Some videos from Christchurch’s Central City Development Unit on the transport changes taking place.
And a timelapse of the construction of their new bus interchange
Some videos from Christchurch’s Central City Development Unit on the transport changes taking place.
And a timelapse of the construction of their new bus interchange
I didn’t manage to get a “development update” post out last month, but I’ve now finished doing a pretty major update to the RCG Development Tracker page. Among other things, there’s been a new tranche of Special Housing Areas, a bit more info on things happening around Westgate, and I’ve updated a lot of apartment projects around the city (which ones have begun construction, expected completion dates, etc). Plus there’s been the usual array of new projects being announced.
The Tracker does actually cover the whole country, but taking a “Greater Auckland” perspective, there are currently 4,605 apartments or terraces under construction, with another 1,541 completed since 2012, and 2,694 currently selling off the plans but not yet being built.
On the Special Housing Areas front, since I don’t think we’ve mentioned it before, the council will now be focusing on getting brownfields SHAs approved in the remaining 13 months of the Housing Accord. In the first two years of the Accord, there’s been a massive amount of greenfields (i.e. urban fringe/ sprawl) land granted SHA status, which we’ve been quite critical of. It’s good to see that the focus, and hopefully the resources, will now be shifted to making development easier within the existing city. That’s the goal of the Auckland Plan, after all.
Also in positive SHA news, a recent Herald article announced who the developers would be at two Special Housing Areas which had already been announced. Ockham Residential will be developing the site at Avondale Racecourse, and Avanda Ltd will be tackling a large site on the edge of the New Lynn town centre, including the Monier brickworks factory.
In both cases, it now seems that the sites are going to get more homes built than previously thought. For Avondale, Ockham are planning 52 dwellings, up from the “at least 15” mentioned when the site was initially identified as an SHA. For New Lynn, the master plan aims to create 1,800 homes, up from 600.
July was a good month for consents, with growth across the board. The problem with looking at “moving annual” figures, which is what I usually focus on, is that each month you’re only changing one figure out of twelve – so changes in the trend can take a while to show up. That said, it seems like Auckland is starting to build more homes of all kinds – consent numbers are up for detached houses, apartments and other housing types.
In the last year (the year to July, at least, which is the latest data available), there were 8,567 dwellings consented in Auckland.
We’re still not building enough homes, though. With three people per household in Auckland, we’re building enough homes for 25,000 people a year – but our population is growing by at least 40,000 people a year. This is not something that can be solved overnight, and we need to keep growing supply to provide adequate housing for the city.
Christchurch, in Cashel St I Wait
We haven’t talked much about Christchurch recently, but it’s an important part of this fair nation and we should all be keeping an eye on what’s happening there. Four and a half years on from the February 2011 earthquake, the Christchurch rebuild still has many years to run. The video below, posted by Cera last month, shows progress on some sites (including some of the government’s “anchor projects”) while much of the CBD is still vacant.
The “Retail Precinct” is actually a major office precinct as well, and is made up of several large developments by the private landowners. That includes Antony Gough’s The Terrace, which began construction in 2013 – the first of the big projects to do so – but then stalled until July this year. It’s now back in action. In the mean time, some other big projects nearby – the BNZ Centre, aka Cashel Square, and the ANZ Centre – are also under construction.
Then there’s the Bus Interchange which opened a few months ago, the Justice Precinct which is well underway, and a range of other things which you can explore in the Development Tracker map (or Cera’s Progress Map). However, there are still many sites which don’t seem to be making progress, and developments which were announced to great fanfare but have now stalled – this includes a Cathedral Square site which was to have been known as ASB House, but ASB has now pulled out.
The city continues to evolve and grow, and it’s good news to see things moving forward in the private-led Retail Precinct and the public sector ‘anchor projects’. On the other hand, it’s tough to look at the Cathedral Square area, and the Cathedral itself which you can see right into via a missing wall, and not be able to find many visible signs of rebuilding. As for the Cathedral, church leaders and the government have agreed to appoint a consultant who will review the situation, and a final decision on its future could be made by the end of the year.
Part 5: Is there an alternative model to re-developing a city centre?
