One of the more disappointing things about Steven Joyce’s reaction to the CBD Rail Link business case is how political he has made the issue of transport funding. As I noted in my post a couple of days back – the integration of land-use planning and transport is being increasingly understood (they’re mutually dependent in many respects), just that Joyce comes out on the side of preferring auto-dependent urban sprawl to a public transport based compact city urban strategy. Joyce’s preference seems to be based largely on political grounds – that those nasty ARC planners have spent the last 10 years trying to force intensification on people who don’t want it.
While this completely ignores the government’s (both this one and the previous one) contribution to hugely unbalanced outcomes through massive road spending and ignores the fact that most District Plan rules actively encourage sprawl, the whole “public transport is only supported by lefties” argument annoys me. As detailed in the CBD Rail Tunnel business case there are productivity and economic growth (stuff that right-wingers appear to often be concerned about) reasons to spend money on rail. While centre-right parties in New Zealand seem stuck in the 1970s when it comes to their transport policies, it’s interesting to see how different things are in Australia.
Over the weekend there was a state election in Victoria, where the incumbent Labor government lost office to a “Coalition” centre-right government. In New Zealand politics that would probably be a bad result for public transport advocates – but in Victoria it seems quite different. In fact, the Public Transport Users Association, after undertaking a highly detailed analysis of the different parties’ policies, ranked the Coalition ahead of the incumbent Labor government. Somewhat unsurprisingly, they’re both behind the Green Party in Victoria.
With public transport the big issue for many voters, the Public Transport Users Association (PTUA) has given its verdict on the transport policies of the parties going into the State Election, with the Greens coming out on top, followed by the Coalition.
PTUA President Daniel Bowen said that packed trains, slow trams, and infrequent buses had voters looking to all political parties for a solution to Melbourne and Victoria’s transport woes.
And he said the Green and Coalition promises for reform through an independent public transport authority were crucial in their party policies receiving the best marks.
“The Greens scored an A, and have an aggressive agenda to upgrade public transport, with a Public Transport Authority being central to better managing and planning the network. The vision of frequent public transport across Melbourne is welcome, and would provide more residents with a genuine alternative to car travel.”
Of the two major parties, Mr Bowen said the Coalition had come out with a stronger set of policies than Labor, and scored a B.
“The Coalition has a number of positive policies, underpinned by a pledge to buy 40 additional trains, and introduce a Public Transport Development Authority to provide central management and planning.
“While we have concerns over the Coalition’s push for the east-west cross-city road tunnel, the pledge of feasibility studies for rail to Doncaster, the Airport and Rowville, as well as level crossing eliminations are very welcome.”
Mr Bowen said that Labor were promising some worthwhile upgrades, ultimately they fell short of what is needed, scoring a C. “Labor seems to have no overall vision for a fast, frequent, connected network across Melbourne and Victoria, and have ignored community calls for a shakeup of the management of public transport, which has scores of organisations involved but nobody taking responsibility for such essentials as making sure buses meet trains.”
Mr Bowen said that despite Labor deservedly trumpeting Smartbus as a success story, it was disappointing that they had not pledging any new Smartbus routes. Labor also lost points for continuing to push the destructive North-East freeway link.
There’s a quick video providing further information:
I do wonder why things are so different here in NZ. Is it perhaps because the majority of the population doesn’t live in a large city? (whereas a massive proportion of Victoria’s population lives in Melbourne). Certainly in local politics it seems that public transport support (at least superficially) can cross the political divide – just not when it comes to nation-wide politics for some reason.
In the comments, Rob Russell has alerted me to the fact that Rod Oram talked about transport and spatial planning on National Radio this morning. A link to listen to the item is here.
Somewhat coincidentally, I’ve also received today a copy of the original SAHA International assessment of the cost-effectiveness of the various Roads of National Significance that Rod Oram’s article a week and a bit ago referred to. The whole assessment can be read here, but I find page 33 the most interesting:
So there we go. Proof the Puhoi-Wellsford’s cost-benefit ratio is actually 0.4.
NZ Herald columnist pulled out one of his best articles yet today – shining a light on the diverging opinions of central government and the Auckland Council when it comes to Auckland’s transport and land-use planning future.
Writing in the Sunday Star-Times, Mr Joyce said the challenge for Auckland’s spatial planners would be “not to impose their ideal Auckland on us, but allow for an Auckland that reflects the varied ways in which the people of our biggest city already choose to live”.
Simpletons like myself had thought the spatial plan concept was introduced to try to repair the huge cock-ups we Aucklanders have made by doing just that, choosing to live by sprawling ever outwards – towards Whangarei in one direction and Hamilton in the other.
But no, says the minister, “we … have to understand that people like to live where they want to live …”
As I said yesterday, it is simply untrue for Joyce to state that Auckland’s urban sprawl is the result of a ‘natural desire’ for the city to spread that way. Low density development is planned for down to the minutest detail throughout our existing District Plans. It will be interesting to see how and if those plans change as they are replaced by an Auckland-wide plan over the next few years (which one assumes will be informed by the ‘higher level’ Spatial Plan.
However, as our planning and transport documents have developed over the past decade there has been an increasing divergence – with the planning documents focusing on intensification (at least at the higher strategic levels, this has yet to completely filter down into the nitty gritty District Plans) but the transport strategies retaining much of a roads focus. The point of the spatial plan is to bring these together: so that we have our land-use and our transport strategies working together, not in conflict. This essentially means a choice between a public transport focused compact urban strategy and a roads-based sprawl strategy (or something in the middle). Steven Joyce’s opinion piece in yesterday’s Sunday Star Times shows quite clearly which strategy he prefers.
