We know that Auckland’s transport plans are completely unaffordable, a more interesting question is “why?” Much of the answer to that questions comes from what I refer to as “overkill”. Essentially, a solution that’s vastly oversized compared to the problem it’s trying to solve. There are a large number of examples of “overkill” when it comes to transport projects currently being planned:
- The East West Link is perhaps the most obvious example, where somehow a bit of congestion around a couple of intersections at each end of Neilson Street somehow led to NZTA and AT proposing a gigantic and enormously destructive motorway through one of the most densely populated and deprived parts of Auckland. Yeah there are certainly some transport problems in the area but the jump to a huge motorway solution is a classic example of overkill.
- The proposed motorway to motorway connection between SH1 and SH18 at Constellation Drive. The problem here appears to be a pinch point northbound on SH1 between SH18 and Greville Road and constraints around the interchanges themselves. Yet again the solution is to jump to a gigantic motorway-to-motorway mini-spaghetti junction that likely to cost upwards of half a billion dollars. What about just adding another lane northbound, extending the Northern Busway to Albany and then seeing whether anything else is actually necessary?
- Puhoi-Wellsford is another classic example of overkill. Yes there are congestion problems around Warkworth, yes there are major safety issues in the Dome Valley and at specific points south of Warkworth, but it’s quite a jump to suggest the only solution to those problems is a massive new motorway that’ll cost close to $2 billion. Operation Lifesaver highlights how most of the benefits from the motorway can be achieved at a fraction of the cost by truly focusing on the problem at hand.
- The recently proposed Lincoln Road widening project once again responds to legitimate problems like a lack of priority for buses, localised congestion and safety issues. Yet the respond is again overblown – massively wide intersections, slip lanes everywhere, extra lanes all over the place etc. The outcome is not just an overly expensive project, but a corridor that gets wider and wider – further degrading the urban form around it.
- Penlink is a massive project to satisfy locals when the real problem is further north at Silverdale and can be solved with other smaller alternatives.
It seems like good transport planning should flush out what projects are overkill and what projects aren’t. An interesting comparison against the above projects is the process that the City Rail Link has gone through over the past few years – especially in the form of the City Centre Future Access Study, which looked in detail at a range of “smaller options” for resolving issues with access to the city centre – outlining which of these would be necessary anyway, which could occur prior to CRL being built but also the point at which the ‘small scale’ interventions need to become so significant you might as well do the job properly – in this case by building CRL.
Throughout the ITP there are a vast number of projects which are obviously “overkill”. Examples include $665m on Albany Highway (surely a typo?), around $800m on a section of Great South Road, a $150m motorway bypass of Kumeu, the $240m Mill Road corridor project and many others. Strip back these overkill projects so they really focus on the problems they’re designed to resolve and we’ve probably gone a long way towards solving our future funding shortfalls.
Len Brown has announced that the city will be looking at using Public Private Partnerships (PPPs) to help fund building some of Auckland’s infrastructure. Here’s the press release.
Public-private partnerships an option for Auckland
Auckland needs to take a good hard look at public-private partnership models for funding infrastructure says Mayor Len Brown, to relieve the financial burden on ratepayers and taxpayers.
Len Brown today released a position paper on PPPs that may be suitable for civic projects in Auckland.
“As the country’s largest and fastest growing city, we have the need for both major investment in infrastructure and finding new, innovative and fiscally responsible ways for this to be delivered,” says Len Brown.
“Every dollar we invest in capital projects – and there will be many billions – needs to make economic sense and be backed by a robust business case. But the traditional procurement and delivery models cannot deliver the infrastructure Auckland needs, which is why I am not inclined to rule out any options that will help us.”
The Mayor says one of the benefits of the Auckland amalgamation was creating the scale to make PPPs at a civic level possible for the first time, and with the Government pursuing greater private sector involvement in infrastructure and services, the public also have a better understanding of PPPs, and why they are distinct from privatisation.
“We have a large and growing body of international experience to draw from – many successful, some not so successful. While PPPs seek to take advantage of private sector expertise and efficiency, a key difference – and a lesson learned early on in the UK’s experience – is that in most successful PPP models, ownership is retained by the public sector, while the risk falls to the private sector.
“That is important for a city like Auckland, where we are seeking to deliver on social as well as economic aspirations through our infrastructure investments.”
Len Brown says with his position paper he aims to kick-start a process of looking at options that might work for Auckland, that would clearly define PPP models and what they can – and can’t – deliver.
“I wanted a realistic, warts-and-all assessment of PPP models. I wanted to know exactly what value PPPs can deliver – both so that we don’t miss opportunities, but also so we don’t trip up.