The fundamental problem is how to increase amenity value without increasing property prices? How to return the amenity value created by the presence and enterprise of the community back to that community rather than to some passive site owner benefiting from increased land prices due to the efforts of others?
Obviously this is a big issue that has troubled theorists for a long time.
I will not suggest any general solutions but I will suggest a model different from Fletchers or even Mike Greer’s might have been more effective for re-developing Christchurch’s earthquake damaged inner core, in particular the Eastern Frame.
I think there was some logic for a government agency in buying up large blocks of land to ensure there is some consistency in what was rebuilt. Although it could be argued the fairest, fastest and simplest way for inner city Christchurch to rebuild would be to let the original owners to rebuild as they saw fit, but with a modern earthquake code buildings. This is what London in the most part did after the Great Fire of London. All the grand plans were eventually rejected by the Crown because of disinterested uncooperative locals and due to the fear of rioting. The major difference between the new and old London being the dictate to build in stone not wood. I believe the major flaw in the Christchurch CBD rebuild is the monopolistic nature of the process.
The eastern side of Christchurch CBD has always been the low cost, alternative, hippy and creative side of the city centre. Enterprises like start-up photography companies had premises in this part of town. Rod Donald the former co-leader of the Green party had his offices at 16 Bedford Row, which is now part of Fletchers Eastern Frame development. The interests of this ‘smaller’ end of town have not been considered in the rebuild model.
If the Crown had repackaged/planned the sites in some sort of logical way and released them back onto the market at cost for hundreds of local site owners/developers (original site owners getting the first right of purchase) to rebuild for their needs I think the community would have been better served.
Something similar to this proposal was done in Amsterdam when they redeveloped an old industrial wharf for housing and commercial space.
This being the Borneo Sporenberg project. This project was discussed in the Transportblog article Multiplication through Subdivision in 2013, as it is the inspiration for the Auckland development Vinegar Lane and some suggested changes to the Unitary plan.
Another way to look at the Borneo Sporenburg development is it is a modern version of the traditional Euro-bloc.
These are efficient high density residential building spaces because they create about 100 residential units per hectare – comparable to apartment buildings. But without the need for the same height and expensive infrastructure such as elevators. Further because each site is developed independently, each site has its own stairs and every floor has lighting and cross ventilation to the street and courtyard. This is important because if there is only one set of stairs for a group of sites and a long communal corridor it would break each floor in two, limiting light and ventilation.
The CCDU has a list of settled Crown purchases in Central Christchurch. This includes scores of purchases for the Eastern Frame. Prices ranged from $1829sqm for a 267–271 Madras St address down to $330sqm for 7 Liverpool St. With the typical prices being around the $1000sqm level. Unfortunately we don’t have the price that Fletchers pays the Crown or the details of the profit sharing agreement. So we cannot know if the Crown is making a profit or loss on land sales, if the Crown paid too much or too little for the land, although Brownlee assures us the Crown will not realise a loss.
With the CCDU purchase price figures we can do some back of the envelope calculations for our Euro-bloc build.
Let’s say the Euro-bloc courtyard developments are divided into sites that are between 7 and 10 metres wide and 10 metres deep, with a further 6 metres deep of internal courtyard space for car parking or other uses. With a height of 3 stories and the possibility of roof-top terraces.
For a 7 metre wide Euro-bloc site.
Would this sort of Euro-bloc development be better than the Fletchers/Crown partnership CBD development?
I think it would for the following reasons.
In conclusion I think there is serious flaws in the Christchurch rebuild model because it only considered the needs of a limited number of property developers and the Crown, whilst ignoring the opportunity to create a broader community of beneficiaries.
Part 4: An alternative explanation?
An alternative to the exploitative explanation is that the governing ‘elite’ response to the Christchurch earthquakes has exhibited a cargo cult mentality (definition of cargo cult here). Eric Crampton a Canterbury University economist who has recently moved to Wellington to work for the NZ Initiative wrote about this thinking behind the desire for higher Central Christchurch property prices in government circles.
