A new NZIER research report, entitled “Disruption on the road ahead! How auto technology will change much more than just our commute to work“, makes the case that new technologies will upend urban transport systems:
Near autonomous cars followed by driverless vehicles (smart cars) will transform our commute to work and much more over the next two decades.
Car-based technologies hold the promise of reducing the billions of dollars we spend on roads by improving how we use them and by saving lives.
We need to rethink our reliance on infrastructure solutions to transport problems and look at how to effectively embrace the new technologies.
If you read on, the report implies that we should stop investing in public transport and count on driverless cars to allow roads to flow more efficiently. The report does not grapple with the question of where the driverless cars will be stored – in spite of the fact that parking is one of the costliest elements of a car-heavy urban transport system. Space is expensive in cities and cars, even driverless ones, do not use space efficiently.
Now, let me be perfectly clear: this is a lazy analysis. As I have previously argued, waiting on unproven technologies to solve our problems is a bad strategy, especially when there are proven technologies that can be implemented right now. It is more realistic to invest in frequent bus networks, rapid transit infrastructure like Auckland’s rail network and the Northern Busway, and safe cycling facilities like the separated Beach Road cycleway. (Auckland Transport, like many other transport agencies, understands this and is getting on with it!)
However, if we set aside NZIER’s technological utopianism, they are making a reasonable point: When a transformational technology emerges, governments must make complementary public investments to enable society to benefit.
With that in mind, I would like to point out that a technology revolution has happened over the last decade – and gone largely unnoticed by New Zealand’s transport agencies. I’m talking about electric bikes, which are now proven, readily-available technology. Several companies are selling them in New Zealand, with basic models going for under $1000, which is price-competitive with a new road bike. In the Netherlands, 19% of all new bikes purchased in 2013 were electric.
Why is this so revolutionary? Simply put, because electric bikes flatten out all the hills on a cycling route. By providing a bit of extra oomph when riding up inclines, they remove a major barrier to cycling in hilly cities like Auckland and Wellington. Suddenly, the vertiginous climb out of the Queen Street gully might as well be pancake-flat Christchurch.
Easy as… climbing the world’s steepest residential street on an electric bike (Source)
Even on flat sections, the additional power provided by the electric motor can make cycling much more relaxing and gentle. That may not matter to the young and/or fit, but it’s a boon to people who are less fit or only starting to cycle.
Consequently, electric bikes have the potential to majorly disrupt New Zealand’s urban transport markets. According to my calculations based on 2013 Census journey to work data, one-third of all commutes in Auckland are under 5 kilometres. At present, only a very small minority of those trips are done by bike. Recent technological change means that could shift, and rapidly. Taking all those short trips on bikes would have a much more fundamental impact on congestion than driverless cars.
However, there are some big barriers to getting the full benefits of this transformative technology. Simply put, our roads often feel too unsafe to ride on. People on bikes often must compete for road space with cars, buses, and trucks. They have to look out for cars backing out of driveways and drivers opening doors into their path. Over a lifetime these risks are more than balanced out by the health benefits of cycling, but they can feel a bit intimidating.
If only there was something we could do to make streets feel safer for cycling… (Source)
There is a strong case for public investment and policy changes to unlock the benefits of electric bikes. It is relatively easy to make cycling safe and common by investing in a complete cycle network. This means:
- Implementing more off-road cycle paths like the successful Northwestern Cycleway and Grafton Gully Cycleway, and the impending Nelson Street and Glen Innes to Tamaki Drive cycleways
- Putting separated on-street cycle lanes, like the excellent Beach Road cycleway, on every major road where there is enough space
- Slowing speed limits to improve safety on side streets and alternative routes like the Dominion Road parallel routes.
This can all be done immediately at a relatively low cost. It will enable us to benefit from a transformative technology that actually exists right now, rather than waiting decades for an unproven technology. So why aren’t the enthusiasts for “disruptive technology” taking notice?
Ports of Auckland did a press release back in September that didn’t really get picked up on:
Working with KiwiRail, Ports of Auckland has doubled the rail services between its Waitematā seaport and Wiri Intermodal Freight Hub.
The increased service starts this week and will bring the port to the doorstep of importers and exporters in South Auckland, potentially reducing the number of trucks coming into the seaport and opening up more space to handle growing volumes.
Ports of Auckland General Manager Commercial Relationships Craig Sain said, “This is just the beginning. With our developments in Palmerston North and Wiri, we’re on our way to make more effective and increased use of rail to improve our service offering.”