Getting back to Rudman’s article today, he does a great analysis of the hypocrisy that is infiltrating transport decision making:
It hadn’t been the best of weeks for the minister. It started with Sunday Star-Times columnist Rod Oram unveiling a secret, independent business study of the Puhoi to Wellsford “Holiday Highway” which showed the cost/benefit ratio as 0.4, which meant that for every $1 invested the return was just 40 cents.
Embarrassingly for Mr Joyce, the analysis was commissioned by the Government.
A few days later, Mr Brown triumphantly released the business plan for the proposed CBD rail tunnel, commissioned by the old regional transport authority and KiwiRail, which declared the $2 billion project would pay for itself more than three times over. A much better score than the Government’s pet Puhoi highway.
Of course, this northern highway was declared a “road of national significance” without waiting for the spatial plan to be developed.
Yet at the grand inauguration ceremony for the new Auckland mayor and councillors, Mr Key said any verdict on the CBD tunnel would be subject to the spatial plan.
I should be getting a copy of this business study into the Puhoi-Wellsford road in the next few days. I’m looking forward to having a read through it.
After repeating some of the lines from Joyce’s opinion piece and its critique of “those evil planners”, Rudman cuts to the point linking back to the CBD Tunnel project:
And with Mr Joyce’s laissez-faire approach to development comes the huge costs of roading, public transport, drainage, schools and so on, that the rest of the community has to pay.
The CBD tunnel report explains exactly why we should not be leaving Auckland’s development to the whims of land-bankers poised to make a fast buck at the city’s fringes.
It argues that if Auckland is to achieve the Government’s goal of becoming a globally competitive urban centre, it has to create a highly liveable, high-density central working environment to attract the best and brightest from home and abroad.
In a nutshell, this is the reason why I’m surprised Joyce has had such a negative response to the CBD Rail Tunnel business case. The project is not being proposed on the ground of its “green credentials” (even though I’m sure getting 10,000 vehicles off the road has good green credentials). It’s not about simply creating a more vibrant CBD to improve the quality of life for people who live, work and play in the CBD (although I’m sure it will contribute to that too). The project’s viability is based on its ability to allow (and indeed encourage) concentrated employment in Auckland’s CBD – which all research tends to indicate would have a massive effect on Auckland’s (and indeed New Zealand’s) productivity and eventually wage levels. That’s exactly the sort of language I thought this government had a keen ear for.
Plenty of coverage in the NZ Herald today about the CBD Rail Tunnel project – including an editorial. Here are some extracts with comments:
Anybody looking for reliable data to support this contention will not find it easily. The report, prepared by consultants for the former Auckland Regional Transport Authority and KiwiRail, is everything those commissioning it could have desired.
It has not subjected their proposal to critical analysis, and does not highlight the likely operating losses that probably would be charged to ratepayers.
I think this is an unfair criticism. The business case was over a year in the making, it encompasses around eight volumes, it has been reviewed by NZTA, it was peer-reviewed by PriceWaterhouse Coopers, it uses international examples to back up its case and so forth. The “controversial” employment benefits that boost the project’s cost-benefit ratio from 1.1 up to 3.5 have been used in similar NZTA assessments of the roads of national significance. Contrary to the editorial’s assertion, it talks quite specifically about rail operating costs (page 11 of this appendix). In fact, it’s the most comprehensive business case I’ve read for a transport project. The contrast with the lightweight business case of the Puhoi-Wellsford road is quite remarkable.
The editorial continues:
It is an exciting project. The loop could be the revival of the CBD, bringing all corners of it within a 500m walk to a station. The ridges around the inner city would be more easily accessible. The line from the western suburbs could come straight into the city, rather than joining the southern line at Newmarket. Most important, many more trains could run once Britomart became a through-station.
All of this might entice many more employers to set up in the city. It might entice commuters to leave their cars at home. They might decide to live near railway stations rather than beaches. They might.
This is a somewhat valid question I suppose. A lot of the cost-effectiveness of this project depends upon it being the spark that recentralises Auckland’s development patterns, concentrates a lot more employment in the CBD and leads to resulting higher wages. There probably is no exact way of knowing whether that will happen or not. But I think the business case certainly makes a pretty decent argument that recentralisation is a heck of a lot more likely with the rail tunnel than without it – and puts together a pretty decent argument that Auckland’s economy (and as a result that of the country as a whole) would benefit from employment concentration. That certainly seems to have been the case in the various case studies the business case looks at from North America.
“Build it and they will come” is a dubious theory. White elephants happen. Now that Auckland has a single council in command of all its rate revenue and unrivalled in its expression of the city’s interests, we need it to keep a cool head. A rail circuit of the inner city needs to be assessed more critically than the tone of this report suggests…
…History has shown that when Aucklanders really want a transport link, when they know they will use it, they are prepared to pay for it. Before Mr Brown, Mrs Fletcher and the rest try to convince Mr Joyce of the merits of this proposal, they should put it to Auckland – with an honest price on it.
Then, if ratepayers are as excited as they are by the case for an inner city rail circuit, they could have a proposition the Government would find hard to refuse. As it is, it sounds like business as usual – Auckland’s voice whining like a demanding child expecting a treat from the taxpayers.
While white elephants do happen, it’s actually pretty difficult to find one when it comes to investment in rail transportation. As far as I know, all rail systems in Australian cities are experiencing dramatic increases in patronage, leading to upgrades to the system either being planned or already under construction. The same seems to be true in North America – where cities like Los Angeles have massive plans to expand their rail systems, Vancouver’s Canada Line has been a wild success, Toronto has big plans to expand its rail system and so forth. Going by international experience – and Auckland’s history in the form of the supposed white elephant of Britomart – rail seems to be a pretty sound investment.