“PPPs will seldom if ever deliver lower capital costs. We can borrow money at least as cheaply as the private sector. For a PPP to make sense, the prerequisite equation is the value that it delivers – whether it be through applied expertise, commercial synergy, improved service delivery or risk allocation – is greater than any additional cost of finance.
“If Auckland is to be ambitious and prudent, we need to be smart too. While our balance sheet is strong, it cannot sustain the pressure of the magnitude of investment Auckland needs. And the same is true of the Government.”
The position paper includes international examples of where PPPs have or haven’t worked and why. It also lists dozens of projects in Auckland as large as the City Rail Link and as small as the upgrading Auckland’s parking meters that might benefit from PPPs.
Len Brown will now ask council staff to use the framework presented in his position paper to create a work programme through which the council and wider community can have a good hard look at all the options and apply the ones that will deliver real benefits for Aucklanders.
And the position paper is here.
Now I obviously haven’t had time to go through the entire position paper however here are just some initial thoughts on it and the press release.
1. Work out what we actually need
Yes if Auckland is to grow as expected then it will obviously need to invest in more infrastructure and I don’t think anyone doubts that. This isn’t just from a transport point of view but also covers other infrastructure like water and community facilities. However on the issue of transport I think that before we start rushing ahead and working out how to pay for the massive wish list the council is proposing we first need to actually work out what projects re needed.
The list of projects and in the Auckland Plan and their priorities were largely decided at the political level and the modelling in the ITP showed that despite spending $68 billion that measures like congestion would still get worse. So let’s start by actually working out what projects and priorities will deliver the best outcomes for the city. I’m almost certain that if we did that, there would be some substantial changes to what is current planned and of course this is one of the key ideas behind the Congestion Free Network.
2. Different types of PPP
While we work out what is needed in 1. we can of course have a discussion about funding options and I guess that is where this release from Len Brown comes in. The press release does at least acknowledge a couple of key points in that building with PPPs will almost always be more expensive and risky. The question really becomes if the private operator is able to deliver other benefits that would not normally be available to the council/government.
Further not all PPPs are the same and there are different types and it’s important to marry the right type to the right project. The main types of PPP are shown in the chart below.
I have had a number of people from within different parts of the industry tell me that when it comes to just building infrastructure, that pretty much all of the benefits associated with a PPP from private sector innovation can be obtained through an alliance that sees risks shared. That type of model is already used in New Zealand on a number of projects including the likes of Waterview. An example of the type of innovation often talked about is that with more traditional contracts the client (e.g. council) may award a contract to a company that offers the cheapest price. As the project goes one and cost pressures come in they may substitute some materials for cheaper ones but that have higher maintenance costs. By comparison the alliance model apparently allows the builder and client to work though the longer term implications as issues invariably come up.
In short it’s incredibly important that if we go for a PPP that we get the right model for the right project (or part of the project).There may be opportunities for PPPs in some specific parts of projects but if it is just to build infrastructure then our existing contracting methods can likely do that much better.
As an example with the City Rail Link you might find that the council/government pay for the tunnel portion and the basic station box but do a PPP for actual station construction and operations. That might allow for the private partner to buy surrounding properties and integrate that with the station itself to maximise its use through the likes of providing retail and office space, similar to what is done in places like Hong Kong. If that were an option and the council structures the deal right it could significantly reduce the long term costs of building that part of the CRL.
Of course the council or government could do that itself however over the last few decades we have them shift away from these kinds of activities.
3. Demand Risk
Of course when it comes to transport the biggest issue of all is that of demand risk. In Australia the high profile failure of numerous toll roads due to woefully wrong projections on traffic volumes – especially when a toll is involved – has burnt the PPP sector strongly and now it seems they aren’t prepared to take on the demand risk. As such they have ingeniously worked out that they can push that risk back to the public sector which is why we are now seeing projects like Transmission Gully about to be built using an availability contract. That effectively means the private company builds it and the client (NZTA in this case) pays a fee to use it providing it is up to a certain standard. This kind of project is almost certainly a waste of time and money as it presents virtually no risk to the private sector yet is being paid for by more expensive private sector debt. The table below shows where the risk would site under a PPP with the council
It’s also worth considering what the shifting of the demand risk says about various projects. It basically confirms that we are in a period of change and we can no longer just assume traffic growth will always happen. If the private sector isn’t prepared to take on the risk on motorway projects themselves then perhaps it’s a good indication the government shouldn’t be either.
4. Deal Structure
When a PPP deal is put together the banks financing it will go through each aspect and work out how much risk it creates. Just like insurance the more risky you are to the company, the higher they charge you just in-case something goes wrong.