“Containers moved by rail was up by 64% in 2013/14, but it is still a small percentage of the total containers coming through the port. We’d like to see this number grow over the coming years,” he said.
In 2010, with the opening of the Wiri Intermodal Freight Hub, KiwiRail ran four services of 23 wagons a week in each direction. Over time, this number increased to eight services and starting today there will be sixteen services a week.
“There is ample capacity on the line to the Port to increase services further and we will continue to work with KiwiRail to get the most out of the line,” Mr Sain said.
KiwiRail General Manager Sales – Freight Alan Piper said, “Ports of Auckland’s drive to increasingly move freight by rail to its Wiri inland port has seen a rapid increase in growth of daily services this year. This is a great example of KiwiRail working closely with its customers and provide flexible growth capacity to enable more use of rail to transport goods around the country.”
Now sixteen services a week may still not sound significant, but each train can haul about 70 twenty foot equivalent containers. Each train is at least 35 trucks off the road. Take a look at this video – it’s been sped up 4x, since the train is so long:
With freight volumes increasing though, the need for a third track on the Eastern Line (in particular between Wiri and Southdown, with an estimated capital cost of between $50m – $70m) becomes more apparent as passenger services are increasing too. Kiwirail might argue that Auckland Transport should contribute to the cost, but I’ve heard that Kiwirail charge Auckland Transport a track access fee in excess of $18m annually .
As the owner and landlord of the Auckland rail network, it would be fit the current charging model for Kiwirail to invest more in the network, and recover the costs through an increased charge in exchange for higher passenger rail frequencies. This needs to happen before the opening of the CRL if Kiwirail wants to continue to grow its freight operations. Would it be too much to ask that the Goverrnment’s contribution to the CRL be in the form of a capital injection to Kiwirail, so that not only the CRL track could be built, but the third main as well?
On the other hand, $50m – $70m is at the bottom end of NZTA’s project expenditure, so perhaps it could be included as a line item in the freight focussed East-West connection project.
The current Metro Magazine has has an article by me on Auckland, its new urban nature, and surprise!: Why we need a change in transport infrastructure investment to unlock its true value.
Most here won’t be unfamiliar with the arguments but the discipline of writing for print and the general reader called for a rethink of the arguments and evidence. Also the photos aren’t bad either:
Coincidentally I came across this brilliantly accessible piece by NSW transport academic Michelle Zeibots on the relationship between different urban transport systems and their outcomes for city efficiency:
Most people will take whichever transport option is fastest. They don’t care about the mode. If public transport is quicker they’ll catch a train or a bus, freeing up road space. If driving is quicker, they’ll jump in their car, adding to road congestion. In this way, public transport speeds determine road speeds. The upshot is that increasing public transport speeds is one of the best options available to governments and communities wanting to reduce road traffic congestion.
Emphasis added. This supports my assertion that the biggest winners from the new uptake in ridership on Auckland’s Rapid Transit Network are truck and car users.
This relationship is one of the key mechanisms that make city systems tick. It is basic microeconomics, people shifting between two different options until there is no advantage in shifting and equilibrium is found. We can see this relationship in data sets that make comparisons between international cities. Cities with faster public transport speeds generally have faster road speeds.
Yet parts of the highway complex in NSW are now talking about ‘solving congestion’ by building a third road crossing instead: required because of the traffic to be generated by the massive $11billion and more WestConnex project, proving, if ever proof were needed, that all motorways lead to are more motorways. And missed opportunities to invest in higher speeds on all modes through the spatial efficiency of Rapid Transit systems.
This paradoxical phenomenon is understood under various names as this Wiki page shows [Hat Tip to Nick], but perhaps this is as helpful for the average citizen as the Duckworth Lewis system is to the average cricket fan. Which is why I so like the way Zeibots has simplified it in the Sydney Morning Herald article above.
Anyway go out and grab a copy of the new Metro with the Jafa flavoured cover to see my version:
58: Four Seasons in One Year
What if we made more of seasonal change in Auckland?
Auckland does not, despite what many of us say, have a tropical, or sub-tropical climate, but a temperate maritime one. All the palm trees in the world could not fool permanent residents of Auckland that this city is winterless. We may have four seasons in one day, but we also have four seasons in one year. It is just that you wouldn’t often know it as you watch our gardens, parks, streets, and cityscape through the seasons.
The largely evergreen-ness of Auckland reflects our native flora and that is an important defining characteristic of the New Zealand landscape. But at a finer grain, in our city parks, residential streets, and private gardens, we are sometimes missing out on some of the small delights of life with an insistence on nothing but greenery all year round.
