The cost of
implementing the revisions to the Building Code
of Australia and the net cost of implementing
the draft Transport Standards were estimated in
recent Regulatory Impact Statements at $3.4 and
$3.7 Billion over 20 years respectively. i.e.
total $7.1 Billion or $355 Million per
year.
These sums may appear to
be large, but they cannot be interpreted as such
without reference to aggregate
benefits.
While the Transport RIS
attempted a narrow definition of benefits
focussed on the extra patronage and consequent
fares raised and on savings to some Government
programs due to improved transport, the Building
RIS made no attempt to measure the benefits of
changes to the Building Code except through a
vague qualitative survey of people with
disabilities, the results of which defied
logical interpretation.
An Economist’s
Approach to Measuring Benefits
It is impossible to
estimate the benefits of any particular DDA
Standard because the standards are inter-related
i.e. one part cannot work without the other.
There is little point in having accessible
transport if buildings are not accessible; and
there is little point in having accessible
education if transport is inaccessible or if
discrimination is allowed to continue in
employment etc.
It is however possible to
estimate the benefits of accessibility in the
community as a whole by attempting to
estimate:
- how much people would
be willing to pay for an accessible
environment; and
- the production lost to
the economy as a result of an inaccessible
environment.
Economists make these
sorts of measurements all the time. The final
estimates involve reasoned guesswork which can
be refined ad infinitum, but which reasonable
people may argue over if the basis of the
measures is made explicit and if the measures
are verifiable (even if they are hard to
actually find). The estimates below are initial
“back-of-the-envelope”calculations.
Community Willingness to
Pay for Accessibility
How much would people in
the community be willing to pay to avoid
inaccessible buildings and transport if they
knew the probability of their requiring an
accessible environment, and if they were aware
of the costs of an inaccessible
environment?
Better economists would
look for the answer to this in an
“insurance” model, for the issue
really boils down to people insuring against the
“hardship” of an inaccessible
environment in the event of a person’s
needing such an environment.
The actuarial method is
the same whether one insures against the loss
due to fire, theft or disability. There is of
course a market for insuring against the
short-term income loss due to disability, but
there is no market for insuring against
long-term income loss, or losses due to an
inaccessible environment (and for various
reasons the necessary conditions for the
existence of such a market are unlikely to ever
occur).
The formula for estimating
what a risk neutral rational informed individual
would be willing to pay for such insurance is
simple - namely, multiply the probability of
loss by the value of the loss. Of course not
every individual is risk-neutral, few are
informed, and possibly fewer are rational - but
economists carry on regardless because it is not
clear what the implications of alternative
assumptions would be.
Given that almost 0.5% of
the population use wheelchairs, it would not be
unreasonable to assume that 0.5% of the
population will need an accessible environment
at some time in their lives. Nor would it be an
exaggeration to suggest that the average value
of loss due to an inaccessible environment when
an average person acquires or develops a
disability is 20% of income - because of income
loss, higher cost of living, loss in lifestyle
options etc (i.e. $6,000 loss for a person on
$30,000)1.
Multiplying 0.005 by 0.2
gives what is known as an actuarially fair
shadow price of 0.1% of income i.e. $30 per year
for a person with an income of $30,000.
Multiplying by the 17,000,000 population, this
amounts to $510 million per year or $10.2
Billion over 20 years.
This is a conservative
estimate in that:
- it adopts a low
probability of needing access (only 0.5% of
the population) even though 4% of the
population cannot access transport because of
their disability; and 14% of the population
has a handicap (i.e. limitation to perform
certain tasks in relation to self-care,
mobility, verbal communication, schooling
and/or employment);
- it ignores the amount
that people would be willing to pay so that
friends, family, and other citizens are not
handicapped by an inaccessible environment -
surely people have some altruistic and
citizenship feelings and are not wholly
individualistic.Y
ii. Lost
Production
A second benefit of an
accessible environment is the lost productivity
in the community due to people with disabilities
being unemployed because of inadequate
access.
