A Key influence on transport

So, John Key announced he was resigning as Prime Minister yesterday. I’m sure that over the coming days and weeks there will probably be a nauseating amount of coverage about him, his decision and whoever his replacement ends up being. Below are a few thoughts on the role Key has played in the discussion of urban transport in Auckland

Perhaps Key’s biggest influence on urban issues has been in relation to the City Rail Link. If you cast your mind back, in 2008 he first appointed Stephen Joyce as Minister of Transport and then in 2011 he appointed Gerry Brownlee. Both men, and obviously with the backing of Cabinet, were extremely critical of the project, primarily by appearing to completely misunderstand and misrepresent its purpose and the impact it would have. For example, Joyce once said of the project “that is not smart transport; that is pouring money down a hole”, while Brownlee was perhaps even more opposed, at one point in late 2012 saying “I take big issue with the suggestion that the city rail link is useful or popular”. Even in May 2013 Brownlee was downplaying the project and suggesting it was unimportant.

But everything changed just a month later in June 2013 when Key overrode his ministers and announced for the first time that the government would support the project – albeit not till 2020 and with uncertainty around the exact level of funding from the government. At the beginning of this year Key again weighed in on decisions about the project by announcing the government would support the project starting sooner than 2020. In both cases the business community had a strong part to play in changing the government’s position.

Emmerson CRL John Key 2016.01.27

Even though it took a lot longer than hoped, I suspect we could still be hoping for the project now if the likes of Joyce or Brownlee were in charge.

The second big transport area Key has played a important role has been with cycling. He was instrumental in creating the Urban Cycleway Fund (UCF), which has resulted in unprecedented levels of spending on cycling after decades of almost no investment in bike infrastructure.

John Key on Bike 1

John Key while on a visit to the Netherlands

But it wasn’t just his support for the CRL and cycling projects that was positive, he turned up to a lot of transport events, from cycleway celebrations, to business lunches and even to celebrate the arrival of the final electric train, and speaking about urban transport incredibly well, often making comments that are not too dissimilar to what you might find here on the blog. As one example, here’s one part of what he said at the EMU celebration last year.

When it comes to public transport, there’s nothing unique about New Zealanders or Aucklanders. You know this sort of thing that’s put out there that the average Aucklander isn’t going to get on an electric train or bus or whatever. It’s not true because those very same Aucklanders when they go to London and live there for the big two years on the OE the first thing they do is get on the tube. So what’s the difference, well the answer is sheer convenience and reliability and in the end people will get on trains alright provided they turn up when they want them, they’re there and working, and they’re clean and tidy, and that’s exactly what you’ve got going on here.

He may not have been perfect but at least he seemed to understand urban transport issues when he wanted to, although perhaps it’s just the mark of a good politician to say the right things to the right audience.

It’s also worth noting that his government is currently trying to stop Light Rail from being an option on Dominion Rd with a remarkably similar approach/feel to it as the opposition to the CRL prior to 2013.

With Key going, of course now focus is going to shift to who the next leader will be, and the likely Cabinet lineup. Here are a few things to think about.

  • At this early stage, Bill English is widely tipped to become the new leader. As I understand it, he’s been quite important behind the scenes in understanding the urban economy argument which has helped in getting the government to support some of the investment mentioned above as well as things like the Unitary Plan. If he becomes the PM a lot of people are picking Stephen Joyce to be the next finance minister. Given his stances he’s taken in the past on many of the issues we advocate for I can’t see this being a good thing.
  • With a new leader, and election a year away, it’s highly likely we’ll also see a cabinet reshuffle. I actually think Simon Bridges has done a relatively good job in the role over the last few years and I’m not sure if there is a better person for the job within the government at the moment, especially at that Cabinet level.
  • There always seems to be a resentment towards Auckland from the rest of the country as to how much is spent here by the Government. Across all areas combined, Auckland typically gets a smaller share of government spending than its share of population or GDP. Key was possibly one of Auckland’s biggest allies in the government so with his departure does it mean we could see the National Party shift focus and spending away from Auckland in a ‘play for the regions’?
  • On some more specific questions,
    • Will the government still share the costs of the CRL 50:50?
    • Will we see a repeat of the Urban Cycleway Fund after the next election?
    • Will we see light rail down Dominion Rd?

What are your thoughts on John Key’s resignation? (as they relate to transport and urban issues).

Tweet of the Day: 21st Century City

21st Century City

Not sufficient, but essential: The provision of a high quality spatially efficient Rapid Transit Network in a city may not guarantee city quality and a flourishing urban economy, but neither are likely without one. In this century.

Why we do this

Here is a great 15 minute look back at the work of Streetsblog and Streetsfilms from New York, that articulates the motivation behind what we do here at Transportblog. However modestly compared to their output. This is a worldwide movement; the profound improvement of lives, one street at a time. It is also, I believe, unstoppable, simply because it is so effective, so overdue, and therefore so powerful.