Current dogma dictates that is pretty much impossible for the public sector to plant exotic flowering trees and plants in Auckland. So perhaps it is up to residents, in front and back gardens and balconies everywhere, to embrace a new blossoming of Auckland life?! We often hear calls for more colour in Auckland, more flowering plants would go a long way to answering that call.
Stuart Houghton 2014
Last week, I took an empirical look at construction cost overruns for recent road projects in New Zealand, concluding that NZTA and regional transport agencies systematically underestimated the costs to build roads by an average of 34%. These findings are in line with Oxford professor Bent Flyvbjerg’s international work on infrastructure cost overruns. They obviously pose a challenge for people writing business cases – how can you be sure that you’re choosing a good project?
However, Flyvbjerg’s thesis has considerably broader implications. He suggests that infrastructure costs are low-balled (and benefits are overestimated) due in large part to “strategic misrepresentation”. Or, in plain English, when planners and politicians lie about a pet project to ensure that it gets built.
Coincidentally, I happened to be reading Paul Mees’ brilliant book Transport for Suburbia when thinking about this issue. Mees, who died last year at far too young an age, does a fantastic job communicating the theory and practice of high-quality public transport networks. The book is based on case studies of a number of cities, including Auckland.
In chapter two, Mees takes a look at the fateful decision that Auckland made, in 1954, to scrap its comprehensive public transport system, fail to invest in a regional rail network (as had been promised for over two decades), and build an urban motorway network. Interestingly – or disturbingly – the decision seems to have been made on the basis of two big “strategic misrepresentations”.
The first strategic misrepresentation was that Auckland wasn’t dense enough for good public transport. As this was easy to disprove by looking at the facts on the ground – which showed that 58% of motorised trips in Auckland were taken by public transport (and only 42% by car), and that the average Aucklander took 290 PT trips a year – it was necessary to lie with statistics.
In an MRCagney working paper on population-weighted densities that I published in September, I showed that Auckland is a relatively high-density city by New World standards – certainly dense enough to sustain high-quality public transport. My colleague Nick Reid used the same data to demonstrate how pro-sprawl think tank Demographia is still using misleading statistics to make its case. But Mees shows that the misuse and abuse of population density was even more rampant in the 1954 decision:
The Committee carefully sifted the Fooks table, deleting all the anomalous cities, such as Vienna and Zurich, that might have alerted readers to its real purpose. The Committee then added its own density estimate for Auckland, calculated using the very same methodology Fooks wrote his book to debunk, namely dividing the population of the region by the gross area under the jurisdiction of the Auckland Regional Planning Authority. This was not an inadvertent error either, as the same Technical Committee (with much the same membership) had only four years earlier estimated the urbanized area of the region at 30,000 acres, instead of the 113,000 used for the Master Plan’s calculations. This gave a density of 15 residents per acre not 4 (37 per hectare not 10), double the figures for Australian cities cited in the Master Plan and triple the figure given for Los Angeles.
The second strategic misrepresentation, which would be familiar to Flybjerg, was that motorways would be relatively cheap. While both rail investment and road investment carried a substantial price-tag, the decision to choose roads was made on the basis of the fact that they wouldn’t be that much more expensive than rail. But Mees finds that was simply not true:
The Auckland Technical Committee’s cost estimates proved to be no more robust than its density calculations. It had claimed that the rail scheme would cost £11 million [according to the RBNZ's inflation calculator, this is equivalent to $560 million in today's dollars], almost as much as the £15 million price tag [$760 million] for the motorways. In 1962, an engineer named Joseph Wright claimed that both figures has been distorted to favour motorways. Motorway costs had been underestimated, with the true figure closer to £40 million [$2 billion today], while rail costs had been inexplicably inflated from the  Halcrow estimate of £7.25 million [$370 million]. ‘Where did the figure of £11 million come from?’ he asked. ‘I understand that the committee which produced the Master Transport Plan had 26 members, only three of whom had any experience of handling public transport… The whole Master Transport Plan has a motor car complex’… Wright was no car-hating train-spotter: he was the Ministry of Works engineer in charge of the Auckland motorway project.
In short, Auckland was sold its motorways on the premise that they would be quite cheap. But within a few years, it was apparent that the true cost would be much, much higher. Even Wright’s estimate of £40 million, or $2 billion in today’s dollars, to complete Auckland’s road network now seems laughably optimistic. These days, transport agencies can easily spend $2 billion on motorway expansions in a few short years.
When the government announced, at the last budget, that it would be spending an additional $800 million on a package of Auckland motorway projects, few people batted an eye. It’s evident at this point that a mere $800 million isn’t enough to complete the network, or even do anything more than provide a temporary fix. But remember: the designers of Auckland’s motorway network claimed that it would be finished for that sum.
