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Looking back at the existing LTP

Yesterday it emerged that the council is taking a knife to its next Long Term Plan and potentially start cutting projects completely in a bid to keep rates down. One comment that came through clearly yesterday was that the council will have to be careful what projects they cut because if they cut the wrong ones, like many of the PT and walking/cycling projects they should also cut the worlds most liveable city slogan too. Below is a press release from the council on the subject, the key point being that the public won’t get to hear what’s planned till late August.

The next phase in Auckland Council’s Long-term Plan (LTP) process is underway as elected representatives and officials meet to consider what the council should do during the next 10 years and how to fund it.

In March, Mayor Len Brown set the direction for a full review of the budgets and work plans of Auckland Council and its CCOs, and today’s workshop provides an overview of the sorts of things to be considered as Auckland plans for significant growth over the next decade.

“We need to make some tough choices to find the right balance between progress and affordability. Today we begin the conversation about how much we spend, when we spend it and what we spend it on to ensure Auckland’s communities and economy continue to prosper and the city remains a great place to live for all Aucklanders,” says Len Brown.

“In the months ahead, we’ll be asking Aucklanders about which major investments are the most important and affordable over the next decade to deliver Auckland’s vision to become the world’s most liveable city.”

The LTP is reviewed every three years. The next 11 months will see an extensive consultation process involving the council, its CCOs and the people of Auckland. The revised LTP 2015-2025 is due for adoption June 2015.

“Aucklanders want progress, especially on affordable housing and transport, but we know there is no appetite for large increases in debt and rates, so the next phase we begin today challenges us to find the trade-offs over the coming months to ensure increases are sustainable while still delivering on our promises – we can’t afford to do it all.”

Auckland’s first LTP in 2012 was based on the new council’s objectives but was still working with numbers carried over through amalgamation from the legacy councils.

This LTP provides the united Auckland Council with its first opportunity to realign those budgets and develop a 10-year programme of work based on a single plan and vision for Auckland.

Auckland Council Chief Executive Stephen Town says:

“The current LTP contains carry over numbers from the legacy councils and projects an average rates rise of 4.9% for each of the remaining years until 2022. To limit rate rises to between 2.5% to 3.5%, we need to be innovative and bold in looking at alternative revenue sources, reprioritising spending and finding cost savings to achieve our financial targets and take the pressure off households.”

“Auckland’s AA credit rating is testament to the careful and responsible approach we have applied to financial management. But we don’t have a blank cheque book to fund Auckland’s growth, and so we need to be clear about the priorities in the Auckland Plan.”

The LTP covers everything we do and how we pay for it – from collecting rubbish, building cycleways, delivering community services to investing in technology and innovation to ensure Auckland is a competitive global city for investment.

Detailed workshops will be held throughout July and August to help inform the Mayor’s Proposal for what activities should be prioritised, how to reduce total spend to keep rates low and alternative sources of funding for the 2015-2025 plan.

The Mayor’s Proposal will be presented in late August, and will then go out for public consultation so Aucklanders can have their say on shaping Auckland’s future.

The Long Term Plans is a 10 year budget but it gets reviewed every three years. In this post I’m just going to highlight what transport spending is planned in the current LTP which covers the period from 2012 to 2022. In particular I’m going to focus on the 2015 – 2022 parts as that’s what the council will likely be making substantial changes too.

When it comes to transport the current LTP is split into three sections:

  • Public transport and travel demand management
  • Roads and footpaths
  • Parking and enforcement

They can be summarised below (note: these are just the costs and ignore revenues and and money from other sources e.g. the NZTA or government)

LTP 2012-22 All headlines 3

 

 

Delving deeper each section can be broken down as below

Public transport and travel demand management

The one thing that stands out the most is that rail OPEX is expected to jump substantially which is primarily related to running more services, post electrification and then from 2020 for the CRL. We do know that the new electric trains cost about half as much in maintenance and fuel costs as the current trains and that Auckland Transport is about to go out to tender for a new rail contract from 2016 onwards. Those two things will hopefully combine to reduce those costs.

Rail costs feature strongly on the CAPEX side too which is comprised mostly of the costs for electrification and the City Rail Link. One thing not covered is the bus infrastructure that will be needed to support the new network which hadn’t been created – at least not publicly.

