The report makes only brief mention of what will likely be the biggest issue for transport going forward, funding. We have already seen the NZTA have to do a deal with the Auckland Council to help [...]]]> This carries on from my first post about the briefing from the Ministry of Transport to the incoming ministers.

The report makes only brief mention of what will likely be the biggest issue for transport going forward, funding. We have already seen the NZTA have to do a deal with the Auckland Council to help cover some of their funding shortfall but the next graph shows that we will only be able to cover the planned expenditure with a ‘high growth’ scenario.

Figure 18 shows projected NLTF revenue and investment projections to 2030.
Under ‘median’ and ‘high growth’ revenue scenarios, the revenue raised will be able to fund projected investments. Our modelling predicts that high oil prices and lower GDP growth could reduce revenue to the point that it is insufficient to meet current projected expenditure. However, higher oil prices would also reduce the demand for road travel and expenditure on roading, and increase the demand for public transport

NOTES:
1. High oil price scenario is based on the Ministry of Economic Development’s oil price reference scenario (US$ 115 per barrel in 2009$ by 2030) with appropriate fleet replacement adjustment.
2. Low GDP growth scenario assumes annual GDP growth is 1 percent lower than current GDP growth path.
3. High GDP growth scenario assumes annual GDP growth is 1 percent higher than current GDP growth path.
4. The large increase in NLTF revenue observed since 2008 is due to 100 percent hypothecation of NLTF (effective from September 2008).
5. Expenditure projections from 2011–12 to 2021–22 are sourced from Government Policy Statement (2009 and 2011 versions). Thereafter, a $100 million increment per year has been assumed.

 A ‘high oil price’ scenario would erode FED revenue with the gap between revenue and currently forecasted expenditure increasing rapidly after 2020 — under this scenario, revenue would be $4.9 billion less than forecast expenditure over the periods from 2021 to 2030. This scenario is in the nature of a risk rather than a certainty

I don’t know about others but to me it seems like they are playing a game of chicken with oil prices, this might help to explain the sudden rush we are seeing with low value projects and many of the RoNS. I think this will be an area of increasing concern and one that we will need to keep an eye on closely.

One area that is made pretty clear is that there is going to need to be a lot of continued focus on Auckland (and it’s surrounding areas) in the future due to the amount of population growth that is expected. Auckland is expected to take about 60% of the national population growth while the Waikato and BOP regions will also get bigger. This is best shown in the form of graphs and these two from the document help to highlight the change we will see over the next 20 years.

This kind of population growth will put a lot of pressure on Auckland’s transport system, as we are already seeing many of the easy/low cost projects have already been completed which means that to dramatically expand capacity things start getting very expensive regardless of the mode i.e. in the billions of dollars. The MOT picks up on this a little bit: (note – when they say to urban transport it appears they are just referring to all forms of transport in urban areas)

61. Because the majority of New Zealand’s growth will be in urban areas over the next 20 years (primarily in Auckland) urban transport networks will play an increasing role. This means they will need to become more effective through better use of infrastructure, urban planning, and demand management tools.

There is also a bit of paranoia starting to creep into the report, in this case a paranoia about rail, the high level comment in the section titled Investment in Roads says:

Roads are critical to the efficiency of urban centres, with private motor vehicles and buses providing transport modes for most people. This importance will continue.

Rail’s role is supplementary. It provides commuter rail travel in Wellington and Auckland and reduces road congestion.

Rail provides about 15 percent of freight movements. This share is expected to remain about the same through to 2031.

In Auckland, commuter rail travel will account for about 4 percent of peak commuter trips in 2041 compared to less than 2 percent now

So for a comment about investment in roads we get absolutely nothing about the governments investments in the RoNS yet we get 3/4 of the comments about rail. This paranoia is something that gets repeated in other parts of the report, especially the last comment about the percentage of trips.

Carrying on with the report we get to the usual traffic growth predictions that suggest unending growth in traffic volumes despite both local and international evidence showing that is not the case, even the graphs they present show this yet they seem to expect the valve will keep being opened further, this also related directly to the amount of money that will flow into the NLTF. One thing I noticed is they also show a high growth path but never show a low one which could quite possibly happen with the way the world economy is struggling along at present.