Cock-up or conspiracy: What do you think happened here?
Last week the Briefings to government ministers (BIM) were published. I’ve already looked at what the Ministry of Transport (MoT) and NZTA have said about transport in Auckland and so in this post I’m going to look at some of the other points mentioned in the documents. In particular what they say about long term trends and funding issues.
Perhaps the most significant aspect in the BIM from the MoT is that they are finally starting to acknowledge the transport world is changing. That demographics are shifting and people are starting to think and use transport differently to the trends that have persisted for around 60 years. Of course these are the same issues we regularly talk about and previously the ministry seem to have taken “it’s a blip” approach the the real world results. As such it was a pleasant surprise to finally see such an acknowledgement from them.
The MoT have split the changes into three areas:
- A growing and ageing population
- Uncertain demand for personal travel
- New technologies driving improvements in safety, efficiency, and environmental outcomes
A growing and ageing population
Along with the talking about the huge population growth expected in Auckland the briefing notes this important point about the biggest demographic group in most western countries.
By 2036, the number of people in New Zealand aged 65 and over is forecast to double to 1.2 million. The ageing population is more pronounced outside of the major urban areas and international data suggests that individuals halve their vehicle kilometres travelled when they retire. This is likely to radically change transport demands in the regions and reduce the revenue base available to maintain the transport network and meet social expectations for levels of service.
Our large older generations halving their car travel would have a massive impact on the demand for new roads in particular. As that happens the demand for Super Gold cards is going to soar. The next section almost had me falling of my seat when I first read it.
Uncertain demand for personal travel
Around 96 percent of personal travel in New Zealand occurs in private vehicles. Historically, the total distance travelled by private vehicles has increased consistently over time. This consistent growth has been driven by an increase in population and the number of vehicles in the fleet, and an increase in the distance travelled on a per capita basis. However, as shown in figure 2 below, this growth has stalled in recent years.
The average distance travelled per-person in light passenger vehicles has fallen by around 8 percent, from a peak of about 7,600km in 2004, to around 7,000km in 2013. The total distance travelled over the same period has increased marginally (from 39.3 billion kilometres in 2004 to 40.4 billion kilometres in 2013) as a result of population growth. This trend is not unique to New Zealand – it has been observed in a number of developed countries.
There is some debate as to whether this trend is the result of economic factors or a more structural shift in attitudes towards personal transportation. The fact that this trend emerged before the onset of the global financial crisis gives cause to believe that social, behavioural and lifestyle factors (such as the proliferation of smart phones, social media, online shopping and video conferencing) may also be having an influence. A related trend is a reduction in the number of driver licences being issued. In particular, fewer young people are choosing to drive. This suggests that in some groups, the perceived merit of car ownership and use may be declining.
Strong population growth means that overall demand for transport across all modes will continue to increase. Motor vehicles are and will continue to be the predominant mode of transportation in New Zealand for the foreseeable future. However, the rate of growth in motor vehicle travel seen in the twentieth century is unlikely to continue. An ageing population, rising fuel prices, increasing urbanisation, improved mobility and accessibility options, growing health and environmental concerns, and changing consumer preferences all appear to be contributing to reduced per-capita travel in motor vehicles and an increase in demand for alternative transport options
To me this is a huge admission from the MoT and I guess they could only go on so long ignoring the data that was in front of them. I really hope this means we can start to have a more rational discussion about our transport future along with an acknowledgement that we can also shape that future, especially in our urban areas. The last section touches on this future a little however it once again shows the ministry (and we’ve seen it repeated by the Minister) seem to think driverless cars are going to magically change everything.
New technologies driving improvements in safety, efficiency, and environmental outcomes
Technology is everywhere, and it is changing the way we live our lives. It is changing how and when we communicate with each other, whether we travel to purchase goods or have the goods come to us, and where we work. It is changing the demands that we, as a society, place on the transport system and our need for it.
Modern transport systems are becoming increasingly reliant on technology, with increasing levels of automation delivering improvements in safety and efficiency. In the long-term, the use of fully autonomous or driverless vehicles has the potential to revolutionise the transport system. In the more immediate term, the increased availability and reducing cost of information technology will offer improvements in efficiency, safety, and social experience. Technology will play an increasingly important role in helping to improve service levels while managing costs.
Moving on, the long term future of the current funding model is raised and it’s clear the MoT is concerned about the future funding stream for transport. Here are some high level predictions for what the MoT say we may see.
