There are two types of roads in New Zealand, state highways and local roads. State highways are owned and 100% funded by NZTA – building them, renewing them and maintaining them. Local Roads are owned by local councils (there’s a rather weird legal situation in Auckland where I think the council own the road but Auckland Transport manage it on their behalf) and are funded roughly by way of a 50/50 split between NZTA and council (generally rates) funding. So already we clearly have a situation where roads are subsidised by ratepayers as part of councils’ 50% share in funding their construction, renewal and maintenance. But let’s leave that aside for a minute.

What’s interesting in this situation is that you effectively have Central Government charging (by way of fuel tax and road-user charge) road users for using a piece of infrastructure that’s owned, maintained and renewed by local government. In essence, it’s a somewhat strange situation – an analogy might be that I own a theatre: I built it, I maintain it and I look after it. But people using my theatre actually pay someone else for the privilege: not me. Obviously, the unfairness of the situation is largely resolved by NZTA part-funding local roads – in our analogy giving me back about half of what it costs to renew and maintain my theatre.

A good way of measuring whether local councils are getting their “fair share” of NZTA’s money is to look at the split of actual travel (and therefore technically revenue) which happens on local roads versus state highways and then compare that with the split of spending on local roads and state highways. We already saw that in Auckland the split in travel is approximately two-thirds on the local road network and one-third on the state highway network: If we were to take a fairly strict “user pays” approach to road spending in Auckland, there’d be an argument for roughly a two-thirds/one-third split for local roads and state highways. With public transport largely on the local road network, arguably the split could be even higher.

Where I’m getting with this relates to an amusing document released under the Official Information Act to Green Party transport spokesperson Julie-Anne Genter, which she has passed onto bloggers on this site. It relates to a Ministry of Transport response to Steven Joyce last year, when he was seeking some technical justification for shifting even more money into state highways at the cost of money that would usually go to local councils. You can see this point outlined in the paragraph below: 
Unfortunately for the Minister, the actual figures tell the complete opposite story. We learn that the local road share of travel is increasing (very slightly), but bizarrely we see that the state highways share of expenditure is increasing – a huge mismatch: 
The table clearly highlights that over the past decade there has been an enormous increase in state highways spending and a much slower increase in local road funding, even though the share of VKT between the two has stayed relatively constant. Back in the early years of last decade we can see that there was a reasonably match-up between VKT and expenditure, but since around 2005/2006 that has changed enormously due to the huge ‘spend-up’ on state highways.

In effect, what we see is local councils now pretty much subsidising state highway projects, in particular the big budget items of the Roads of National Significance. Meanwhile the amount of money available for local roading projects is getting squeezed harder and harder, with less spent in the 2011/12 year on local roads than was spent in the 2006/07 year. With the 2012 Government Policy Statement proposing a further big increase to state highway spending, while putting the squeeze on local road spending, it really does become obvious that our local roads are getting screwed over.

P.S. the Ministry (wisely) suggested that such a table not go in the cabinet paper!

Kiwi Income Property Trust (Andrew Buckingham) (Douglas Allan) (Gerard Thompson)Andrew Buckingham Douglas Allan and Gerard Thompson on behalf of Kiwi Income Property Trust spoke to their written submission and in particular:

• Supports overall thrust of RLTP, and in particular supports provisions that address integrated management of land use and transportation planning; proposals to complete the motorway network whilst also strengthening Public Transport; and specific works including CRL, AMETI, works proposed in and around New Lynn, upgrading of Te Wero bridge.
• Seeks completion of a functioning isthmus rail loop connecting Britomart, southern line and NIMT by constructing a link between the two lines at Te Papapa/Southdown.
• Seeks implementation of Southdown-Avondale rail connection.
• Seeks additional emphasis on aspects of land use/transport integration, including the need for concentrated office/retail/education activities in identified nodes and Public Transport corridors.
• Seeks a consistent car parking policy to avoid discouraging intensification in identified nodes.

KIPT definitely seems to be a company that gets it as they wouldn’t use PT wash in a submission as the RLTP will have a big impact on how people access their property investments. They also manage to cover off many of the points we raise on this website so congratulations KIPT At pretty much the other end of the spectrium is the Upper Harbour local board which manages to be even worse than Orakei local board.

