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Kapiti Expressway’s BCR is actually 0.2!

A great scoop by Campbell Live tonight showing that the cost-benefit ratio of the Mackays to Peka Peka part of the Kapiti Expressway – a key section of the Wellington Northern Corridor RoNS project – has been recalculated recently as being 0.2. That is, for around $630 million worth of spending we’re only going to get roughly $120 million of benefit. Click the picture below, or here, to watch the video: 

To be honest I’m not surprised that more detailed analysis has shown that this project makes no economic sense. In some respects it is a solution in search of a problem – much like Puhoi-Wellsford. The Wellington region simply isn’t growing in population very much, plus it has a pretty effective existing rail system. There simply isn’t the need for a vastly oversized piece of infrastructure like what is proposed.

However, I think the real story becomes clear when we start putting the pieces of this puzzle together. Recently we’ve found out that NZTA are happy to fudge the numbers on their $5 billion harbour crossing project and that they generally vastly over-estimate the benefits of their motorway projects. One wonders whether they just typically bury reports – like the one obtained by Campbell Live – which don’t give them the answer they’re after and shop around for something more palatable. In any case I think it’s time for some sort of independent investigation into NZTA as clearly they’re doing a rubbish job at assessing the merits of transport projects and there are, literally, billions of dollars at stake to get this right.

81 comments to Kapiti Expressway’s BCR is actually 0.2!

  • mike

    Safety upgrades on the current highway and building a second bridge and the 2 lane Western Link Road along an already designated route to take local traffic off the highway would surely bring about the majority of the so called benefits without tearing the community in two and without the huge costs of the needless expressway. I have been saying this for a long time and completely bemused why this project has been pushed on so aggressively.

  • Dave

    May the whole RoNS programme be exposed for the out-of-control ministerial hobby-horse that it is. May it collapse like a flimsy building on non-existant foundations. May its misguided and arrogant architects be unseated. And may transport policy in New Zealand get back on track (pun fully intended).

  • Adam W

    The truth is out there !!

  • Mr Anderson

    A further delicious possibility relates to the question of what other RoNS projects have been reassessed in recent times to take into account lower traffic projections and what this has done to their BCRs?

    • They were all meant to be updated as of 30 September but I am struggling to get the NZTA to release them. From a document I have obtained dated 3rd August

      Updated benefits and costs for each of the roads of national significance will be published by 30 September 2012.

    • Mr Anderson

      Just keep hammering away with those OIA requests and don’t be afraid to complain to the Ombudsman if they keep being a pain.

  • Hamish O

    This article brings up the question of whether we should provide compensation for everyone who looses value in their house because of transport projects. I think we should, but the flip side of it is that we should charge people who’s value in their house increases, such as those on the main road before it is bypassed. This means that no or little extra money has to be spent, but a massive and unfair cross-subsidy between home-owners is avoided. Obviously the loss/gain in CV would have to be adjusted for the general area’s rise in value due to project, which in this case provides faster connections to Wellington etcetera.

    • Bob Scott

      I wish that this could be enough to expose what is really happening to those unfortunates like us whose whole life has been blighted by a RoNS project (in our case Puhoi to Wellsford). Government/NZTA intend to build the road through my house, but since the rouute was announced 2 years ago, I haven’t been able to sell my house and move on. We have been strung along, lied to and threatened by NZTA because we dared to protest. Legally, NZTA do do have to even start negotiations under the Public Works Act until they issue a “Notice of Requirement” which they have told us they won’t do until at least Oct 2013. So that’s 3 years since our basic right to dispose of our property to a buyer of our choice has been removed from us. Our property is unsaleable to anyone other than The Crown. – The law needs to be changed.

      We have had to prove hardship to NZTA just to get on a list of special cases permitted to talk to them about the purchase of our property, but they do not have any funding available for property purchases. Remember, this is a project which at the latest estimate is going to cost $1.89 Billion and they don’t have any funds available to secure the route?

