MoT acknowledge changing trends and future funding issues

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.

2014 Briefing to the Incoming Minister - Travel Demand

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.

2014 Briefing to the Incoming Minister - NLTF

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%.

2014 Briefing to the Incoming Minister - Historical Spend

Overall it’s good to finally see some sense starting to come through from the Ministry but the question is, will the government listen?

What Is Happening With Airport Rail?

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:

SMART Scheme Assessment Report

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.

The macroeconomics of transport – and should it influence NZ’s investment priorities?

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).

Features-SMH

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).[1] 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).

MicroEconomics

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).

explicit

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 … ;).

 

 

Help Defend the Flyover Decision

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:

  1. 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.
  2. 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.
  3. 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.

  1. Spread the word.  Circulate this email to anyone who you think would be keen to help.
  2. 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 arch@architecture.org 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/

  1. Join the Architectural Centre.  Information is at: http://architecture.org.nz/memberships/.  More information about us is at: http://architecture.org.nz/
  2. Donate any amount you can.  Our bank account details for internet banking are included on the membership form at: http://architecture.org.nz/memberships/
  3. 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:

Architectural-Centre-Manifesto

MoT and NZTA on Transport in Auckland

Yesterday the government released all of the Briefings to Incoming Ministers. These are briefings from the various government agencies that give an overview of what they do, what they’re working on and of course key issues related to the portfolio. They are developed prior to the election and are intended for which ever political party takes office. Of interest to us are the briefings from the Ministry of Transport (MoT) and the NZTA.

The first thing I noticed about the briefings was just how much more effort agencies are putting in to the design of the briefings themselves. Even compared to just 3 years ago they’ve gone from being fairly simple documents to much more elaborate presentations which perhaps reflects the fact these are starting to be viewed by the public much more. There is a heap of interesting information On to the content itself. Due to the amount of material for this post I’ll just stick to the parts about Auckland.

Both agencies dedicate significant portions of their briefings to Auckland and the challenges the city faces however positively they both make some significant comments and suggestions.

Perhaps the most interesting part of the briefings comes from the NZTA in relation to the City Rail Link (CRL). The NZTA have broken down their briefing into two main sections, the first is about who they are and what they do while the second is about the agency’s area of focus. That second section has been further broken down to The next 3-6 Months and The Next 1-3 Years. In the next 3-6 months section they dedicate one part to the CRL. They say.

Auckland Council and Auckland Transport are continuing to plan, design and acquire property for the City Rail Link. The City Rail Link is now being delivered in two distinct parts.

Phase One is the enabling works to build two rail tunnels between Britomart under Queen Street and the Downtown Shopping Centre, and a ‘cut and cover’ tunnel under Albert Street as far as Wyndham Street. The enabling works are planned for 2016 to 2017 to coincide with the planned redevelopment of the Downtown Shopping Centre by Precinct Properties Ltd. Auckland Council is budgeting between $240 million and $250 million for these works. The aim is to complete the enabling works before the World Masters Games in April 2017. We think this is a sensible sequencing of enabling works which will minimise disruption of critical intersections in the CBD, and enable compliance with the planning conditions that only one intersection can be out of action at any one time. A more compact construction schedule at a later time would prove too disruptive.

Phase Two is the tunnel boring machine and station building stages of the project. This phase could start as early as 2018 and be completed by 2022 at a cost of around $2 billion. Design and procurement decisions for this phase could be taken progressively from 2015/16 onwards, but are dependent on future funding decisions and commitments.

The Crown is not currently an active partner in the City Rail Link project implementation. The government has signalled it will only consider being a funding partner to enable a construction start in 2020, or possibly earlier if certain patronage or other targets are achieved. The risk of not being involved in these early stages is that the key elements of the project get determined in the meantime. If the Crown is to be a future funding partner it needs a mechanism to identify options and risks around planning, design, procurement and financing.

We have experience in complex infrastructure projects of the scale of the City Rail Link. One mechanism to help manage Crown risk could be for the Transport Agency to become a technical partner with Auckland Transport in developing the City Rail Link. This would be consistent with the one transport system arrangements that have been forged with Auckland Transport and Auckland Council over the last 3-4 years.

There’s a couple of very clear points the NZTA are making. Firstly they agree on the timing for the early works which will see the tunnel built from Britomart to Wyndham St and secondly they clearly want to be more involved in the project. I think this would be a big positive because as they mention they have a lot of experience in building large infrastructure projects and that is likely to be very useful to the teams designing and building the project.

The suggestion of the larger Phase Two starting in 2018 is an interesting one. I’ve heard suggestions that even if the government agreed to fund the project tomorrow there’s so much work ahead with all of the design that still needs to happen that any construction is still years away. 2018 is also conveniently between the date that the council/AT want and what the government want. A compromise solution of 2018 seems like a fairly realistic trade off and with the early enabling works already complete would see the project opened only 1-2 years after the council has planned for.

Overall it’s fantastic the NZTA have taken this position and it’s in quite stark contrast to the briefing from the MoT which hardly mentions the project.

The NZTA in a separate section about Auckland go on to say: (emphasis mine).

Auckland city centre faces growth challenges and changing travel patterns unlike any other New Zealand location. Even with the City Rail Link (irrespective of its timing), providing for and managing growth will require a step-change in bus infrastructure and operations. We are working with Auckland Transport to guide and review the business cases for proposed investments to meet these challenges.

The Auckland Plan sets out the direction for land use and transport planning over the next 30 years. The strategic direction for transport in the Auckland Plan is to “create better connections and accessibility within Auckland, across New Zealand and to the world.” The direction of transport strategy in the Auckland Plan could be generally described as an increasing focus on public transport and active modes from the past, but also includes significant investment in new roads, particularly in the large areas of greenfield land to be urbanised. This proposed strategy has been criticised by some as it acknowledges that despite the proposed sixty billion dollar transport investment congestion is still as bad in 30 years’ time. However this fails to recognise the significant growth over this period and that a network free of congestion is not an appropriate goal. While severe congestion is undesirable, the focus needs to be on supporting economic growth and productivity through provision of better access to markets, employment and business areas.

Transport investment in the short to medium term is focused on increasing the capacity of the road network, completing key links as well as improved management of the network to maximise capacity and efficiency for the movement of people and freight. Increasingly as Auckland continues to grow, and in line with international experience in large cities, a greater emphasis and investment is needed on public transport, active modes and demand management.

The Transport Agency considers the strategic direction for transport outlined in the Auckland Plan is basically sound and that the focus needs to be on sustained delivery while continuing to refine the strategy over time

Over to the MoT and there are a few things I noticed strongly in the MoTs discussions on Auckland. One is that they are quite concerned about the implication funding projects in Auckland will have on the rest of the nation. They are very concerned that by funding projects in Auckland that people in other regions will demand more investment too. In addition they still like to try and belittle both the city centre and the impact that PT has on travel.

2014 Briefing to the Incoming Minister - Auckland Future

2014 Briefing to the Incoming Minister - Auckland Future 2

 

 

There is one glimmer of hope though.

Different regions have different transport demands. This can create tensions under a national funding system. For example:

  • Auckland has at times suffered from relatively low per-capita investment in transport infrastructure and will face increasing congestion in the future as a result of strong population growth. The ‘golden triangle’ region of Auckland, Hamilton and Tauranga is expected to experience significant growth over the next 30 years, and there is a strong argument that good transport links in this part of the country will deliver the best returns for New Zealand overall.
  • Many small regional centres have stagnating or declining economies, with some experiencing population decline. Some of these regions are already struggling to maintain their transport services and infrastructure with increasing maintenance costs and fewer rate-payers to fund them. However, it is often argued that transport can stimulate regional economic growth, and that stronger regions will help to alleviate pressure on our major cities.

The high cost of addressing congestion in cities, increasing demand for public transport alternatives, and a perception that big cities are taking more than their fair share will result in escalating pressure on the national funding allocation system. In addition, we have a large investment in transport infrastructure (the roading network) that can be underutilised for much of the day. Building the network to meet ‘peak’ demand is neither sensible or feasible.

So in the same document we have the NZTA saying they want to be involved in the CRL longer term and that greater emphasis on PT is needed while in the other document we have the MoT saying that building a network just for the peak isn’t sensible or feasible. Next they’ll be telling us that people are travelling less (that’s tomorrow instalment).

A delay to the CRL?

The Herald reported yesterday that an increasing number of councillors are thinking of voting to delay the City Rail Link to 2020.

The $2.4 billion City Rail Link could be deferred until 2020 because of mounting concerns by councillors about its impact on rates, debt and big cuts to community services.

A number of councillors are having second thoughts about an early start on the rail project and support deferring work until the Government comes on board with funding in 2020.

Auckland Mayor Len Brown has locked $2.2 billion into a new 10-year budget to begin work on the 3.5km underground rail link in 2016 and completed by 2021.

On Wednesday, all 20 councillors and the mayor will debate the budget and make decisions on the rail project for public consultation.

The issue stems from the fact local boards and the council have promised a huge number of projects over the years, many of which originated in pre supercity days. Cuts and deferrals to some of these projects combined with efficiency savings as a result of having a single council had already brought projected rate increases down to around 4.9%. To take things further Len Brown’s plan for rates was to limit rates rises at 2.5% to 3.5%. It doesn’t take a rocket scientist to work out that if you have a programme of spending that requires a 4.9% rates increase but you limit the increase at 2.5 to 3.5% that you will have to cut some projects somewhere. For transport those cuts mean a very reduced transport spend and the tables below show the extent of a 30 year transport programme (not including state highways) with that limited rates increase.

committed-projects

 

basic-network-projects

On top of that there were many cuts to other areas of the council’s budgets including a lot of funding for local board projects, something which angered most, if not all of the local boards.

That has contributed to some councillors now supporting delaying the CRL.

Labour councillor Ross Clow was the first centre-left councillor to break ranks with Mr Brown last Thursday on the flagship rail link and call for it to be deferred until the National Government’s 2020 start date.

He said the budget was gutting suburban areas such as Avondale, which had been waiting 30 years for a new town centre, in favour of “pet projects” like the City Rail Link.

“Mr Mayor you have been up there twice in the last few months telling them they are going to get this and that, yet your proposal has absolutely nothing in the budget,” said Mr Clow.

Albany councillor John Watson is another pro-link councillor having second thoughts.

Circumstances had changed dramatically with huge cuts to community services and projects, he said, citing a $20 million project to widen Whangaparaoa Rd.

“Nothing has been signalled on the horizon and that’s totally unacceptable,” Mr Watson said.

On the side of delaying the CRL there seem to be two general groups, the haters and the opportunists.

The haters are those who primarily for ideological reasons either don’t like Len and/or don’t like the CRL/rail. This group includes the likes of Cameron Brewer, Dick Quax and George Wood. Those in this group are unlikely to ever support the CRL although if they’re still around when it opens I’m sure they will happily take some of the credit for its success.

More of a concern are the opportunists who have arisen primarily due to the funding discussions. Some of them look at the cost if the CRL and mistakenly think that by deferring it, it will suddenly mean a heap of money will be available that they can use to fund projects in their local area. Alternatively some know the importance of the CRL and are trying to use it as leverage to get concessions out of the mayor, again for local projects. In many ways this is one of the big issues with having all councillors elected from wards rather than having some elected at large like the Royal Commission on Auckland Governance suggested. I’m aware some have taken this stance in the hope that it will put pressure on the government to stump up with funding but if anything it will do the opposite. Effectively what these councillors are doing is using the CRL to play a game of chicken with an oncoming train.

The whole situation has shades of Robbies Rail to it. Back in the 1970’s mayor Sir Dove Myer Robinson’s plans for a regional rail system were cancelled by the government after support for it was undermined by similar parochial local body politicians and planners.

I part I think some of the issue with this comes from the poor job Auckland Transport have done in really explaining the region wide benefits the CRL provides. That there are councillors and local board members who have a rail line passing through their area opposing the project because they think there are no benefits to their communities is a testimony to the fact it hasn’t been explained well enough. Perhaps a fresh set of eyes is needed to look at how the project is communicated to both the politicians and the public. The video below is probably the best effort AT have made with their comms but it relies on people actually watching it fully to get any info.

Before people get too concerned there are a couple of important things to note. The Herald note that most of the group that supports deferring the CRL do support work on the first section which will be tied in with the redevelopment of the Downtown Mall. That will see the tunnel dug from Britomart to as far as Wyndham St and is crucial if many of the other Downtown projects are to go ahead. By the time we’re getting towards needing to get started on the remainder of the tunnel – likely around 2016/17 – we will have had another 2-3 years of strong patronage growth on the back of the current tranche of PT projects and as the pressure mounts on transport capacity it is likely to leave little choice for both the council and government but to invest in the CRL.

The second thing to note is that by delaying the CRL it won’t actually free up money to build the local projects these councillors are hoping for. While debt will be needed to fund construction the council capitalise the interest until the project is complete and the region starts benefiting from the investment (those interest costs are already built into the overall project cost). What that means is there is no impact on council finances until the projects opens which isn’t likely to be till 2021/22.

 

While the project will definitely go ahead at some point in time a speed bump imposed by local politicians is far from ideal. I would suggest that it would be a good idea to email all councillors expressing your support for the project to go ahead and be open by 2021/22 along with the regional benefits it provides. It doesn’t have to be a big email and rather than provide a template it’s best if it comes from you in your own words.

Want lower rates? Cut back on urban sprawl

Suburban sprawl is a radical, government-led re-engineering of society, one that artificially inverted millennia of accumulated wisdom and practice in building human habitats. Charles Marohn

In the recent article The Conservative Case Against the Suburbs Charles Marohn (@StrongTowns) takes on the awkward relationship between conservative Americans and cities. He questions why conservatives not only perpetuate myths around the suburban experiment but also cede urban issues to the left. Like Peter’s post on Monday this The American Conservative piece is a response to geographer Joel Kotkin’s love letter to the suburbs in Why Suburbia Irks Some Conservatives.

Marohn cites the federal largess of central government programs- the FHA, Fannie and Freddie and the interstate highway system – all of which have underwritten and subsidised the smudging of cities over the landscape.

The sad reality is that, despite the marketing, the suburbs were never about creating household wealth; they were about creating growth on the cheap. They were born under a Keynesian regime that  counted growth from government spending as equivalent to that coming from private investment. Aggressive horizontal expansion of our cities allowed us to consistently hit federal GDP and unemployment targets with little sophistication and few difficult choices.

That we were pawning off the enormous long-term liabilities for serving and maintaining all of these widely dispersed systems onto local taxpayers–after plying municipalities with all the subsidies, pork spending, and ribbon cuttings needed to make it happen–didn’t seem to enter our collective consciousness. When all those miles of frontage roads, sewer and water pipes, and sidewalks fall into disrepair–as they inevitably will in every suburb–very little of it will be fixed. The wealth necessary to do so just isn’t there.

He also questions why conservatives tend to entrench the notion of an urban left and a rural right when cities could benefit from a closer look at inefficient market distortions.

These are places that have been abandoned to the left for decades. Many urban dwellers are hungry for better government. They want a more responsive bureaucracy. They favor unwinding many of the stifling regulations and perverse subsidies that have built up over the years. They are angry with the political patronage systems run by a governing class that has been unchallenged for decades. Why would conservatives cede this ground so easily?

Strongtowns has been covering a wide range of transport and urban issues over the last several years including some highly critical pieces on the traffic engineering profession, transportation economics, and street design. During that time I never considered their work to be following a particular left/right political paradigm.

I’ve written a few things inspired by the Strongtowns aproach.  Below is a diagram calculating the property value of various land development types (land value+capital value)/area. Note how poorly suburban/horizontal/car-based typologies perform compared to traditional land developments (see for example the Onehunga Mall property). This is how the ponzi scheme of suburban car-oriented development pencils out. Atlantic Cities wrote a great piece calling this “the simple math that can save cities from bankruptcy” which describes the thought process:

We tend to compare buildings to each other, without looking at their unit value. This would be like comparing the fuel economy of the tank of a Ford F-150 to the tank of a Prius. We don’t shop for vehicles that way, because that makes no sense. We look at miles-per-gallon, not miles-per-tank, because tanks come in all different sizes. We should look at buildings, Minicozzi argues, the exact same way.

In a country where many people derive income come from land productivity, it seems that this approach would resonate. But maybe not. One  example is Westfield (malls) pleading in the Unitary Plan hearings to maintain minimum parking regulations.

Parking minimums, set at reasonable and appropriate levels, are essential to ensure that sufficient parking is provided for identified activities and localities.

Such regulation, requiring spatially inefficient development, ensures that the return on public investment – roads, pipes, footpaths – remains very low.

Property value - location and form

Property value – location and form

Here’s another example. This 3D graphic illustrates property values (land value+capital value/area) not height. The new, modest, 4-story apartment block (Ockham Building) has 13 times the property value as it’s neighbours (mostly one-story stand alone homes). This property value also translates to rates which for the most part fund ongoing road maintenance but also city services like community pools, libraries and berm mowing.

occam

Doing the math – property value premium of infill intensification

This above image was cross posted to Facebook and someone (I assume) with a “conservative” disposition said:

It probably generates more than 13 times the cost involved to provide additional council services – plus additional congestion costs!

Lets take this comment at face value. Here is a project that has few car parks, is located on a frequent bus line, next to rail station, and within cycling (if not walking distance) from the largest concentration of jobs in the city. This part of town has a very active mode share and the shortest journeys to work averages (0-6km). Worrying about congestion in this context is a failure to understand the spatial implications of congestion mitigation (see image 1 above) or a very optimistic expectation about vehicle travel time contributing to economic productivity.

As far as the additional council services – I don’t know the specific impacts that 20 additional households has on existing schools or the pipes under the street, but a recent Council study has determined that attached dwellings are only 60-80% as costly to serve. (link)

Overall it seems very likely that 20 households in an existing neighbourhood close to the city centre in the space of 20 meters is much more cost effective than serving the same across 200m in a greenfield scenario. And it seems reasonable, and even fiscally responsible, that someone should do this math.

The case for free-market urbanism

In the National Review, a conservative American magazine, Reihan Salam takes a look at the confused state of the American debate over intensification. His article, entitled “The Great Suburbia Debate” criticises the position taken by Joel Kotkin, a long-time campaigner for low-density suburban development. He writes:

Though I’m an admirer of Kotkin, and though I can’t speak for every conservative who has made the case for denser development, he gets a number of important things wrong…

For example, Kotkin claims that “some conservatives” (again, no names) have been “lured by their own class prejudice” into turning against market forces. “In reality,” Kotkin writes, “imposing Draconian planning is not even necessary for the growth of density.” Of course, this is exactly the argument that Edward Glaeser makes in The Triumph of the City, a manifesto for the pro-market, pro-density right. “In places that have both liberal planning regimes and economic growth, such as Houston and Dallas,” he observes, “there has been a more rapid increase in multifamily housing than in cities such as Boston, Los Angeles, San Francisco or New York.” Indeed, this is why many conservatives, myself included, have explicitly argued that cities like New York, San Francisco, and Los Angeles should look to the liberal planning regimes of Houston and Dallas as a model. (To be clear, by “liberal” planning regimes, Kotkin means less-restrictive, more market-oriented planning regimes, and so do I.)

The global cities that manage to be both highly productive and affordable, like Tokyo and Toronto, tend to have liberal planning regimes, which allow for rapid growth of housing stock, and in particular of the multifamily housing stock. These regions are characterized by rapid housing development in the suburbs and in the urban core, and their “suburbs” tend to be more urban than low-density suburbs in the U.S. governed by stringent planning regimes that tightly restrict multifamily development. When Glaeser makes the case for density, he does so not by calling for “imposing draconian planning” on cities and towns. Rather, he explicitly calls for the relaxation of land-use regulation.

[...]

Kotkin relies heavily on the work of Wendell Cox, a transportation consultant who seems to believe that denser development is necessarily a product of central planning. In desirable regions, however, less restrictive planning regimes will naturally lead to higher densities, as property owners will naturally seek to maximize the value of their investments. Restrictive land-use regulations tend to limit density, not impose it on unwilling landowners.

Salam’s article is excellent and I recommend reading it in full. I pulled out these excerpts as they highlight a few essential facts that often go missing from the debate over urban policy:

  • Denser development cannot be imposed by fiat – it will happen if and only if there is market demand for it (as there often is in places that are accessible to jobs and amenities). If nobody wants to buy apartments, then no apartments will get built!
  • Urban planners can’t simply require people to build at higher densities – but they can limit density to below what the market wants.
  • The rising demand for higher density development isn’t a market distortion, but evidence that the market is working.
MERCHANT Q

The market’s been at work in New Lynn (see also: Transportblog’s development tracker)

In short, we must interpret rising population densities as the result of many individual decisions rather than the whim of an urban planner. My research shows that population densities are rising rapidly in Auckland and several other large NZ cities, which suggests that we’re voting heavily for density with our feet and our wallets. This is, as Salam suggests, a natural outcome of market forces and should be accepted with equanimity. We should recognise this demand where it exists and make complementary public investments in walking and cycling facilities and public transport.

Lastly, I’d note that people from all across the political spectrum should be able to appreciate cities. As Jane Jacobs observed in The Death and Life of Great American Cities, a good urban neighbourhood demonstrates many of the virtues that conservatives celebrate, such as small business ownership, a close-knit community that watches out for itself, and independent-minded civil society (often battling against big government bureaucracy in the form of overreaching traffic engineers).

Jane Jacobs campaigned against this Pharaonic act of bureaucratic hubris (Source)

Jane Jacobs campaigned against this Pharaonic act of bureaucratic hubris (Source)

As a result, we often see centre-right mayors implementing good urban policies. Big-city mayors such as New York’s Michael Bloomberg, London’s Boris Johnson, and Buenos Aires’ Mauricio Macri have been right at the forefront of the movement for better cities. They’ve realised that better cities are more prosperous, and that it’s possible to improve a city by improving the choices available to people.

An Auckland Urban Redevelopment Agency?

Details are starting to emerge from the Council’s review of its Council Controlled Organisations (CCOs) to see if any changes need to be made to them. The CCOs were set up in 2010 by the government as part of the super city changes to manage many of the council’s functions. The CCOs are:

  • Auckland Council Investments Limited
  • Auckland Council Property Limited
  • Auckland Tourism, Events and Economic Development Limited
  • Auckland Transport
  • Auckland Waterfront Development Agency Limited (Waterfront Auckland)
  • Regional Facilities Auckland
  • Watercare Services Limited

We’re not likely to see many changes to Auckland Transport or Watercare as their existence is enshrined in legislation however the other CCOs are not.

One change I’ve long liked the idea of is to merge Waterfront Auckland and Auckland Council Property Limited (ACPL) to create a region wide urban development agency. Waterfront Auckland has been the driver behind the spectacular and internationally award winning redevelopment of the Wynyard Quarter while ACPL manages almost 1200 properties around the region worth over $1 billion. They say part of their role is to facilitate development that supports the council’s broader place shaping and housing development objectives however on the surface it doesn’t appear that much has happened in this regard. A combined agency that is able to harness some of the knowledge and skills that Waterfront Auckland have built up and leverage that across the region would be extremely useful.

Wynyard Central

Density done well coming to Wynyard

I know many others who have expressed this view too and it appears this might be exactly what will happen.

The Auckland Council is considering merging its waterfront agency and property company as it focuses on how to improve run down main streets.

The new development agency is the biggest change being considered in a year-long review of council-controlled organisations, which has so far continued behind closed doors.

Council chief executive Stephen Town has provided a glimpse into the review, which will run for a further month.

Mr Town said the council had looked at similar re-generation agencies in Australia, which put existing council property into joint ventures, with the private sector or government.

“In some parts of Auckland we’ve got very large land holdings clustered in town centres,” he said.

“It’s not inconceivable to see $500 million to $1.5 billion developments occurring over 10 years.”

The council is loathe to name possible redevelopment centres at this stage. However there are obvious candidates.

On the same day as the council unveiled the agency proposal, members of Avondale Community Action appealed to the Auckland Development Committee to re-vitalise their neglected town centre.

Avondale includes vacant private sites in the middle of the town centre, run down council-owned facilities, and Housing New Zealand property ripe for redevelopment. Other long-established centres in decline include Mt Albert, Otahuhu and Papatoetoe.

Mr Town said the work though could begin in earnest before then, under existing council structures. He said the development agency would likely begin life inheriting a portfolio of surplus council property, but would be expected to enhance council finances, rather than be a burden on them.

If an Urban Development Agency is formed, it is expected to result in cuts to management within the existing Waterfront Agency, and Auckland Council Properties Limited. That has yet to be explored.

If it goes ahead the biggest risk is what kind of culture comes through and that will likely be determined by how the merger occurs. In my view it would be better to put the property acquisition and management experience into the Waterfront Auckland structure rather than to put the urban design, planning and development experience into the ACPL structure.

Overall a well run urban redevelopment agency would be a huge asset to the council that would enable some of the visions highlighted in the Auckland Plan to become a reality.

Wynyard Quarter Residential 1

 

The Great Auckland Transit Revival: Theory and Practice

Einstein

2011 saw the release of a study led by Ian Wallis Associates into Auckland’s public transport performance. It is a sober and restrained report that simply sets out to describe the performance of Auckland’s PT systems on comparative terms with a range of not dissimilar cities around the region. A very useful exercise, because while no two cities are identical, all cities face similar tradeoffs and pressures and much can be learned by studying the successes and failures of other places. The whole document is here.

The cities selected for the study are all in anglophone nations around the Pacific from Australia, the US, Canada, and New Zealand, with Auckland right in the middle in terms of size. And as summarised by Mathew Dearnaley in the Herald at the time, it showed Auckland to be the dunce of the class by pretty much every metric. Although the article is called Auckland in last place for public transport use it’s clear that the headline it would have reflected the report’s findings more accurately if the paper had simply said; Auckland in last place for public transport. Because it showed that the low uptake of public transport in Auckland cannot be separated from the low quality, slow, infrequent, and expensive services available.

Here’s the uptake overview:

Comparator cities

So it’s clear that population alone is no determinant of PT uptake. If it isn’t the size of the city what is it? Various people have their pet theories, some like to claim various unfixable emotional factors are at work, like our apparently ‘car-loving’ culture, though is it credible that we have a more intense passion for cars than Americans or Australians? The homes of Bathurst and the Indy 500? Others claim that the geography of this quite long and harbour constrained city somehow suits road building and driving over bus, train, and ferry use. A quixotic claim especially when compared to the flat and sprawling cities of the American West which much more easily allow space for both wide roads and endless dispersal in every direction. Another popular claim is that Auckland isn’t dense enough to support much Transit use. Yet it is considerably denser than all but the biggest cities on the list.

So what does the study say is the reason for Auckland’s outlying performance?

It considers service quantity [PT kms per capita], quality [including speed, reliability, comfort, safety, etc] and cost both for the passenger and society, and easy of use [payment systems]. Along with other issues such as mode interoperability, and land-use/transit integration. And all at considerable depth. The report found that Auckland’s PT services are poor, often with the very worst performance by all of these factors and this is the main driver of our low uptake.

And happily some of the things that stand out in the report are well on the way to being addressed. Here, for example is what it says about fares:

Fares and ticketting Benchmark Study

The HOP card is no doubt a huge improvement and has enabled some fare cost improvement. And we can expect more to be done in this area soon, we are told, especially for off peak fares. Additionally the integration of fares is still to come [zone charging].

Here’s what it says about service quantity and quality:

Service qual. Benchmark Study

Oh dear.

Yet there is one thing that the report returns to on a number of occasions that perhaps best captures what’s wrong with Auckland, and offers a fast track to improvement. And, even at this early stage, gives us a way of checking the theory against results in the real world:

Rapid Transit benchmark study

Right, so perhaps the biggest problem with Auckland’s PT system is simply the lack of enough true Rapid Transit routes and services. To qualify as true Rapid Transit it is generally accepted that along with the definition above, a separate right of way, the services must also offer a ‘turn up and go’ frequency, at least at the busiest sections of the lines. And that this is generally considered to mean a service at least every ten minutes, but ideally even more frequent than that.

In Auckland we only have the Rail Network and the Northern Busway that qualify as using separate right of ways, and the busway for only 41% of its route. At least the frequencies on the Busway are often very high, where as on the Rail Network they only make it to ten minute frequencies for the busiest few hours of the day. So to say that Auckland has any real high quality Rapid Transit services even now is a bit of a stretch. However these services have been improving in the three years since the report was released, and will continue to do so in the near future with the roll out of the new trains and higher frequencies on the Rail Network, and more Bus lanes on the North Shore routes especially at the city end of their runs.

Here is a map with a fairly generous description of our current or at least improving Rapid Transit Network:

CFN 2015

Even though it is only three years since the report was released, and there is much more to come, there have been improvements, so we can ask; how have the public responded to the improvements to date?

Below are the latest Ridership numbers from Auckland Transport, for August 2014:

August 2014 Ridership

SOI: Statement Of Intent, AT’s expectations or hopes. NEX: Northern Express.

So the chart above, showing our most ‘Rapid’ services, Rail and the NEX, are clearly attracting more and more users out of all proportion with the rest, and way above Auckland Transport’s expectations or hopes as expressed by the SOI, is a pretty good indication that both the report authors were right, Auckland is crying out for more Rapid Transit services and routes, and, at least in this case, Einstein was wrong: Practice does indeed seem to be baring out the Theory.

And from here we can clearly expect this rise in uptake to continue, if not actually increase, as the few Rapid Transit routes we have now are going to continue to get service improvements. And 19% increases, if sustained, amount to a doubling in only four years! Rail ridership was around 10 million a year ago, so it could be approaching 20 mil by mid 2017, if this rate of growth is sustained.

But this also means we can clearly expect any well planned investment in extensions to the Rail Network [eg CRL] or additional busways [eg North Western] to also be rewarded with over the odds increases in use. Aucklanders love quality, and give them high quality PT and they will use it.

Furthermore, given that these numbers are in response to only partial improvements even extending on-street bus lanes for regular bus services looks highly likely to be meet with accelerated ridership growth. I think it is pretty clear that Auckland Transport, NZTA, MoT, and Auckland Council can be confident that any substantive quality, frequency, and right-of-way improvement to PT in Auckland will be rewarded with uptake.

Given that Auckland’s PT use is advancing ahead of population growth [unlike the driving stats] I believe we have already improved that poor number up top to 47 trips per person per year. So there’s still plenty of room for growth even to catch up with the next city on the list. So perhaps it’s time to formally update that report too?

Imagine just how well a full city wide network of Rapid Transit would be used? Clearly Auckland is ready for it:

CFN 2030 South-Grafton