Upper Harbour Local Board (Brian Neeson)Brian Neeson on behalf of the Upper Harbour Local Board spoke to their written submission and in particular:

• Suggested that the Statement of Priorities is somewhat hollow and meaningless. Safety should be higher up the list.
• 32.4% funding split for Public Transport is misleading as assumes Government will contribute to CRL.
• Major projects: rail electrification: does Auckland have capacity to supply power?
• Strongly oppose the CRL, suggested that the timing is inappropriate and not affordable at this time.
• Stated that other major projects are acceptable or supported (AMETI acceptable with rephrasing).
• Include additional harbour crossing, Penlink and Puhoi to Wellsford motorway as major regional projects in this cycle.
• Major projects next cycle:
• remove CRL;
• shift out development of cycleways along SH corridors and SW airport multi-modal corridor, as not high priority;
• bring forward Puhoi-Wellsford motorway, additional Waitemata Harbour crossing (investigation), busway extension to Hibiscus Coast
• (designation), Penlink (commencement); and
• Other projects supported, except red light camera installation.
• Detailed comments on local projects listed in submission. Budget and timing generally supported, except:
• Rosedale/Greville busway station: more evidence required as to necessity;
• Requested that Auckland transport bring forward the: East Coast Bus priority, Albany SH17/Spencer Road intersection (brought forward and phased), Albany Lonely Track Road/Gills Road intersection; and
• Seeks assurance that agreement with NZTA to progress Coliseum Drive Link will be fulfilled.
• Requested that the intersection of SH17 and The Avenue in Albany be upgraded with urgency.
• Requested that parking in the Albany Village be looked into.
• Requests a left hand turn onto the motorway at en Pickering Drive.

To be honest I am pretty speechless that this would come out of a local board. There are of course plenty of other submissions, some I feel are good and others bad and I will do a post giving a more general coverage of the feedback shortly

One problem that contributes to undermining support for the project is just how little information Auckland Transport share with the public on issues such as this. Really the only information we have to determine the cost of the project, and how it’s made up, is from an Appendix to the 2010 Business Case and then some further details in the 2011 Business Case Review. Here are some of the details from the original business case, which breaks down the costs: There are a few important points in the table above, which are worth highlighting:

• The physical works of the project cost around $981 million out of the total budget of $2.4 billion. The rest seems to be property costs, contingency, design, client management, contractor’s margin and something called “funding risk”. I’ll call these the “other costs”.
• The $2.4 billion total is actually the 95th percentile estimate (that is, there’s a 5% chance the cost will be higher and a 95% chance the cost will be lower). The “actual” cost (which I presume could be thought of as the most likely cost) is almost bang on $1 billion.
• The stations make up a significant portion of the project’s physical cost: Aotea, K Road and Newton stations have a combined cost of around $455 million (excluding the “other costs”), around 46% of the project’s physical cost. Including all “other costs”, K Road and Newton stations are more than $300 million each.

As well as the “core cost” of the project (which has a closest estimated cost of $2 billion), the original business case also highlighted a number of additional areas of cost that would be required to implement the City Rail Link. These are summarised below: The $100 million in associated rail infrastructure works includes duplicating the Onehunga Line and grade separating a number of level crossings along the Western Line, as detailed in Appendix F. Whether these should be included in the cost of the CRL, just as whether the additional rolling stock should be included in the project’s cost (you don’t see the additional cost of buses included in business cases for bus projects) is an interesting debate to be had.

Debates between Central Government and Auckland in the Business Case Review have been very well covered on this blog over the past year, but what was interesting is that the parties generally agreed in their assessment of the project’s cost. This is outlined in the Workstream 6 document:

Our reviewers raised more than two dozen points ranging from major concept suggestions to relatively minor cost queries and opinions, which were referred to the APB&B Study team and Auckland Transport for their views. Most of these suggestions were countered, giving confidence that the original concept and costs had been considered in a robust manner. Some of our suggestions will be carried forward to the detailed design stage, when that is approved.

Both our reviewers were very interested in the benefits to the concept design and construction methods that might be gained through having contractors input to the project. Contractors’ knowledge of techniques and technology could potentially be used to save time and money by optimal design, staging, and construction. Our reviewers are of the opinion that it is conceivable that, given contractor input, it may be possible to reduce the costs if other innovative ways of working could be achieved, and this forms one of our conclusions.

They both agreed with the peer reviewers that the project could be carried out for the estimated cost (excluding property costs) of between $1.9b and $2.2b. Thus they confirm that the estimated construction costs are realistic.