      • Dave

        I am still hoping/praying that this whole thing falls through, along with the administration that is driving it.

      • Watcher

        Bob, Hamish – I couldn’t agree more with you! Yes, the Public Works Act needs to be changed – but not tweaked – it needs a radical overhaul. It is one of the most manifestly unfair pieces of legislation I have ever seen and a critique of it would need a whole guest post to itself. Being affected, like Bob, by P2W, it has been an interesting journey having to deal with NZTA over the past couple of years. Having looked critically at what has happened over the past couple of years it is my belief that there are some systemic problems within NZTA regarding their obligations to affected property owners. This stems from their inherent desire to save costs – they see property purchase and mitigation of the impact of their road upon affected property owners and the community at large as a necessary evil that must be done as cheaply as possible.

        To this end they rely heavily upon the Public Works Act and the new road noise standard NZS6806:2010. This standard is heavily skewed in favour of any public organisation wishing to build a road. The provisions within this standard are so generous to the road builder that there is no way that they (usually NZTA) would ever NOT be able to meet the criteria mandated in the standard. And even if they can’t meet the criteria they can, according to the standard, say that it’s too expensive to mitigate properly so they won’t (this is enshrined in a “best practicable option” clause). It’s an interesting point that, as I understand it, one of NZTA’s senior staff sat on the committee that developed this new standard. Fortunately, NZ has clued up people who sit on Boards of Inquiry and this standard was thoroughly discredited in the BOI findings of the Transmission Gully Project (full transcripts available from the EPA website).

        However, this doesn’t stop NZTA from using this standard to attempt to quash the complaints of affected property owners – even though they know that, the precedent having been set, they will have to implement better mitigation than they want to. There is more than a whiff of intimidation here that I find quite unconscionable – especially as it comes from public servants under direct government mandate.

        It is my belief that NO organisation wishing to build any public work that may impact upon property owners should EVER also have the obligation of looking after the property rights of affected individuals – the conflict of interest is too great. A separate department should be created with the sole responsibility of managing the rights of affected property owners. All affected property owners (those who may lose property and those within a nominated designation envelope) should be given the opportunity of selling their property to the new department. This new department will then take upon itself the risk to those properties, manage the mitigation of said risk with the organisation wishing to build the public work and lease or on-sell those properties as and when it chooses. If done properly, this approach could be self funding within a few years and would result in a lot less personal anguish and misery to affected property owners.

    • Definitely not, those whose houses are affected by land value decreasing should be compensated for the land value decreases caused by these projects. However it’s not the owners fault that a motorway is being built that increases their land value, nor if it were a Public Transport route that increased their land value. Why should they have to pay more because of it? Forcing people to pay the extra is just as bad of not compensating people for their loss. Compensation needs to be built into the cost of the project itself.

  • Rob Mayo

    It would be good if this whole RoNS fiasco becomes enough of an issue over the next 2 years to contribute to a change of government in 2014.

    • Stu Donovan

      Yes you would think that the National Government spending $10 billion on transport projects of highly dubious quality is sufficient poorformance that it impacts on their electability.

      After all, National’s claim to fiscal responsibility is about the only political leg they have left to stand on – and the RoNS debacle is whittling that away very quickly indeed.

  • Luke E

    Brownlee is such a hypocrite with what he says about how you can’t just look at the BCR! Or did he forget to add “If it’s a roading project” to his statement?

    • Stu Donovan

      The other irony is that the RoNS are supposedly being developed for their economic impacts, yet most analyses suggest that they cost more to build than they deliver in terms of benefits! Since when has destroying economic wealth been a government priority?

  • The RoNS programme was always fraudulent; no oversight nor proper process. Project selection by ministerial whim, Steven Joyce should be forced out of office over this, these are his personally selected projects willingly pursued by government agencies with total disregard for objectivity. So his is not the only head that should roll.

