Rowley wrong on Rapid Rail

In his 2013 budget response, Opposition Leader Dr Keith Rowley highlighted the implementation of the Rapid Rail project as the key to a new PNM administration policy to introduce growth in the economy.

The project, aimed at solving the horrendous traffic build-up found on the country’s roads, and not just in the capital city, he argued, has the potential for unleashing significant local capacity by including the use of T&T steel and cement in a venture that has been estimated by the Association of Professional Engineers to cost as much as $20 billion and with an additional $3 billion annual cost in maintenance and operational outlay.

As much as I can see a Rowley-led administration presenting a superior alternative to the hapless bunch of PP incumbents, the Rapid Rail project is a costly and flawed engineering solution to an economic problem that the Opposition Leader should reconsider.

The engineering misdiagnosis has already seen billions expended on building new highways and other engineering infrastructure that are quickly overcome by the ever growing demands as the traffic on the roadways continues its inexorable growth.

Our traffic problem will never be solved by engineering solutions, since it is an economic one caused by the disincentive to public transport created by the inefficiencies of a long-standing government policy that favours a fuel subsidy as a mechanism for passing on to the citizenry an oil-wealth dividend.

The problem is that the policy has been maintained even as the oil wealth is now significantly depleted. The fuel subsidy has instead fuelled a rise in car ownership that has peaked at 353 vehicles per 1,000 persons in 2007 according to Word Bank figures, ranking us 44th in the world in vehicle ownership.

The economic nature of the problem is evidenced by the trend in vehicle ownership that mirrors the economic growth rates and suggests that the key to reducing the high car-ownership levels that fuel traffic congestion must first be the removal of the fuel subsidies which encourage it.

The cost of the subsidy is not the approximately $4 billion expended annually by the Government as a transfer to vehicle owners. That is just the accounting cost. Its economic costs includes the $96 million allocated for the servicing the debt incurred by the water-taxi service in the 2013 budget estimates, the $7 billion price tag attached to the Point Fortin Highway and the high cost of maintaining the overcrowded roads that would not otherwise be associated with a country of our level of development.

Every study that has been conducted on the eradication of fuel subsidies has shown that they are accompanied by a significant level of traffic reduction. It is elementary economics that demand falls in response to a rise in prices, and the price rise in fuel will lead to a lowering of the demand for gas that will be reflected in less traffic.

But that is not the only flaw in Dr Rowley’s analysis. The Opposition Leader suggests that the findings of a feasibility and engineering design study commissioned in 2006 suggest that not only is the project feasible but that significant work had been done which would have taken the project close to procurement.

“All that was needed to be done was to put the project out to tender, and this could have been done in phases,” he said. There are two problems with this study. The first is that it was conducted at the height of the gas boom, where both our level of traffic and the level of revenue which sustained it were unsustainable, and are not likely to be repeated in the near future.

The second is that the feasibility study was done at a time when T&T enjoyed a fuel subsidy which would have distorted the transportation demands. By the time of the next elections, if one is to take the word of the Finance Minister, one suspects the fuel subsidy will be long gone.

The feasibility study appeared to have fully explored the adoption of a rapid-rail system in T&T but did not seem to examine any of the mass-transit options other than a rapid-rail system. In any case, by the time the feasibility study was completed and the international financial system had crashed, key assumptions would no longer be valid. Indeed, it would have created a very expensive footstool for then Works minister Jack Warner.

Both the Association of Professional Engineers and the T&T Manufacturers Association voiced strong objection to the rapid-rail project on technical and not political grounds. It is now accepted good governance practice that elected governments should first attempt to achieve buy-in from key constituencies when undertaking massive infrastructure projects.

Much of the opposition to the Rapid Rail was a result of the PNM’s ignoring this approach and shoving it down the nation’s throat as a done deal, similar to the approach of the PP administration in the Pt Fortin Highway project. There has been no discussion of the implications for the millions invested in the maxi-taxi industry and how they will be affected by this.

In his post-budget meeting in Belmont, Dr Rowley recognised that the project had its detractors, but that an administration led by him would be proceeding with it anyway. That is the wrong approach, especially for someone who has carefully navigated the PNM to a more democratic culture through the symbolism of waiving the balisier tie and the suggested adoption of one man one vote.

Maybe the rapid-rail project is the way to go for the country, but given the very credible objections, the compelling case for it is yet to be made.Maxie Cuffie runs a media consultancy, Integrated Media Company Ltd, is an economics graduate of the UWI and holds an MPA from the Harvard Kennedy School as a Mason Fellow in Public Policy and Management.