Eric described this thinking as;
Eric Crampton’s analysis (articles here and here) indicate the Fletcher/Crown high property price business model is a risky strategy for redeveloping Christchurch. It is a big ‘all your eggs in the one basket’ project. The risk being that the fundamental amenity value of Central Christchurch has fallen, not risen. There are less businesses, shops, workers in Central Christchurch than previously. Long-term inner city Christchurch problems of transport and parking have been put in the ‘too hard’ basket and left for another generation to solve. Christchurch itself lost just over 2000 residents or nearly 1% of its population between the 2006 and 2013 censuses. Meanwhile the neighbouring Cantabrian councils of Waimakiriri grew by about 6500, or by close to 20%; Selwyn grew by 8700 — more than a third. Eric Crampton states these facts indicate prices and rents in downtown Christchurch, in particular the east side of the CBD should fall -not rise. A local property developer explains why.
Barnaby Bennett a designer and editor is a critic of the proposed convention centre.
His argument (same link) has similar themes to the cargo cult mentality argument for the Eastern Frame in that what is happening is a result of stress and the need for the governing elite to appear in control.
I think Eric, Earnest and Barnaby are right and the result will be inner city Christchurch, especially on the east side, will be a sterile, expensive and a slowly built place compared to similar sized cities. Unless a new direction is found, this is a massive missed opportunity. The Canterbury region is New Zealand’s second largest region. Its population is growing much faster than the similar sized Wellington region and is only second to Auckland for population growth in the country. An expensive inner city area will reinforce the Canterbury trend of extreme decentralisation whereby businesses leave the centre and residents leave the city for neighbouring satellite towns and lifestyle blocks.
Part 3: Is the Fletcher/Crown development exploitative?
What did Mike Greer mean by “politicking on houses”? If one uses standard urban economic geography analysis to examine this situation we get some understanding of what he might of meant (note I have never met Mike Greer so this is an educated guess). The following graphs show how key variables of a typical city change from the centre to the edge of the city.
Visually these graphs would depict the following type of city.
The key point is that house and land prices are typically higher in the city centre and decline towards the edge of the city. For cities it really is all about location, location, location.
Why are centrally located properties worth more than peripheral ones?
So when one is discussing the property prices of a city you are really talking about a 3D curve. With site prices varying with location –x and y dimensions. But a city can be built in three dimensions –X,Y,Z or ‘out and up’. Businesses and residents choose where to locate themselves based on price, land area, floor area and whether to be more centrally or peripherally located.
The key features of the graphs being how high the central values are, what the median value is and how low the peripheral values are.
To reduce median property values to get affordable housing, the whole curve has to move lower, site prices in real terms have to be stable or falling in all locations. Construction costs have to be falling or at least stable for all locations. Then competition from cheaper new builds will cap rising prices of existing property.
There is an argument that cities need a supply vent that can quickly respond to increased demand to prevent excessive increases in land and property prices. That supply vent needs to be some combination of ‘up and out’. Typically affordable housing advocates such as Demographia argue that access to cheaper rural price fringe land through the competition effect keeps more centrally located city land prices lower and therefor median property prices affordable. They argue ‘up’ by itself is not enough to keep the property market stable. This article will focus on the other end of the market, on whether there is competition in the inner city section of the Christchurch property price curve. The underlying question is: does this section of the market need competition too?
Affordable housing has been a stated aim of this government since prior to their first election in 2008. How have their actions in rebuilding Christchurch since the earthquakes of 2010 and 2011 been towards achieving this aim?
The business model of the Fletcher/Crown agreement is that this entity would use it monopolistic control over a large part of the centre of Christchurch to extract the maximum profit possible from both the underlying land and the housing units. In other words to push up the city centre section of the property price curve as high as possible. It is hard to reconcile this monopolistic profit maximising business model against the governments long expressed goal of improving housing affordability.
Monopolistic suppliers achieve pricing power by restricting the amount supplied to the market in such a way that prices rise. In the real estate game this is called land banking. Typically land bankers exploit the difference between rising demand and inadequate new supply -delayed due to regulatory or infrastructure failure. The suspicion is that Fletchers Christchurch CBD development will price for the top dollar and if it doesn’t achieve that, it will slow construction down, until it receives the desired price. At the time Eastern Frame land was acquired by the Crown (with the threat of compulsory acquisition) many land owners questioned the morality of this “land banking acquisition process”. Many commenting on the Press’s article “Owners riled by eastern frame plan”. Here is a few examples.
There has been an apartment building boom in many Australasian cities, sites for apartments have doubled in price in the past three years in Sydney, constructions costs are also rising. Vancouver in Canada is facing similar pressures. Is the Fletchers/Crown profit maximising entity trying to capture some of that boom? Australian and Canadian business commentators indicate the key driver of this apartment building and property price boom is off-shore investors. So Mike Greer may be right in that the CBD rebuild is not to service the local Christchurch community in an affordable manner. Instead, it is designed to create unearned capital gains opportunities for those outside of Christchurch. In the first instance the beneficiaries will be the Fletchers/Crown profit sharing partnership, whose priorities are nationally focused, rather than giving back to the Christchurch community. Off-shore property investors with a capital gains business model are a potential second wave of non-community beneficiaries.
The above analysis points towards a deliberate exploitative process, that the government is not interested in its market regulator duty of ensuring the property market provides affordable housing and low property related input costs for business. But the deliberate part may not be true, Gerry Brownlee the Earthquake Recovery minister firmly rejects any ‘conspiracy theory’ accusations of favouritism between the Crown and Fletchers.
You can read Part 1 here.
Part 2. The Crown/Fletcher development within the context of the Christchurch rebuild and national economy
This is the hoped for Christchurch after the CBD is successfully developed.
To get an impression of where Fletchers intends to build, follow this link for pictures of the Christchurch city environment as it is now in 2015. You will see pictures of a damaged city core. Suburbs close to the centre of city abandoned due to the liquefaction risk. New suburbs being built further out, many in satellite towns like Rolleston and Lincoln.
Before the earthquakes, there were 6000 businesses in the central city, the area bounded by the four avenues, with a daily working population of 51,000. About 7000 residents lived in some 3500 households, mainly in the north-east corner. The hospital – one of the largest in Australasia – remains a big employer and government workers are coming back as damaged governmental buildings are repaired or replaced. However, the private sector commercial rebuild is slow, with many businesses committed to long term leases elsewhere in the city. Many offices have been built outside of Christchurch Central Development Units (CCDU) control east of the city centre on Lincoln Road and Victoria Street.
How much has the Crown spent on rebuilding Christchurch? Much less than people realise is chartered accountant Cam Preston’s answer. There was a significant initial amount of support, but since then the Crown has gone about reducing expectations and focusing on national issues rather than local rebuild goals – such as the government getting back into surplus. This has had ramifications for how the Eastern Frame development evolved.
For some reason Canterbury finds it hard to negotiate its local interest against national pressures. There is a despondency amongst locals that public bodies or services can be of help. There is much bitterness against all the government institutions involved in the rebuild. Both those representing the Crown — Brownlee, CCDU, CERA and Commissioner appointed Ecan and those representing the local interest — CCC.
Canterbury’s poor record of receiving national public spending for local infrastructure can best be seen in transport funding. The Canterbury and Wellington regions are of similar size, population and economy. Although Canterbury is the faster growing region. Yet somehow Wellington has 150km of passenger rail and, once Transmission Gully is finished, 100km of motorways. Meanwhile, once Christchurch’s Northern and Southern motorways and bypasses are completed it will have something like 30–40 km of motorways and no passenger rail. This being despite Canterbury having some of the easiest conditions for transport infrastructure construction and significant need for it.
Peter Nunns from Transportblog said back in March regarding transport spending from 2002/03 to 2011/12.
The newly elected Christchurch City Council have a positive vision for the future of Canterbury in which the Council and the Crown work together to create a much larger and more cohesive region, connecting a successful dense core to affordable more dispersed satellite towns. So far this vision has gained little traction at the national level.
The goal of Canterbury having 2 million people by 2050 may seem grandiose, but there is no doubt that Canterbury is one of New Zealand’s faster growing regions. With the right support, New Zealand could have a second international sized city – comparable to Adelaide. Christchurch is of a size and has the geography that with the right planning policies, infrastructure provision and a competitive/productive construction industry, new developments –homes and businesses could be built very affordably. An affordable growing Christchurch would contribute a lot to rebalancing New Zealand’s economy. Whether this happens or not is reflected in the large degree of uncertainty in Canterbury’s growth projections from Statistics NZ. Which range from either keeping up with Auckland to barely growing at all.