    • MFD

      Forcing Joyce out of office, though desirable, will not achieve the cancellation of the egregious RONS. IMHO it requires voters (especially traditional National voters) to recognise just how bad these “ïnvestment” decisions are and inform National MPs of their dissatisfaction. They first need to made aware and maybe we are beginning to see that happening. My MP (Nat) recently sent out a leaflet aimed at the rural populace asking for feedback on their investment in rail and road (all lumped together as one bullet point). He’s going to get it and I will be splitting my opinions into those for rail and those for road.

  • As I understand it, the people who got this report pitched it to the Dom Post, who wouldn’t cover it. What is the deal? Why won’t the major Wellington paper cover any story that is critical of the Northern Corridor, no matter how obvious its problems? They are not doing their job.

    • Dave

      @ Julie Anne Genter: This would explain why it is so hard to get a letter published in the Dom Post which is critical of the RoNS!
      As for “justification” for these projects, all that the proponents can now point to is an unprovable expectation of future growth despite present trends indicating the opposite, plus a naive belief that some miracle new energy-source will soon be developed to make up for decline of cheap oil. What an utterly vapourous business-case for making a $10 billion investment. Julie I hope you get to rip into them!

    • That’s always been the case with Fairfax. Getting anything critical of the RoNS into their rags has been like pushing blood into a stone. When they do deign to cover a story we’ve sent them, they meekly trot off to NZTA to get a balancing view but when NZTA publish a release, it’s swallowed completely with nary a call to us to verify. Who’s bought whom, is the question on my mind.

    • Matthew

      On the Dom Post website today looking for news of TS Sandy the only thing I could see that said Hurricanes was about some rugby club. Does the Dom Post even cover world events? Maybe they’re just rubbish journos all round.

  • Also, the consultants (and expert witnesses for the BoI) simply say that the “conventional” time saving benefits aren’t that relevant, and it’s bigger, wider economic benefits from a national perspective that will accrue. It’s unbelievable.

    If the road is already relatively uncongested, how will the new highway increase access and “create growth”. No one answers this question. The chamber of commerce guys and the RTF and the NZTA (all middle aged white men) just repeat this ridiculous mantra that building a highway will create growth and jobs.

    I sure hope I get to cross examine them in the BOI process…

  • Dave

    Steven Joyce and Gerry Brownlee only hold their portfolios because John Key lets them. He is 100% complicit in all of this.
    And to think that all of this could have been stopped in its tracks a year ago if a few extra percent of the voting public had bothered to open their eyes!

    • Swan

      I don’t recall Labour vowing to halt this project. It was Labour, with the support of the greens, who changed the legislation to make all this possible. Further, they were actively promoting a similarly uneconomic rail project at the last election.

      I don’t see any party advocating just not spending the money by not taking it off the taxpayer in the first place.

      • Which uneconomic rail project was that Swan, I heard them both supporting the CRL but that has a BCR of 1.1 at an 8% discount rate without WEBS

      • Stu Donovan

        You’ve heard of ACT surely?

        Personally, I don’t find the “Labour changed legislation to make this possible” argument very compelling. Irrespective of the legislation, what we can conclude is that transport spending under the last government was of significantly higher quality than the current one.

        To say that the last government is responsible for the current administration’s poor decisions (e.g. RoNS) is dodging the issue in my opinion. Yes, Labour changed the LTMA and re-structured Transfund and Transit etc, but they did so while generally maintaining levels of investment in what could be considered high-quality transport projects.

        The fact that this government has completely abused their position in light of the new legislation is not Labour’s fault: That’s like holding them responsible for not realising how bad National would be!

        • Swan

          I do not want to condone the current government policies which are not defensible. But it is a fact that a number of high quality projects were available due to low spending through the 90′s which have now been built. Labour has subsequently supported Penlink, and the CRL to name a couple of dubious projects.

          Also, whilst labour had positive BC projects to build, they managed to erode that value in many cases (eg by building tunnels)

          • Louis M

            How is the CRL “a dubious project”? As Matt L has said, the most conservative BCR comes out at 1.1!