In terms of funding, the “if Auckland wants it, Auckland should pay for it” argument, I say “not a problem”. Auckland pays far more fuel tax than it gets back in transport spending, it pays far more general tax than it gets back in government spending and Auckland was prepared to pay a regional fuel tax to fund electrification before that got cancelled by the government. I have no problem with Auckland paying for this project: through its taxes, through its fuel taxes and yes, most probably through its rates to a reasonable extent. One would think that Auckland would benefit a lot more from this project than from the Puhoi-Wellsford road – which will largely be paid for by Auckland’s fuel taxes.
It will be interesting to see if Auckland Council, and in particular Mayor Len Brown, start making a bit of noise in favour of the project. We could be in for a very interesting showdown between central and local government. Someone must be regretting this whole Super City idea.
Last week wasn’t a good week for Transport Minister Steven Joyce. Starting on last Sunday, highly acclaimed business journalist Rod Oram wrote a superb article completely slamming the business cases for a variety of the roads of national significance that Joyce is so fond of. Then on Wednesday the business case for the CBD Rail Tunnel comes out – a project that he has been very very lukewarm on. Worst of all, the business case is ‘compelling’, mainly on the grounds of things like boosting productivity, transforming Auckland into an ‘international city’, freeing up the roads of 10,000 vehicle trips a day to the central city – so that roadspace can be used for freight, other business trips and so forth. Heck, the business case speaks so much his language – or the language of this government – in terms of things like labour productivity, increased wages and so forth that you would almost think he’d written it himself.
Except he hasn’t – and his good mate Bill English has said that there’s no more general government funding for rail ever again because KiwiRail’s turnaround plan has used up far more than his limited goodwill when it comes to rail. So really, Joyce know that if the government is to contribute to this CBD Rail Tunnel with the annoyingly good business case there’s only one place for the money to come from. And that is from his beloved Roads of National Significance. Most annoyingly (for him) the particular road of national significance that most people are talking about stopping – or dramatically cutting back – is his particular pet project: the Puhoi-Wellsford motorway. To make matters worse, current MP for Rodney electorate Lockwood Smith is retiring from being an electorate MP at the next election and he’s been eyeing up this electorate for a long time. Cancelling a huge motorway project that he’s championed so strongly to divert the funds to a darn railway project – who uses the trains in Auckland anyway, none of his mates that’s for sure – is the last thing in the world he wants to do.
It’s a pretty tricky situation. The cost-effectiveness of your pet project is being attacked left, right and centre. There’s another project – one that you’ve never been keen on – waiting in the wings to take most of your favourite project’s funding – and it seems to have a compelling business case. What do you do?
Well, you go on the attack of course. First you slam the business case for this annoying rail project – even if a bit of what you say isn’t quite comparing apples with apples. Then you scramble around to try and appeal to the masses that the column written by Mr Oram last week wasn’t correct and in fact you have the best interests of the general public at heart after all – even if they voted overwhelmingly for a pro-rail mayor. (Oh, and you work out who the idiot was who thought up of this whole Super City idea – didn’t they know it would make Auckland an annoyingly powerful beast?)
The result is a rather bizarre opinion piece in today’s Sunday Star Times (when was the last time a Minister wrote an opinion piece in a Sunday newspaper I wonder?) Cam Pitches over on the Campaign for Better Transport blog has a great paragraph by paragraph analysis of Joyce’s opinion piece – so I’ll focus more generally. His defence of the roads of national significance is pretty weak – as the only real thing he says is that “they weren’t plucked out of thin air and that they are crucially important to the country’s economic future”. I would say that’s possibly true of a few of them: like the Victoria Park Tunnel and completion of the Western Ring Route – but for others the benefits appear relatively minimal when looked at by the experts, particular when the benefits are weighed up against the pretty significant cost. Once again, I think it’s useful to show the graph below – which illustrates how the benefits of the CBD Rail Tunnel stack up against the seven roads of national significance: Joyce then goes on to tell various lies about investments in the rail network – claiming that $4.5 billion will be spent on turning around KiwiRail (only $750 million is being spent by government on that, the rest is to come from within KiwiRail); claiming that the current government is spending $1.6 billion on Auckland’s rail network (the $600 million Project DART was funded in the 2006 budget, $500 million for electrification infrastructure was funded in the 2007 budget and the $500 million for rolling stock is the subject of a lengthy ongoing debate and may be paid for by Auckland ratepayers in the end.)
But perhaps what I find most insightful – and most concerning – is what’s written in the last few paragraphs of his piece:
Some people believe the way our cities have grown is wrong. They think the quarter acre section is a fool’s paradise. People should live more in apartment buildings and less with a backyard, or heaven forbid, in a small town outside of the city.
It’s a philosophy that argues that urban planners should have much more say about how we live our lives; and it’s an agenda that the old ARC had in Auckland for a long time: have a cast-iron metropolitan urban limit, force up the price of sections, increase the density of our suburbs, have people live in high-rise apartments, don’t let people get off the highway at Puhoi. And so on. If you follow that logic too far, the Auckland Harbour Bridge would never have been built, and the North Shore would still be a couple of seaside villages.
The truth is more prosaic. Yep, we should allow the city to increase in density (watch councillors run a mile when it comes time for the district plan changes), and we should support cost-effective transport options that support that. But we also have to understand that people like to live where they want to live, and provide cost-effective transport options (roads even!) for those people too. Amusingly, Auckland has increased in density in recent times. But largely not where the central planners said it would, (along the transport corridors) and instead in the beach-side suburbs. Fancy that.
