The public rightly expects that decisions regarding major public expenditures will be made with a keen eye focused on the comparison of cost and benefit.
Most people would no doubt agree that public expenditure is not a political football, and that large amounts of public money should not be spent on: frivolous projects, projects that yield comparatively low benefit relative to other projects that might be built in their place, or projects that require a much higher level of expenditure than the benefit that they afford.
Yet, valid as these points may be, it can be difficult to decide how to measure cost and benefit. Nowhere is this truer than in relation to urban transportation. What is the aggregate cost of a high-speed open-road corridor, cutting across a downtown area, when one factors in both its environmental implications, and its divisive effect on the city life? On the other hand, how much can one justify in the way of additional expenditure to put in a suitable alternative? For that matter, what is a suitable alternative?
To a very large extent, the answer to these questions depends upon what one perceives to be the kinds of business that should be located near the downtown core. Ultimately, the decision concerning in which direction to proceed requires a balance of political, social, environmental, economic, engineering and financial-accounting considerations. Often, these concerns tend to be overwhelmed by rhetoric and dubious data.
For instance, despite a number of new initiatives in recent years, it is difficult to identify reliable information relating to public infrastructure investment to determine whether the problem of under-investment is being corrected or is continuing to worsen.
New bridges, roads, railway-related infrastructure for subways or light rail systems, transportation hubs serving as the nexus for different modes of transport will entail major expenditure in almost every region of the country. Motor vehicles are not currently in vogue with governments, and thus there is now an increasing emphasis on encouraging a larger number of people to shift to public transit.
The City of Toronto, proposes several new light rail transit (LRT) lines that will, upon implementation provide a network of rapid transit throughout the city.
One of the attractions of light rail transit, is that is considerably less expensive than the cost of a comparable subway system, both in terms of initial capital cost (i.e., price of installation) and in terms of operating and maintenance cost.
The downside of light rail transit is that many people consider it an eyesore. Also, it usually requires the conversion of one or more major arterial roads so as to accommodate the light rail system. This impairs the flow of vehicular traffic and has much the same impact on neighbouring community life as the construction of a multilane highway.
In Canada, by long political traditions, those who pay the lion’s share of any cost usually have little say in overall policy formation. Accordingly, important decisions regarding local public transportation are invariably dominated by the provincial or federal governments. In recent years, both of these levels of government have shown a distinct preference for rail-based systems, although bus system improvements have also enjoyed some favour.
Investment in transportation infrastructure provides a good illustration of the range of competing policy objective that are implicit across almost the full range of municipal government expenditure — and particularly with respect to construction. A decision not to build a light rail transit system almost invariably implies some form of financial commitment of corresponding scale — such as the construction or improvement of the road.
Such alternate expenditures can carry with them as much in the way of risk as the original option. And also, the selection of any of the competing options carries with it numerous social and economic implications.
Stephen Bauld is a government procurement expert and can be reached at swbauld@purchasingci.com.
Some of his columns may contain excerpts from The Municipal Procurement Handbook published by Butterworths.
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