A growing successful international sized city needs a functional inner city area. Will the Fletcher/Crown development provide this for Christchurch?
A case study of how our government approaches urban development.
The Christchurch post-earthquakes rebuild is peaking and construction activity will plateau for a while before tailing off. So this is a good time to review the Christchurch CBD rebuild model.
Part one: The $1 billion Fletcher/Crown housing project
A little over a decade ago in 2002 before I was married, I bought a small two bedroom, single garage townhouse in Kilmore Street in Central Christchurch for $160,000 on a single nurse’s salary. A decade later, after a series of devastating earthquakes in Christchurch, the Crown decided to take control of fourteen hectares of land. Seven hectares of that land, just a few blocks from my old townhouse, is being developed as part of the Eastern Frame development of the CBD rebuild.
So it is with great interest I follow the design/development stage of this process, in which Fletchers has negotiated an exclusive deal with the Crown to develop this large block of prime land. This development will be a mixture of apartments and townhouses. The Eastern Frame is approximately 20% of the inner city core of Christchurch. So the success or otherwise of this development will have a significant impact on New Zealand’s second largest city.
A simple division of the projected monetary size of development and the number housing units it will create, indicates the average price will be in excess of $800,000. A price that is out of reach from those on a nurse’s salary, in stark contrast to my experiences a little over a decade ago.
The Eastern Frame development is the biggest Government housing project in Christchurch. In combination with two other smaller Government housing projects, this provides more than $1 billion of work for Fletchers. The Eastern Frame project is budgeted to be worth $800 million and when completed it will have nearly a thousand residences. The first homes being planned to be ready in 18 months with the project expected to take 8 or 9 years to complete. The deal between the Crown and Fletcher is a profit sharing contract. This includes upfront payments to the Crown and further payments as sales are made. Simply put, as Fletcher completes and sells residences it shares the profits with the Crown.
Mike Greer, a member of an opposing group who bid for the project was less impressed with this model of urban development and has spoken out about his concerns.
In part 2 Brendon looks at the Crown/Fletcher development within the context of the Christchurch rebuild and national economy
This is a guest post from Anthony McBride in Christchurch on the opening of the new bus interchange a few weeks back
One of the best news for a long time, for me, and I’m sure thousands of others as well, is the (partial) opening of the new Christchurch Bus Interchange…It was a freezing day for Christchurch with the temperature at 8am hovering about 0°C, but driving by the former temporary bus exchange, and into the modern bus interchange, was a really a bit of a moment of excitement, I actually heard some soft wows as we turn into the station, we parked into the tooth, and have the bus doors and sliding doors open, it was a sight of hustle and bustle.
It’s quite awesome seeing the smiles on people’s faces, including the staff who were handing out chocolates and bus maps for everyone. And hearing announcements echoing over the warm halls on what buses are arriving and the doors which they are due to arrive at.
“O Queenspark, Door 11”
It has a very airport like feel to it. There are even posts next to tactile paving with buttons on it, where the blind can push the buttons to find out which door it is, and what bus it is.
And the information boards are great too….
My personal fears about the slowness and dangers of the sawtooth design appears to be incorrect, with the buses backing out taking no more than an extra 20 seconds, and the bus drivers don’t have to worry about any of the public walking into the bus movement area as it is closely monitored, and all buses will be stopped should anyone walk in.
Looks like a Control Tower…!
Extra pictures from when I looked around outside the interchange….The new cycling lane is open, the cycling racks are well in the area is well used and there is even some cycling traffic lights!
As some of you may be aware, Christchurch City Council has applied for NZTA funding to develop the network of major cycleways illustrated below.
This economic appraisal of this investment is discussed in detail in this blog post. The benefit-cost ratio for the $160 million investment was estimated using NZTA’s Economic Evaluation Manual to be 7:1, with the benefits of the project breaking down as follows.
All well and good.
