Bikeconomics

Cycling economics lacks mainstream political backing in Ireland…for now

Ireland is similar to many countries in the world when it comes to prioritising cycling infrastructure. There is not enough political backing for it from mainstream political parties to give it necessary priority & that leads to a similar mindset in public policy making by public officials. Simply put, politicians are not going to win many hearts & minds if they tell their core voters that they will need to give up more road space for cycling & walking. In Ireland, by far most journeys are done by car (see Census 2016 data here).

 

Short term economics of car ownership

Car ownership generates a lot of income for various groups in Irish society even though in Ireland we do not manufacture cars. For example:

  • Car sales generates VRT (Vehicle Registration Tax)
  • Car sales generates VAT (Value Added Tax/Sales Tax)
  • Car owners must pay an annual Motor Tax (based on carbon emissions since 2008)
  • Car owners must insure their car which generates income for large insurance firms (primarily multinational/foreign owned)
  • Car ownership generates substantial media marketing for media organisations
  • Heavier car traffic generates road tolling revenues for state & private road operators
  • Excise & VAT taxes on fuel account for over half the cost of a litre of petrol/diesel

You get the idea from the list above. This list would not be exclusive to Ireland but in Ireland a substantial amount of money is generated from the various taxes levied on car ownership.

From a public official’s perspective, this is easy money. Apart from putting in some small amount of infrastructure to collect the motor taxes & tolling, there is very little the state needs to do to generate this car related revenue. Motor tax alone generates roughly €1 billion, which is a substantial amount of money for a country the size of Ireland.

 

Why say this is short term economics?

The challenge with this money is that there is no relationship between the money earned & the costs of car ownership. Despite popular opinion that Motor Tax is in fact “road tax”, the money generated from motor tax & indeed all the related taxes simply go into the general taxation money pot. There is no guarantee that a single cent of it goes towards road maintenance, construction etc.

It is easy money for the state & in turn is quite addictive. With this as a policy principle & everything the state appears to do seems to support that it wants more car ownership, not less, means that all the consequences both short & long term are essentially ignored. This would include:

  • Increased pollution caused by having more cars on the roads
  • Economic costs caused by traffic congestion
  • Ireland’s inability to meet its EU climate emissions targets
  • Increased sedentary lifestyles is causing an increase in various health issues including obesity, type 2 diabetes, heart disease & more. Car ownership contributes to this by encouraging more people to drive to school, work etc. instead of taking bicycles, walking, public transport etc.

 

Failure to plan & invest in road infrastructure

Historically, Ireland has not been top of the class for urban or indeed rural planning. Our roads are a mish mash of ranging from decent to appallingly dangerous designs. Even in 2017, national & local authority road engineers tend to design cycle lanes as add-ons to motor vehicle centric designs which in turn discourages increased cycling & walking as commuting options. As an example, in a 20 year timeframe, primary school children are cycling far less. According to CSO data for Census 2016:

“Among primary schoolchildren, 59.8% went to school by car, compared to 59.2% in 2011. Commuting by bus fell by 7% on 2011. Overall, those walking and cycling accounted for 25% of primary school commuters in 2016, compared with almost 50% in 1986.”

This is an indictment of public policy making towards cycling & alternative transport methods for commuting to school.

Cycling a cargo bike

How can cycling help?

The economic benefits of encouraging more cycling are potentially enormous. Study after study both global & Ireland based have shown that increased cycling can help in various ways including:

  • Reducing traffic congestion by encouraging more commuters to use bicycles. Traffic congestion in Dublin alone costs the economy over €350 million per year according to research
  • Improving air quality by reducing car traffic & using emissions free transport such as bicycles
  • Improving physical & mental health of individuals who exercise through cycling. This ultimately creates a healthier population overall & reduces the costs to the national health system to treat various diseases such as diabetes, obesity, heart disease etc. It is estimated that obesity costs the Irish health system over €1 billion per year
  • Reducing wear & tear costs to road infrastructure as bicycles do not cause a fraction of the wear & tear damage caused by cars

 

Will politicians & public policy makers listen?

Mainstream opinion will need strong leadership to bring about any radical change in policy. For Ireland, various external factors are going to significantly alter the revenue stream as it stands. Irish officials will need to adapt even if they decide they need to simply chase the car money tree! For example:

  • Ireland is set for record multi-million euro fines as we are not meeting our legally binding EU emissions targets. Basically the government is going to have to pay over money for “nothing” as it is failing to tackle our growing transport emissions.
  • Diesel cars are being phased out & most car manufacturers are going to hybrid fuel models of petrol/electric with many going for Electric Vehicles only (EVs). Ireland has stated that it seeks to have its entire fleet as an EV fleet by 2040. These vehicles will potentially generate more revenue in VAT via increased electricity demand but these taxes are paltry in  comparison to the various fuel excise & VAT revenues generated.

The can kicking is probably reaching the end of the road & something needs to be done. If we are serious about tackling our various challenges ranging from the emissions to public health & traffic congestion, policy makers will see that economically it makes a lot of sense to invest heavily in cycling infrastructure throughout Ireland especially in our towns & cities.