Thus, people with
disabilities have a lower participation rate in
the workforce because of direct and indirect
discrimination, with a major element of the
indirect discrimination being due to inadequate
access to buildings and expensive transport
costs.
The participation rate in
the workforce of the estimated 80,000 wheelchair
users in the community aged 15-64 has been
reported to be 38% as compared to a 76.9% rate
for people without disabilities. If just 12,000
currently unemployed wheelchair users were made
employable as a result of an accessible built
environment and transport, the participation
rate would increase to 53% which is still 23%
below the national average. If these newly
unemployed workers had an average productivity
of $25,000 per annum (almost $10,000 below
national worker productivity) then National
Income would increase by $300 million per year,
or $6 billion over 20 years.
This figures is an
underestimate of an accessible environment not
only in that it is conservative in assuming that
the participation rate only increases by 15%,
but also insofar as it:
- excludes people with
vision and hearing impairments and people
with ambulant disabilities who also have a
lower participation rate and whose productive
potential is also lost because of inadequate
access;
- excludes the lost
productivity due to the lower workforce
participation of family members and voluntary
carers who are needed to assist in transport,
transfer and mobility because the environment
is inaccessible.
The $10,000 discount for
productivity is problematical. On the one hand
people with disabilities take more time in
getting some things done, and in our system, the
value of time is one of the keys to monetary
reward.
On the other hand, the
greater workforce loyalty and problem-solving
skills, the thicker “hide” and wider
vision are factors which enhance
productivity.
Distribution
Effects
What is the cost of an
inaccessible environment to a person with a
disability?
What would be the cost per
person of an accessible environment if the cost
of access was shared across the
population?
These are what economists
call distribution issues as opposed to a real
resource or efficiency issues. It is a question
which modern Economics has tended to ignore, but
which used to be a principal focus of Economics.
It is a critical question for people with
disabilities.
People with disabilities
have a higher cost of living due to an
inaccessible environment because:
- they have to catch
expensive taxis instead of using less
expensive public transport;
- they have less choice
in shopping and entertainment and therefore
pay more for lower quality goods and
services;
- they spend
significantly more on nondiscretionary
equipment, goods and services which have
little intrinsic “utility” apart
from the ability to assist in accommodating
an inaccessible environment (portable ramps,
mobile phones, attendants for
access);
- they face undesired
cultural marginalisation and discrimination
because so much ordinary activity requires
“special” treatment in the face of
an inaccessible environment.
$4,000 per year would be a
conservative estimate of the average
out-of-pocket costs of an inaccessible
environment to wheelchair users. Given the
120,000 wheelchair users of all ages, this
implies an total cost of amounts to $480 million
per annum, or $9.6 billion over 20
years.
This does not account for
the large number of people with ambulant
disabilities, people with hearing and vision
impairments, and people with other disabilities
affected by an inaccessible environment. If we
were to apportion $1,000 per year as the cost of
an inaccessible environment to 250,000 of the
almost 1 million people who use sticks, frames
and crutches as mobility aids, then an
additional $250 million per year or $5.0 Billion
over 20 years could be added to the value of an
accessible environment.
This still excludes
300,000 people who use mobility devices other
than sticks, frames, pushers, wheelchairs and
scooters as well as 620,000 other people that
the Australian Bureau of Statistics has counted
as having handicaps. In this, the estimate makes
the patently incorrect conservative assumption
that people with these handicaps (including
people with vision and hearing impairment) are
handicapped by factors other than the built
environment or transport.
The estimate also excludes
the cost to family and friends who also bear
some cost of an inaccessible
environment.
Thus we have 370,000
people bearing a $730 million annual bill for an
inaccessible community i.e. $1,973 per person
with a disability. This compares with 17,000,000
citizens paying $355 million per year for
creating accessible buildings and transport i.e.
$20.88 per citizen.