The last area I will touch on are the comments related to Auckland. As mentioned earlier the shear amount of growth that is expected to happen in the region will add considerable pressure to transport networks that has the potential to soak up large amounts of central government transport funding. They suggest that there is a $10 to $15 billion funding gap and once again we see the rail paranoia come back as in relation to the transport projects outlined in the Auckland plan we get:

The draft Plan emphasises a shift to public transport to accommodate future trip growth and reduce congestion. It proposes over $5 billion of new rail capital spending to support this goal. The proposed spending on rail is part of an ambitious capital plan which proposes some $22 billion of new capital spending on major Auckland transport projects, predominantly roading related projects, over the next 30 years. The draft Plan canvases new funding mechanisms, with an emphasis on a road pricing scheme, to fund this programme.

So $5b or slightly over 20% of the planned funding is in rail yet that is considered ambitious while around $17b, planned mostly for roads isn’t. You would think that culling a few excessive roading projects would be recommended however slightly later directly responding to the draft plan we get:

The draft Plan does not address forecast congestion on the State highway network
Much of the forecast congestion occurs on the State highway network. The draft Plan has a heavy focus on public transport, which will reduce pressure on the State highways. However, the draft Plan does not
propose significant new highway capacity (with the exception of the proposed additional Waitemata Harbour Crossing and a possible new connection between the southern and southwestern motorways).

Those two projects alone will cost around $7b which is more than the suggested rail improvements and yet they say there isn’t enough focus on the state highway network. The MOT have also claimed that many of the projects in the draft plan “may provide limited value for money” which is odd considering that many of them haven’t even been assessed in great detail yet. Out of step with most of the report which tends to avoid making specific suggestions they have given an idea of some measures that could be taken to make better use of existing roads.

(a) improvements to traffic light timing and control
(b) variable lane markings and signals
(c) high occupancy vehicle lanes to increase the passenger capacity of bus lanes

This basically equates to “lets give cars more space”, especially the last one which is just a fancier way of saying that we should allow cars in bus lanes (also worth noting that this is the only time in the main part of the document that the word ‘bus’ is used). In the end the MOT’s recommendation on Auckland seems to be to do nothing as they say that there will be a little bit of breathing space after the current group of projects finishes before the next major round of projects needs to be decided upon. My feeling though is that in two years time when the EMU’s start rolling we will start to see some really major jumps in rail and other PT use (from feeder buses etc.) and that the window the MOT thinks it has will actually be quite small.

The first briefing gives [...]]]> The government has released the briefings ministers received from their ministries and of course this blog is fairly interested in what the transport ministry has to say. The briefing has been split into two sections, one giving an overview of the portfolio and the other the policy challenges and upcoming decisions.

The first briefing gives a fairly high level description of what the portfolio is about, what the ministry does and what powers the minister has. It also goes through the various law and rule changes that have happened recently and the levels of funding that the ministry/portfolio is involved in. Overall there isn’t really anything new in here but that is what I would expect to see.

The second briefing on the policy challenges and upcoming decisions is much more interesting as it gives a good indication on the ministries thoughts which are what are likely to heavily influence the minister. The first section that really caught my eye was the section on oil prices on page 17. It seems that there is a bit of confusion in the message they want to deliver, first up there is a sort of high level comment about oil prices saying:

Almost all road transport is fuelled by petroleum products. This fuel source will persist over the next 20 years, but electric and plug-in hybrid vehicles will gradually become more widely used, as the real price of oil continues to increase. However, petrol and diesel will probably still fuel around 85-90 percent of vehicles in 2030.

In the short-term, people resist changing transport usage as costs increase. However,over longer time periods, oil price increases are more likely to induce changes in travel, lifestyle, and locational decisions.

but later on the same page they say

New Zealanders have a range of preferences for how they arrange work, shopping, socialising, and participation in education. These lifestyle preferences usually require travel. In the short term, individuals are reluctant to  make lifestyle changes when the cost of transport increases. However, sustained oil price increases are more likely to induce change in travel patterns over longer periods:
• In the medium term (say 2–5 years), people can purchase more fuel efficient vehicles and make greater use of public transport, cycling and walking, where those choices are feasible.
• In the longer term (5–20 years), people will be more willing to make substantive and permanent changes to lifestyles in order to reduce their transport demand. For example changing patterns of social interaction, and living closer to places of employment and education.

So in 20 years time with high oil prices most vehicles will still be powered by oil based fuels but at the same time now where near as many will be driving them as most people would have made large changes to their lives to reduce their demand for transport or at least oil fuelled transport (but more on that soon).

The next thing that caught my eye was in the section on Land Transport starting at page 20. In the very first comment they say:

It will be increasingly important to manage the existing land transport network to its full potential.

There are wider economic impacts that cannot easily be estimated and considered in the traditional benefit cost ratio (BCR) evaluation framework. The current BCR assessment is based on a relatively high discount rate (8 percent real) and a 30-year horizon. This rate tends to discount away the benefits of long-life projects, such as motorways.