And that will be the challenge for Auckland’s spatial planners. Not to impose their ideal Auckland on us, but allow for an Auckland that reflects the varied ways in which the people of our biggest city already choose to live.
Well, there’s certainly going to be an interesting battle between local government and central government when it comes to the final details of Auckland’s first spatial plan. I must say that I get really annoyed by the line of thinking that Joyce is peddling here – that naturally our cities want to sprawl and we should allow and encourage it to happen. The corollary of this statement is also very annoying – that supposedly this whole public transport and intensification push just comes from a few nasty planners wanting to tell us how to live our lives.
What this debate – and Joyce’s position – completely misses is the fact that sprawl doesn’t just occur naturally. In fact, around 95% of our current planning rules actively promote sprawl: minimum lot sizes, maximum building heights, minimum parking requirements, minimum building setbacks, maximum site coverage, maximum density limits – they all seek to do nothing but limit the intensity of development. While in many cases this is perfectly understandable – it must be recognised that just about every rule in the planning books actually works to encourage – not discourage – low density, single-use, auto-dependent development patterns. Sprawl doesn’t just occur by magic, and in fact cities built before we had lots of planning rules tend to be higher-density, mixed-use, walkable settlements. The kind of places that supposedly are being forced onto an unwilling public by nasty planners at the Regional Council.
The other issue that Joyce completely ignores is the whole question of economic efficiency. How much money has been spent in Flat Bush – for example – building all those brand new schools, all those brand new roads, all that fancy new parkland and so forth? Furthermore, as areas like Flat Bush inevitably tend to be auto-dependent, all the car trips generated by that area need to be accommodated around the region – hence the “need” to spend up large on projects like AMETI, the Highbrook motorway connection and so forth.
An ARC study earlier this year compared the economic efficiency of a sprawl-based future with that of a compact city based future. The results were very interesting: In short, the expansive scenario (that Joyce seems to be promoting) has infrastructure costs around $10 billion more than the other scenarios – but provides the worst outcomes in terms of accessibility and trip reliability. So even if people supposedly “prefer” sprawl (and yet again I would point towards most planning rules promoting sprawl by stopping more intensive developments that it would seem to me most developers actually want to do), if it gives the city overall the poorest outcome for the highest price – why would you do it?
Following on from the Memorandum of Understanding signed between various parties on improving transport access to Auckland International Airport a few months back, the tender for “the first stage of an investigation into preferred routes for rapid transit and state highway links to the airport” has been called. Here’s Auckland Transport’s media release:
Auckland Transport, Auckland Council, the New Zealand Transport Agency, Kiwirail, and Auckland International Airport Ltd have signed a memorandum of understanding to undertake the joint investigation.
The New Zealand Transport Agency will fund the first stage of the study, which is known as the South-Western Airport Multi-Modal Corridor Project.
The study will identify preferred transport routes between the Manukau Harbour Crossing and the airport, towards the junction of SH20 and SH20B and towards the commercial and industrial area in Manukau.
It will also investigate improvements to state highways and public transport (including bus and rail rapid transit). The study will identify the need, timing and feasibility for improvements.
Phases two and three are dependent on the outcome of the first phase. The aim is that the second stage will further assess the preferred routes at a detailed level, with the third stage of work preparing to protect the chosen route.
The project will also identify current and potential integrated transport/land use opportunities along the various transport connections to the airport.
According to estimates, the number of passengers through the airport is projected to grow from the current 13.4 million a year, to 24 million in 2025 and potentially as much as 36 million by 2050.
A recent Market Economic study projected employment at the airport and the surrounding airport corridor area to grow from the current 21,000 to as much as 38,000 by 2031.
If this really is a study on the first step of making rail to the airport a reality (which is my understanding of what it is), then it’s certainly being very secretive about that purpose. The word “rail” only gets mentioned once – and that’s for some reason to highlight that rapid transit to Auckland Airport could be by bus or rail – even though ARTA did a study a few years back showing that heavy rail was by far the best option for serving the Airport with Rapid Transit.
Personally I’m really not sure what a bus rapid transit option would achieve over and above what we already have with the airport bus. Perhaps it might add a few bus lanes onto State Highway 20 between the Airport and Mangere Bridge – but what happens at Onehunga? We already have a railway line between Onehunga and the CBD, what we don’t have is a busway between Onehunga and the CBD (and it would be stupid to build one when the railway line’s there). Because of the whole “what on earth would you do between Onehunga and the CBD?” question, it seems silly for this study to even be considering the option of bus rapid transit to the airport again – especially when previous studies ruled it out.
It’s also odd that the study would focus on motorway improvements. While there are some roading improvements to the airport that will inevitably be made in the not too distant future – like grade-separating the Kirkbride Road intersection and extending the motorway grade section of George Bolt Drive right to the airport – this is already reasonably well underway in terms of its planning.
I suppose perhaps the most useful outcome of such a study might be providing a mechanism to link up future transport projects and ensure that they are compatible and – if any project is built before any other project – the first project makes the next one easier to construct. A good example here is the grade separation of Kirkbride Road, where a future road bridge could be build long enough to accommodate a railway line passing under it (potentially much like how the Northern Busway passes beneath Northcote Road). It the study addresses questions like that – then it will make a useful contribution to making Airport Rail a reality. If the study focuses on designing fancy motorways to the airport and even considers bus rapid transit as the preferred option for rapid transit to the airport, then the study will be a complete waste of time and money.
Steven Joyce’s main response to the release of the CBD Rail Tunnel business case seems to have been to immediately question the accuracy of the study. In particular, he has questioned the validity of including broad urban regeneration – or employment based – wider economic benefits of the project. This is taking a very big swipe at the business case, because it is these particular benefits that make the CBD Rail Tunnel stand head and shoulder above other large transport projects.