          • Max

            You won’t find that many here who consider the CRL “dubious” – and even under the same roads-centric short-termist assessment, it has a positive BCR, so whatever you feel about it, looking at the same rules, the same playing field (I won’t call it a level playing field), then Labour is not supporting anything like the current boondongles National is. To claim so is, in my opinion, a smokescreen, a “they are all bad the same way” fudging not born out by reality.

            Any party will propose/support some stupid things – that is not an excuse for the party in power to support massively stupid things.

          • swan

            Didn’t the NZTA review come up with 0.4? Agreed this is higher than many of the RONs (no joke), but still pretty low.

          • Hamish O

            Didn’t the NZTA make some funny assumptions though? I heard Brownlee say it was 0.1 in parliament once.

          • Louis M

            Was it an NZTA review or a Cabinet review?

          • Swan – Do you mean the review that assumed there was unlimited capacity on the roads for additional cars

          • swan

            I dont know, but it seems to me there are two types of BCR. Official ones by proponents, and then independent ones. I think it is hard to say objectively that Auckland councils BCR was any more robust than NZTA’s “official” BCRs for the Rons.

            And both have reviews (secret or not) that show very low BCR’s. I think the only thing you can really say is that economic analysis has been well and truly debased in this country when it comes to large projects, transport or otherwise.

          • MFD

            Any analysis of this nature is dependent on the quality of the data used. The analysis methodology seems OK; it’s the data and/or assumptions that are questionable.

          • ingolfson

            Swan, you are again claiming that essentially both the CRL and the Puhoi-To-Wellsford BCR calculations are both lies. That is the worst kind of throwing two things together and then calling it a day.

            You will find that the CRL’s BCR may be different according to whatever report you look at (actual reports – not claims made by talking heads, including those in parliament) but that this largely was the case of government constantly asking them to be more conservative about things (while they themselves allow their own reports to be wildly optimistic) and Council reluctantly complying, because what other option do they have, short of calling National liars. And even with all those changes, the BCR stayed positive, and didn’t actually change much – just the goal posts keep getting moved by National.

            To argue that that is the same as Puhoi, where the results were crap, and have stayed crap, since BEFORE it became a RONS, and only became half-respectable when once all kinds of assumptions about economic benefits were included (I say half-respectable, because I distinctly remember sitting in an expert session half a year before RONS were all the rage and hearing several economic evaluation experts discuss the fact that “Wider economic benefits” were really an unproven thing – some months later, National made them the centre-piece of the largest spend-up ever)…

            To say that the two are comparable when government is refusing to allow to Council to assume economic benefits when they assess the CRL, even though they use them for their motorways – that’s the real scandal here.

          • swan

            Ingolfson, the review done by NZTA has a BCR of 0.4 including WEB’s, or 0.3 without. That is not above 1.

            http://www.transport.govt.nz/ourwork/rail/Documents/City-Centre-Rail-Link-Review-final-report.pdf

          • Swan you are still missing the point that you are using a BCR from a organisation who has economic bias towards making the report. I haven’t seen one independent report with a BCR lower than 1. Independent is very important. Also have you compared their list of WEB’s against both RoN’s and CRL?

          • swan

            Joshua, I think you are suffering from one sided skepticism.

            The NZTA/MOT study included independent expertise and peer review. Not that I am saying that report is definitively independent, but what report is? How independent do you think the AT commissioned report was? Have you even read it? Dry analysis it is not. It was written by PB and BECA – engineering consultants who would love nothing more than to have a job like the CRL on their books. I am not going to go into which reports are better or worst when it comes to the CRL and the RONs, but when it comes to the NZTA review of the CRL vs the AT report, I know where I am putting my money.

          • Peter M

            I thought we’d pointed out quite clearly what a piece of rubbish the MoT review of the City Rail Link project is. Just consider for a minute the fact that everything in the MoT’s review assumes that there are no bus capacity constraints in the CBD.