In the cities, cars remain the dominant means of people transport. Urban transport networks will need to become more effective through better use of infrastructure, urban planning, demand management tools and public transport increasing its role.

They acknowledge that we need to move away from the traditional BCR framework but this is exactly the thing they slammed the CRL business case for, it has also noted here in the past about just how much impact having a high discount rate and relatively short assessment time frame has on the outcomes of projects.

Continuing to work my way through the document I really had to have a chuckle at these two comments:

55. New investment in State highways is evaluated by the NZ Transport Agency (NZTA) using three criteria.

(a) Strategic fit which considers national strategic objectives as specified in the Government Policy Statement on Land Transport (GPS)

(b) Effectiveness which considers how well proposed activity would achieve the GPS impacts identified in strategic fit

(c)  Efficiency which measures the BCRs

57. The major highway projects tend to score well on strategic fit. The BCRs for major improvements to the network have declined in recent years.

Basically that means the government tells the NZTA what projects it want and if the NZTA goes to do them then they can tick off two of the three assessment boxes which means that economic considerations get largely pushed out of the way and that is evidenced in the last part of comment 57. In just 5 years we have gone from have over half of all approved projects having high BCR’s to over half of them having low BCR’s. That’s an astounding change in such a short time considering there are a large number of projects out there that haven’t even been approved yet, things like Puhoi to Wellsford or the group of projects in Wellington.

The last thing I will cover in this post is showing just how much our transport expenditure has changed over time, as you can see spending has really ramped up in the last few years and in the space of about 5 years we have more than doubled how much we spend as a percentage of GDP. Of note the transport and storage sector accounts for around 5.2% of all of our GDP

There is quite a bit more to cover, especially the parts that relate to Auckland but I will leave that for the next post

The first is about the future of the Port including its impact on the city. Great to see a [...]]]> Two interesting articles in the Herald this morning. Both a refreshing change from the largely silly and scaremongering level of the debate about Auckland’s future in that publication and other parts of the mainstream media recently. 

The first is about the future of the Port including its impact on the city. Great to see a private logistics company stating the obvious about the port:

Mainfreight boss Don Braid says better rail and use of an inland port should restrict the need to reclaim more of the Waitemata Harbour.

Mr Braid, the Herald Business Leader of the Year for 2011, is unconvinced by the case from the board and management of Ports of Auckland on the need to fill in more of the harbour.

And

Mr Braid said he was frustrated at how reliant the port was on moving containers by truck and the lack of rail.

“If you are running an efficient port with an efficient transport network feeding it in and out, then you have a very good chance of being able to use the inland port to help with the overflow and restrict the additional land the port might well need.”

Very hard to see this as anything other than good sense and good business. Land in South Auckland has got to be way cheaper than trying to make the stuff out in the harbour. And there clearly is more capacity on the rail line, although the future amplification of the Eastern Line must be protected, especially as passenger demand on the AK network is showing no sign of halting its dramatic climb.

Also he makes the second obvious point that a level of proper government led strategic control needs to be exercised over this whole industry, to co-ordinate our investments in this vital area. Let’s hope ideological prejudice doesn’t prevent this equally sensible idea from being exercised:

He also wanted to see a national port strategy to stop spreading limited capital over 13 ports “fighting for a little piece of the action” and an end to Auckland councils “raping and pillaging” port dividends instead of reinvesting in greater efficiency.

I’m still struggling with the mixed messages out of the Port company, which I have to say looks increasingly poorly run. I mean which is it?: Either the port is being run out of business by evil unions and the under-bidding of Tauranga or it’s booming like a Chinese subway and they demand to be able to pave the entire harbour….? Such a missed opportunity that proposed merger with Tauranga in 2006, then there would at least have been co-ordination for surely the upper North Island is effectively one market for the movement of goods at this scale.

Interesting though that council ownership doesn’t seem to help much, in fact may muddy the council’s thinking and actions. Torn between wanting that return on investment, and doing right by the city and citizens….?

The second is more problematic. On the one hand Michael Barnett of the business owners union appears to be completely on the money, especially if you only read the headline:

Len Brown’s vision needs funding, ideas and urgency

I fully agree, 2030 is a ridiculous wait for the urgent need to balance Auckland’s distorted transport infrastructure pattern. To still only really have road based transport as the one widespread network in our biggest and growing city would be a disaster in 10 years let alone 18. Len Brown is showing every sign of being worn down by relentless opposition to his sensible vision for Auckland. Especially the bullying obstruction from the government, who of course jealously hold all of our taxes, the money required for intergenerational investment. His Anniversary Day speech was timid, he’s exhibiting a bit of Stockholm Syndrome I’m afraid, getting very defensive. So isn’t this good?:

Mayor Brown’s estimate that we have until 2030 to get an integrated transport solution in place to avoid unacceptable day-long congestion has to be seriously questioned. There are major bottleneck sections in the motorway network – for example at Mt Wellington and Constellation Drive.