And it is, ultimately, about ending the dominance of our streets by traffic, about returning balance to this easily overlooked but vital slice of public space. Everything is interconnected in this increasingly urban age, and the street is really were it all comes together in the city. Get the streets right and so much else will follow; from human wellbeing to wealth creation and equity, from public health to personal freedom and opportunity, from environmental sustainability to social resilience and security.

A great thing in the film is also something we are seeing here; the mainstreaming of these ideas into our institutions. This does sometimes lead to confusion for some people, as when the Council, Auckland Transport, or NZTA do something we agree with we do of course praise them, yet some people think we should only ever be critical and never supportive. This is naive and would be counter-productive. Rather we would love to be made unnecessary; we believe our views are rational and supported by evidence and deserve to be the official ones. Here’s to the next decade and more of constant improvement and reasoned and evidenced activism. And thanks for reading.

Funding Strategic Transport

With the release of the Auckland Transport Alignment Project (ATAP) it once again got me thinking about a funding anomaly in our transport system, the Rapid Transit Network (RTN), or the Proposed Future Strategic Public Transport Network as ATAP calls it.

atap-future-strategic-pt-network

The general way in which we fund transport in New Zealand hasn’t changed for decades, if not close to a century. State Highways are fully funded by central government while local roads and public transport (except rail infrastructure) are funded roughly 50% by central government with the other half coming from local governments (by way of rates) – there are a few exceptions that sit outside of this but by in large it hasn’t changed.

One of the reasons for State highways being fully funded is that they are considered a strategic network. They’re the key roads linking regions, cities and towns together throughout the country. Within cities like Auckland they, primarily in the form of the motorways, do the same thing but also link disparate parts of the city. Here’s what the NZTA say about them:

The state highway network provides a strategic roading link between districts and regions. State highways help to facilitate the safe and efficient movement of people and goods throughout the entire length and breadth of the country. They link main centres of population to industrial hubs and tourism destinations. State highways also play an important role in delivering public transport solutions. In our planning, we work to build connections with local networks and maintain the functioning of the state highway.

As mentioned above, ATAP has described future strategic PT network to go along with a strategic road network. This is important as it’s a recognition that high quality PT has a key role to play in Auckland’s future. Here’s what ATAP says about them both:

Auckland’s strategic road, rail and public transport networks are the most critical elements of the city’s transport system. It is essential to maintain and develop strong, safe and resilient strategic networks that can cope with increased demand.

Further information in ATAP describes these strategic networks as the “Backbone”, linking major locations and providing for highest volumes of movement. Here is the proposed future strategic road network. Most of the Tier 1 routes are already state highways or proposed to be them (East West Link) with the biggest exception being Te Irirangi Dr and Ti Rakau Dr.

atap-future-strategic-road-network

According to the NZTA as of 2015, across the country state highways make up just 11.5% of all roads (12.7% by the number of lane km) but in Auckland this is just 3.9% of roads (6.6% by lane km). Yet these roads are responsible for a large portion of traffic with as much as 48.5% of all vehicle km travelled estimated to be on state highways. These figures are shown below.

2014-road-lengths

Because of their strategic status, state highways also get a lot of funding. In the current 3-year National Land Transport Programme (NLTP), across New Zealand state highways are allocated $4.2 billion for improvements and another $1.7 billion for maintenance. By comparison just $465 million is allocated for improving local roads, $1.7b for maintenance of local roads while public transport gets $1 billion, mainly for services – and around half of these figures are paid for by local rates.

A big question going forward is how we’re going to pay to develop that strategic PT network. One fear I have is that the deal for City Rail Link, where the council and government share the costs 50:50, has set a precedent in how we fund the rest of the PT network. Auckland needing to fund 50% of all PT, regardless of how important or valuable it is, while even every minor state highway project gets 100% funding will continue to lead to even more perverse outcomes than we already have.

So, given both the strategic road and PT networks are serving essentially the same purpose, why shouldn’t they be funding the same? Why should it matter what mode is being built if it’s considered a strategic network?

I feel this is going to become a greater and greater issue, especially with the upcoming completion of the Western Ring Route. Once Waterview early next year is completed we will have all the key inter-regional links in place. From that point out any motorway projects within the urban area are just about increasing capacity for local movements.

Ultimately, I think a wider funding discussion is needed. ATAP doesn’t break down the costs of developing transport too much but does suggest that over all modes there is a funding gap of up to $400 million annually. There will obviously be a lot of future discussion about how to close that gap and those discussions could go on for many, many years. In the interim perhaps it’s time for the government and council to rethink how funding is structured. Here are a couple of ideas:

  • The strategic PT network is treated the same as the strategic road network and funded 100% from the NZTA out of the NLTP, this includes rail infrastructure which is funded directly by the government.
  • Perhaps combined with 100% funding, the development of the strategic PT network is handed over to the NZTA
  • Another option could be that Auckland is given bulk funding for transport and Auckland Transport’s role expanded to including the development and maintenance of the local state highway network and local rail network. This would allow all transport projects in the region to be assessed, prioritised and funded under the same conditions.

What do you think, should strategic PT corridors be funded the same as their corresponding road networks and how would you do it?