            Again, no bus capacity constraints. They assume we could run 2000 buses an hour down a street with no problems at all.

            Now please remind us why we should given absolutely any weight to any bollocks that comes out of MoT?

          • aww another little shake :) sorry in chch. But swan, first of all I’ve worked with BECA on other contracts. If you look at the work they complete, and the expertise they have in engineering, you will notice that they don’t have the power to win such consultancy contract. The experience in tunnelling alone is thin, yet alone in rail. For someone more tuned into the topic I would be going towards Opus International Consultants who have a better idea on town planning and transport engineering. BECA is full of structural engineers, roading engineers and traffic engineers. Not baised at all.

            Also I know I wouldn’t trust NZTA for that matter! Neither would I trust AT but at least AT is the lesser of two idiots.

            Also you are trusting a report that underestimates Auckland’s Population Growth, assumes unlimited capacity of our roading and bus network, and assumes we don’t need anymore rail lines, and is prepared to ignore the latest statistics in growing train patronage?

          • Bryce P

            Apparently Beca are the writers of the leaked Kapiti report as well Swan. So, who to believe? Could they be right in both cases or neither? I’m sure a company of that size and reputation have a vague idea of what they are doing?

          • MFD

            The APB&B business case assumes a 2041 bus scenario of 38 k persons into the CBD per day during the AM peak with no increases in bus services but with the CRL in place (page 24). The MOT review assumes 42.7 k persons into the CBD absent the CRL (Appendix A, page 19). The difference is ca. 12%. How does this demonstrate an assumption of “no bus capacity constraints”? Surely the assumption is that the constraints occur at a figure greater than 42.7 k.

            The APB&B business case assumes 46.5 k persons travelling by car in 2041 absent the CRL whereas the MOT review assumes 39.2 k absent the CRL so no assumptions re unlimited capacity for cars there.

          • swan

            Peter M,

            I know this site did a rebuttal of the NZTA review, and whilst some of those points may well be valid, I don’t accept that Transportblog is the final arbiter of truth on this matter I’m afraid. 2000 buses an hour is a strawman as MFD has pointed out.

            The main issues the review found were a) with the conventional transport benefits (which they considered to be massively overstated), and b) with the “innovative” WEB’s assessment (which they considered to be part exaggeration part total BS), .

            So if you want to believe that the CRL, the Kapiti expressway, or Puhoi to Wellsford have a robust business case, IMO you are acting on faith more than evidence.

        • Yeah, nah. Kris Faafoi addressed that yesterday: http://www.labour.org.nz/news/the-gloves-still-on-over-expressway

          What Shearer was reported as saying was that, if it’s underway and holes have been dug, they probably wouldn’t be able stop it if they got into power as too much would have been spent. Which is not what Faafoi has been saying, or Phil Twyford, and is not to say that Labour *supports* the M2PP expressway. It’s also a pretty dumb statement to have made, even in the off-hand manner in which it was reported.

          • Louis M

            Just like it’d be unlikely that they’d stop a holiday highway that was halfway through construction. But fortunately it doesn’t start construction until 2015, so there will be time time to cancel it if they are elected in 2014. If they’re not then we’re in trouble.

          • They’re hoping to turn the first soil on Kapiti next year a) because preloading peat takes sooooo long before you can build on it (and we have a LOT of peat) and b) to get it on track so that Labour feels they have no choice.

  • Section 96 of the Land Transport Management Act outlines the operating principles for the NZTA.