In the next ten years:
- The historic link between the rate of economic growth and the level of demand for transport will continue to weaken. We will achieve economic growth without an equivalent increase in transport demand.
- As our population becomes more concentrated in urban areas, local councils with stagnating or declining populations and low growth prospects will find it increasingly difficult to meet the cost of maintaining their existing networks.
In 20-30 years:
- Gradual improvements in the fuel efficiency of cars will slowly erode the effectiveness and fairness of Fuel Excise Duty as a means of collecting revenue from transport users.
- Solutions to congestion in cities are likely to become increasingly expensive. This could increase the tension between cities’ and regions under a national funding system.
- Greater demand for public transport and active modes could put pressure on the National Land Transport Fund, which is collected from motorists.
The first point about the weakening link economic growth and transport demand is something we’ve highlighted a long time ago. This is quite important as the Roads of National Significance are largely based on the idea they will improve the economy. The last point is also an odd one as we know that investing in PT infrastructure can really help bring down operating costs while also boosting revenue due to more customers using the services.
The briefing says impacts of changing trends could have these impacts on the government.
- We will need to answer difficult questions around the amount that should be collected from transport users, what it can (or can’t) be used for, and how it should be distributed around the country.
- As expenditure rises and the amount collected from motorists at the pump decreases, regular increases in fuel taxes will be required. This could prompt changes to the way we collect revenue from transport users.
- Measures to contain costs and transition towards a more sustainable expenditure path will be challenging, particularly for transport providers that are accustomed to continuous improvements to network standards.
- The government should expect increasing pressure for more funding from both larger cities (especially Auckland), which are struggling to pay for the investments required as a result of population growth; and smaller regional centres, which are facing rising costs with fewer rate-payers to fund them.
There are some serious issues in there and it seems the third one could be aimed at large infrastructure builders hoping for continuous large projects like currently seems to be happening. The current set of projects are already putting large pressure on the National Land Transport Fund (NLTF) and this is highlighted in this graphic below where expenditure is greater than the revenue being generated.
Lastly it’s interesting to see the current transport spend in the context of New Zealand’s history. It’s currently at 1.3% of GDP which is the highest level it’s been for decades and well above the OECD average of around 1%.
Overall it’s good to finally see some sense starting to come through from the Ministry but the question is, will the government listen?
I recently ran across a New Zealand Herald article from 2000 on the region’s plans to start building good rapid transit infrastructure. (Which, as Patrick highlighted in a recent post, is exactly what is holding Auckland back relative to its peer cities.) I noticed three things from the article:
- We’re still having to scrimp and save and struggle to get good public transport projects built
- This is in spite of the fact that the projects that have been built (against the odds) have been runaway successes
- Many of the people who were urging caution back then are still around, but they haven’t acknowledged the evidence and changed their position.
On to the article:
The North Shore busway, allowing buses to travel faster than cars, will be the acid test for Auckland’s grand public transport schemes.
Planners are pinning their hopes on around $1 billion of rapid transit services running every five minutes along dedicated corridors as one answer to congestion.
The $130 million busway, a carriageway alongside the Northern Motorway, is likely to be first out of the blocks. It is being eyed to see how it fares for funding in about three months – and how many people it will coax out of their cars when it starts picking up passengers in three to five years.
Of course, the Northern Busway wasn’t actually completed until 2008, and the rest of the plan is still a glimmer in Auckland Transport’s eye.
Stephen Selwood, then of AA and now heading the NZ Council for Infrastructure Development, was quoted extensively in the story:
The region’s Passenger Transport Action Plan set targets of doubling and tripling public transport numbers in several key areas by 2011.
Yet the Automobile Association’s northern regional manager, Stephen Selwood, is not convinced they will be reached.
“The key test will be the busway, because that is the one where we know there’s congestion and thousands of people go over the bridge. If we can’t make that one work, nothing will.”
What actually happened? Although the busway was constructed late, it worked like crazy. By 2012, actual patronage on the busway was almost double what the patronage forecasts indicated:
More prognostications from Mr Selwood:
The Passenger Transport Action Plan’s market-share goals for the number of commuters headed towards the central business district range from 15 to 45 per cent, and Mr Selwood claims this shows an improved public transport system would cater only for a minority.
By 2012, public transport accounted for 44% of all motorised travel to the city centre during the morning peak. (Walking and cycling weren’t included in the data, unfortunately, but they account for a significant share of overall trips.) Since then the PT mode share has increased even further. Public transport, including the successful Northern Busway, has accounted for all of the net growth in city centre access since the 1990s:
One last comment from Mr Selwood:
Auckland, with its traffic growing at 5 per cent a year, cannot ignore the motoring majority and a need for more roads, he says.
