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Busting an annoying transport myth

One thing that perpetually annoys me is when Steven Joyce rolls out the “we’re spending $1.6 billion on rail in Auckland so please stop complaining about all the money we’re spending on roads.” We see this line being trotted in in some of the Questions and Answers section to the Government Policy Statement:

It is also important to note that the majority of central government funding for public transport infrastructure is provided outside of the National Land Transport Fund and so not included in the GPS. Most of this funding is for metro rail. To date more than $2 billion in Crown appropriations has been agreed, of which $1.6 billion is for Auckland and $485 million for Wellington. 

It is true that $1.6 billion is being (and has been) spent on upgrading Auckland’s rail network over the past few years (and over the next few years). The money is comprised of:

  • $600 million for Project DART
  • $500 million for the infrastructure side of rail electrification
  • $500 million for new electric trains

So in total that is $1.6 billion. But there are two important questions to follow this up with: how much of that is being funded from central government and how much is being funded by this central government.

Looking first at Project DART, the rail project in Auckland that included double-tracking the Western Line, building Newmarket, New Lynn, Onehunga and Manukau stations – and other upgrades to the network. This $600 million project was actually funded in the 2006 budget – according to the Project DART website:

The 2006 Budget included funding of up to $600 million to fund these improvements and speed development of the Auckland rail network.

The project is the most significant redevelopment of the rail network in New Zealand since the 1980s.

So this passes the threshold for being funded by Central Government, but doesn’t pass the threshold of having been funded by this government.

Turning next to the infrastructure side of electrification – which includes stringing up the wires, raising a few bridges, putting up poles, building electrical sub-stations and so forth. According to the electrification webpage, funding for this was set aside in the 2007 budget:

In the 2007 Budget the Government announced its support for the electrification of Auckland’s rail network, and gave ONTRACK the funds to build the necessary infrastructure…

…Planning and concept development started immediately and physical work began in 2008.

We expect it will take about five years to electrify the Auckland network, and the Government has indicated that it wants the project completed by 2013.

So this is basically in the same situation as Project DART: yes, funded by Central Government outside the NLTF, but once again not funded by this government.

Finally, if we turn to funding for Auckland’s electric trains, it doesn’t even pass the very first base of being “outside the NLTF”. The very reason public transport services funding has actually increases in the Government Policy Statement is because this money will go into repaying the loan for the electric trains. Loaning $500 million to KiwiRail to pay for these trains, which Auckland Council and NZTA will need to repay, is quite different to actually giving the $500 million for the trains. So the trains aren’t being paid for outside the NLTF, they aren’t being paid for by Central Government – and obviously not by this  government.

So really, I’m struggling to find a single cent that this government has set aside for passenger rail in Auckland.

24 comments to Busting an annoying transport myth

  • Matt L

    It’s worse when you consider that DART is pretty much finished, Newmarket opened in Jan 2010, New Lynn and double tracking was finished in July 2010 and Onehunga opened in Sep 2010.

    The only thing not opened yet is Manukau but even with that it is already built and the tracks are in so with the exception of a few finishing touches there you could call DART completed.

    What would the balance look like if we included the SH projects over the last 5-10 years

  • James B

    Great reporting by the Herald. Blame the increase in fuel tax on public transport.
    http://www.nzherald.co.nz/politics/news/article.cfm?c_id=280&objectid=10741048

  • George D

    That’s a pretty terrible article. I hope Rudman or someone else is being fed the facts so that we can get something out there. The $1.6b figure is entirely false, and if you compare PT infrastructure to new roading (esp past 2013), the ratio is insane.

  • Luke

    same with the $400 million for Wellington, only new money here is the $88 million announced a month or so ago, and thats over 8 years.

  • Sam F

    Priceless – Auckland public transport is now copping the blame for a nationwide fuel tax, courtesy of the same government that prevented the Auckland Regional Council from actually paying for PT improvements via a regional fuel tax a couple of years ago.

    The scapegoating above means that everyone elsewhere in the country will be grumbling about spending on Auckland and its fancy-pants rail plans – masterful politics there – whilst ironically Aucklanders will be paying central government the same money they would have paid to the regional fuel tax, but will get almost none of the PT benefits.

    I’d find it all quite funny were it not so deeply perverse and tragic for the cause of decent transport in Auckland.