Here’s a good summary of what he’s said (from here):
Joyce said the report talked about congestion but didn’t get into the detail of how that would be addressed in terms of actual numbers.
He took issue with the report’s statement that the standard benefit-cost ratio (BCR) for the project was equal to or higher than that of two of the Government’s Roads of National Significance.
“They have released a BCR with Webs (wider economic benefits) and they’ve been a bit naughty because they’ve called it a BCR,” he said.
“Then they’ve gone out beyond the NZTA evaluation manual and said `by the way, we’ve got a new way of calculating it which improves it even more’.
“What they’ve tried to do is compare the BCRs, including Webs, on the tunnel project with the plain BCRs of the two other projects.”
Joyce said the actual comparisons, at the level of BCRs including Webs, were identical.
But how right is that? Is it actually true that NZTA haven’t looked at these wider economic benefits? Is it really true that Puhoi-Wellsford has exactly the same BCR as the CBD Rail Tunnel when you exclude any sort of wider economic benefit? What is the difference between the wider economic benefits in the NZTA economic evaluation manual and the employment benefits (we could call them the wider-wider economic benefits perhaps?) Have these ‘wider-wider’ economic benefits been used in cost-benefit analyses overseas?
So many questions, so I thought I would need to do a bit of research to try and find some answers. A useful start is to look at the graph I put together yesterday – which effectively “added in” the CBD Rail Tunnel to a graph that formed part of SAHA International’s economic analysis of the seven Roads of National Significance. As you can see, each project has three bars. The green bar is for plain old transport benefits (known as ‘conventional benefits’ in SAHA’s report). The purple bar is what we might call “conventional wider economic benefits” – those that are in NZTA’s economic evaluation manual. The blue bar is effectively the purple bar plus what are called ‘employment benefits’. Obviously the blue bar is always bigger than the purple bar, because agglomeration benefits simply form ‘part of’ the true wider economic benefits of a transport project.
So let’s be fully fair and outline the level of each of the different types of benefits for the CBD Rail Tunnel and the Puhoi-Wellsford Road. For the CBD Tunnel this can most easily be found in the Executive Summary on page 5 – in two different tables:So for the CBD Rail Tunnel we have conventional transport benefits of $1.319 billion, we have traditional agglomeration wider economic benefits of $185 million and we have these broader productivity/employment benefits of $3.333 billion (which include the agglomeration benefits). These are the totals that I used to create the three bars in the graph earlier in this post.
For the Puhoi-Wellsford road, for some reason even though SAHA International’s assessment – with appendices – runs to 166 pages, there’s no similar table, just the graph I’ve included above. That would indicate around $500 million in conventional benefits and say around $100 million in wider economic (including employment) benefits. Even taking into account the lower cost of Puhoi-Wellsford, it seems clear that if we do our best to compare ‘apples with apples’, the benefits of the CBD Rail Tunnel are vastly superior in every way: $1.3 billion to $500 million in transport benefits, $184 million to pretty much nothing in agglomeration benefits and $3.33 billion to around $100 million in agglomeration plus employment benefits.
There is no comparison.
Funnily enough, with Steven Joyce accusing the CBD Rail Tunnel’s business case of ‘creative economics’, it interesting to note that the SAHA International Assessment includes another proposed way of measuring wider economic benefits (shall we call it the ‘wider-wider-wider approach?’). This approach seeks to measure National Economic Benefits from these projects – benefits to productivity, benefits to higher wages and their flow on effects, and so forth. It is all fairly complex but overall it would seem as though these ‘wider-wider-wider economic benefits’ cover at least as much as what is measured in the CBD Rail Tunnel business case – if not more. Yet when they’re graphed, the results don’t look particularly spectacular: If there’s one question I would like to ask any economist out there, it would be whether the ‘productivity benefits’ used in the CBD Rail Link’s business case are more like the “agglomeration + employment” benefits shown in blue above, or whether they’re more like the “CGE benefits” shown in purple above. But for our purposes here it doesn’t really matter – because the CBD Rail Tunnel’s $3.33 billion of productivity benefits are vastly more than just about any other RoNS project out there (potentially with the Wellington Northern Corridor as the exception – which is a slightly odd result given Wellington’s lack of population growth) no matter how you measure them.
My reading of the CBD Business Case tends to suggest that the $3.33 billion of productivity benefits largely arise from what might be called an “employment premium” – in that workers in Auckland’s CBD are more productive, higher earning and contribute more in a GDP per capita sense than workers anywhere else in the city, or even the country. This is shown in the graph below (from page 80 of the business case): Workers in the CBD clearly have a higher productivity than those elsewhere – as the work is more specialised, travel is reduced, particular industries are attracted to a CBD location and so forth. This is all extensively explained through the CBD Rail Tunnel’s Business Case. This is where the $3.33 billion in productivity benefits come from, this is what makes the CBD Rail Tunnel’s cost-benefit ratio a spectacular 3.5.
So is Steven Joyce right in saying that this type of approach constitute “WEBs on steriods”? Or are they simply employment benefits that have also been measured for just about all the Roads of National Significance (except Victoria Park Tunnel because that’s already under construction). I tend to think the latter.
