Governments must look beyond short-term spending of public funds

Phil Pettitt, Chief Executive of 67 innovITS, the UK's ITS Centre of Excellence, argues that governments need to look beyond the short-term when looking to pump-prime economic recovery with public funds

It seems, in the current economic climate, that a 'good' day is one in which no company is announcing job cuts or going into administration. Consumer demand is down and businesses are retrenching, cutting costs and fretting over the consequences of shrinking opportunities and order books. It has not been this bad for a long time - potentially, several decades - and no one knows when we might begin to see signs of real recovery. We are paying the price of the financial sector letting risk get out of control. Once, financial institutions would lend to almost anyone. Now, they refuse to lend even to each other. That was okay when they were playing amongst themselves but it has spilled over onto the high street and into the manufacturing sector. As a consequence, the current slowdown, which is being driven in the main by a general feeling of wariness, is being further fuelled by the absence of the levels of support we might usually expect from the banks and other institutions.

At least governments collectively have decided to take an active role. A Keynesian response to the economic downturn is very much the fashion as they try to stimulate demand with the announcement of lots of public works projects. There is a commitment to public spending to at least soften the effects of the recession if not assist in pulling the economy back into movement. Transportation projects are very much en vogue. Hopefully there will be more to come or a quicker-than-expected recovery so we can all get back to normal business.

Avoidance tactics

The governments' intention is to get the global economy moving again before ossification truly sets in. There is good reason for this, as the longer the recession lasts the longer it will take to climb out of it. Thus, the emphasis must be on getting public money spent as soon as possible. The focus, therefore, will be on the acceleration of existing projects or those well down the pipeline. For most transport projects this causes issues in that the planning process will scupper any chance of them being a part of the solution to the current crisis. At least we may get an accelerated repair programme for an infrastructure that still needs a lot of work to bring it up to the standards we all expect - we may see a lot of potholes get fixed.

There is a lot of benefit to schemes of repair; such action does correct our infrastructure and create work in the short term. However, there is a future beyond the current recession. If we do not believe that then why bother with all the investment? Not only must we find projects to provide work and maintain our lifestyles but we must also look to take this opportunity to invest in that future.

Many successful entrepreneurs-turned-pundits have argued recently that it is now that there are great opportunities for investment. Or to put it another way, we need to invest now in order to be amongst the fittest once growth returns. For companies and countries to last and succeed, then adversity is a spur to innovation. Those that retain their fitness are better prepared for the better times ahead. More pessimistically, one might also say that to continue to survive in a harsher world also takes a lot of grit and adaptability. In such an environment, innovation again has a role.

So what are the transport challenges we should now focus upon? Apart from fixing and maintaining roads and railways, we need to make our journeys more predictable. There is nothing new here. If we are to be successful nations then our economies need such predictability to underpin industrial efficiency. It also makes life a lot more comfortable. We could build a lot more roads or use the current climate to push for accelerated exploitation of advanced traffic management schemes, more sophisticated routing aids and improvements for the informed traveller.

And just because there is a recession climate change will not take a sabbatical; this should remain a prime guiding criterion. We need to reduce the environmental impact of journeys not least because being good to the environment is also good for our purses or wallets too; this is a crucial message which needs to be hammered home to all businesses and consumers when every penny counts. There is much that ITS can contribute to lowering our costs of travel through improvements to the efficiency of trips. Not least are planning tools with which to avoid/reduce the number of journeys or schedule them for less congested periods. ITS could also plan routes for least cost - taking into account far more than road classification and historic congestion - thus lowering CO2 and fuel costs. Recent projects have shown clear benefits for drivers using telematics to assist them to drive more frugally.

Spend to save

Why invest specifically in ITS, one may ask? It is a good question. In more successful times we can worry about 'luxuries' like saving lives, saving the planet and making life a little more comfortable. For now it may be enough to repair our roads and start some favoured infrastructure replenishment schemes. So is this just less-than-impartial pleading for just another special interest group or is there any real advantage to be had from a focus upon ITS solutions? I believe that ITS has a very good case to make.