  • LucyJH

    to be fair (and I find this hard to do) the Minister did have a choice – he could have cut the remaining funding for electrification in 2008 and he could have also stopped the purchase of the EMUs. He chose not to. So, even if he hasn’t put a lot of money on the table himself, he has not introduced cuts as he could have done.

    • Sacha

      What’s the bet that decision was from Bill English and other more moderate members of Cabinet?

    • obi

      Good point. Funding a project doesn’t mean that you take a pot of money from the consolidated account and give it in advance as a lump sum to a project, but that there is an intention to spend the money in the future as required. Labour’s policy is ambiguous, but I believe they’ve promised to cancel at least some of the RoNS. Similarly, National could have cancelled all of Labour’s projects, but has in fact continued to write cheques as required. It is money that this government is spending, even if the last government intended to spend it.

      • Not quite obi. The Project DART and AEP pages say that the money was “set aside” in the 2006 and 2007 budgets for the two projects. My understanding is that this means the capital grant was made then, just obviously it took a while for that money to actually end up being spent.

        I’m not totally sure how government spending works but I assume what happened is that the funding got allocated in the 2006 & 2007 budgets into some sort of special account, which it could then be spent from at a later date.

        • obi

          It would be amazing if it happened the way you describe for any project. Usually “funded” means that something is approved and can be paid for out of expected future income and budgets. For large projects Treasury might be involved in this process. But the money will actually be disbursed as required, which is sensible because government pays future bills with future income.

          Government has thousands of projects on the go at any one time. There aren’t thousands of special accounts sitting around full of money raised in the past that needs to be paid out in the future.

          • Kevyn

            obi, The Land Transport Fund is a statutorily separate fund available only for land transport projects. Up till 2004 it did operate on the pay-go model you describe but since 2004 it has operated on the fully funded model. That means that when a land transport project is approved for funding the entire approved cost must be set aside in a short-term investment account from which payments will be made as required. The change from the old system to the new resulted in several years when hundreds of millions were “allocated” to projects in the NLTP but where no actual road works happened for several years until the full amounts for each project had been set aside.

          • obi

            Thanks for that Kevyn. I’m wrong, but amazed that they organise things that way since it isn’t the way government deals with other capital projects. I wonder what they do with the money while they wait (sometimes years) to spend it? Is there any chance that it is invested in government bonds like a big chunk of EQC’s account was, making it a book entry rather than a real pot of money?

          • obi

            I’ve researched NLTF by reading their 2010 annual report, and now I’m really confused. Their total assets are $350million, which are entirely held by the crown. There is a note: “The National Land Transport Fund is a notional account only. There are no actual cash and cash equivalents as funds are held by the Crown.” This indicates that the fund is a theoretical concept rather than an actual allocate of real money. I’m cool with that… it avoids the issue of having to fund infrastructure in advance, and of having pots of money sitting around on one hand while the government borrows money on the other.

            But!… $350million isn’t within an order of magnitude of the amount required to fund currently approved projects which must include Victoria Park, Waterview, North Harbour, rail electrification, and the Waikato Expressway. How can these projects be fully funded in advanced and the assets to do this are small change?

  • LucyJH

    to be honest, I think it was mainly pragmatism – it would have been really silly to stop the project halfway through and they would have lost an awful lot of the benefits from the investment already made and, also, the Auckland Council would have screamed blue murder. So they decided to keep it going even though they didn’t particularly want to…

    • Also it is so much cheaper than running diesels, and especially than buying new ones and being committed to whatever petrol price. But he did cancel the previous process and now claims the credit for it. But remember it’s just a loan for the EMUs…. really this PT wash. Even Joyce couldn’t find even the slightest argument against electrification. Also gives them one lonely little CC mitigation programme… watch that get overworked in the PR spin cycle too.

      Talking of business decisions, any dispassionate look at how to meet the coming growth in AK would see the value in unlocking the billions of dollars in ROW potential in the existing rail network. But this does mean fixing the gap in the CBD as a matter of urgency. Spending money to unlock value is not a weird idea in business. This is why counting the current boardings when evaluating new projects is simply a way of trying to talk them down.

  • Cam

    @Obi – seriously your’e tying yourself in knots trying to condradict something that’s plain for all to see. Just be honest this government does not like investing in public transport and has not done so in any meaningful way. Not leaving New Lynn and Newmarket as holes in the ground half completed is nothing to shout from the rooftops about. The money had already been budgeted for DART and for electrification.