That might have been true back then. But it’s not true now. The most recent Census data shows that road traffic is growing at an anemic pace while all other modes are booming:
In short, Auckland has faced the public transport “acid test”, and it has passed, with flying colours. This is even more impressive in light of the fact that:
- The key projects that have been undertaken, such as the Northern Busway and rail electrification, have often been finished far behind schedule. Rail electrification was supposed to be done in 2011, for crying out loud!
- The successful Northern Busway hasn’t been followed with investment in other essential rapid transit projects, such as the (planned but not yet built) AMETI busway to the eastern suburbs and the Northwestern Busway on SH16.
- Successive governments have spent billions on Auckland’s motorway network even after it became apparent that demand was flatlining.
In light of the results, I look forward to hearing the NZCID’s strong advocacy to stop building motorways and put the funding towards good public transport projects.
As the Herald reported yesterday, it looks as if Auckland Transport have really dropped the ball in getting a designation in place for rail to Mangere and Auckland Airport – what should be called the “South Western Line”. It is worth emphasizing that the main point of any rapid transit project in the south west is not so much to provide air travellers with a rail link, but to provide the more than 20,000 workers at the airport with a decent alternative, and also benefit the residents of Mangere and South Auckland who probably have the worst public transportation services in the entire region.
Some years back, a cross-stakeholder South-Western Multi-modal Airport Rapid Transit (SMART) study was commissioned to look at the rapid transit options. It was supposed to be making progress towards a designation, and for some time we have been wondering how the study was progressing.
This week, through a LGOIMA request, we finally got our hands on a copy of what has turned out to be an interim, and final report. Unfortunately, Auckland Transport instructed consultants GHD to cut the three phase study short in September of last year.
Phase Three of the study was supposed to “focus on developing documentation to support route protection. This would have entailed developing a draft Notice of Requirement and/or easement documentation for future-proofing of the preferred route. Within the airport designation, it was anticipated that an easement would be agreed and included in the current Auckland Airport Masterplan.”
However, the study was cut short with the following reasons given:
There is no explanation as to why the plans listed have a higher priority than designating rail to the airport. Auckland Transport and Auckland Council have to be the party responsible for driving the rapid transit designation process through, but instead they’ve more or less said “Ugh – too hard!” and sat on their hands.
Fast forward a year later, and things have now come to a head as the NZTA are wanting to push through the Kirkbride Road grade separation project, which will turn SH20A and SH20 into a continuous motorway. There is currently no provision for a rail corridor in any of the draft plans, and it is my understanding that the NZTA are waiting on a clear direction from Auckland Transport on where the rapid transit corridor will run.
The interim SMART report supported an earlier study from 2011 which concluded that a rail loop through South Auckland remains the technically preferred strategic option (I’ll have the detail on a later post) yet no progress has been made in designating the rail corridor.
Most worryingly of all, it looks as if Auckland Transport is now re-litigating the decision for heavy rail and is considering light rail instead for the corridor between Onehunga and the Airport. There are currently no public details on any of the following factors:
- How much would the light rail rolling stock cost, what would the capacity be and where would the rolling stock be housed?
- How much slower would light rail be, compared to a heavy rail solution?
- How much cheaper could a light rail route be, bearing in mind that Sydney’s light rail is now likely to cost $2.2bn – about the same per kilometre as heavy rail between Onehunga and the airport?
So many questions. So few answers.
In this recent post John explored some of the links between transport and economic growth.
In this post I wanted to expand on some interesting macroeconomic issues related to transport investment. These issues have been rolling around in my head for some time and John’s post prompted me to stay up late writing a blog post. But before I begin I want to openly acknowledge that 1) these issues are complex and 2) like always, I pretend to have all the answers.
Nevertheless I think the issues are worth raising and debating.
First, let’s carefully define some terms so we can create a shared sense of understanding, rather than having to slash and stumble our way through a jungle of jargon and prejudice.
When I say “economics” I am referring to the social science which concerns itself with understanding people’s values based on how they allocate their scarce means, such as time. Some people simply refer to economics as “the science of scarcity”. Others prefer the “dismal science”, either way I think you get it. If you don’t, then the cartoon below should help (source).
Now, what is the difference between micro and macro economics?
