Australia’s most comprehensive WFH study reveals $5.5bn saved in travel time costs, recommends spending on digital infrastructure

iMove Cooperative Research Centre

Australia’s most comprehensive report to date on the impacts of working from home (WFH) – including policy recommendations – has been released. It revealed WFH has unlocked a $5.5bn reduction in travel time costs (from a pre-Covid $10.3bn).

The report – Prospects for Working from Home: Assessing the Evidence – is an iMOVE Cooperative Research Centre meta-analysis of four of the centre’s research projects conducted over the last two years, involving leading academics from the Universities of Sydney, South Australia, and Western Australia. The comprehensive nature of the report comes from its longitudinal, multi-jurisdictional approach – with multiple data sets gathered at various points during the pandemic.

Its headline recommendations include investing in digital infrastructure as well as physical infrastructure, and due consideration given to the balance of spending when comparing respective benefits. “Any investments in physical transport infrastructure in the future should include an additional sensitivity test to consider the relative merits of alternative, or parallel investments in digital infrastructure,” the report said.

On travel time costs (one of the largest costs of transportation, and often the primary justification for transportation infrastructure improvements), the iMOVE research revealed a savings of close to $5.6bn for the Greater Sydney Metropolitan Area.

“The $5.579bn of reduction in travel time costs represents a 54.02% reduction in the pre-COVID-19 total time costs of $10.3bn, much of which we would suggest can be associated with congestions costs,” the report said.

The report also recommends an uptake in WFH for public servants from all tiers of government “where this offers real gains in productivity”.

And it says employers and employees should be supported in bargaining for new WFH terms and conditions, which could include an industry code of conduct covering minimum working hours, terms & conditions, and dress requirements for video conferencing.

“All tiers of government need to carefully review the medium and long-run impacts of working from home and consider whether policy adjustments or major reform is required. This especially relates to industrial relations, transport infrastructure investment, the provision of public transport services, land use planning and cities policy and, more broadly, macroeconomic policy,” iMOVE managing director Ian Christensen said.

The new report draws together the findings of four iMOVE CRC research projects undertaken by the University of Sydney’s Institute of Transport and Logistics Studies (ITLS), University of South Australia, and the University of WA.

It said the proportion of people working from home increased from about 8% in pre-Covid 2019, to about 40% in 2020 before declining slightly to 38% of the Australian labour force in 2021. However, a new WFH normal could see “between 40-50% of the Australian workforce feasibly work from home some days of the work”, the report said.

The report also looks at how employees and employers face up to the new workplace realities of WFH, including negotiating for new employment contracts, and establishing new systems and processes for WFH. It moots a voluntary industry code of conduct “without direct government involvement and without limiting firm-level flexibility”.

The code would establish standard WFH conditions for:

– Minimum work hours across standard time periods;

– Dress and appearance standards (for video conferencing);

– Who pays for capital equipment (laptop, screen, printer etc); and

– Who pays for home energy consumption (e.g. air-conditioning).

Recommendations

The report makes seven public policy recommendations for all tiers of government.

Recommendation 1: Transport network infrastructure investment and public transport

This includes that infrastructure review bodies (such as Infrastructure Australia or state counterparts) “carefully review” demand forecasts for proposed future transport infrastructure investments. This is not to say that public investment in transport infrastructure, or public transport in particular, should be reduced. “Rather, given the uncertainty around future transport demand and the opportunity cost of public resources, new projects should be reviewed in light of the potential structural changes in the Australian labour market and, as a consequence, transport demand,” the iMOVE report said.

Recommendation 2: Industrial relations flexibility

The Commonwealth Government should consider the suitability of the provisions of the Fair Work Act 2009 to support voluntary agreements relating to the extent and nature of working from home and propose changes where necessary.

Recommendation 3: Digital infrastructure

Experience during the lockdowns highlighted the pivotal role of digital infrastructure in establishing access to WFH and other flexible work patterns. As a result, estimates of the potential value of investments in digital infrastructure may need to be adjusted, possibly resulting in a stronger case for investments which strengthen digital networks.

Recommendation 4: WFH Standard Industry Code of Practice

(See above)

Recommendation 5: Government employment

The Commonwealth, and State and Territory governments, should review the feasibility of increasing WFH for ‘office-based’ public servants where this offers real gains in productivity.

Recommendation 6: Ongoing review of WFH

State transport departments should undertake annual surveys for at least the next two years and report on the extent of the permanent (or structural) adjustment towards WFH by occupation, geographic and socioeconomic groups. This would include identifying the scale of permanent change relating to commuting and non-commuting demand, public transport demand, planned transport network investment, environmental impacts, and impacts on transport, land use and planning and cities policy.

Recommendation 7: Productivity

The Commonwealth Government should assess the economic impacts of the mandatory shift to WFH during the Covid period (2020 and 2021) on Australia’s productivity performance, including likely trends in WFH in the post-COVID environment and related productivity impacts.

Summary

In summary comments, the iMOVE report noted the mass adoption of WFH is a “complex phenomenon with diverse economic and social impacts”.

“As these impacts – both positive and negative – play out, there will be potentially many adjustments made to employer-employee agreements and household arrangements, which will in turn affect regional transport and property markets, transport network investment and planning, and government policy.

“With a greater focus on local activity, there may be a need to reprioritise improvements in local public transport, safer pedestrian walkways and precincts, and bicycle lanes, serving short distance trips throughout the day, with the added benefit of improving first and last mile connectivity to public transport and (hopefully) contributing to improved health outcomes through greater physical activity.

“Many of the impacts will be, ultimately, translated into changes in the returns to labour (i.e. wages), capital (i.e. profits) and asset prices (e.g. commercial and residential land values). The transport market will adjust via fares and fees charged and network asset prices, and potentially government revenue and expenditure decisions,” the iMOVE report said.

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