Ride Sharing & Fare Evasion – Land Transport Amendments

The Government has introduced this years Land Transport Amendment Bill, they say it will

  • Introduce new requirements that will apply to all small passenger services, by removing outdated provisions and by catering for the use of new technologies that facilitate such services
  • Make the alcohol interlock programme mandatory for repeat and serious first time drink-driving offenders
  • Increase penalties for fleeing drivers, or those who fail or refuse to provide information that may lead to the identification of fleeing drivers
  • Include new provisions to help limit fare evasion on public transport
  • Update the Act’s requirements relating to heavy vehicles to complement the new Land Transport (Vehicle Dimensions and Mass) Rule 2016
  • Make miscellaneous changes to various Act provisions to make them more workable.

I will mostly focus on the Small Passenger Services changes & the changes regarding Fare Evasion.

 

Fare Evasion

Last September Simon Bridges indicated that in the next bill he wanted to crack down on Fare Evaders on PT network, he said he believed it was costing $2m a year, and up to 5% of passengers were fare evading in Auckland.

Simon Bridges - fare evasion

The new bill will give Enforcement Officers new powers

  • To require passengers to show evidence they have paid for fare.
  • To require passengers who cannot show evidence of paying fare to provide contact details including Name, Address, and DOB.
  • To order removal of passenger from PT service who cannot provide evidence of paying fare.
  • The ability for them, or the body responsible for them to issue infringement notices for failing to pay a fare.

The Enforcement Officers will be warranted by Commissioner of Police, who can remove warrant if powers misused. The Enforcement Officers will not have the power of arrest beyond the scope of the Crimes Act 1961 which applies to all persons.

Penalties

  • An infringement fee of $150, or upon Conviction $500 for failure to pay for fare.
  • Any failure to comply with any legal orders given by Enforcement Officers will upon Conviction face a fine of $1000.

There is some defenses to the act, for example if the ticket machine is not working, the guidance also states the Enforcement Officers have the discretion to grant warnings, or to simply ask passenger to pay ticket. I think this is really good, many of us have probably forgotten to tag on once in awhile not because we are Fare Evaders, but simply in hurry, didn’t tag on properly, or just plain forgot, its only human. Also I have seen many tourists, both from rest of NZ or Overseas who have not understood the system, so I hope the Officers do show some discretion. Many of us have also dealt with broken Ticket Machines.

Basically the main difference between is now only the Police can do the above, now ticket inspectors who are warranted will be able to do the same.

They say these changes are necessary because gating is very hard to do for all stations & has a high CAPEX/OPEX cost associated with it.

Another question will be will AT only ask Ticket Inspectors to be warranted, or will they also have the TM’s warranted.

Small Passenger Services

In 2015 the Government had public submissions on changes to the Small Passenger Services, which I believed I submitted on as a Private Individual. The suggested changes were in response to the rise of Uber & other Ride Sharing companies whose operations were legally ambiguous. Simon Bridges wanted to update the regulations to provide legal clarity regarding these companies, while also simplifying the current system. The MOT believes the new system will “Deliver benefits through more competition, allow flexibility to accommodate new technologies, and will enable transport operators to make their own business decisions on a range of issues, while the system will regulate to provide the fundamental safety requirements.”

The definition of a Small Passenger Service is “Anyone carrying passengers for hire or reward, in a vehicle designed to carry twelve or fewer people (including the driver) is operating a small passenger service.”

The Changes are

  • Removal of signage requirements.
  • An area knowledge certificate (Outdated now we have GPS)
  • Removal of requirement to complete a P endorsement course, however will still need to display driver identification card, as well as complete police check.
  • Removal of requirement to complete a Full Licence test every 5 years.
  • Removal of requirement to belong to approved taxi organisation.
  • Removal of requirement to operate service 24/7.
  • Removal of requirement to have certificate of knowledge of law & practice.
  • Removal of requirement to have driver panic alarm.
  • Creation of a Small Passenger Service Licence replacing Passenger Service License.

Drivers will still need follow within work time limits, and either as or under a person/organisation holding a Small Passenger Service Licence.

Vehicles will still need to have a Certificate of Fitness as well as in the 18 urban areas be fitted with a camera, however exemptions are

  1. Providing services to registered passengers only.
  2. Driver and passenger information (e.g. names and photographs of both driver and passenger) is available.
  3. Driver and passenger information is available before each trip.
  4. A record of each trip is available (e.g. GPS records).

Carpooling Services i.e. Apps that connect people for carpooling which is different from Uber will also be subject to different rules, for example the third-party providing must have a Small Passenger Service Licence however the drivers don’t need to meet the requirements of a Small Passenger Services driver.

So what do you think about the changes?

Geographic dimensions of Trumpism

Donald Trump’s unexpected presidential victory has already prompted a considerable body of political analysis, which will no doubt be extended and elaborated over the coming years as we all get to grips with the forces that propelled him to victory (or, conversely, which consigned Clinton to defeat).

In this post I want to comment on the geographic dimensions of Trumpsim. In particular how Trump’s victory reflects existing local geographies, while also potentially shaping global geographies in the future. I am particularly interested in the following two aspects:

  • The urban-rural divide, which pits predominantly Democratic urban areas against predominantly rural Republican areas; and
  • The consequences of self-sorting, whereby disaffected Democratic voters migrate to other countries.