    (1 )In meeting its objective and undertaking its functions, the Agency must—
    (a)exhibit a sense of social and environmental responsibility, which includes—
    (i)avoiding, to the extent reasonable in the circumstances, adverse effects on the environment; and
    (ii)ensuring, in relation to its functions under section 95, and to the extent practicable, that persons or organisations preparing regional land transport programmes—
    (A)take into account the views of affected communities; and
    (B)give land transport options and alternatives an early and full consideration in a manner that contributes to the matters in subparagraph (i) and subsubparagraph (A); and
    (C)provide early and full opportunities to the persons and organisations who are required to be consulted in order to contribute to the development of regional land transport programmes; and
    (iii)meeting the requirements of section 18H (Māori contribution to decision making); and
    (b)use its revenue in a manner that seeks value for money, and,—
    (i)if the revenue is part of the national land transport fund, in accordance with section 10(3); and
    (ii)in all other cases, for the purpose for which it is collected; and
    (c)ensure that its revenue and expenditure are accounted for in a transparent manner; and
    (d)ensure that—
    (i)it acts in a transparent manner in its decision making under this Act; and
    (ii)it gives, when making decisions in respect of land transport planning and funding under subpart 1 of Part 2, the same level of scrutiny to its own proposed activities and combinations of activities as it would give to those proposed by approved organisations.

    Shall we start a fund for a judicial review?

    • I’m in Cam, what would it take to get a robust legal opinion, do you think?

      • I’ll find out. It’s pretty clear that NZTA need to “give land transport options and alternatives an early and full consideration” and “use its revenue in a manner that seeks value for money”. Hopefully a common sense definition applies. (Note that it is pointless bringing this up at a Board of Inquiry as it is outside of the scope of the Environment Court.)

        • Surely it’s time that the auditor general was looking at the culture at both NZTA and the MoT. Irrational Exurberance springs to mind as a phrase to describe the frenzy with which these institutions are intending to blow our money, with wild disregard to process, balance, or transparency.

          Of course the the public servants may only be ‘following orders’ in which case i hope they have a damn good paper trail that will show the ministers to be responsible. We’ve certainly heard them in the house saying that process doesn’t matter, and that ‘everyone knows’ how good these projects are…..

          • Good thinking. The Office of the Auditor General has put the AIFS investigation on hold now that Snapper and AT are before the courts, so they will be looking for something to do.

  • Louis M

    Fantastic to see the media are finally covering this issue. The government spending this money on RoNS has not been covered adequately.

  • Steve Reeves

    And this is surely evidence that NZ *does* actually need stricter lobbying and “revolving door” rules etc. It’s likely that this is driven by the construction firms. I can’t see how anyone else can possibly benefit. So, how many meetings (probably un-minuted) have the civil servants and ministers had with the roading constructors? How much have the constructors given to the party? Loads to find here!

  • The Trickster

    I remember distinctly my brother talking about how the Swaps (out of the Waikato) were heavily investing in road metal quarries back just post the election of National in 2008…. make of that what you will.

  • Matthew

    There is some scope for doing some more targeted road building in Kapiti that the locals would actually appreciate, and that would ease bits of congestion that through motorists would like.

    1. a 2nd crossing of the Waikanae River which many locals would use for getting between Waikanae and Paraparaumu easing the SH1 which can be bad in the peaks, especially around holidays and on weekend mornings. (I consider the existing local roads good enough, and the rest of the Western Link Road would be an expensive waste of money which would duplicate the existing local roads)
    2. In Waikanae, Elizabeth St and Te Moana Rd intersections with SH1 are adjacent, and by bending Elizabeth St around (through where the Bunnings is) to join Te Moana Road, bridging the railway line, then that would eliminate a level crossing, and all the congestion associated with it.
    3. An Otaki bypass.

    The locals are also trying to get a Raumati Station built, and I’d suggest another new station at Lindale with links to Mazengarb Road, giving 4 Kapiti stations instead of the current 2.

    • Louis M

      Sounds like a good compromise there Matthew.

    • Luke C

      the cheap Western Link Road did exactly what Matthew above said and was all ready to go in 2008, and would of cost $90 million for a standard single lane at grade road for exactly the same route! However National cancelled it, delaying any improvements for at least 5 years.

    • Glenn C

      I like the idea of having a Lindale station with a street linking it to Mazengarb Rd – maybe a road coming off Awatea Ave?