LTP 2012-22 - PT

Roads and footpaths

On the CAPEX side there are a couple of really large projects in the form of AMETI, Penlink and the Mill Rd corridor however most of the ones on the list are arterial upgrades that are/were expected to cost around $30 million each.

LTP 2012-22 - Roads and Footpaths 2

 

 

Parking and Enforcement

LTP 2012-22 - Parking and Enforcement

Note: you can see a list of all the projects that were included in the figures above in this old post.

I suspect that until plans are released in August that there will end up being a lot of rumours flying around about just what projects are going to be funded and which ones won’t. The herald yesterday suggested some projects that might be cut include:

  • Electrification to Pukekohe which will be essential to the proposed greenfield development in the area.
  • Penlink
  • A 20% cut in the already meagre cycling budget
  • A North Western Busway – something the NZTA should really be building as part of the Western Ring Route project and that is going to be needed to support the greenfield growth in the North West.

To me this also process is also going to highlight one of the glaring inconsistencies in how we fund transport. Local projects have to go through years of debate and cuts to get them to starting line but when it comes to state highways we have the government who can just come in and build stuff even if it isn’t what the city wants or needs. I imagine our funding priorities would be quite different if the city was able to choose how to spend the money we’re pouring into state highways.

24 comments to Looking back at the existing LTP

  • Fred

    If the Northwest busway is an NZTA project and is not in the current LTP how can it be “cut”?

  • Don

    What about a discussion on selling Council owned assets so they free up capital for investment in infrastructure. Airport Company, Port Company, Water Company, Land. With the current financial hole these should no longer be considered ‘sacred cows’.

    • Yes selling watercare is a amazing idea. It certainly won’t lead to aucklanders paying through their nose for a essental service is a few years (like every other example of this happening). And on the land the council should sell the land under all the roads to a private business at a cut price rate, they surely won’t under invest and over charge for them. Sorry if this seems too sarcastic, but I have yet to see a single example where a council selling assets has ended in a postive result for the ratepayers. Sure the people who buy the assets make out like bandits.

      We need to stop thinking of governments and councils as Businesses. They provide public services and need to run on a cost recovery model. We need to stop doing this endless splitting off of different segements into CCO’s (which is clearly a precursor to flogging off the ones that will sell), and recombine them all, so they can run more efficently. Work out simplified rules with IRD so you don’t need so many accountants and lawyers, change the Cheif exec’s title back to Town Clerk and stop paying them a “market” salary based on the capital value of the council.

      If the answer is sell lots of stuff so we don’t have to put up rates, then they need to put the rates up.

  • Simon

    Auckland councillors George what’s-his-face and Penney what’s-her-name were on morning report this morning discussing the reprioritisation. Penney refused to rule out a deferring, scale back, or cancellation of the CRL. That would be a disastrous outcome.

    • bbc

      Could simply be politicking, I guess they don’t want to come across as being biased, however, the fact that NZHerald more or less only lists things to be cut as being PT, and walking/cycling shows the bias they have–roads are holy but everything else should be cut.

  • JimboJones

    Wow the CRL / rail does look incredibly expensive compared to buses; the current opex for buses is much less than rail even though we move 6 times the number of people with buses
    Maybe it does make sense to postpone the CRL until the next Labour government get in and provide a decent level of funding (its not likely to happen this year).
    While we are waiting, why not make some proper improvements to the bus network. How about a place in the city where you can catch a bus to almost anywhere (e.g. Britomart), as opposed to the current setup where you need to know about 10 different places where various buses leave from.

    • Gary Young

      The CRL may, at a superficial level, appear to be more expensive compared to buses but it is a reasonable price to pay for the tremendous economic boost it will bring to many parts of the city and surrounding suburbs. Also, please pay attention to other posts here regarding the limits as to how many more buses can be crammed into CBD streets.

      Speaking personally I say bugger the cost. The CRL is not (or should not be) about dollars. It is about providing Auckland with an important public service, with strong emphasis on the words ‘public’ and ‘service’.

      • The CRL will have a profoundly positive impact on operating cost. We have estimated that rail cost recovery post CRL should at least be around 80% and that’s without fare increases. Simply the result of a profoundly better service attracting many more users plus the much lower costs of running electric services. Basically more fuller trains cover their own costs better than fewer emptier ones.

        The CRL really banks the recent and current investments in upgrading our clapped out old system, without it we won’t get full value from this spending.