To highlight the urban-rural divide, I think it’s useful to hone in on a state like Pennsylvania, which Trump managed to carry by a small margin (which was somewhat surprising in a historical context, given that the last time Pennsylvania was carried by a Republican presidential candidate was way back in 1988).

pennsylvania-election-results

Now consider a map of population density in Pennsylvania.

Striking huh? Population density is strongly positively correlated with levels of Democratic support. And from an initial look the same pattern seems to be present in many of the other swing states that Trump won over. The main conclusion is that Republican voters are considerably more likely to be drawn from suburban if not rural areas, while Democratic voters reside in urban areas.

Some of you might be thinking that urbanization may simply be a proxy for — rather than a cause of — political preferences. While this may be valid, the degree to which political preferences coalesce around geographical differences is nonetheless interesting. The reason being that this urban-rural divide is a telling backdrop to increasing political polarization, as illustrated in the figure below.

It’s hard enough to engage with people who hold different political views, let alone when many of them live many miles away. My point here is that geographic concentrations of political support may contribute to increasing political polarization. They may even support the formation of isolated ideological bubbles, within which political supporters (of both sides) feel “normal”. In these bubbles opportunities for engagement and even rapproachment between parties becomes less likely. Some might argue that the urban-rural divide in US politics is nothing new. There is some truth to this, and there’s obviously a need for more research and analysis, which I’ll leave to people who are more knowledgeable on these matters than I. The key point, however, is that geography and politics are really strongly intertwined, and that may not be good for fostering engagement.

The second geographic dimension to Trump’s victory was something that struck me when I was perusing Google analytic trends in the aftermath of Trump’s victory. I was interested to know whether there was a change in Google search trends for “moving to New Zealand”. There was as it turns out; the figure below shows worldwide trends for the phrase “moving to New Zealand” over the last five years. Notice anything in particular? Yes, two spikes; one small one in the wake of Brexit and another — more recent and much, much larger — spike in the wake of Trump’s victory.

1-moving-to-nz

To hone in on the latter, I next I filtered these results to searches from IP addresses registered in the US. This only served to strengthen the pattern shown above.

2-us-moving-to-nz

And then I zoomed in on trends during the last seven days.

3-moving-to-nz-from-us-last-week

By now it should seem obvious: Trump’s election has prompted an enormous spike in the number of people in the US who are searching the phrase “moving to New Zealand”. And I do mean enormous: The spike is unprecedented in recent history by a factor of about 30.

More interesting from a geographical perspective, however, is the fact that Google also provides a state-by-state breakdown on the origins of the Google searches, as shown below. Here, we can see that searches were higher (in relative terms) in states like Oregon and Colorado, for example. I can think of two reasons why this may be the case: 1) there are a large number of Democratic voters in these states and 2) they have similar natural environments to New Zealand.

4-geographic-origins

It’s interesting to compare the map above to that below, which shows the winner of Presidential votes in each state.

5-electoral-map

Again, the spatial patterns are rather striking. It seems that Trump’s victory has prompted many people who live in predominantly Democratic states to consider moving to New Zealand. The degree to which this flows through into actual migration is, of course, a separate question, and one that we’ll only know the answer to in a couple of years’ time.

At first glance this seems to provide evidence of “self-sorting” at both the local and international levels. That is, people with similar preferences are tending to concentrate in particular locations. And this is something that may have real ramifications. Think of the close elections in states like Florida, for example. Even a relatively small exodus of Democratic voters from key states to countries like New Zealand, Australia, and Canada might be sufficient to flip a state from one candidate to the next (NB: Google searches for moving to the latter two countries also spiked in the aftermath of Trump’s victory).

I can understand why people might move in response to such events and, in fact, I’d probably consider doing the same. From New Zealand’s perspective the ramifications of such migration are relatively benign, and even positive. On the other hand, I can’t shake the bad feeling I have when the direct outcome of a political process (as opposed to indirect consequences, such as changes in policy settings) is sufficiently traumatic to cause people to migrate to another country.

From a U.S. perspective this also looks rather bad, unless you’re the most ardent Republican supporter who just wants everyone else to sod off. I personally don’t think there’s many people like this.

Regardless of what you happen to think about Trump, this data suggests that he has alienated people to a sufficient degree that they are considering upping sticks and moving to more tolerant climes. That of course may have ramifications for migration, housing, and transport Down Under.

Interested in hearing your thoughts.

New Auckland Councillor Maiden Speeches

Yesterday the new Auckland Councillors gave their maiden speeches. The ones delivered by Efeso Collins from the Manukau Ward and Richard Hills from the North Shore ward were particularly good. Watch them here

Here’s Daniel Newman from the Manurewa-Papakura ward and Greg Sayers from the Rodney ward

And finally Desley Simpson from the Orakei Ward.