Wikipedia describes microeconomics thusly (source):
“Microeconomics … is a branch of economics that studies the behavior of individuals and small impacting organizations in making decisions on the allocation of limited resources (see scarcity). Typically, it applies to markets where goods or services are bought and sold. Microeconomics examines how these decisions and behaviors affect the supply and demand for goods and services, which determines prices, and how prices, in turn, determine the quantity supplied and quantity demanded of goods and services.“
Generally, we evaluate transport projects on a microeconomic basis.
That is, we analyse the impacts of transport investment by considering how it affects individuals, or in some instances firms. The only “trick” is that in many cases the impacts of transport investment are “non-monetary”, in the sense that we are analysing things that are not openly traded in a market in response to supply/demand. Travel-time is an example of a non-monetary good. When faced with non-monetary goods, transport economists must impute values from other data, e.g. wage rates and/or surveys. Where the microeconomic benefits of a transport investment exceeds its costs, then we typically consider it to be economically worthwhile (source).
In contrast, Wikipedia defines macroeconomics in the following terms (source):
Macroeconomics … is a branch of economics dealing with the performance, structure, behavior, and decision-making of an economy as a whole, rather than individual markets. This includes national, regional, and global economies. With microeconomics, macroeconomics is one of the two most general fields in economics. Macroeconomists study aggregated indicators such as GDP, unemployment rates, and price indexes to understand how the whole economy functions. Macroeconomists develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, international trade and international finance.
Personally, I’m an avid microeconomist. As regular commentator mwfic astutely noted in John’s post:
One of the weaknesses of GDP is that it misses out any measure of quality of the items we buy or the utility we get from those items. I could sell two cars and walk everywhere and even at a pinch ride on a bus and it might lift GDP ever so slightly. But GDP wouldn’t include how annoyed I would be walking in the rain and standing wondering if the bus will actually turn up and then having to stand up and get thrown around, or sit squashed against a stranger while the driver does his best to give me motion sickness. Yes cars cost me money and so does the petrol but I spend that money happily because I get back a benefit that outweighs the cost.
Notwithstanding my personal preference for analysing people rather than arbitrary aggregations of people (“economies”), I do consider that macroeconomics makes an important and useful contribution to public policy decisions. Indeed, “it’s the economy stupid”.
More specifically, macroeconomic indicators can tell us a lot of useful things about microeconomic decisions. High inflation, for example, will tend to cause interest rates to be higher than they would be otherwise. This in turn will tend to skew individual decisions to those investments that deliver short-term returns. As an aside, this is one reason why I believe that people who are “Green” should strongly support monetary policy settings that are likely to contribute to lower long-run inflation (and lower interest rates). Environmentalists and monetarists unite!
The links between macro and micro economics don’t end with interest rates and inflation; there are a number of other aggregate economic indicators, such as exchange rates, unemployment rates, and tax levels which impact on the decisions that individuals make on a day-to-day basis.
So microeconomics and macroeconomics are ultimately linked; they differ primarily in the level of aggregation. My theory of aggregation is illustrated below (source).
But how is all this relevant to transport investment?
The reason it matters is because there seems to be two (inter-related) macroeconomic channels that are plausibly affected by transport investment: 1) the size of the domestic economy and 2) the demand for labour.
First, in terms of the size domestic economy, John’s post shows that all other (microeconomic) factors being equal, New Zealand would be better off with greater uptake of non-car transport modes, because this would reduce the need to import fuel and vehicles. In turn our GDP per capita would likely be higher, simply because more of what we spent on the latter is likely to be spent locally.
Second, in terms of the demand for labour, different types of transport investment have different levels of labour input. Generally most studies I have read (such as this one) find that investment in local roads, walking/cycling, and public transport requires greater labour input than the same investment in highways. It’s fairly easy to understand why: The former require more workers, whereas the latter require more machinery. Hence, shifts in our transport investment towards local roads, walking/cycling, and public transport is likely to increase the demand for labour, reduce under-employment, and ultimately strengthen the government’s fiscal position.
The key caveat on all this is “all other factors being equal”, especially in this case the microeconomic value of transport investment. That is, we are not arbitrarily interested in a so-called “make work” scheme. What we are observing, however, is that different transport investments do have different impacts on the labour market and indeed the size of the domestic economy.
So where does this leave us? Well in my mind, we should continue to evaluate the merits of transport investment primarily within a microeconomic framework. However, where two different transport investments have the same microeconomic value, i.e. they have identical benefit-cost ratios, then why would we not consider their macroeconomic effects as a way of breaking the tie?