Looking at one last unanswered question, are these productivity benefits something that seem to have been simply invented to help justify the CBD Rail Tunnel – as Joyce seems to be intimating? It would seem not – as a report attached to SAHA International’s assessment shows that increased labour-force productivity (through people working in central areas rather than in distributed areas) contributes vastly to the cost-benefit analysis of London’s CrossRail project: I still don’t think that I fully understand the various ways to measure wider economic benefits of transport projects – and in fact it would seem that there’s quite a lot of debate amongst the real experts on these matters too. But what is clear to me is that the CBD Rail Tunnel’s business case was undertaken in a very similar way to how all the Roads of National Significance have been analysed. The big difference between it and all the other projects is simply the massive amount of ‘employment/productivity benefit’ that the CBD Rail Tunnel creates. But this should come as absolutely no surprise – it enables and encourages more jobs to be located in the CBD of the country’s biggest city where there is already a concentration of high productivity jobs. In fact, if ever a project was going to benefit from employment/productivity benefits then the CBD Rail Tunnel is that project.
Quite simply, the reason the CBD Rail Tunnel’s benefits stand head and shoulder above most of the other RoNS projects is because it is a better project. It delivers better value for money, it delivers real economic productivity and employment benefits. It delivers significant transport benefits (over twice those of Puhoi-Wellsford), half of which are to road users. There’s a reason why I’m a huge supporter of the CBD Rail Tunnel project – and the business case clearly illustrates that. It can transform Auckland like no other project around.
This is a Guest Post by regular CBT forum contributor Jodi Johnston. If any readers wish to contribute a guest post please email the admin – details under “contact us”.
For people who have seen my postings on the CBT Forum, this will all be familiar material to you all, and I do apologise that you have to see this again. For people who are not regular viewers of the CBT Forum, I hope you enjoy the following piece.
Over the past twenty years, starting with the introduction of the ex-Perth DMUs in 1993, there has been a sea change in the suburban rail system in Auckland. We have seen improvements throughout the network, and especially so on the formerly neglected Western Line, where the line has been duplicated over the last few years and the passengers have benefited from service improvements. Unfortunately, this has come to some degree at the cost of the Southern and Eastern Line which has not benefitted to the same degree in spite of having over twice the number of passengers as the Western Line. This imbalance came to a head in September 2010 when the Western Line got the benefit of four six-car SA train sets, while the Southern and Eastern Line got very little in the way of capacity improvements, with only the section between Auckland and Penrose benefitting to any degree. As the next section will show, this imbalance has been building for some time.
The Present Situation
Before launching into the main part of the piece, it would pay to look at some of the recent history around timetabling for the Southern and Eastern Line. Since September 2005, the peak timetable has essentially stayed the same for passengers south of Otahuhu. The specific times have changed slightly, a game of musical chairs has been played with rolling stock, and the stopping patterns have been tweaked, but it is relatively easy to trace the ancestry of today’s services with their 2005 predecesors. Any improvements to the service for Southern and Eastern Line passengers has largely been confined to those passengers north of Otahuhu were a large number of short runner services have been instituted, in part to deal with loadings, and in part due to media outcries.
The last additional service that was instituted south of Otahuhu was in April 2007 when a short runner service running via Glen Innes became a Limited Stop service with an origin in Pukekohe. This service was specifically started to alleviate heavy loadings on the Silver Fern, and became reasonably popular fairly quickly. The last improvement in capacity for those passengers south of Otahuhu was in July 2009 when the Silver Fern was replaced with a four-car SA train. Between 2005 and 2009, there had been limited capacity improvements for those passengers south of Otahuhu, mostly related to when the three-car SA trains were extended to become four-car SA trains in 2008.
What makes the situation all the more horrifying is the fact that four of the stations south of Otahuhu are among the busiest stations in Auckland. Papakura Station with 3333 passengers a day as of 2009 was the 3rd busiest station in Auckland; Manurewa was 4th with 3083 passengers a day; Papatoetoe was 6th with 2432 passengers a day and Middlemore was 8th with 2246 passengers a day.
Obviously raw statistics does not say much without personal observation. Before looking at that, I would note that most overseas rail and metro systems are comfortable with passengers standing for up to twenty to thirty minutes. In the case of the Southern and Eastern Line, that puts the threshold anywhere between Sylvia Park, Penrose and Middlemore for Auckland bound passengers, and between Middlemore and Puhinui for Newmarket bound passengers (for those who are interested, that puts the threshold for the Western Line anywhere between Baldwin Avenue and New Lynn for Auckland bound passengers, and between Avondale and Glen Eden for Newmarket bound passengers).
Given those parameters, looking at the services as they pass Westfield Station is a good measure of loadings on services on the Southern and Eastern Line. I took the opportunity to observe these services on a Wednesday morning peak in October prior to the end of the Second Semester, so this would be an approximate measure of loadings on a typical morning peak when workers, University students and school students are likely to use the train. Unfortunately, this day did coincide with a teacher’s strike day, so there would have been fewer school students than normal on the train services that day.
It was pretty obvious from the beginning that there currently is a strain on some of the services heading from Papakura and Pukekohe. The major problems appeared to be around the 7:03am Limited ex Pukekohe and the 7:34am ex Pukekohe, with what appeared to be a horrific loading on the former service. Some of the other services looked like they could only accommodate a few more passengers before there would be problems down the line – this is especially so of the services that run via Glen Innes which need to absorb the demand from stations further down the line.
The above observations indicated that the services with the highest loading were two services that both originated at Pukekohe. It seems strange when it is considered initially, but when you sit down and consider it, Pukekohe has to be one of the great curve balls to patronage on the Southern and Eastern Line. Since it gained a regular service to Auckland a decade ago, patronage has grown by leaps and bounds and as of 2009 was the 30th busiest station on the network with 636 passengers a day. What makes that more remarkable is that at the time the 2009 patronage count was conducted, there were only 12 services from Pukekohe per day, and 13 services to Pukekohe per day.
Even if we assume that half those passengers are going to Auckland with the other half coming from Auckland and with only two-thirds of the passengers travelling during peak, which still leaves you with an additional 200 passengers. When one considers that there are only six services available for the commuter, of which only three are viable, it is pretty clear that you are going to get about a carriage worth of additional passengers, and anecdotal evidence seems to suggest that this is happening – especially with the 7:03am Limited.
The impact further along the line would also be significant. Where you would have 250 passengers on a train at Westfield on a service that originated from Papakura, that train now has over 300 passengers and given how few passengers board at Westfield and Otahuhu, it is clear that the train would have had standees from Middlemore and possibly Papatoetoe – pushing the boundaries of what would be acceptable by overseas standards.
Now you are probably wondering, it is all well and good that the Southern and Eastern Line is having all these problems, but there has just been $500 million spent on the duplication of the Western Line – surely that justifies having extra capacity on peak hour services to maximise the benefit of the investment. Personally, I ask so what?
We need to remember why that $500 million was spent on the Western Line in the first place – it was spent because there was a capacity problem that could only be fixed in a limited number of ways. As the infrastructure existed prior to 2004, there was only sufficient capacity to run train services once every half an hour past Avondale, and thus there was a capacity constraint. The only available methods to fix this problem was either the full duplication of the line, the construction of additional passing loops with all their associated timetabling dilemmas, or the elimination of contra-peak services and running additional peak direction services one after the other similar to how services had been operated prior to 1993.
Therefore, the $500 million was spent in order to deal with a capacity problem and not in order to justify the allocation of a lot of extra capacity while other lines have had little in the way of increased capacity.
Other associated problems
This is not the first time that a serious misjudgement of patronage demand has occurred. With the introduction of the July 2008 timetable, the 4:15pm to Papakura via Newmarket which had been allocated a 236 seat SX train set was replaced with the 4:10pm to Pukekohe via Newmarket which was allocated a 130 seat ADL train set. The 4:15pm service had been highly popular with standees when the service left Auckland, and it should not have been all that surprising that the 4:10 service would be equally popular. It wasn’t until a passenger got injured and there was a big article on Close Up that the capacity was restored. Political interference aside, we need to consider one more reason why there would have been a misjudgement in patronage demand.
That reason of course is how our patronage figures are currently derived. Our patronage figures are solely derived from counts that are made by the onboard staff at various points on the trip. For the Southern and Eastern Line, the counts occur in the vicinity of Homai, Glen Innes and Ellerslie Stations. This not only means that patronage from some stations is missed in the monthly statistics, but it also means that patronage on each service is determined by these counts. As I have stated through this piece, the problem are those passengers who originated from Papatoetoe and Middlemore and have to stand for half an hour or more, and those passengers are not at all able to be considered when rolling stock allocations occur because, well, no-one knows how many people board.
Another concern is the honesty of the former Auckland Regional Transport Authority. When they cut capacity on the Southern and Eastern Line back in July 2008, there was absolutely no official mention of it – anywhere. It was only when passengers looked at the timetable and actually saw the rolling stock allocation that they realised that there had been a cut. Similarly, the promotions for the recent September 2010 timetable heavily mentioned an increase in seats across the network, and this could be easily read as indicating more peak hour capacity. For those passengers who have to endure a trip on the Southern Line south of Penrose or the Eastern Line, there was absolutely no increase in peak hour capacity in the morning peak. This potentially made that advertising misleading.
What needs to be done?
Throughout this piece, I have commented on the situation for the average Southern and Eastern Line passenger. I noted that since 2005, there has been virtually no change in capacity for passengers south of Otahuhu. I have noted that there are significant numbers of standees on services in the morning peak by the time they arrive at Westfield Station – and this is pushing the boundaries of what would be deemed acceptable by overseas systems. It is no good outlining problems without outlining the solutions as well.
With the February timetable change, there needs to be four six-car sets allocated to the Southern and Eastern Line. This would have the impact of increasing Southern and Eastern Line capacity by eight carriages and would help alleviate capacity problems in the period prior to electrification. This would not at all disadvantage Western Line passengers, as they would still have a net gain of four carriages on top of all the additional capacity that they obtained with the September 2010 timetable.
Based on my limited observations, I would suggest that the following morning peak services would need the additional capacity
6:54am ex Pukekohe via Glen Innes
7:03am ex Pukekohe Limited via Newmarket
7:25am ex Papakura Limited via Glen Innes
7:34am ex Pukekohe via Newmarket
In the afternoon peak, where the situation is much more comfortable, I do not have any specific suggestions. Obviously, there would either need to be a limited stop pattern to skip those stations that do not have suitable length platforms, although such a pattern should not exist for long as there is an apparent deadline of having all platform extension works completed by the middle of next year.
Other things need to be done as well to ensure that such situations are handled correctly in the future. Passenger counts need to be conducted in the vicinity of Westfield Station; this would give an idea of the number of passengers at what is a pretty critical boundary point. Advertising from Auckland Transport needs to be more honest, and while they might not want to promote capacity cuts, at the very least do not mention an increase in seats throughout the network when there isn’t an extra morning peak seat for the thousands of commuters who travel on the Southern Line south of Penrose and the Eastern Line. Another possibility might be to make service patronage data a little more publicly available. I note for instance that City Rail in Sydney released their morning and afternoon peak patronage data (can be found here, and this means that a fair comparison can be made about patronage on services and on lines.
The NZ Herald today reports on the CBD rail tunnel business case, giving a particular focus to Steven Joyce’s very disappointing response to it. Over recent months it had seemed as though Joyce has warmed to the project, often describing it as something that did seem to ‘stack up’. But I really do need to wonder how genuine he has actually been with regards to the CBD Rail Tunnel. It seems like his comments reported in today’s paper perhaps highlight his true feelings:
But Transport Minister Steven Joyce says a report from a $5 million study commissioned by KiwiRail and the former Auckland Regional Transport Authority raises many questions to be worked through before the Government can consider contributing to such a costly endeavour…
…But Mr Joyce last night described the inclusion of transformational benefits to calculate a return of $3.50c for each dollar invested as “webs [wider economic benefits] on steroids” and said it was the first time he had seen such an approach in a business case.
He said an estimated $1.99 billion cost for the tunnel did not include $340 million for extra tracks and trains needed to run through it, making a total of $2.3 billion.
“It would be the biggest thing that would suck up all the money in Auckland for quite some time.”
The frustrating thing is that he’s just plain wrong on all the excuses he’s now using to delay his support of the project.
Let’s first looks at his claim that rolling stock isn’t included in the proposed cost of the project – that’s clearly wrong:
Under the summary of capital costs it’s clearly shown that $240 million has been dedicated to the purchase of 24 new three car EMUs. The study has clearly compared the economic efficiency of two options – the base option which includes the $240 million spent on additional rolling stock or a more ‘bare basics option’ which includes only a small amount spent on extra rolling stock. The graph below shows that the cost-effectiveness of both options is the same:
On the other matter, that this is supposedly the first project to use the urban regeneration benefits that he unfairly calls “WEBs on steroids” – once again he is clearly wrong. The recent report undertaken by SAHA international to peer review the cost-effectiveness of the various Roads of National Significance looked at this very issue – and undertook a number of studies to analyse various types of wider economic benefits, including induced employment growth, which is what the CBD Rail Tunnel business case looks at.
To illustrate this point, I’ve taken the graph from SAHA’s report that highlights the level of various benefits from the seven roads of national significance and inserted the transport (green), basic wider-economic (purple) and ‘employment’ (blue) benefits that the CBD Rail Tunnel will provide. My figures have come from page 5 of the business case’s executive summary: (It is probably necessary for me to note that the reason Victoria Park Tunnel doesn’t have wider-economic benefits is not because they don’t exist, but rather because its funding was approved without looking at these benefits – therefore they’ve never been calculated).
I must say I really did think Steven Joyce was coming around to supporting the CBD Rail Tunnel project. It’s very disappointing that he’s now dismissing it based on matters that aren’t even true – particularly when he has a business case in front of him that spells out a compelling economic argument for proceeding with the project. I thought the government wanted to boost the country’s productivity and international economic competitiveness?
After waiting months and months for the business case of the CBD Rail Tunnel to be released, it’s quite weird to now have literally so much information on the project at my fingertrips I don’t quite know what to do with it all. As I noted in my quick post earlier, my general feeling is that an exceptionally sound and detailed business case has been undertaken here which provides a very good argument for moving forwards on the project.
As I had expected, the real benefits of the project relate to what might be called its secondary benefits – the way in which it enables Auckland’s CBD to be transformed and the level of ‘agglomeration’ that it provides for. The argument that this is key to Auckland’s – and New Zealand’s future economic growth – is very sound. This is shown in the level of benefits – as outlined in the table below: Effectively, the transport benefits of the project (faster rail travel times, reduced congestion and so forth) cover the cost of the project with the “net value added from CBD increased productivity” providing the real benefits – and to a highly significant extent.
What the business case points out quite well is the relationship between this project and Auckland’s future economic development – this is the basis of the increased productivity measure that provides the bulk of the project’s benefits. This is summarised in the following few paragraphs from the business case’s executive summary:The business case goes through a variety of “alternatives” to the CBD Rail Tunnel – masses of bus lanes on every CBD street, an underground busway tunnel that turns out to be much more expensive than this current proposal and – perhaps the most likely outcome should the project not proceed in the desired timeframe – that the poor access to Auckland’s CBD will incentivise businesses to locate elsewhere in the region (or elsewhere in the country, or somewhere overseas) and the result will be a loss of agglomeration benefits, a loss of productivity and in the long run a loss of economic growth and development for the region and country as a whole. Therefore I think the business case is highly justified in saying that the project is critical to Auckland’s transformation into a globally competitive urban centre.
In fact, if I was to criticise the business case I would do so on the basis that it’s a bit too conservative. A large chunk of the benefits come from the project “making possible” employment growth in the Auckland CBD – but this is dependent upon what modelling system you use to calculate likely future levels of employment in the central city. The business case uses the model that informed the Regional Land Transport Strategy, but more recent ARC studies suggest this might under-estimate employment level quite significantly (this is true for both sprawl and compact land-use patterns). This is shown in the graph below:
Faster rates of employment growth (and this is dependent upon the speed of economic recovery in Auckland) will increase the requirement for the CBD Rail Tunnel project, and therefore increase its cost-effectiveness.
If we look at the transport benefits of the project, it’s interesting to get an idea about how much quicker it will become to travel on the rail network from various parts of Auckland to the CBD. This is outlined in the table below: Some of the time improvements are truly spectacular. New Lynn to Aotea (midtown) goes from 45 minutes to 23 minutes. Morningside to Aotea decreases from nearly half an hour to only eight minutes! The project is going to make these places particularly attractive propositions to live in – if I were a property investor I’d start land-banking now.
There’s plenty of further interesting stuff in the business case, which I’m sure I’ll dig up over the next few days (or commenter may wish to draw attention to particular things they think are worth noting). I must say overall the robustness, the detail and the effort that has gone into this business case is very impressive. It definitely puts the Puhoi-Wellsford business case to shame.