Economic case for restoration of the road
Bellingen/Bowraville Road
Restoration works – cost justification
Introduction
The Value Management workshop on 14 December 2010 recommended that the Bellingen/Bowraville road should be restored, mainly to achieve the potential development of social, economic and cultural benefits for the communities of Bellingen and Bowraville.
It was shown that although alternative of the Pacific Highway (existing and new roads) would mean that people and businesses could still drive to both towns, it was unlikely to happen. The regional centres of Coffs Harbour and Port Macquarie would benefit, leading to a decline in activity in Bellingen and Bowraville.
Comparison against other road costs
The cost of $23 million to restore the Bellingen/Bowraville road, represents less than 4% of the cost of the Kempsey bypass for the upgraded Pacific Highway.
Marx Hill Bellingen road improvements cost $6 million .
Costs/benefits
The estimated cost is to restore the road to the condition that existed before the storm (no betterment) but applying modern road construction standards. - $23 million.
Some action to deal with the damage has to be carried out and the cost to close the road is $13 million.
Therefore the cost/benefit that needs to be measured is the difference between the options, which is $10 million.
It is apparent that some of the costs estimated are also income to the companies and individuals who will work on the restoration. Eg they will pay taxes on those earnings. At a guess about 10% of the cost will flow back to governments through taxes.
If this assumption is accepted, then the cost to be justified is $9 million.
Governments use the long term bond rate as a measure of the performance of investments eg 6%..
Using this approach we are looking at a figure of $540,000 per annum to measure the economic value of restoring the road.
Economic benefits. It was suggested at the Value Management workshop that the closure of the link between Bellingen and Bowraville has resulted in spending flowing to regional towns like Coffs Harbour.
Looking forward to 2020, when the new Pacific highway will be a dual carriageway from Sydney to Brisbane, Woolgoolga is likely to be the stopping point for tourists passing through the mid north coast.
A strategy needs to be developed to encourage visitors from the south to come to Bowraville, then take a leisurely scenic route to Bellingen. Similarly to come to Bellingen from the north and take the scenic route to the south along the Bowraville road.
Fifty vehicles a day with average of two people spending just $20 each in one or other towns creates expenditure of $1.46 million per year
It has been shown that money spent locally, especially on services has a multiplier factor as the money circulates a number of times through the local community.
A multiplier factor of 5 raises the effective expenditure to $7.3 million with a tax flow at 10% of $730,000.
