10 February, 2018, 12:00 am
WE all have had enough of this traffic congestion. Not only is the number of vehicles on the road skyrocketing, the invasion of the orange cones brigade is choking the traffic flow in all directions. It is also being felt in smaller towns across Fiji.
Traffic congestion is now a national problem. The bad news is that it will get worse very quickly and there is no solution in sight. Traffic congestion has mushroomed almost overnight.
It seems like only yesterday when I could zip into Suva in 10 minutes from my home in Namadi Heights.
Now it can take more than 45 minutes. We have heard the frustrations of those living as far away as Nausori who must leave home at 5.30am to make it to work in Suva on time. This is simply ludicrous. Yet, the public continues to shoulder this silently.
Who benefits from this traffic congestion? Of course, it’s the car dealers who have sprouted up like mushrooms. The other is Government collecting monies from Customs duties, VAT, and registration fees.
What is the root cause of the congestion? As you can see in Graph 1, the root cause is the explosion of reconditioned hybrid cars (blue blocks) on the road which have tripled in the three years to 2016. The proportion of imports of these cars to the total vehicle imports has doubled in just two years to 2015 and continues to rise. These figures will be even higher if you include the 2017 numbers.
Another presentation that represent the actual number of cars on our roads is the total new registration of vehicles (Graph 2). This has almost tripled in only five years since 2011.
The volume of traffic will rise further with the registration amnesty now granted by the Fiji Roads Authority (FRA).
What has brought on this explosion in the purchase of cars? Have people become suddenly richer? No such luck. The increase is basically because reconditioned vehicles are cheaper.
The price of a reconditioned vehicle can be as low as $15,000, about half of what they were before 2006. Furthermore, financial institutions are competing to finance the purchase of these vehicles. The affordability of these vehicles has meant more people at the lower income brackets are buying cars.
Why are the cars cheaper? The major reason is that the Government had reduced the Customs duty on reconditioned hybrid cars. The impact of that decision is what we are now facing on a daily basis.
One reason given for reducing the duty on hybrid cars was to save on fuel imports. I don’t expect a reduction in the quantity of fuel that we import because fuel savings from using hybrid cars is more than swamped by the increase in the number of cars. More cars travelling bumper to bumper for a long period of time is bound to increase fuel consumption.
The other reason given for reducing the duty on hybrid cars is climate change. I am no expert on this but intuitively, the total carbon emission will rise because of the increase in the number of cars.
This government policy is the root cause of the traffic congestion that the people are now facing. It is again a clear reflection of the short-term populist focus of this Government and the total absence of good planning and thoughtful evaluation. We all know that our roads are not built to accommodate the number of vehicles that we now have.
A forward-looking government must first expand the road capacity to cater for the higher volume of traffic. But have you seen any expansion to our roads? Government is simply rebuilding old bridges and resealing old roads.
It is not expanding the roads especially in built-up areas from Nausori to Suva. The Government’s only solution that I have heard so far is to car-pool. That is simply not enough.
The orange cone brigade has invaded our cities and suburbs. I thank this brigade for their toil under the hot day that we are facing.
While many of us think there is a lack of planning and co-ordination in the mobilisation of the brigade, I believe that the truth is the opposite.
I believe there is an ulterior plan to get these roads all done by a certain time. The terrible imposition to the public is secondary to its aims.
Unfortunately, these decisions come at a great cost to the people.
With the aim to hasty build roads, the standard of design and workmanship suffers. It makes us doubt the integrity of the procurement process and FRA’s capability to manage contracts.
In many places, the new road surfaces are uneven. Some roads had to be rebuilt to bring them to the same level as the man-holes. Pot holes appear as quickly as they are repaired.
These are obvious signs that the design is flawed, or the construction is not well supervised. Ultimately, these result in the wastage of taxpayers’ money.
While owning a car has its benefits, there are also the cost of registrations, servicing, and repairs. These reconditioned cars are being dumped into Fiji.
Some of these cars need repairs very quickly after purchase. If you add the interest on the car loan, the annual cost of operating a vehicle in one year can be the same as the purchase price of the car itself. I conservatively estimate these operating costs for only reconditioned vehicles at more than $500,000 per year for the whole country. The purchases of motor parts add to our import bill.
If the car loan is not repaid on time, financial institutions will repossess the car leaving the owner with nothing but a big debt to pay. The impact of owning a car affects our everyday lives. Families may have to sacrifice priorities like education and housing to fund the cost of running a vehicle.
The rise in bad debts of banks and credit institutions could raise interest rates on all consumer loans. Unfortunately, no one is educating our people, especially the younger generation, of setting priorities and identifying financial risks.
Government is borrowing to finance these roadworks. It is the younger generations who will shoulder the burden of servicing this higher debt. The payment of interest on our debt is already more than $300 million per year.
The most important economic cost is the reduction in national productivity by being late to work, leaving work early, stress and tiredness from the waking up early in the morning and arriving home late in the evening, more time taken to go to meetings during the day, and less time with the family.
How can we measure this loss? There is no perfect and simple framework that one can use for this estimation. We will have to resort to bold but reasonable estimates.
If we make a reasonable estimate that on average 30 per cent of the total wage and salary earners loses say one hour of productive time per day because of the longer travelling time, we are losing a mammoth 1.56 million man-days in a year.
Therefore, in my calculation, the traffic congestion is costing the country about $370m a year in lost production. This is going to get worse.
Needless to say, the e-Transport system adds to the problem. If you add the stress, the tiredness, and the cost of health treatment, this is still an underestimation.
Over time, the public will adapt to live with these conditions. But, like the e-Transport, tolerance of this congestion does not remove nor lighten the load or lessen the cost. People will carry this burden every day.
Traffic congestion and e-Transport have greatly inconvenienced the whole nation. A forward-looking government should plan carefully.
A caring government should put the interest of the people first.
* Savenaca Narube was the former governor of the Reserve Bank of Fiji and permanent secretary of the Ministry of Finance. Views expressed are his and not of this newspaper.