In summary, it seems that the NZTA reviews found the cost estimated in the original business case to be realistic, and if anything their feedback suggested that savings were possible through an innovative contracting process.

The significant number of peer reviews the costing has gone through (APB&B themselves had the costs reviewed by three different external agencies) suggests that these numbers are pretty robust. Which is why it is rather surprising to see higher numbers being bandied about in more recent times.

Coming to our last question, how could the project’s cost be trimmed a bit, we learned from commenter “Greg N” (who himself learned from Auckland Transport’s Stephen Rainbow) last month that various options are being looked at on that very issue: in particular delaying the construction of some of the stations (presumably either K Road or Newton station or both, as they are the most expensive and each are likely to generate much less patronage than Aotea Station) and/or not building the eastern link between Newton and Grafton.

The eastern link, K Road and Newton stations are three very expensive parts of the project, if we recall the table earlier on in this post. If we assume that adding in the “other costs” (design, contractor profit, contingency etc.) doubles the actual cost from its pure construction number, we get the following numbers for those three aspects of the project:

• K Road station: $319.6 million
• Newton station: $315.2 million
• Eastern Link: $180.8 million

A grand total of $815.6 million in those three pieces of infrastructure which seem to be ‘up for debate’ over whether they will actually happen (when the project is initially constructed). Obviously there are good reasons to build the two stations and it seems like there is an argument for the Eastern Link (plus probably a pretty significant infrastructure requirement if you don’t build it as you’ll need to turn a heap of trains around somewhere on the Western Line), so there’s a debate to be had around whether they should be in or out, but it’s fair to say that the cost saving potential is rather significant. Of course ‘future proofing’ for the two stations will incur some cost, which is another matter to consider.

But to come back to the question in the title of this post – what does the CRL cost – is seems the answer is fairly complicated and a bit of a movable feast. But what do we know?

• We know is that the core cost of the project has been assessed over and over again (with three stations and an eastern link) at around $2 billion.
• We know that a significant chunk of this could be saved (say $500 million and I feel like I’m being conservative with that) by delaying the stations and perhaps not building the Eastern Link.
• We know that some extra trains will be needed, and some infrastructure works around the rest of the rail network, though it’s debatable whether they should be included as part of the project.

All up, it seems like there’s a pretty damn good chance the project could end up being under $2 billion – including the additional trains and additional infrastructure needed, if the stations are delayed. If this is the case, then it’d be great to have Auckland Transport start telling the world about this very soon before the project loses even more public support. It would also be good if those that do oppose the project actually came up with some ways that we will be able to move people around the region in 30 years time when there are potentially up to 1 million extra people living in it.

The report confirms that providing we improve how buses move around the city centre that there is sufficient capacity in the busway until around 2041. One of the improvements to the city centre that is listed as needed is the City Rail Link which will have the effect of removing a large number of buses from the South and West from the cities streets which will free up that space for additional buses from the North Shore. With the busway moving an increasing number of people over the harbour bridge each morning along with the completion of the western ring route in 4-5 years time, we should also see the need for another harbour crossing pushed out to a similar timeframe.

The report starts with the assumption that the busway has already been extended to Silverdale and that the city side improvements have been completed to allow for up to 250 buses per hour to feed into town. It then goes on to look at a number of different routes and  technologies for futuredevelopment options but also notes that  experience, particularly in Australia, shows that bus based RT systems don’t get same level of land use change as rail lines/stations do. The options range in cost from $1.5b all the way up to $15b and all options were put through an evaluation matrix and the heavy rail options came out with the best results. All of the options considered are listed below:

There are quite a few options there and I think we can all agree that the options costing $13b+ are simply not going to happen, even though they came out the highest in the evaluation criteria. The conversions of the busway to heavy rail still very highly and at $2.5b (which I assume includes the cost of the crossing) actually seems fairly reasonable, especially if we can hook it into the existing network with something like the X pattern we have discussed on here before.

The report to the council also includes an image from the Auckland Plan that we haven’t seen before, presumably it will be in the final version of document which is being worked on at the moment (the content has already been signed off). It seems to show that thinking is starting to shift within the council that any future rail connection interface with the existing rail network at Aotea rather than at Britomart.

There is quite a bit of detail in the report but in all it is good to see some thought going into when we will likely need to start making improvements, that is unless the good folk of the North Shore start to increase their usage of the busway at a faster rate than predicted which is something that could very possibly happen.