    I’m getting sick of some of the cynical fibs being told here, this is much like the way SJ uses 2006 census data when commenting on Auckland rail patronage.

    • obi

      What knots? The current government didn’t cancel any of the previous government’s public transport projects, and approved some new ones. That’s a slightly more “meaningful” position than the last government, and if they genuinely hadn’t wanted to fund public transport projects then they could easily have canceled them.

      Government has the ability to promise things without actually working out how to pay for them or spending the money. A good example is Waterview. Labour promised a fairly extravagant underground scheme but hadn’t actually budgeted the money. After the election, the Mt Albert locals were fairly adamant that the gold plated scheme was what they’d been promised. National had to find the money to proceed. They did. Would you take Waterview off a list of current government transport projects? I wouldn’t. But you could take Waterview, North Harbour, and the Waikato Expressway out of the list of new state highways because they’re not new government projects, and therefore shouldn’t be counted for some reason.

      • rtc

        Waterview hadn’t been even approved at that stage let alone funded, electrification and project DART had been both approved and funded, hence they don’t count as current government projects and yes Waterview can be counted.

  • Cam

    “But you could take Waterview, North Harbour, and the Waikato Expressway out of the list of new state highways because they’re not new government projects, and therefore shouldn’t be counted for some reason” – To follow on from what RTC said above – No you couldn’t and you are not talking about the same thing, but I think you know that..

    The previous government had budgeted the money and committed it to these projects, in the case of project DART they had even spent a fair chunk of it already. The fact that they did not cancel these does not mean they are now right to claim these as their projects.

    By the way which new PT projects has the government approved? I have been following then issue very closely and can’t think of a single one. Or are you just referring to the fact that the government cancelled the fuel tax and gave a loan to kiwirail instead? C’mon Obi abviously you are a big fan of this government but trying to justify this is pulling a very long bow.

  • obi

    “By the way which new PT projects has the government approved?”

    Auckland rail electrification, new Auckland trains, new Wellington trains, and extension of Wellington rail to Waikanae. But that isn’t particularly relevant since most public transport improvements are funded by councils, service providers, and fare payers. Organising services and paying for them locally by stakeholders will almost always have a better outcome than central control, in my experience.

    I don’t understand the argument that only central government expenditure on transport is worth discussion and comparison, rather than the combination of central government funding, local government funding, bus fares, train fares, airline tickets, and ferry tickets that actually fund our transport sector. For instance, central government doesn’t allocate much funding at all to air travel, but we have a great air travel system. You wouldn’t presnt a graph that compared central government funding for roads, rail and buses, and air travel, and use it to argue that it was unbalanced and the government should therefore buy some new Boeings for Air NZ to fly.

    • errr? who saved Air NZ’s arse then?

      Anyway you look at it transport is a service that is funded through taxation, including all roads, so please let’s argue whether we’re spending that tax well or poorly and not waste time on absurd abstractions… what else would you rather ask: Does society exist?

  • Malcolm

    I hope someone questions Joyce about this in parliament some time soon. It would be interesting to see his response, as those public transport projects were clearly funded by the previous government. How can they even claim that as part of this GPS? Isn’t it just flat out lying?

  • Simon C

    Thanks Josh for finally writing something about this. I am getting really tired of Mr Joyce claiming his govt has spent 1.6billion dollars on Auckland commuter rail when they`ve actually spent sod all. You really should email Q+A or The Nation to interview Joyce and more critically analyse his use of figures like Auckland commuter funding and also Auckland commuter trip numbers using 2006 data.

  • Luke C

    I came to the conclusion a long time ago (about upon the announcement of the ‘hoilday highway’ as a project of national significance) that Steven Joyce has either just got his priorities seriously wrong or he is being sponsored by the NZ Automobile Association and Exxon Mobil. He is seriously misrepresenting a lot of people and I think it’s appauling that he’s allowed to so blatantly ignore the public as Transport Minister. Another question; when will funding be provided to close the 100km gap in electrification between the Nth Is Main Trunk AC system at Hamilton and Auckland’s in preparation for Waikato Commuter Rail and their new ‘Underground’ station? Then perhaps one day the overlander service could have just one locomotive change.

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