That means if we put out to tender vague documentation, we could end up paying a lot more over a 30+ year period compared to if we had just used more traditional methods. Any variations to the contract along the way can also lead to much higher costs. It also needs to be noted that the private sector can be incredibly tricky and will do anything to find loop holes to get out of deals. The paper notes the case of the Araat Prison in Australia where there were two building companies who set up a joint venture to build the project. However as the project hit difficulty the joint venture split up leaving little opportunity to tie any recourse back to the two parent companies.
Lastly it will be really important for the council to consider the reputational risks and its citizens expectations. For example if we were to build the CRL as a PPP and that involved the operation of the trains too then if something were to go wrong the trains would likely stop running. That could have serious impacts for the economy until the issue is resolved.
I think that in conclusion there might be some specific cases where a PPP might actually work for some projects but we are going to have to be extremely careful about how we do them. I have to imagine the NZCID has been pushing extremely hard for this announcement behind the scenes. Their members list contains most, if not all of the organisations involved in PPP industry in NZ. There is probably a lot more to talk about but I’ll end it with this.
At the end of the day PPPs are just another form of debt which is a way of spreading the costs out over a long period of time. It means those that get benefit in the future also contribute towards the cost. The millennials (1980-2000) like myself are the generation that will still primarily be paying for this infrastructure in 30 years-time. So perhaps we should also be considering a focus on the projects that enable the kind of city this group wants to be living in, not the infrastructure that reinforces the ideals of their parents.
Last week Len Brown presented his first draft of the councils budget for the next financial year (2014/15). If approved as is it will see the total amount of money raised from rates increase by 2.5% which is said to be down from the 4.9% projected in the long term plan. The increase was brought down due to the changes agreed last year (which included the berm cutting changes) as well as further savings identified this year although the the 2.5% also includes some new spending added to the plan.
The new spending has come about as a result of a few requests for additional funding. These are
As you can see only some of the additional funding requested has proposed to be part of the plan and of that the Living Wage Policy has had a lot of time in the media however as you can see that represents only a small fraction of the amount that Auckland Transport requested (but didn’t get). Slightly more information about the Auckland Transport request is below.
Auckland Transport – at this stage no increase. Auckland Transport have signalled a budget issue which is related to both shortfalls in revenue and increased costs. However, before any increases in funding are considered we need to have a robust discussion with the Board and senior staff on the issues that have led to this shortfall and explore a range of alternatives to simply topping up the budget with ratepayer funding.
The comment about needing alternatives to just topping up budgets with ratepayer money is an interesting one as it matches with comments I have heard elsewhere that AT put their hand out for more funding without even considering cutting back some of the stupider projects on their books. I suspect part of the problem is that many of the projects on the books are also able to get NZTA funding. The way the system works is that the money from them can’t just be used for whatever the AT wants and so if the project is cut back then AT are almost certain lose the government funding they have. All of that means that if AT decided to cancel or delay a project that had NZTA support then they may be reliant on whatever funding they can get from the council.
So just how much do the council spend currently (or are planning to spend)? The first few tables show the planned capital expenditure for the 2014/15 year for projects over $3 million.
The CRL costs will primarily relate to property acquisition but other than the CRL and EMU costs there certainly isn’t much for other PT projects and many of the projects needed to really make the new PT network work properly look like they aren’t going to get funding – they are probably in the $18m that Auckland Transport are asking for extra funding from. But the figures above are only the capital expenditure costs, below is the planned operational expenditure.
On Tuesday night the new Council was officially sworn in and the Committee Structure announced, best covered here. We will discuss the Committee Structure further in future posts – because it is interesting to consider the slightly different approach that has been taken to transport compared to under the previous Council. In this post though it’s worthwhile touching on a few interesting elements of the speech given by Len Brown on Tuesday evening – which can be read in full here.
One element touched upon early in the speech is how the creation of Auckland Council truly has enabled us to finally tackle the really big issues facing the city in a holistic sense:
We live well here in Auckland, but not as well as we could. We have jobs, but not as many as we could. We have houses, but not as many as we need. We have a transport system, but not nearly as good as it should be.
Some people believe that the less councils do, the better off we are. That is not a point of view I hold.
A council can, if it dares, be bold. It can imagine remarkable things and then it can find the way to make them real. We know what needs to be done.
The work began three years ago, and we start this new term today with many of the most important building blocks in place.
If you think about it, without the councils coming together the City Rail Link could have never advanced to the extent that it has – the project is simply too big and scary for any one of the previous Councils to have tackled, especially with a sceptical government. Having a single Council has enabled us to be bold and do things that simply weren’t possible before. But of course there is still a long way to go.