There is a particularly strong argument in terms of cost. In general, an ITS implementation will cost less than other means when looking to deliver a given benefit. In the UK, for instance, the recent introduction of Active Traffic Management (ATM) on the M42 to the east of Birmingham cost around £100 million. A feature of ATM is real-time control of hard shoulder running to alleviate congestion at peak times and it has been estimated that the cost to achieve the same effect using more traditional methods, such as increases in road capacity, would have been five times as much. The public sector does not have limitless cash, unless it tries to print money as its route to liquidity. By way of example the hyperinflation currently blighting the Zimbabwean economy highlights the risks, if not the sheer stupidity, of such an approach.

We need to be very careful how we fund projects, therefore. The bottom line is that we want to employ people and as many people as possible should get employed to develop these ITS schemes. They might cost less because there is less concrete to pour and less use of large, and thus costly, plant and engineering. But the key here is that ITS projects offer a better cost-to-employed ratio.

ITS will also engage a wider industry than just those involved in civil engineering. A distinguishing feature of modern ITS solutions is how they require a contribution from many different sectors of industry. If we consider all that we can do in the short term, then investment in ITS can pull through business for civil and transport engineering, the communications industry, consumer electronics and even the automotive industry to a small extent. In the past there has been a reluctance on the part some of these players to fully engage with this novel technology but now they need the business to survive. Now is the time to engage this wider community in this new New Deal.

Speed and impact

ITS projects also tend to have a far less negative impact than traditional transport solutions, and thus take less time to get under way. For instance, compare the building of an extra motorway lane with the introduction of ATM. The former will require a lot of land. This is not just a matter of land take and diminishing countryside (admittedly, a bigger issue in more crowded countries than in others) although that will raise local opposition. ATM does need some land but far less than any new build. Planning and start-up is faster, therefore. Similar arguments can be made for other types of road scheme. We shouldn't ignore what we should do for the railways and other modes but that is in addition to road traffic-based improvements. The reality for any transport scheme not immediately ready to go is that starting it now will make it too late to help with the current recession. Of course, once past this current crisis, the arguments still stand: ITS is quicker to get into operation.

A ready skills base

We can do a lot more than upgrade roads and railways. There is a lot of infrastructure beyond that. We need to better harness the information available and get it delivered in our phones, cars and PCs. There is a lot of information which we currently do not use adequately and which we all want to exploit more fully. The issue is that this requires IT skills to deliver. The usual reaction in such economic downturns is to ensure that manufacturing and building are retained. However, a distinctive aspect of this current crisis is the impact on knowledge working and professional people; we are experiencing the so-called 'white-collar recession'. We thus have a workforce available with database, data analysis and communication skills. There is much talk of new applications requiring high levels of security and privacy. We can set against this availability an often-heard plea of a skills shortage in ITS. We have the opportunity, at least in the short term, to fill this gap.

So far I have spoken primarily about the public sector role in all of this. However, there should be some great opportunities in the consumer sector. People will still be buying but they will want to focus on economy, on saving money. This is especially useful for those technologies that are helping to improve travel efficiency and thus reduce our CO2 impact. It is also true of any technologies that help a company deliver more predictably or efficiently. Lower costs and differentiation through better levels of service will be the keys for firms competing during the recession and the growth period which follows. Finding investment capital will be tough, although those same pundits who advocate investing now during the recession to be fit as it ends are also suggesting that the smart money is looking for good projects in which to invest. Certainly, the familiar homes for that money do not seem like good propositions right now.

So it could be a prosperous 2009 after all. We need to get the message out that ITS can save money and help us invest our way out of recession and to a brighter, cleaner future. As an industry, we need to look hard at possible investment decisions and continue to press the benefits that ITS offers.