Well no. Because Barnett’s idea of an integrated transport solution is simply more and more motorways. He goes on to say:

NZTA commissioned research in 2007 for the east-west corridor indicated that if a strategic solution is not in place by 2020, the whole route will be gridlocked most working days. Yet there are no firm plans or funding to get the project under way.

And finally the killer; the line that has been used again and again by the the road building lobby for years in Auckland: completion.

The point: The economic and social benefits of the major roading investments Auckland has made over the past 15 years will not be realised until these gaps and weak links in the network are tidied.

Really Mr B, will there ever come a time when you and your members will agree that we’re done here, that to build anymore motorways would only trap every individual and business deeper into auto-dependency, congestion, and uncompetitive transport costs: Time to build that long planned complementary rapid transit network to free up the existing and lavish motorway system? Because it is clear to any detached observer of Auckland’s motorways that the last missing link, the last gap in the network, is now consented and about to be built: the Waterview connection. Especially when you add all the millions of dollars of extra work also funded and occurring on SH1, and SH 16. No, to create an integrated transport network we need to urgently invest in everything else, and not spend anything much more on motorways. We have pretty much built nothing but motorways for 60 years in Auckland, many of them twice, and very little else. So to get to an integrated system we have to play catch-up with the other modes. It is absurd to believe that we could afford to spend to the degree that Barnett is urging.

And remember the investments that have been recently made in the RTN network, the Northern Busway and the rail system, are paying of handsomely: the busway is delaying the need for further huge spends across the harbour and rail use keeps booming: at an outrageous 384% since before Briotmart was opened. Again saving us from trying to expensively accommodate ever more cars onto our narrow isthmuth.Reading though and it is clear that Barnett is being more than a little sly, is he urging the government to get behind Brown’s programme?, to free up our transport capital to support the council’s wishes? Oh no. His real agenda is to say sweet words about the necessary public transport plans of the council but then to launch into a vast list of road projects that he knows have a far greater chance of being funded under this current government, simply because they are roads, not because of their relative value. Could it be that that Mr Barnett’s Forum and the lobby group NZ for Council Infrastructure Development that he quotes are really more interested in us funding everything on their lists for the sake of their members’ balance sheets than objectively having the city’s and the nation’s best interests at heart?

So yes it is time to fill in the missing gaps in this growing city’s infrastructure, but those gaps are not road shaped. For example, if we need more connection across the Waitemata Harbour it must be by the modes not currently supported by the infrastructure. We need to be able to walk and cycle. But most importantly this missing link in the RTN network does need filling and happily this means saving billions of dollars compared to building yet more car lanes across the water. See this analysis and do the math Mr Barnett: next Harbour Crossing. Because surely your members can build other things than just motorways?

The NZ Transport Agency says tolls on the Northern Gateway Toll Road (NGTR) on State Highway 1 north of Auckland will increase on 1 March by 20 cents to $2.20 for cars, motorcycles and light [...]]]> The NZTA has announced that the toll on the Northern Gateway toll road will rise from 1st March 2012. They say:

The NZ Transport Agency says tolls on the Northern Gateway Toll Road (NGTR) on State Highway 1 north of Auckland will increase on 1 March by 20 cents to $2.20 for cars, motorcycles and light commercial vehicles, and by 40 cents to $4.40 for heavy commercial vehicles.

The increases are the first since the toll road opened three years ago.

The NZTA’s Regional Director for Auckland and Northland, Stephen Town, says the increases are regrettable but necessary to ensure the toll road remains viable and on-track to repay its debt as planned within 35 years.

“Although the legislation covering the toll road allows for the tolls to be annually adjusted in line with increases in the Consumer Price Index (CPI), they haven’t increased since the road opened in January 2009. Inflation and the 2010 GST increase have both impacted on the NZTA’s ability to maintain its debt repayment level, so it has become necessary to adjust the tolls,’ Mr Town says.

Transaction charges introduced in August 2011 to some toll payment methods will not increase. They remain at 40 cents for payment by kiosk and $3.70 when payment is made by phone. Transaction charges apply each time one or more tolls are paid for. For example, from 1 March the total cost of purchasing one toll trip at a kiosk will be $2.60 – a $2.20 toll plus a 40c administration charge – and the total cost of purchasing 10 trips at a kiosk will be $22.40 – $22 for the ten trips plus a 40c administration fee.