        • Foreigner

          Hi Patrick. Can you provide the basis for the rail recovery cost being 80%? That seems very high considering the high capital and opex cost, even allowing for the increase in passenger journeys.Remember that the proposed zonal fare structure allows for free transfers so the passenger yield is low. There is sometimes confusion between the number of passengers journeys and the passenger yield/revenue.You only have to look at Mt Eden Rd not being fully commercially ( high degree of subsidy paid for concession fares) even though the route is relatively short haul and patronage is high. Even better case study would be the City Link.

          • That is Opex only. The Capex is separate, but does include maintenance as that is covered in the ‘access fee’ AT pays to KR for use of the track. Capex is a separate issue, after all how long do you amortise a rail tunnel for? They are still running trains in London, under the Thames, that were built in the 1840s. More than 150 years ago!

            The CRL will still be there with trains whizzing through by the time the come to build the Newmarket Viaduct for a third, forth, and fifth time…. And more. Still powered by our own electricity.

            Will search out the post when not on a mobile. Basically the electric trains and New Network lift Opex recovery to over 50%, from it’s currently very poor mid 20s, and the CRL to at least around 80%.

            This does not, of course, include the economic benefit. This is simply financial calcs.

      • Although in general I support sensible spending from local and central govts, there really isn’t a better time than now to build the CRL.
        Consider:
        - All the work on it that has already been done. They’ll just get the consultants in again if it’s delayed for a number of years. = $
        - The supposed ‘rockstar economy’ (god, I hate that label). If it’s really as good as the govt would have us believe (and not just Fonterra and Chch propping it up), why wouldn’t you build when you have good lending rates and strong repayment options?

      • JimboJones

        If they do make big cuts to the PT budget, I’d rather see the CRL delayed than have cuts to other parts of the PT network upgrade. While I can see that the CRL needs to be done, there is no need for AT to put money in now when the government isn’t going to help fund it for another 8 years. Of course I’d rather they didn’t make cuts to the PT network and in fact increased funding, but what’s the chances of that?
        The fact that we can’t rely on just buses by 2030 doesn’t mean we can’t improve the bus network now so we have something usable.

  • “One thing not covered is the bus infrastructure that will be needed to support the new network which hadn’t been created – at least not publicly.”

    As usual no investment for buses in a rail-centric plan that actually assumes major growth in bus patronage to work.

    According to the 2010 Auckland CBD Rail Link Business Case, even when fully implemented in 2041, the CBD Rail Link will only carry 1 in 5 commuters by (Rail) Rapid Transit while 1 in 3 will continue to arrive by surface bus.

    Even importantly, the CBD Rail Link Business Case estimates rail passenger growth of 20,000 passengers/day by 2041. But it also assumes 20,000 MORE BUS passengers to travel to work in the CBD every day (which is nearly twice the current number of bus passengers to and through it) but assumes such an increase will happen without any capital funding.

    Is this reasonable . . . or fair ?

    • As usual that study has likely significantly underestimated rail ridership. One example, in the models used for the CCFAS huge penalties [time and cost] are assumed for all transfers, yet mass bus to train transferring is already observable at those locations designed for it: Panmure and New Lynn, and rail to bus especially at Grafton [inward bound]. We are getting descriptions of entire H+E buses emptying onto the train at Panmure for example, we await the data keenly.

      It is important to remember that this is in a situation where the old trains at old frequencies are still running on the Eastern Line, the fares are yet to be integrated, and there are still no Buslanes from Howick and Pakuranga to Panmure, and the New Network which directs more bus services more frequently to the interchange station is not yet operating! People are smarter than traffic modellers.

      So there are a number of important conclusions from this:

      1. The models contain absurd and outdated pro-drivring assumptions.
      2. The CFFAS bus numbers to the City underestimate bus/train transfers significantly; as people will, are already, transferring to rail where made convenient in order to avoid congestion.
      3. The bus/train/ferry single coordinated network is already working yet it hasn’t been built yet.
      4. The new stations New Lynn, Panmure, Grafton, Papakura, already built, and to come; Otahuhu, Manukau City are not just Train Stations but Interchange Stations that serve both modes equally and are essential for the operation of both networks. And the Interchange Stations have to precede the New Network; it is dependant on them.

      Yet they are counted as Rail spending, is that reasonable… or fair?

      But the most important thing to try to understand is that Auckland is changing to a coordinated system where people routinely use more than one mode depending on what is best for their journey and obsessing about one pet mode over another is just silly, out of date, and irrelevant.