This would likely mean that investment in local roads, walking/cycling, and public transport was prioritised ahead of investment in highways, especially during times of underemployment. At times of low underemployment and/or high inflation, we could similarly favour transport investments that don’t employ many people and thereby don’t divert our human resources away from more productive endeavours. Or we could spend less on transport overall, and instead bank the money for times when interest rates are lower. This is less about “stimulus spending” and more about saving money when prices are high (e.g. cost of capital, wage inflation), and spending it when prices are low. In some ways this is simply matching investment levels to prices, in much the same way as anyone in the private sector would.
But these are all just half-baked ideas; I’d be keen to hear other people’s ideas. Assuming someone read past the first few sentences? Time is, after all, the scarcest resource of them all … ;).
From the Architectural Centre in Wellington:
The NZTA flyover and recent appeal
The NZTA have proposed building a flyover adjacent to New Zealand’s historic Basin Reserve. There are several complex aspects to the issue, but the basic chronology is:
- The Minister for the Environment established a Board of Inquiry in mid-2013 to decide if a flyover should be built by the New Zealand Transport Agency (NZTA) adjacent to the Basin Reserve cricket ground. The flyover is part of the government’s planned country-wide Roads of National Significance.
- The Board decided that the flyover should not be built. This was the result of a 72 day long hearing. The Final Decision is at: http://www.epa.govt.nz/Resource-management/Basin_Bridge/Final_Report_and_Decision/Pages/default.aspx(and there is a brief summary of issues attached). There were a number of non-profit community groups who opposed the flyover, and we worked together collaboratively to ensure alternative views were presented at the hearing.
- NZTA have appealed to the High Court asking for the decision to be overturned. The agency has also questioned a number of matters of law including issues to do with the evalution of urban design, heritage, and alternative options to the flyover.
Wellington is not a city of flyovers, and this proposal would place a flyover within a sensitive heritage site in our city, which includes an area of small nineteenth and early twentieth-century houses which would be dwarfed by the size of the 320m long concrete flyover, and become the dominant view for people living in Ellice St. The flyover would also block the view down the Kent/Cambridge Terrace boulevard, as well as obscuring views of the historic Basin Reserve cricket ground. We believe that a concrete structure of this large size, in this position, is not appropriate for this part of the city, which includes Government House, and the National War Memorial Park.
In addition to opposing the flyover, we believe that it is important that the alternative view to that of the NZTA is properly represented at the appeal hearing.
This means that we are off to the High Court.
It is no secret that the parties opposing the flyover have limited financial resources, and that the lack of an opposing voice in these proceedings will mean that not all of the relevant arguments will be put before the High Court. We consider it to be important for this to be a properly democratic process, which means that views from both sides of the argument need to be heard. It is for all of these reasons that the Architectural Centre will be a party to the appeal, and for these reasons we are asking for your support.
If you are supportive and would like to help there are a number of things that you can do.
- Spread the word. Circulate this email to anyone who you think would be keen to help.
- We’re holding a charity auction at 5.30-7.30pm Wed 3 December at Regional Wines and Spirits (15 Ellice St, by the Basin Reserve, Wellington)and are asking architects/artists/authors/designers/film-makers/poets etc. to donate drawings/paintings/designs/sculpture/poems/manuscripts/autographed books/film/anything – so if you can donate something that would be fabulous, and if you can encourage others to donate something that would be grand too. An auction poster is attached.
If you can donate something to be auctioned, please email us at email@example.com and/or post it to the Architectural Centre, P.O. Box 24-178, Manners St, Wellington, or deliver it to Cranko Architects, 81 Harbour View Rd (M-F 8am-6pm), and include your name, email etc. Additional information is at: http://architecture.org.nz/2014/11/01/architects-draw-charity-auction/
- Join the Architectural Centre. Information is at: http://architecture.org.nz/memberships/. More information about us is at: http://architecture.org.nz/
- Donate any amount you can. Our bank account details for internet banking are included on the membership form at: http://architecture.org.nz/memberships/
- Come to the charity auction… it would be lovely to see you there.
We really appreciate that there are many, many worthy causes that are likely to be taking up your time, energy and money, so we completely understand if you are too stretched to support this one with your time and/or money too. But if this is the case, your moral support and circulating this email to others, will be hugely appreciated by us.
nga mihi nui
Christine McCarthy, Victoria Willocks and Duncan Harding
on behalf of the Architectural Centre
The Architectural Centre is the most venerable advocacy group for better urban form in New Zealand. Formed in Wellington in 1946 by idealistic young architects and planners [including my parents] with aims of improving our built environment. The Manifesto includes clauses such as “Architecture must facilitate better living” and “Good architecture is elegant environmentalism.” A very good history of the Centre, Vertical Living, has just been published by AUP. Here is the full manifesto: