on those networks are a major weakness. The scores for road user speed are consistently low across all external trip origins and destinations. This has a significant negative impact on the economic productivity of the region given that private trips account for a large proportion of the transport task. In particular, the connectivity performance between Sydney and Wollongong is mixed. Road and rail network coverage is strong, with scores of 4 and 5, respectively. Public transport speed and quality are average with scores between 3 and 4. However, road user speed is particularly poor, with a score of 1. The analysis also highlights a particular weakness in the Illawarra’s freight connectivity, particularly to Sydney’s west and southwest. To identify the economic effects of differences in connectivity, the scores above are compared to scores in four benchmark regions. Comparison of the Illawarra with the four regions demonstrates that the Illawarra has the lowest overall connectivity (2.4 out of 5). The Illawarra’s score of 2.4 is 25-30% lower than the scores in the other Australian benchmark regions.
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