There is no administration fee for tolls paid on-line at www.tollroad.govt.nz, or for ‘set and forget’ toll accounts.

‘To minimise cost and time for road users, we encourage customers to pay by toll pre-pay account or via the website as neither of those payment options attract extra cost,’ says Mr Town.

The toll road is a 7km section of SH1 between Orewa and Puhoi which provides road users a shorter, quicker option to its free alternative – SH17 through Waiwera. Borrowing $158M of the total $372.5M construction
cost, meant the NGTR was built ten years earlier than it would have been under traditional funding methods.

As at the end of December 2011, the NZTA had repaid $17.5M of the debt.

I personally don’t have a problem with the cost rising as I think it is important that the toll reflects the benefits that people get from the using the road but I know there will be a number of people out there that will complain about it. I’m sure the question will also be asked of some if this increase is related to the cash flow troubles the NZTA is having at the moment.

They have also put out some FAQ’s on the increase here.

Northern Gateway Toll Road

The second [...]]]> After months of silence, Len Brown has started talking about the City Rail Link again. In an opinion piece in the Herald yesterday he talks about the need for the region to get on with building the transport infrastructure it needs like the CRL and associated with that the funding mechanisms to pay for it all.

The second major issue – transport and how to pay for it – is something we will need to work on for the next two decades.

Our transport infrastructure is already under stress. We must begin work on some key projects such as the additional harbour crossing, access to the airport, transport links to South-east Auckland, upgrading arterial roads and busways, investing in walking and cycling, and upgrading our ferry service.

The level of investment needed to cope with Auckland’s growth is considerable.

One thing I am pleased about is that he has started to articulate some of the benefits of the CRL and why it is needed, there are of course other benefits that he doesn’t mention, things like faster journey times but at least it is a start. The council and Len much more actively selling the project is something I have been suggesting needs to happen for some time.

Unblocking Auckland’s transport system is one of the keys to unlocking New Zealand’s economic potential. We need a much more efficient system for businesses to operate effectively.

As a trading nation, transport is our lifeblood. We cannot afford to have our products and workers sitting on blocked roads. A more efficient transport system is crucial if we are to reduce our carbon footprint, and improve the environment.

Our transport system must be integrated. Yes, we need new roads, but we know from past experience that new roads clog up almost as quickly as the bitumen sets. Unless we are investing in alternatives now – in a single transport system, involving trains, buses and ferries with an integrated ticketing system – perish the thought of driving across town in 2030.

The City Rail Link is crucial to this. It will essentially “complete” Auckland’s rail network, and effectively double the capacity of the rail network across Auckland. By turning Britomart Terminal into the through station it was designed to be, it will allow more trains to move around the entire network more frequently.

Combined with our new, clean and fast electric train fleet arriving next year, it will mean more trains stopping at your local station or transport interchange, with less time in between services.

Considerable analysis has been done on this link. There is significant public support for it. We know we need to get on and build it but what we do not yet know is how we will pay for it. The cost is significant, and we will need to look at a variety of sources.

So far, the Government has declined to contribute to the project, leaving the council to consider other sources of funding for this and other projects. Rates, obviously, are the principal source of funds for local government and will form part of the solution, but they are a blunt option and we need to always be mindful of issues of affordability. We must investigate new funding avenues. I want to consider a range of solutions.

He then goes on to talk about some potential funding options and has this nice little line for the likes of the AA who complain about road taxes being used to fund PT projects.

Yes, as the AA tells us, road users already pay for the costs of new roads, but they also stand to benefit considerably from reduced congestion with any shift towards public transport.

Of course while the funding issue is far from sorted, one thing the government did agree to last year was the council seeking a designation for the project. AT’s Chief Executive report to the board in December had this to say about what was happening.

Preparatory work to support the lodgement of the NoR to protect the CRL route continued in November. This included communications and stakeholder engagement planning to support this process, and a detailed review of the NoR material previously prepared for KRG/ARTA. The Terms of Reference for a CBD Access Study to respond to the Minister’s request was finalised by the Project Team and is now ready to be released to tender. An engineering delegation from CNTIC (China) visited Auckland and Christchurch in November. AT met with CNTIC and discussed the CRL tunnel construction.

Its good to see things are continuing, even if it isn’t as fast as we would like but even so I suspect that over the course of the year we will get a lot more information about both the designation and the funding options.