  • Blair

    Public transport in Asia is financially sustainable because PT operators are allowed to monetise the economic value created by PT hubs, e.g. through control over property development rights over train stations. Is that the case in Auckland?

    • tuktuk

      Financial returns generated by selling the property rights over the train stations is a potentially big upside to the CRL, one of the biggest potential property developments this city has known. This project is actually the pathway to Auckland’s financially secure future.

      Transport economists out there might want to take a look at what some entrepreneurs are doing in Florida. A private development company, who also happens to own a strategic rail corridor, is planning an intercity rail corridor linking Miami, Fort Lauderdale, West Palm Beach and Orlando International Airport. The rail operation is to be funded by transit oriented property development with no requirement for capital funding or operating subsidy. Link as follows – http://www.allaboardflorida.com/

      With a post CRL operating ratio of 80%, Auckland electric rail network might come very close to breakeven, or into operating profit, if building rentals from property purchased around the new CRL stations is factored in. It all depends on the scale of the property acquisitions that Auckland Council feels able to engage in. Auckland owns the downtown car-parking building, the ASB Tower building and the land around Aotea Centre. Could those sites be re-developed and/or intensified in parallel with the construction of the new CRL corridor? Which other sites are suitable for purchase and post CRL redevelopment?

      The ability to profit from the land immediately above and adjacent to the rail corridors is unique to rail and quite in contrast to motorways which generally destroys the property values of land above and immediately adjacent.

      It really is time that the ability to generate property value increase is properly factored into rail business cases. There needs to be a more direct involvement by the railway builder and owner in the adjacent property that financially benefits from re-development of the rail corridor. In many cases, this is how railway construction has been funded, since the beginning of rail. And for the doubters out there – take a look at Britomart.

      The only question in my mind is – following purchase and redevelopment of property alongside the CRL, should the council keep those properties and reap the reward of rental income? Or, sell off the properties at a profit to pay down the CRL debt?

  • […] Source and full post: http://transportblog.co.nz/2014/07/08/looking-back-at-the-existing-ltp/ […]

  • Stevenz

    If you go to any major world city – I guess that’s redundant – take a look at the infrastructure that is required to keep it going. Paris has, what, six rail stations? Much of the central city trackage is undergroud, and so is a metro system that carries more than a million people a day (and the RER). Ditto for London – Underground, Thames Barrier – and New York – subway, lots of huge bridges, three major airports. Hong Kong’s massive airport, underground, huge housing projects, port development. Many of these projects are not apparent to the untrained eye – sewer and storm water systems. Add your own favorite examples here… If Auckland wants to play in that league, they have to invest in very large projects or stop growing about now. (I am not advocating public works for the sake of public works, construction jobs and ribbon cuttings which are so common in third world countries, and that do far more harm than good – Yangtzee dam, new cities, the KL dual use tunnel…. um, Brazilian soccer stadiums.,…)

  • bbc

    Cut one of those 18 million road corridor ‘upgrades’ and you’ll have saved 2 years of cycle infrastructure funding. The fact that cuts to cycling are even being discussed is ludicrous and basically suggests Auckland’s leadership has a long long way before it actually understands what the city needs. Len Brown must have been asleep in JSK’s talk, as the repeated discussions of how cheap cycling is and how important it is appears to have completely bypassed him.

  • anna

    We continue to view transport funding from a modal perspective and fail to recognize the interdependence of the system. The more we invest in roading with the mistaken belief that this will ‘solve’ congestion and address growth the more we perpetuate embed a transport network dominated by cars. Investment in new roading capacity undermines our investment in pt. There is a significant opportunity to substantially cut back on roading ‘improvement’ as in capacity… and focus on throughput and rebalancing the system by investment in the most efficient modes. Also why doesnt Auckland Council endeavour to get government to invest $800 million in solutions that it works through rather than solutions that have been predetermined by HNO?

    • Yes indeed. But you could say that there is an opportunity in the government showing it’s totally monomodal hand. AC needs now to direct AT to act to balance the total ledger which means leaving the road funding as much to government as possible. In practice, for example, this means accepting that SH1 southern widening means absolutely no four laning of Mill Rd. AT needs to be instructed to not try to play the ‘big road’ game with NZTA as elements there clearly still want to.

      AC needs to be clear ad unequivocal with it’s ‘Controlled Organisation’.

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