Until about a week ago when two economists from the University of Canterbury, namely Glenn Boyle and James Hill, released their review of the business case for the major cycleways network. Based on their review, Boyle and Hill conclude the actual BCR is more likely to range from 0.7 – 1.6. They reached this conclusion for the following reasons:
I’ve subsequently reviewed Boyle and Hill’s review. My general conclusion is that while they make some valid points, they miss the mark in the places that matter. This in turn means that their conclusions are at best unsubstantiated and at worst simply wrong.
The key issues I find with their analysis are summarised below.
The first issue relates to their grounds for dismissing time savings. First, Boyle and Hill the divide total (estimated) time savings by the total (forecast) number of vehicle trips in Christchurch so as to calculate the average time saving per vehicle trip. They then reason that because the average time saving per trip is ~6 seconds, then the time saving benefits are too trivial to be included in the business case.
This analysis smacks of the sort of erroneous logical reasoning that one would critique in a first year statistics course.
Consider the statistical distribution of time savings that might result from cycle investment. It’s reasonable to suggest these savings will not be distributed evenly.
More specifically, the time savings will accrue primarily to vehicle trips that occur within specific corridors and at specific times. That’s certainly what the modelling of cycle flows seems to indicate, as shown below. From this map one might expect very small time savings for vehicle trips in areas such as the airport, Brighton, and Banks Peninsula, with larger time savings for vehicle trips travelling in the peak direction on key radial corridors.
The need to consider the distribution of time saving can be illustrated with a stylised example. Imagine a city where there are 1,000 vehicle trips, and where a proposed cycle investment will save 2 minutes for 50 vehicle trips, while the remaining 950 vehicles trips are unaffected. The average time saving in this city is only 6 seconds per vehicle trip, even if every vehicle trip affected by the investment actually saves 2 minutes.
The takeaway message is that the localised time savings in a large transport network cannot be accurately represented by the average time saving per vehicle trip. The latter metric may indeed obscure what are tangible savings for a small number of vehicle trips.
Or, to put it another way, if Boyle and Hill wanted an even more sensational figure, then they could have averaged time savings over all vehicle trips in New Zealand rather than just Christchurch, and concluded that the project would save less than half a second per trip. But that would be even more ridiculous.
Reductio ad absurdum; QED Boyle and Hill’s dismissal of time savings is unsubstantiated (NB: One could of course analyse the distribution of time savings and consider only those savings that were above a certain minimum threshold, but Boyle and Hill have not done this).
The second issue relates to their choice of an alternative discount rate. The major cycleways project is a transport investment which is seeking funding from NZTA’s land transport programme.
Let’s make this very clear: NZTA specify that a discount rate of 6% is to be used when undertaking economic appraisals of transport investments. It is therefore entirely appropriate for the business case to use a 6% discount rate. If Boyle and Hill have an issue with the discount rate that has been chosen by the NZTA, then they should raise those arguments in an appropriate forum – not pretend it’s an issue associated with the major cycleways project.
At this point it’s worth pausing for a moment and simply noting that if we add back in even 50% of the travel-time savings and use the 6% discount rate stipulated by NZTA, then the BCR for the cycleways project is likely to return to respectability – even if we accept all of their other points. And I don’t …
The third issue relates to their discussion of travel behaviour change. Boyle and Hill question the magnitude of travel behaviour change, but ignore that the business case takes a conservative view of behaviour change when compared with the results of stated preference surveys.
Stated preference surveys in Christchurch suggest that up to 30% of people would be willing to switch to cycling if sufficient safe infrastructure was provided. At present, the Census suggests that around 7% of people in Christchurch cycle to work, while the Household Travel Survey suggests that around 3% of total trips in the Canterbury region are made by bike.
The modelling did not conclude that cycle mode share would increase to 30%. It took a much more conservative view, which is that the cycleways would boost the number of cycling trips by 15-35%, which would imply an increase in mode share of 1-3% to between 5-10%.
A bit of international context would help here. Other cities that have invested in transformative changes to cycling infrastructure have experienced much larger increases in cycling mode share. For example, the Dutch only started investing in safe, quality cycling infrastructure in the 1970s. Today, many Dutch (and Danish and Swedish) cities have cycle mode shares in the range of 20% to 40%. Moreover, more modern cities like Portland have achieved cycling mode shares approaching 10%. QED the travel behaviour change assumptions in the modelling are within the range of what we observe elsewhere.
