Israel is lagging behind other Organization for Economic Cooperation and Development (OECD) member countries in the scope and quality of sea and land transportation infrastructure, according to a 2014 Bank of Israel report slated for publication next month. The report explains that these conditions have a negative effect on growth and the quality of life in Israel.
In order to assess the level of public transportation in OECD countries, the Bank of Israel conducted a comparison between 41 metropolitan areas in 23 OECD countries. The Bank of Israel took into account variables such as the number of journeys per traveler and the proportion of total journeys in which public transportation was used. The report also gives weight to other variables, such as per capita GDP, average family size in the metropolis, and population density.
The report states that use of private vehicles in Israel is double the use of public transportation. While travel in private vehicles rose 4% annually, starting in 2000, the number of journeys using public transportation rose only 2% annually. The length of roads per national area in Israel is lower than in most countries, despite the relatively high road investments made in recent years.
The length of railway track per national area and the ratio of railway use to the use of private vehicles in Israel are also below the OECD average. The Bank of Israel predicts that if the inferiority of Israel mass transit systems is not addressed, with time it will become a serious constraint, because the population in Israel, other than in the central region, is growing much more rapidly than the population in the OECD countries.
The condition of Israel's ports is controversial. On the one hand, the number of ports is reasonable - a little below the median. On the other hand, their quality is near the bottom of the scale. The report notes that the government has decided to build two up-to-date ports, and also intends to improve service at the existing ports.
According to the report, the lag in public transportation is due to a low volume of investment in rail transportation, compared with relatively high investment in roads. The Ministry of Finance previously estimated putting public transportation infrastructure in Israel on the same level as in Western cities would require an investment of NIS 200-250 billion. While cumulative investment in public transportation infrastructure in metropolitan areas in Israel is estimated at €1,500 per resident, this investment in Western metropolitan areas is estimated at €10,000 per resident, seven times as much. The report also predicted that if no investments are made in the coming years, every passenger can be expected to waste 60 minutes more a day on the roads.
Improvement in GDP
The report asserts that an increase of 1% of GDP in investment in infrastructure projects can be expected to give an immediate 0.4% boost to GDP, and a 1.5% increase four years later. "The government should therefore use regulation to affect the level of infrastructure, create appropriate conditions for investment by the business sector, and subsidize the investment or its implementation," the report states.
The report also states that an improvement in public transportation will lead to a better fit between employees and the firms employing them, and will support a population willing to join the labor market, but unable to buy a private vehicle. The availability of public transportation also has consequences for the quality of life, because a long journey to the workplace harms the balance between leisure and work, and the use of a private vehicle damages the quality of the environment.
Published by Globes [online], Israel business news - www.globes-online.com - on March 18, 2015
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