      Done well, with a good-sized ‘park & ride’ facility, it’d have a decent catchment.. serving the north side of Paraparaumu & the beach – and giving them a way to catch the train without going anywhere near State Highway 1 or Kapiti Road.

  • Kevyn

    Stu Donovan
    October 30, 2012 at 11:36 pm · Reply
    That’s the opposite of what actually happened. When Labour came to power Transfund had total control of the National Road Fund. The Specific phrases in the Transit NZ Act that had created that situation were “independent of the Minister” and “have regard to Government policy”. Unfortunately for Transfund its funding manual gave too much weight to the benefit of saving lives and not enough to saving time. Labour’s reforms have empowered Cabinet to act independently of NZTA and merely “have regard to” expert advice. Consequently where Transfund would never have contemplated the holiday highway or Transmission gully and the Kapiti Expressway ahead of more economically valuable works Labour gave National the power to dictate that these hobby horse throwbacks to 1920s Main Highways Board plans get priority even over preserving the existing investment in roads and highways.

    • Luke C

      a bit harsh on Labour for that, as if National wouldn’t of changed the law itself to enable RONS to proceed! Labours law changes were intended to take away from NZTA’s excessive road focus, as they happened around 2007 when the sustainability work was all going on.
      However they equally allowed a conservative government to direct NZTA towards excessive uneconomic road building.

      • Yup. National changed the RMA to allow “projects of national significance” to be fast-tracked, under urgency, and then announced a bunch of projects of “national significance” – quelle surprise! If Labour hadn’t made the changes in their time (as you point out, for sustainability reasons), National would have done it in their first 30 days anyway.

      • swan

        IF they wanted to avoid an “excessive roads focus” they could have written this into the legislation. The point of independence is that funding proposals are assessed against an objective measure, so pet projects dont get priority. It is not reasonable to suggest Labour had to do this for sustainability reasons. If they wanted an objective sustainability yardstick, there was nothing stopping them from empowering Transfund with a funding formula or similar that accounted for sustainability.

        The fact that they didnt makes you wonder. Looking at what happened to the proposed Johnsonville busway in Wellington might give you some clues though.

  • Peter M

    Some interesting further information in Phil Twyford’s press release: http://www.labour.org.nz/news/plug-should-be-pulled-on-kapiti-expressway

    “A leaked report by engineering consultants Beca shows the half a billion dollar motorway project has a benefit-cost ratio (BCR) of 0.2, which falls a long way short of break even at 1.0.

    “It also reveals that a $515 million investment will generate a return of only $118 million over a 30 year period. Spending this much money on what Beca describes as a ‘relatively uncongested part of the road network’ would be an economic and environmental crime.

    What would be really interesting to know is what changed in the assumptions that led to such a dramatic reduction in the BCR. My guess is that the more recent analysis has a more realistic traffic growth scenario (i.e. less growth, like what’s been happening) compared to earlier assumptions. Less traffic growth in the future, if this turns out to be what has changed, is clearly absolutely catastrophic in terms of its impact on the BCRs of roading projects.

  • Stu Donovan

    Thanks for the detail Kevyn but I don’t see how that’s the “opposite”: of what I said in comment? In that comment I openly acknowledged that Labour’s reforms to the LTMA compromised the independence of the decision-making on transport investment in New Zealand.

    However, my point was that in spite of this Labour still managed to make better transport investment decisions (in terms of economic value for money) than National. This is highlighted by the MoT’s brief to the last incoming minister (Brownlee) where they showed a steady deterioration in the economic value for money of transport projects under National’s governance.

    In turn, I believe it’s a red herring for Swan, and others, to claim that all of National’s poor transport investment decisions can be laid at the door of Labour’s legislative changes. To me, that’s ignoring the fact that under Labour we invested in projects that generally had high BCRs – so I think – as an economist who values these things – I can objectively say that Labour made better transport decisions.

    Note that I’m not being politically partisan here, because I don’t tend to vote for Labour :).

  • Ian

    Does anyone believe Mark Sainsbury have been allowed to break this story?

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