Light Rail by-election stoush

On the weekend, the Labour Party, as part of the Mt Roskill by-election campaign, announced their intention to fund 50% of the cost of the proposed light rail line from Wynyard to Mt Roskill via Dominion Rd, one of the routes Auckland Transport first suggested in January last year.

The government have responded with both barrels, accusing Labour of pork-barrel politics but also quite worryingly, reverting to with many of the same arguments and contempt they showed for the City Rail Link – and we know how that worked out.

The Spinoff were clearly thinking of many of the same things I was on the issue yesterday but here are a few others in no particular order.

Government already agreed improvements were needed

One of the oddest aspects of this whole debate is that the government, through the recent Auckland Transport Alignment Project (ATAP), have already agreed an upgrade of the road is needed. The main report says this about central access:

Access to this area is physically constrained, and there is competition for limited street-space between vehicles, pedestrians, cyclists and public amenity. This means it is imperative over time to move more people in fewer vehicles. This requires a continued modal shift towards public transport, walking and cycling.

Although bus efficiency improvements can help cope with increased demand in the short term, there are limits to the extent to which such improvements can continue to provide sufficient capacity. A mass transit solution will be required in the medium term. Key criteria for determining the best long-term solution should be the ability to meet projected demand in a way that integrates with the broader strategic network, provides for and stimulates ongoing growth along these corridors and in the city centre, and delivers value for money.

In the supporting information they also say:

Based on current forecasts, we concluded that the constraints in central Auckland can be managed through bus efficiency improvements for the next 10 years. Efficiency improvements over the next decade include continuing the roll out of double decker buses, changes to bus stops, and improving the routes taken into the central city.

On that basis, we concluded that a higher capacity mode, possibly light rail, is likely to be required on the central isthmus in the medium-term (2028-2038), and subsequently extended to Auckland Airport.

So the report talks about the need to move more people to catching PT and that more buses are only short term solutions.

Perhaps the biggest problem with ATAP, and what is reflected highly in this situation is the timing. As we’ve discussed before, ATAP relies heavily on old school transport modelling, the same stuff that has regularly over estimated driving demand and well underestimated the growth in PT use. That means many of the PT projects are likely to be needed sooner than ATAP suggests and light rail down Dominion Rd is probably the most likely of the proposals to be pulled forward. This is also partially confirmed by the table below showing the two main packages assessed as part of ATAP. Light Rail is teetering between decade 1 and 2 depending on the package suggesting at the very least it will need to be near the start of decade two.

atap-major-package-differences

Rapid Buses

In his interview with Radio New Zealand yesterday morning Prime Minister John Key was trying to pour as much cold water on the project as possible. He did highlight that Mass Transit was listed in ATAP as a second decade project that could mean light rail but that the Transport Agency are also looking at bus options. The term Mass Transit as used in ATAP is deliberately ambiguous as the reality is, some members of the government and their various agencies have an almost allergic reaction to the term rail. Some believe that whatever a train can do, a bus can do too, and do it cheaper.

The reality as it’s always been. is that we’ll need a mix of modes and it depends a lot on the route. In some. cases heavy rail is needed, in others light rail will be fine but in most cases buses will do the job well.

Dominion Rd is already the busiest bus corridor outside of the Northern Busway. The issue is that just chucking more and bigger buses on Dominion Rd – and other roads on the isthmus – isn’t a long term strategy for the simple fact is that there’s only a limited capacity on city streets to be able to handle those buses plus all the rest from other parts of Auckland. According to the Central Access Plan, the business case for Light Rail, Symonds St is already over capacity and that only gets worse as more buses and demand get added over time.

Symonds St Bus Numbers

Symonds St Bus Numbers

Unless the government and their agencies address how putting more buses on an already over capacity routes, they’re just wasting everyone’s time.

“Buses use roads”

John Key also reverted to this old chestnut during his talk on Radio NZ to defend his government’s investment in so many roads. It’s a line they’ve used many times before but as with previous times it is fundamentally flawed. The issue is that buses need to be able to pick up and drop off passengers and that happens on local roads, not motorways like the government have focused on. As such you’re not going to see any AT services running through the Waterview tunnels, or on any of the widened motorways. The big exception to this is along State Highway 16 west of Pt Chev however there, the government and their agencies refused to build a busway to enable buses to work properly. The upgrades aren’t even finished and not building the busway at the same time is already looking to be a massive and costly blunder.

The real reason for the government opposition?

I’ve long wondered if the real reason the government have often been so reluctant to support rail projects is they know they’ll actually be too popular and everywhere will want one. This is a point Stephen Joyce himself raised in his opposition to the plan – which has also served to see it discussed much more than it probably would have otherwise.

To say nothing of every other electorate in Auckland looking for multi-billions in new railway lines.

It’s not just Auckland that will want them either, I can imagine Wellington, Christchurch and maybe a few other cities wanting rail investment.

Why only half Labour?

A key part of Labours policy of supporting Light Rail is that they’ll pay for half of the costs with Auckland paying the rest. This is the same as what’s now happening with the City Rail Link. Yesterday Mayor Phil Goff raises a point I’ve been meaning to write about since ATAP, why should Auckland pay half. I’ll discuss this issue in greater detail in a separate post but there are a couple of key issues I have.

First, the government’s contribution would come from either general taxes or from a reformed National Land Transport Fund. Even based on that 50:50 arrangement Auckland actually contributes about 68% of the costs because an approximately 36% of the governments contribution would also come from Auckland, as that is Auckland’s proportion of the national economy  economy. So while paying for 68% of these urban Transit project Auckland will still be contributing 36% of the cost of every State Highway everywhere else in the nation. In effect this is using transport capex funding as a kind of city penalty; a way of redistributing from Auckland rate payers to the rest of the nation.

Second and a point also raised by Phil Goff yesterday, why should Aucklanders be stumping up 50% for a national scale project. Auckland’s Strategic Road network (the motorways) are all paid for, 100% by the government. ATAP also agreed on a Strategic PT network as shown below with the Dominion Rd route clearly visible. I’d argue that the strategic PT network should for the most part be funded the same way as the strategic road network.

atap-future-strategic-pt-network

 

The project is a PPP

One aspect missing from the current conversation is that the project isn’t expected to be funded like most transport projects. It has been previously discussed that this would be built and operated as a PPP, something the government have said they want more of. While in most cases PPPs are just another name for debt, with transit systems and the right incentives it might help encourage the private operator to also boost development along the route to make the project even more successful.

Some certainty is needed

Upgrading Dominion Rd has been an on again, off again discussion for the last 20 years and upgrading it is way overdue. As the local business association pointed out yesterday, they need some certainty as to what’s happening

The Dominion Rd Business Association has today called on both the National and Labour parties to stop playing politics over the future form of mass transit along Dominion Rd, saying that businesses along the 7km iconic strip want certainty over what transport will look like over the coming years, not political posturing.

….

Mr Holmes says the uncertain future for Dominion Rd has been a constant source of worry and confusion for businesses and landlords alike, holding back any significant investment in the area.

It’s time that Mayor-elect Phil Goff, Auckland Council and Auckland Transport work constructively with political parties across the political divide to come up with a definitive answer for mass transit in Auckland.

Given the history I don’t think that’s too much to ask

 

 

Regardless of whether light rail or some other form of better buses happen on Dominion Rd in the future, as ATAP points out, some improvements are needed to happen now. The bus lanes have too many gaps, especially through the town centres, they don’t run for long enough each day and double deckers are needed.

No Councillors on AT Board, perhaps not a bad thing

It was revealed yesterday that in a departure from the past six years, there would be none of the Auckland Councillors will be on the Auckland Transport Board of Directors.

Auckland Transport spends more than $1 billion a year running the city’s roads and public transport network, and for the last two terms councillors Christine Fletcher and Mike Lee have been paid directors on the agency’s board.

Mr Goff said removing the councillors would improve accountability, but he would keep the roles open in case it did not work out.

“The feedback I have to date is that [having councillors on the board] has not been the strongest form of accountability,” he said.

At first blush this seems like a blow for accountability and transparency, especially given transport is by far the single biggest area of council spending. But as is often the case, if you look deeper into the issue it’s not so clear that this is a bad outcome. In this post I’ll look at a couple of these issues. To be clear this isn’t about the performance of the two councillors who have served on the board to date, Christine Fletcher and Mike Lee, but more the issues having councillors in the position creates.

The key argument for having Councillors on the AT board is to provide a more direct link between them and the Council’s governing body. In theory that sounds like a good idea but in practice it just doesn’t work – and that’s not the fault of the Councillors appointed. All board directors have the same collective and individual responsibilities regardless of whether they were appointed or are an elected member. That includes keeping confidential information confidential, particularly as some discussions and decisions can impact land prices. As such the Councillors on the AT Board can’t just go back and tell the Mayor or other Councillors what was discussed. A prime example of this happening came up at the beginning of last year when AT announced they were investigating light rail on the central isthmus. Apparently, the Mayor and Councillors were only told this piece of work had been happening shortly before AT told the public.

As I understand it, some elected members were quite annoyed they weren’t told earlier by their colleagues who sit on the AT Board but those two board member simply weren’t allowed to tell them without breaching their board responsibilities. What’s the point of having them there if the rules prevent them from reporting back to council.

One answer is that it could be to push the council’s agenda. But in cases like LRT, how could they know the council’s thoughts without telling them. Further Because all the important stuff is discussed behind closed doors, we also can’t tell if the Councillors are pushing the approved council agenda or their own personal views.

We’ve been lucky that for the first two terms, Len appointed Councillors who we know have played key roles in supporting the improvement of public transport in Auckland but he or a future mayor could have just as easily appointed someone who is on the other side of the PT supporting spectrum. In that regard having no Councillors on the AT Board and better use being made of the council’s toolkit for managing AT might be a better long term approach – I’ll cover that later in the post.

Another issue with having the Councillors on the board is it gives them multiple bites at the cherry that other Councillors don’t get an opportunity to do, and this goes both ways. In one situation, a Councillor might push a project/stance that the rest of the council votes against. They can then use their position on the AT Board to try again. One case I can remember this happening in was around the debate over mowing grass berms. After council’s governing body voted to stop funding it, Christine Fletcher tried unsuccessfully to get the AT Board to agree to do it. Going the other way, a current example is Mike Lee who disagrees with decision the AT Board he is part of made over airport rail and so wants the Council to overrule that decision.

In my view having Councillors on the board then creates odd situations when those same Councillors then criticise a decision made by AT that they were involved in making, or where AT are criticised for following a policy the board approved.

And AT’s Chairman Lester Levy says this in the article above.

The mayor is my boss

It’s good to have that nice and clear. He also says this about decisions

There are differences of opinions, yes, but there are differences of opinions between normally appointed members.

Of course, none of this is to say that AT should be left unaccountable to do their own thing. The opposite is true but the council have several ways they can improve the accountability of AT. The biggest thing they could do is taking a much greater interest in setting and holding AT to their annual Statement of Intent (SOI). The SOI is the document that lays out each year what AT should be focusing on and what their targets are. From what I see the SOI is far too often not bold enough and most Councillors just seem to rubber stamp it.

There also doesn’t appear to be any serious consequences for missing targets, such as for patronage. Nor are there any consequences for AT’s seeming continual disregard for various council plans and strategies like with the City Centre Master Plan vision for Victoria St that we’ve highlighted recently. The Council beefing up their oversight role would likely reap greater dividends than having Councillors on the board – each earning an extra ~$50k per annum for doing so.

Goff’s decision to re-evaluate the decision in a year’s time seems like a good solution. If it turns out AT start making even stupider decisions then some Councillors could always be added back again. What’s not clear is if the council will then appoint some directors on a one year term to make up the board numbers.

Six years in it feels like now is an appropriate time to shake things up to change how the organisation is run at both a board and management level to ensure we get better outcomes.

Do Government Powers of Compulsory Purchase Help or Hinder Urban Development?

Preface

How do legal institutions interact with economic outcomes? I think it’s fair to say that legal institutions often don’t register on economists’ radars, mainly because life is simpler when you assume the law is exogenously determined by factors beyond your control. 

While such assumptions are valid for many types of economic analysis, legal institutions are not exogenously determined factors, at least in the long-run. By engaging with legal institutions, economists may be able to identify ways they could be improved. Of course reforms of legal institutions are slow to implement, but they do occasionally happen. Recent amendments to the RMA being a case in point. By engaging with legal institutions, economists can improve our analyses and help to identify possible opportunities for reform = Win-win.

The high-level question I want to answer in this post is whether these powers help or hinder urban development. My interest in these matters was prompted by the Productivity Commission’s recommendation for Auckland to establish an Urban Development Authority (UDA) with powers of compulsory purchase. That is, the UDA should have the power to expropriate privately-held property for the purposes of urban development. I think it’s fair to say the idea of an UDA with compulsory powers of purchase has attracted interest from across the political spectrum, including the Government (source).

In this post I consider why government’s need powers of compulsory purchase and, second, how should such powers be exercised. This post does not present conclusions or recommendations, mainly because I haven’t formed many yet. Instead, it seeks to identify some relevant economic and legal literature as a means of stimulating discussion.

I welcome your comments: Do you think Auckland needs an UDA and, if so, then should the UDA have powers of compulsory purchase? If yes, then what are the potential risks and how would you mitigate them? I’d also be keen to hear about possible alternatives. Enjoy.

Reference: The post that follows draws on an academic paper I am writing about government powers of compulsory purchase. In the interests of avoiding academic self-plagiarism, I should mention that the paper was written first, while this post was written second.

Introduction

The historical development of most cities has been significantly influenced by government interventions. The Eixample of Barcelona, the boulevards of Paris, and the highways of New York are all noteworthy examples of government interventions that have left large and permanent marks on the affected cities.

The powers of compulsory purchase governments use to appropriate private property in order to undertake these interventions is a perennially controversial topic. One U.S. presidential candidate, for example, recently described powers of compulsory purchase as: “… absolute necessity for a country, for our country. Without it, you wouldn’t have roads, you wouldn’t have hospitals, you wouldn’t have anything.” (Team Fix, 2016). In contrast to this effusive support, Justice O’Connor’s dissenting opinion in Kelo v. City of New London argued that contemporary legal interpretations of the scope of the powers mean “Any property may now be taken for the benefit of another private party … beneficiaries are likely to be those citizens with disproportionate influence and power …” (O’Connor, 2005).

Given these divergent views, there would seem to be value in developing a clear understanding of the economic evidence on which the powers are based, certainly before we expand the number of government institutions that have recourse to these powers. In particular, I think there is a need to understand why governments need powers of compulsory purchase and how they should be exercised. The standard economic justification for the powers is that — in their absence — information asymmetries gives market power to landowners, leading to hold-out problems. This is where landowners refuse to sell so as to capture surplus associated with the government’s investment. By annulling landowners’ market power, compulsory purchase avoids hold-out problems and enables efficient levels of government investment. It’s important to note that private actors seeking to assemble property don’t face the same issues, mainly because they can negotiate anonymously to buy properties via third-parties.

Exercising powers of compulsory purchase is not without economic costs. Perhaps the most notable costs arise from involuntary transfers of property, which may result in welfare losses for affected landowners. To counter this issue, most jurisdictions require governments to demonstrate that the proposed intervention is in the public interest, and to pay adequate compensation to affected landowners. These legal requirements give rise to two additional economic questions: How should we define “adequate compensation” and “public interest”?

Neither definition is as straightforward as it first appears. Most jurisdictions define adequate compensation using market prices. Some scholars argue the value of property to its current owners, however, includes idiosyncratic attributes, such as sentimental attachment, which are not reflected in market prices (Nadler and Diamond, 2008). Other scholars argue that these idiosyncratic attributes are already accounted for in market prices, while noting that the landowner’s loss of autonomy is not (Lee, 2013).

Definitions of public use are similarly complex. In the U.S. the definition of public use has even been broadened to include wider economic impacts arising from private activities. Under this definition, governments have been allowed to use powers of compulsory purchase to appropriate private property, which is then transferred to private third-parties. The aforementioned opinion by Justice O’Connor in Kelo v. City of New London was prompted by precisely such a situation. Even where the resulting asset is publicly-owned, there are many situations where public access is restricted, for example by user-charges and/or regulations, which are on the surface not readily distinguished from private ownership. From an initial survey, the economics literature doesn’t seem to have a good answer to the question of how one defines “public use”.

Finally, the processes involved in determining adequate compensation and demonstrating public interest may generate non-trivial transaction costs. Imagine, for example, the resource cost of the recent Unitary Plan hearings, where many highly-skilled, well-paid people were paid to sit in a room for months if not years. Is it possible that the transaction costs involved in a particular legal process outweigh its benefits? I think so. At the very least, there seems to be a need to understand potential interactions between legal processes and transaction costs. It may, for example, be more efficient to offer more compensation early in the process, so as avoid transaction costs downstream.

Answers to such questions are not a trivial academic exercise. Evidence also suggests that protection of property rights affects the incentives facing governments and citizens alike, and impacts on long-run economic development (Acemoglu and Robinson, 2005). Powers of compulsory purchase may also have implications for social justice, with some studies finding that land owned by low-income households is more likely to be taken (Carpenter and Ross, 2009). Recent experiences in Auckland, whereby wealthy neighbourhoods successfully opposed the proposed Eastern Motorway across Hobson Bay, provide some indication of why such patterns may emerge. In the U.S., scepticism over the use of powers of compulsory purchase has given rise to significant opposition from across the political spectrum.

Initially simple questions are, upon closer inspection, revealed to be anything but. Understanding why governments need powers of compulsory inspection, and how these powers should be exercised, can contribute to more informed policies on Urban Development Authorities.

Of course, this doesn’t mean that I’m opposed to an UDA having powers of compulsory purchase. Personally, I’ve always been attracted to the notion of a “New Zealand Place-Making Authority” (NZPA) to counter-balance the NZTA’s movement focus on movement. I think the potential benefits could be significant. Nonetheless, the powers such an institution should have is an open-question.

Gnawing in the back of my mind is the fact that powers of compulsory purchase have in the past been used to pursue questionable outcomes. The highways of New York promulgated by Robert Moses, for example, were justified under the auspices of slum clearances. One of the great urban thinkers of our time, namely Jane Jacobs, was spurred into action by a government body wielding powers of compulsory purchase. Would ignoring the risk such things happen again be indicative of the “fatal conceit”?

References

Acemoglu, D. and Johnson, S. (2005). Unbundling Institutions Daron Acemoglu and Simon Johnson. Journal of Political Economy, 113(5):949–995.

Carpenter, D. M. and Ross, J. K. (2009). Testing O’Connor and Thomas: Does the Use of Eminent Domain Target Poor and Minority Communities? Urban Studies, 46(11):2447– 2461.

Nadler, J. and Diamond, S. S. (2008). Eminent Domain and the Psychology of Property Rights: Proposed Use, Subjective Attachment, and Taker Identity. Journal of Empirical Legal Studies, 5(4):713–749.

O’Connor, J. (2005). KELO V. NEW LONDON (04-108) 545 U.S. 469 (2005).

Team Fix (2016). Transcript of the New Hampshire GOP debate, annotated.

Further reading

Blume, L., Rubinfeld, D., and Shapiro, P. (1984). The Taking of Land: When Should Compensation be Paid? The Quarterly Journal of Economics, 99(1):71–92.

Burrows, P. (1991). Compensation for Compulsory Acquisition. Land Economics, 67(1):49– 63.

Kelly, D. B. (2006). The Public Use Requirement in Eminent Domain Law: A Rationale Based on Secret Purchases and Private Influence. Cornell Law Review, 92:1–66.

Miceli, T. J. and Sirmans, C. (2007). The holdout problem, urban sprawl, and eminent domain. Journal of Housing Economics, 16(3- 4):309–319.

Strange, W. C. (1995). Information, Holdouts, and Land Assembly. Journal of Urban Economics, 38:317–332.