The fourth issue is that Boyle and Hill have misread the EEM guidance on analysing cycling benefits. They claim that cycling benefits have been estimated using an inappropriate (“simplified”) procedure. However, that’s simply not true. The values used to calculate per-km benefits for cycling are part of the core EEM (Appendix A20, if anyone’s interested). QED it was appropriate for the original business case to include these benefits.
The fifth issue is that Boyle and Hill make non-standard assumptions about fuel prices. They criticise the modelling for assuming that real fuel prices will increase. However, the assumptions in the business case are based on modelling published by MBIE – who are hardly a bunch of peak-oil alarmists. Boyle and Hill’s critique basically boils down to “oil prices are around their historical norm”, therefore we should not assume any future increase in price.
As economists, they should know that past performance may not be a good guide to the future.
Boyle and Hill argue that crude oil futures quotes are expecting current prices will persist, although I understand these contracts 1) typically extend out only for the next decade or so, and 2) the liquidity is fairly low in more distant future years. In contrast, NZTA stipulates a 30 year evaluation period for similar transport projects. Moreover, unless Boyle and Hill have an alternative (forward-looking) model of fuel prices, as well as evidence that their model is more accurate than MBIE’s, then their objection to the fuel price assumptions used in the business case is somewhat vacuous.
If, as it seems, Boyle and Hill’s real target is NZTA’s evaluation methods, then their critique of the cycleways is at the very least misplaced. Christchurch is proposing to invest a decent amount in cycleways, but that expenditure is dwarfed by state highway spending. If, for example, Boyle and Hill applied the same attention to the $11 billion RoNS’ programme, then they’d find some projects which start out with BCRs less than 1.0, even with more uncertain agglomeration / wider economic impact benefits included from the outset.
A serious investigation would have at least considered this wider transport investment context, before honing in on the cycleways project as perhaps a case study. And even then it’s a relatively non-representative (and unimportant) choice of case study.
So where does this leave us?
Well, if the aim of Boyle and Hill was to create clickbait for anti-cycling neanderthals, then they can rest happy in the knowledge that they have done their job exceptionally well.
However, if they wanted to foster more informed public debate on the merits of the major cycleways project, or the business cases for transport investment in general, then they have clearly and demonstrably failed. It’s especially unfortunate their review comes across as a deliberately sensationalist hatchet job with largely unsubstantiated and/or incorrect conclusions. By extension, their review does not – as they claim – call into doubt the key finding of the original business case, i.e. the investment in major cycleways represents a relatively effective transport investment. For these reason I wouldn’t expect their review to hold much sway with Christchurch City Council and/or the NZTA.
Postscript: While Boyle and Hill’s review is, in my opinion, “in bad odour”, it is encouraging that the business cases for transport investment are receiving more attention from the wider economics profession in New Zealand. I’d certainly encourage Boyle and Hill to pursue this new found interest further, and would welcome them scrutinising the business cases for RoNS projects, many of which cost in the billions of dollars and start with BCRs less than 2.0. That’s really where the real money is being spent, and it’s where the economic evidence is the weakest.
Every week we read more than we can write about on the blog. To avoid letting good commentary and research fall by the wayside, we’re going to publish weekly excerpts from what we’ve been reading.
Alan Davies, “What would it take to build a tram network the size of Melbourne’s?“, Crikey:
James Dann, “They paved paradise etc etc“, Rebuilding Christchurch:
Lindsay Cohen, “Seattle dog’s rush hour ride: on the bus, by herself, weekly“, Komo News:
Anna Maria Barry-Jester, Why The Rules Of The Road Aren’t Enough To Prevent People From Dying, FiveThirtyEight:
On how speed limits in the US were set
Todd Niall, Knowledge gap in Auckland rail saga, Radio NZ:
Paul Little, Trees, not cars, make a liveable city, NZ Herald
One of a few images from a 1937 plan for London by Sir Charles Bressey on how to accommodate more vehicles in London
Chris Barton, The Best Urban Design of 2014, Metro:
It was a year of winning forms and some massive fails. Chris Barton picks his favourite urban design developments — and hands out the wooden spoons.
And finally, Councillor George Wood sent us a fun game to play via twitter. Fortunately, I passed the test: