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Analysing the 2012 Government Policy Statement ‘Engagement Document’

Perhaps prompted by the various items on Radio NZ this morning, the Ministry of Transport has finally got around to publishing a discussion document for the next Government Policy State for transport funding. You can read the document here and you can also make submissions on it between now and May 27th by emailing:

As I suspected this morning, the 2012 GPS is proposed to very much continue the “1960s thinking” basis of the current policy statement. The bulk of NZTA funding is to be spent on building new state highways (particularly new roads of national significance) even though traffic on them is steady or falling, while funding for just about every other transport activity class (except, interestingly enough, public transport subsidies) is going to be squeezed enormously.

The discussion document outlines the three main focus areas for the 2012 GPS:
Personally I can’t quite see how spending up large on projects with very low cost-benefit ratios and falling demand, plus taking money away from the road safety budget is likely to achieve these three main goals – but I guess it’s interesting to at least know what they are.

The engagement document talks quite a bit about the RoNS – and confirms the potential addition of the further RoNS that I discussed a few days back, including the bizarre Cambridge to Taupo route:
If 6800 vehicles a day along SH1 for much of the section between Cambridge and Taupo represent “high volume”, then the bar is set pretty low. Remember that the one lane Kopu Bridge carried nearly 10,000 vehicles a day back in 2009 – why wasn’t its replacement bridge a four-lane superhighway? (not that I’m saying it should be)

Most of the wording in the document is just fluffy words that generally appear to me as completely contradictory. What really matters are the funding bands that the GPS sets out – with the 2012 version highlighting the maximum and minimum expected spend on each particular funding class for 2012-2015. It also hints at the potential funding bands for years beyond 2015, right through to the 2021/2022 financial year.

But to start with the next three years, the funding bands are shown in the table below:The funding ranges are apparently put in place to give NZTA some ‘wriggle-room’ about what they choose to invest in, but what’s particularly important to look at is the upper limit of the funding range – as it’s my understanding NZTA find it very difficult to fund anything beyond that limit. However, there’s obviously not enough funding in the total ‘pool’ to fund everything at the upper limit, so inevitably some things will miss out and be funded much lower. It’s not hard to guess that state highway funding is unlikely to be the thing that misses out.

A few things stand out for me – firstly the reduced funding for pretty much all the “small things” that NZTA does, like research, transport planning, manging the funding allocation (which I think generally means NZTA staff numbers) and road safety. A lot of things also have their funding pretty much held level – which obviously means a cut in real terms. Those are major expenditure points like local roads and state highways maintenance. One truly bizarre thing about the priorities of this GPS is that we’re throwing money at building new state highways while at the same time being less able to look after the ones we already have.

In terms of public transport, the GPS is a strange mix of OK news and terrible news. On the positive side, a significant increase in funding for public transport services (translation: subsidies) is proposed. This is good as it will ensure Auckland’s rail network can be properly funded, and it should also allow a bit of breathing space to increase service provision levels in response to rising public transport patronage. But on the downside is the absolute gutting of the public transport infrastructure fund – which helps pay for things like railway station upgrades, bus priority projects, ferry terminal upgrades and the like. The gutting of the PT infrastructure fund comes through particularly clearly if we start to look a bit more long-term at the government’s proposed funding bands: To make a little bit more sense out of all these numbers, I have put together a couple of tables in Microsoft Excel, which look at which activity classes dominate the funding, and whether that changes over time throughout the course of the GPS. I’ve used the midpoint between the top and bottom end of the funding range to give a single number for what I think might be the “most likely” level of funding for that activity in a particular year. To simplify it a bit, I also created sub-totals of the various types of spending: state highways, local roads, public transport, road policing and “other”. It’s probably worth noting that the “grand total” available to spend in year in the table above is simply found by adding up the totals of all the mid-points (rather than the actual total of available funding, which as shown in the above tables is somewhat higher).

This shows some relatively interesting results. We can see that while spending on state highways as a whole remains relatively constant in the mid-50% of the total fund, the proportion of that spend one new state highways goes up a lot, while the proportion that’s spent on renewals and maintenance declines. Local roads remains around 20% of the fund throughout the whole period – although considering around 50% of vehicle kilometres travelled in the country are on local roads (the other 50% being on state highways) it’s probably fair to say that local roads in general are under-funded.

It is the public transport funding that probably confuses me most though – with the big increase in funding for PT services but the slashing of funding for infrastructure improvements. Considering that most PT infrastructure improvements (like bus priority measures, ticketing system improvements, ferry terminal upgrades etc.) will improve the efficiency of public transport as well as boosting patronage, some investment in PT infrastructure is likely to mean a lower reliance on subsidies further down the track. It would seem that the government’s deliberate public transport strategy is to withhold funding that would allow the system to be upgraded, while accepting the result of withholding infrastructure funding is the need to boost money spend on subsidies significantly over the next decade.

If we look at the changes to funding allocations over the 10 year period covered by the GPS, some of the changes proposed in this document start to appear a bit clearer (once again these take the midpoints):

The table above really highlights what I’m talking about in terms of public transport funding. Funds available for subsidies almost doubles over the 10 year period, while funding for infrastructure improvements is cut by three quarters. That just seems plain dumb – setting yourself up to have poor infrastructure in the future that will force you to pay out really high levels of subsidy.

In actual fact, there’s a lot in the GPS that’s actually just plain dumb. Like spending up large on building new state highways, but neglecting the ones you already have by cutting funding for renewal and maintenance. Like strongly limiting local road funding even though that’s where most of the traffic growth on the road network is. Like promoting further Roads of National Significance in absolutely stupid places, when you can’t even afford to fund your existing pet projects without stuffing up all other parts of the transport budget. Like cutting money for road safety when supposedly it’s a major focus on the policy statement. Like dramatically cutting public transport infrastructure funding so the PT networks can’t improve, but accepting that will lead to way higher subsidies in the future so making plenty of cash available for them.

I suppose to summarise, the GPS could be worse as there is some good news for public transport in the funding boost for services. However, I just can’t get my head around how utterly dumb much of the document is and how utterly contradictory the goals of the GPS are with what’s actually being promoted to achieve those goals. Surely it’s not hard to realise that, if one is trying to boost economic growth and improve road safety, it’s pretty dumb to spend more on the parts of your road network people are using less, cut money from funding parts of the network that are being used more, drastically cut funding from public transport infrastructure improvements while patronage in the country’s largest city is booming, and decrease funding for road safety initiatives.

24 comments to Analysing the 2012 Government Policy Statement ‘Engagement Document’

  • Luke

    the other really dumb thing is that public transport infrastructure improvements help increase farebox recovery, thus reducing the amount required for subsidy in the long term. So very short sighted thinking.

    • Stu Donovan

      @ Luke – you may want to read the post again, because that was actually one of Josh’s main points ;). Hint: Farebox recovery is just the percentage of operating expenses that are covered by revenue from users – i.e. it’s an indicator of what Josh tends to call “operating subsidies.” But you are certainly right – very short sighted thinking indeed.

  • Stu Donovan

    In general this appears to be a most bizarre and contradictory document. E.g. it expresses support for PT operators to run more commercial services, while providing for large increase in PT subsidies. Somewhere else it espouses the merits of benefit-cost analysis, which is interesting given the low-quality spend on RONs.

    Plus, I don’t understand why the increase in PT subsidies is linked to Metro rail improvements in Auckland, because the EMUs and HOP card will dramatically reduce costs, even if there is some increase in service (not that we can increase services much because of the Britomart bottleneck). Can someone at AT provide us with any insight here?

    Finally, the cuts to PT infrastructure suggest that major PT projects are off the radar. E.g. forget about bus improvements to link in with the Northern Busway and/or Central Transit Corridor. Improvements that would reduce the need for subsidies on these services, freeing up cash to use elsewhere.

    Bizarre and contradictory – and given the low quality spending it really puts lie to National’s claims of fiscal austerity. Although I suspect that most of us knew that was just snake oil …

    • Good analysis Stu. I don’t understand the logic behind it at all – and that’s before we even start to examine what sort of methodology might have been used by Joyce to select the four additional RoNS.

      Any bets for a costing for the Cambridge to Taupo one? Or is it just being used to distract us from opposing the holiday highway?

      • Stu Donovan

        The whole RONs issue is a debacle – how can roads like Cambridge to Taupo be of “national significance”? And how can we identify what roads to build, before undertaking detailed economic analyses of individual projects, or their components? Joyce is saying that economic productivity is the horse pulling the transport cart, all the while he is loading the cart up with RONs that have no economic merits whatsoever. I can’t understand it and frankly it’s almost reason enough to want to avoid New Zealand altogether.

    • This is to break Brown’s rail policies to make them impossible, chain AK PT to central government dependency; I’m figuring the operating figure includes the ‘loan’ for the EMUs, so an ongoing mortgage. So central gov. can point to how expensive PT is and how they generously they have to subsidise it. But also it shows that he is happy to write a cheque out to Infratil for bus services but not to Len for upgrades. Even in the PT field he has found a way to give all our money to his mates. Outrageous.

      I am confident that everything will be different in just even a few years but how much more damage can this lunatic do in the meantime? Tochigi is right, is there anyone with a conscience at the MoT?

  • John Dalley

    Graft and corruption are starting to come to mind.

    • Stu Donovan

      Yes as much as I hate to doubt people’s motives, it seems that graft and corruption are increasingly likely. Under Joyce transport funding in NZ has quickly become a farce, little wonder we’re sliding down the OECD ladder with him throwing money away on ridiculous road projects which only benefit people who drive bulldozers.

  • tochigi

    When is someone at the MOT going to upload the entire contents of their email server onto Wikileaks?

  • The Trickster

    Just a question – do you know where the AADT is taken for the Cambridge – Taupo section?

    I tend to believe it for the SH5 intersecion – Taupo section, but less so for the Cambridge – SH5 intersection section. In saying that, I’ve never seen traffic heavy enough on that peice of road that it’d require 4 laning by any stretch of the imagination. Perhaps Joyce is trying to set his mates up so they can take all the pulp paper from Kinleith and the massive cheese factory just north of there away from rail.

    Absolutely no press on this from either the Herald or any Fairfax publications and barely a peep from Labour. Its like everybody is lying there asleep in the passenger seat while a lunatic is driving.

  • Vinny

    I wonder if the Cambridge to Taupo isnt just joyces “mining under conservation land”. After a bit of public scrutiny he can say we have listened to the people and it’s now off the agenda whilst deflecting attention from over idiot plans he puts into place.

  • BD

    The good thing about this report, there is a lot of awareness regarding the governments roading of national significance, lots of leaked reports getting out there even on the media, especially the Scoop website, this is different than before. Yesterday the Greens released a report critising the new plans and another one I saw on scoop today, see link below.

    This shows that there isn’t much support for the plans at all, especially the Cambridge to Taupo highway which ins’t popular at all and carries very little traffic, heck Great North Road in Auckland probably carries more traffic in one hour during peak time than the Taupo to Cambridge section does in one day. If we keep putting the pressure on the government like this before they announce the plans there is a good chance that National will have to back off. It’s obviously aimed for the trucking industry.

    More good news for public transport, the Wellington Chambers wants roading pricing, an aim to balance the needs of road spending with that of public transport. All good on that one guys!!!

  • I would like to nominate the Auckland-Brisbane undersea toll tunnel for inclusion in RoNS!!!

    • The Trickster

      I raise you an Auckland – Santiago tunnel.

      • Liam W

        Great ideas guys but I think you should change them to bridges…you know, to reduce the cost :P. I raise you an Auckland to Anchorage via Honolulu ten lane bridge…I see real economic benefits in this one.

        • You will have to include pier fishing off the highway in the ‘wider economic benefits’ (WEBs).
          How many jobs will this ‘create’ 10,000′s probably… *

          * A lot of large public projects often claim the ‘creation’ of jobs and count this as a benefit when actually it is a re-allocation of work within an economy and a cost, not a benefit. One exception to this might be when there is a recession and economic stimulus is required.

  • George D

    Um. (insert appropriate expletives here) I think there is a strong case for OIAs that ask how these decisions are made. In the meantime, it is clear that if National and ACT retain power for any length of time, things will reach crisis point. Probably before 2020.

    Nice work in trying to destroy New Zealand’s largest city, National.

  • RascallyRabbit

    Interesting article at The Economist on the perils of investing too much in new road transport and not enough in maintenance.

    I just hope that the support for alternative transport options just becomes too large in Auckland to dismiss so casually.

  • Doing a little more work on this and it gets ever more daft. Over the twelve years from 10/11 to 21/22, taking the average of the proposed figures this GPS expects a total spend of 17.551 billion on new infrastructure. Of this a staggering 17.134 billlion, or 97.62% will be spent on new state highways! And an unbelievably low 417 million or 2.38% is to be spent on new public transport infrastructure. This means no new rail lines anywhere ever, no new busways, barely a new bus stop anywhere in the country at all funded from the NLTF. This man is amazingly extreme and detached from reality.

  • Georgecom

    Over the past week I have travelled the Cambridge-Taupo road 6 times. Whilst doing so I considered Joycey and co wanting to build a RONS on that stretch (was it a 4 lane, 6 lane or 20 lane highway?). I identified what I think are 4 areas of immediate need for remedy, there may be a couple more however the majority of the highway seems ok as is. Most glaringly obvious to me are as follows. One, a passing lane between Tirau and Putaruru heading south, this is a convenience issues. Two, the northern and southern entry/exit to Tirau require work. From the north you sweep down a hil with winding turns. South you pass through a narrow tunnel under the rail line and then do a left hand corner followed by a sharp righthand. The road needs straightening both ends of the town and the rail underpass widened. I class these as safety issues. Third, the bridge at the Te Kuiti turn off needs widening and the road approaching the bridge needs straightening. Again, a safety issue. Fourth, there is a bridge a little south from there that would benefit from the same treatment. Again in the name of safety.

    Taking a totally wild guess, I imagine those projects would amount of tens of millions rather than seemingly hundreds of millions that a RONS would dictate. The Piarere road relaignment north of Tirau cost 8 million to do.

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