It’s also becoming increasingly evident that cities and their councils are far better at tackling many of the issues that impact people who live in them compared to central governments. A point made quite well in this piece.
Everywhere we look we see national governments struggling vainly to tackle the challenges of the modern world. Washington, hopelessly partisan and dysfunctional, is an extreme case. But Whitehall is in many ways clearly over-stretched. The Civil Service remains organised around silos and with a poor record of innovation. Insiders say relations between ministers and mandarins have never been as fraught.
Cities’ governments by contrast tend to display a pragmatic, can-do ethos. Their leaders are often personable mavericks — we know Ken and Boris by their first names — and good at brokering deals and forging unlikely partnerships. The remarkable improvement in London schools — once the worst in England, now the best — has been driven at least partly by the way schools, councils, businesses, charities, arts organisations and others have worked together.
Cities have always been crucibles of invention and their governments are likewise showing increasing signs of inventiveness. Think Ken’s Congestion Charge, bike rental schemes first pioneered by Paris, or the way the Brazilian city of Porto Alegre gave citizens the lead role in setting the city’s budget. Nations hang onto old identities and everywhere struggle to adapt to migration and globalisation. Cities are much more welcoming and forward-looking.
Further on from Len’s speech, there are some more fairly general statements about transport:
And linked in to that programme, at every driveway and every bus stop and every train station and every cycle path will be a transportation system that works as it should.
We are now delivering on an integrated transport system that balances quality public transport, roads, and walking and cycling.
Already we’ve revolutionised bussing, and ticketing, we’re electrifying the trains, and we have the government backing our key priorities, including the City Rail Link.
We have moved the discussion about the CRL along from “why?” to “when?”.
That’s a vital building block, and it’s a reason for Aucklanders to feel very pleased, because CRL is the precursor to everything that cures this city’s sclerosis.
If we can rebalance the transport system, with more people in trains and buses and ferries, on foot and on bikes, and with roads working as they ought to, we will all move freely.
Other cities have done it. So can Auckland.
In a 21st century economy, connectivity could not matter more. The money we invest in transportation – and more than half our entire budget is allocated to it – is an investment for generations to come.
I wouldn’t quite go as far as saying we have revolutionised bussing and ticketing just yet. If AT can get the new network rolled out and HOP working then maybe – but that still seems some way off yet. It’s interesting to note mention of “balancing modes”. Brent Toderian last night said that’s just a sneaky way of saying “business as usual” as in that situation the roading planners/engineers always manage to get their projects to the top of the list as needing to happen before the balancing can occur. The jury is still out over whether the Mayor is willing to sacrifice some of the many stupid roading projects in our current plans to help balance the budget better.
The other mention of transport is in relation to finding new ways to pay for infrastructure:
And I will be looking to alternative sources of funding – for example to help pay for investments in our transport infrastructure.
With that in mind, it’s my aim to lead a debate across New Zealand about the way we fund local government.
If it’s possible to do that in ways other than rates, let’s explore them.
As we’ve said on many occasions, raising money for transport in different ways potentially makes a lot of sense – especially if that process can cleverly manage demand. However with so much fat in the current transport budgets I think it will be a pretty tough ask convincing Aucklanders to pay an additional tax for transport infrastructure we don’t actually even need.
Overall the speech is perhaps a little disappointing in the lack of detail about what key goals the Mayor has over the next three years – a lot of general ‘fluff’ about how great Auckland is or could be. Perhaps that’s not surprising for this kind of speech, but there are many many unanswered questions that remain – particularly around how we’re going to afford the gigantic transport wishlist and when we’ll finally see someone taking a good hard look at whether the projects really deliver on making Auckland the world’s most liveable city.
Before last week’s distractions, there was an NZ Herald article which discussed key issues with Len Brown over the coming three years. Perhaps the most interesting part of that article was the focus that Len put on looking again at the Council’s budget.
You said your first focus was next year’s budget and taking on board some messages from the campaign. What were they?
The community embraces the need to genuinely address … under- investment in infrastructure and particularly transport, but they want to balance that against the issues of affordability and within a budget that is sustainable. One of the key concerns was to keep a real close eye on debt levels and how much we borrow to achieve that. I have got that message.
You have forecast to borrow $2.8 billion in your first three budgets and a further $2 billion in the next three years. Is that wise?
It’s important for everyone to take stock. We have just received the community’s view in terms of the outcomes. The budget is an important part of it. I will be assessing that first budget and need to present that to council on November 17 … I will certainly be reflecting on that. Secondly, we are down against projections on [capital spending] on this year’s budget, let alone the 10-year budget which is a crystal ball-gazing exercise, quite frankly, and we will be assessing our debt levels and budgetary management every month of every year.
Somewhat strangely, he then goes off to discuss how we apparently need the completely idiotic $5 billion Additional Harbour Crossing project, but let’s leave that issue aside for just a minute or two.
During the first term as Mayor there was obviously a lot of pressure to ensure that rates didn’t increase very much – particularly as combining the rates system was always going to mean serious winners and losers (funny how we only ever hear about the losers). Yet there continued to be some big spending items: fixing up the electric trains deal after the government got rid of the regional fuel tax, getting started on AMETI and many other non-transport projects. It seems like the “out” in the equation for the first three years was for the Council to increase its debt levels – taking advantage I suppose of the greater financial muscle the new combined Council now has.
If there is an increased desire to limit the growth of Council’s debt during the next three years, some pretty tough calls will need to be made around what projects happen and what projects don’t (since it’s capital expenditure rather than operating expenditure that is funded from debt). While that applies to all types of Council spending, as we know transport is by far the largest area of Council capital expenditure.
This is where the Congestion Free Network comes in. We first created this network because we were horrified by how expensive the transport plan outlined in the Integrated Transport Programme is and by how badly it missed achieving the goals and targets set by the Auckland Plan. Remember that for $68 billion in the current plan you get:
A heap more transport greenhouse gas emissions (rather than the sought decline):
Basically no increase in the proportion of people catching public transport into the City Centre:
Nowhere near the PT, walking and cycling modeshare target set in the Auckland Plan:
I could go on but this is getting boring. The basic story the Integrated Transport Programme tells is that if you spend a lot of money on stupid projects, you don’t actually achieve what you want to achieve.
As we explained recently, the real beauty of the Congestion Free Network is that because you’ve provided a complete rapid transit network that is free of congestion, you can stop wasting money on unnecessary roading projects which aim for (but of course never deliver thanks to induced demand) reductions in congestion. This means you can build the Congestion Free Network and still save at least $10 billion from what’s in our current 30 year transport plans.
$10 billion of course sounds like a LOT of money. And it is. Surely ripping $10 billion out of a transport budget – even over 20 years – is going to hurt due to what can no longer be done? Well only if your transport budget isn’t full of excessive projects to begin with. The table below outlines our initial thoughts about how you can reduce the spend on new roading projects over the next 20 years from $21.6 billion to $7.0 billion:
To show the savings a bit clearer it’s quite useful to look at them in pie chart form:
As you can see the biggest chunk of the savings just comes from not doing a project that’s not only a waste of money but will actually make things worse. Then we shave money off big slush funds highlighted for motorways to sprawl that won’t be required (unless someone truly is planning to build the Karaka-Weymouth bridge) or widening arterial roads which don’t need to be widened (they probably just need a bus lane). Puhoi-Wellsford gets chopped back to Operation Lifesaver, AMETI’s cost gets fixed so it doesn’t double-count the East-West Link, we scrub out the unnecessary six laning of the Northern Motorway between Albany and Orewa (why would you six lane when you’ve just built a busway?) and many other projects which are generally not completely stupid ideas but where the solution proposed is vastly bigger than the problem that exists (e.g. East West Link). I suspect the only people who really want everything on that list built are the NZCID and their members who stand to benefit hugely from it all.
The scary thing about ripping nearly $15 billion out of the roading budget was just how easy it was. We barely felt mean at all with many of the cutbacks. We’re still proposing Penlink to happen some time before 2030, we still propose to spend money on widening the southern motorway south of Manukau, we’re still spending $1.3 billion on AMETI, we’re still completing the Western Ring Route, we’re still grade separating the Kirkbride Road/SH20A intersection, we’re still spending $800 million on upgrading arterial roads, $700 million on new arterial roads in greenfield areas, $350 million for rail grade separations – the list goes on.
Auckland Transport is supposed to be preparing a second version of the Integrated Transport Programme in the upcoming months – including consideration of the Congestion Free Network as one of the scenarios looked at in this process. We await with great interest to see whether the Mayor’s enhanced focus on the budget extends to chopping out some of the extraordinary waste of money proposed in the first version of the ITP.
We spend a huge amount of money on transport each year and it can often be difficult to see exactly where all of that money is going. Thankfully the NZTA have started to become much more proactive in what information they release to the public and have actually been publishing the details online. As a note, it’s my understanding that the agency have realised that in many cases it is much less work for them to publish the information than have to constantly respond to various official information requests. The only down side is that sometimes the information can be hard to find.
One of the pieces of info they are now releasing happens to be transport expenditure levels broken down by activity class (i.e. new roads, maintenance, PT etc.), year, region and local authority. For each of these it also shows the spending by both the NZTA and by local authorities. The level of detail available is excellent and allows for the data to be analysed from many different angles. For me the biggest downside is that the data only covers the last 10 financial years as I would love to be able to get a much greater history and OIA requests just point me back to this data. I have already noticed that data from the 2002/03 year that has dropped off the tables despite it being there just a few months ago (although luckily I had copied it before it disappeared).
With this post I’m just going to focus on the data for Auckland. First up, here is the total amount spent of transport in Auckland over the last 11 years including both NZTA and local projects. The only spending I believe isn’t included would be the money spent on project DART and Electrification as/are paid for directly by the government (although the the loan for the trains and depot is being paid out of the operational budgets). You can see spending has increased from just over $400 million in 2002/03 to peak at $1.35 billion in the 2009/10 years which was also when a lot of big motorway projects were in full swing (Hobsonville Deviation, Manukau Harbour Crossing, SH20-SH1 at Manukau, Victoria Park Tunnel, Newmarket Bridge replacement). Of course many of those projects were being rushed so the city could cope with the influx of visitors bringing their cars with them for the Rugby World Cup in 2011.
In total terms the area that has seen the largest increase is new and improved roading infrastructure which is probably hardly a surprise to anyone however the percentage share of spending on PT has actually increased from 14% to 27%.
And here is the table with from which the graphs above are derived from. One of the things you can see is that more money is spent on administration than on the cycling network
While the percentage of money spent on PT increased, the total amount of spending on roads at a much more dramatic rate. The next graph shows the spending between local roads and state highways. Maintenance, Operations and Renewals come under the name Ops. As you can see there has been a bit of a surge in local road spending in the last year however it is dwarfed by the amount of money going to the state highway network. It also follows the smallest year in recent times so I wonder if is a bit of a mix up in the data.
Lastly many people like to compare how much money is being spent in Auckland with the rest of the country. It has often been said that Auckland was under invested in years and that the current spending is just to get Auckland back slightly towards more of an even figure. The graph below shows the percentage of money spent in Auckland with the rest of the country. To do this I have already removed the spending by local authorities like Auckland Transport. Currently we spending is roughly around 36% of total nationwide spending.
What is clear from all of this is that we are spending an absolutely huge amount of money on transport in the region and huge portions are going to build new state and improved motorways. What we really need to do is to spend our money better (and this includes PT where possibly huge efficiency gains are possible through better infrastructure with more bus priority).
On the topic of the Congestion Free Network, we frequently get asked what we would do about the roading network and what projects we would change to go along with our proposal. We have said before that we think there is still a need for some roading projects during the same time period and that we think there will be plenty of budget over and above what we are spending on the CFN, to allow for the best parts of the roading network to be built. However with this post I want to take this further and see just what we could pare the roading aspects back to.
Our financial analysis of the Congestion Free Network notes that the CFN will cost about $10b to construct between now and 2030. However, that’s actually slightly less than 40% of the $34 billion that the Integrated Transport Programme proposes to spend on new transport projects over that same time period. Here are the projects and associated costs outlined in the ITP:
The colour coding is also important because the ITP looks out to 2040 whereas the CFN only relates to what happens up to 2030 (for now).
We have worked through the project list outlined above to suggest what changes could be made to this package of projects to better align with the CFN. At this stage, our analysis is just at a very preliminary level for many projects, although for a number of key projects our analysis is based on many of the posts made on this blog in recent months and years which have commented on the merits of different transport projects. As noted in what we’ve said previously about the CFN, our intention is to suggest a realistic alternative to what’s in the ITP and also to ensure that we optimise all kinds of projects to ensure that they deliver value for money (for example we’ve made some big savings from doing rapid transit to the airport differently to what’s in the ITP).
What becomes quite clear from this process is that there are extremely few occasions where we have completely removed a project from what’s in the ITP. Instead, we have often decreased the amount of money we think should be spent on that particular project – because what has been suggested is ‘overkill’ for the problem actually faced. Doing Operation Lifesaver instead of Puhoi-Wellsford is perhaps the best, but certainly not the only, example of this.
A few other important things to consider are:
- The ITP numbers appear to have made a couple of pretty massive numerical errors – in relation to the costing of AMETI and the Albany Highway upgrade. We have noted these and would love Auckland Transport to provide us with the correct figures – we’ve taken a bit of a ‘stab in the dark’ in the absence of this information.
- For “Auckland wide” projects, we’ve had to think about the extent of what’s in the ITP that would be spent before 2030. Our feeling is that a fairly large chunk of the greenfields expenditure would be post 2030 and a reasonable proportion of the “other urban arterials” would as well. For greenfield areas, this is based off the assumption that the Auckland Plan did not expect much growth in these areas until after 2020 (as there are areas like Flat Bush & Hobsonville to develop in the meanwhile and planning completely new areas does take time) plus our general belief that changing demographic may mean less demand for living on the urban periphery than has been anticipated. For other urban arterials, we note that many arterial upgrades are specifically identified in the project list, so the “general” fund appear likely to come as a next phase of projects. Nevertheless, to be conservative we’ve suggested that 65% of region-wide project expenditure will occur by 2030.
So let’s start with the roading projects:
The headline figure is that we’re able to get expenditure on roading projects down from $21.7 billion to $7 billion – a pretty massive decrease. But perhaps what surprised us the most in doing this exercise was just how easy it was. Often we really don’t even think we’re being harsh in many ways – for example:
- Still do Penlink, although only two lanes and not four lanes
- Still do AMETI as currently planned
- Do an even more significant version of the Lake Road upgrade (to enable high quality bus provision)
- Still do the key parts of the SH1 upgrade south of Manukau
- Still do many of the smaller arterial road upgrade projects as planned (e.g. Pukekohe Eastern arterial, Tiverton-Wolverton, Albany Highway and many others)
The main areas where we’ve saved money come from a variety of locations, where we really think that we’re cutting out the poor value aspects of many projects yet still doing what makes sense:
- Only grade separating the SH20A Kirkbride Road interchange and not widening all of SH20A. With a railway line to the Airport we certainly won’t need to widen the motorway – plus the Airport’s own roads seem like the choke point here. Almost $200m saved here.
- Not four-laning from the Airport to Manukau via SH20B. As per above, if we build rapid transit (we suggest a busway, costs in the PT section to come) along this route then we don’t need to widen the existing road. This saves $235m.
- Pulling the ‘East West Link’ back to being a more sensible project rather than the community destroying monstrosity options being looked at right now. Truck lanes on Neilson Street and a few clever tweaks to motorway access for around $150m are likely to deliver most of the benefits of a much more expensive project. This saves close to half a billion dollars.
- Doing Operation Lifesaver instead of Puhoi-Wellsford. This saves about $1.4b.
- Building rail to the North Shore instead of the stupid road crossing. This saves nearly $2b.
- Suggesting some significantly cheaper options for upgrades to Great South Road. Goodness knows why we supposedly need to spend nearly a billion dollars on three sections of this road between Penrose and Manukau. This saves nearly $800m.
- Significant savings from greenfield areas and other arterials – as described above for greenfield areas and also because we think that based on the huge numbers for Great South Road projects the other arterial costs are also likely to be overblown.
So clearly we’ve saved a lot of money out of the future roading budget. But how much of that do we shift across to public transport and how much is just “not necessary” – and therefore can go towards closing the supposed ‘funding gap‘.
At a high level, the CFN proposes to spend just over $1 billion more on public transport before 2030 than what is proposed in the ITP. It’s just a little more on things like a SH16 busway and a little less due to changes like a busway instead of rail between Manukau and the Airport.
Now let’s put these all together for a comparison:
So overall the CFN is nearly $14 billion cheaper than what’s outlined in the ITP over the same time period – and this is with North Shore Rail included. If you were to push North Shore rail out to beyond 2030, (which we’re reluctant to do but agree it’s one of the latest parts of the CFN built) then the CFN is $17 billion cheaper than what’s in the ITP. Which means the funding gap is gone.
The CFN also has more of a balance between funding public transport and roading – with a 42% roads, 58% PT funding split. This compares to the ITP proposing to spend 72% of its capital on roads and only 28% on public transport. I guess the key point is that we can actually afford a high quality PT system and it can be done without having to drastically cut against road building. Instead the roading programme would focus on smaller network tweaks rather than road projects massive in scale. It’s also worth noting that this is just one suggested approach to dealing with the problem, some of you might have different ideas and would like to see certain projects at the expensive of others.
Earlier this year a group set up to gain cross spectrum consensus on how to fund the councils wish list of mostly road projects put out a discussion document on its preferred options and sought feedback from the public on its preferences. One of the disappointments was the Consensus Building Group (CBG) were not allowed to consider whether the projects on the list would actually help to make things better so just had to find funding for everything. They started with an initial list of options that included:
- general rates
- targeted rates
- development contributions
- tax increment financing
- regional fuel tax and road user charge/diesel levy
- tolling new roads
- road pricing on existing roads (i.e. some form of network charging or congestion charging)
- additional car parking charges
- visitor taxes
- airport departure tax
- asset sales
They then narrowed it down to two options
We looked at a number of aspects of the debate including the fact that the plans cater for a massive increase in roading capacity despite the fact that many vehicle metrics including kilometres driven, vehicle ownership and the number of people getting drivers licences are declining. We also had a great guest post from Peter Nunns that questioned whether we should be implementing road pricing in a revenue neutral way first to see what further impact that has on traffic volumes before committing to additional funding to build large new projects.
In the end these are the key points I made a submission about.
Of the two options presented I support option 2.
- We should consider implementing road pricing in a cost neutral way in advance of the need for additional funding mechanisms so we can more accurately measure the impact it has on the transport network.
- Before any additional funding scheme is implemented, all projects need to to be put through a robust process to properly determine their economic impact along with the impact they will have on the entire transport network, not just on the specific area they are located in. The projects then need to prioritised according to which ones have the most positive impact.
- Additional funding should only be obtained for projects that will make a positive impact to the transport system and the exact impacts need to be made clear to the general public.
- Assessing projects based on the how fast they can move a single occupant vehicle is not a good measure of success, we should instead be taking into consideration projects that add the most capacity to the network.
Today the CBG are releasing their recommendation and the most surprising thing is how strong the support is for road pricing with 78% of the responses favouring it in some form. I’m at the announcement on the issue now and will update more after I have had time to go through the details but here is the press release:
Unprecedented agreement calls for action by 2015
Decisions by 2015 and an ongoing funding commitment from the government are at the heart of recommendations released today by the council commissioned group tasked with identifying alternative funding sources for Auckland’s transport.
‘Funding Auckland’s Transport Future’ identifies eight key recommendations that follow nine-months of deliberation by the group and reflect strong public feedback on the issue.
“My career in transport spans more than 50 years and never before have I witnessed Auckland make so much progress in just one year,” says Stewart Milne, Chair of the Consensus Building Group (CBG).
“This level of agreement between key stakeholders is unprecedented.”
Principally, the group has agreed that unless Aucklanders are prepared to accept significantly higher rates increases and heavier congestion, introducing some form of road pricing by 2021 will be required. According to the report, these decisions would need to be made by 2015.
The group has also strongly recommended that the government increase its funding for transport in Auckland and establish mechanisms that support an ongoing commitment to increased government funding.
“Recent commitments by the government are the first step toward securing long-term financial support for improvements to Auckland’s transport infrastructure,” says Stewart Milne.
In April this year, the group asked Aucklanders to consider two possible options for funding the 30-year transport programme and the response was overwhelming. Of the 1320 responses, 78 per cent were in favour of some form of road pricing.
“While the feedback indicates public support for road pricing it is our belief that detailed work is needed on the design of possible road pricing schemes and on addressing the social and economic impacts.”
The report will be formally received by Auckland Council’s governing body on 25 July.
The big question with road pricing is how it would be implemented. If done simply as an off ramp toll, as suggested this morning in the herald there is a risk that it simply shunts a lot of vehicle trips off the motorways and onto local roads which shifts the problem, not improves it. I will wait till I have more details before commenting much further though. Regardless of the outcome, perhaps the biggest benefit to all of this is process is that we have had groups from across the spectrum working together. They might not agree on the exact details but them working constructively together has likely been one of the aspects that helped to convince the government to help fund the City Rail Link.
The timing of this seems to have worked out well with our proposal announced last week of the Congestion Free Network. One of the biggest issues we have is that even with all of this extra funding it is still projected that almost all transport measures, including congestion will get worse. If we are spending $60 billion and things still get worse then we feel it is time we started looking much harder at what projects are on the wish list, whether they are actually doing anything to help the situation or in the case of many of them, likely making it worse. We think that at the very least we need to change the priorities of the projects, bringing forward those that create a true high quality alternative and giving people some real choice in how they travel.
We’ve already seen the massive impact that high quality PT routes can have with the Northern Busway leading to significant growth in bus patronage across the harbour bridge at peak times. The number crossing the bridge by bus increased from 18% in 2004 to 41% in 2011 and we expect we will see similar results from investment in other high quality alternatives. What’s more it would actually be cheaper than what is currently planned. The mode shift would likely see the justification for many of the expensive roading projects diminish greatly, either putting off the need for them, or eliminating it entirely. This in turn may reduce or even remove the need for additional funding (although we still support road pricing in a revenue neutral way).
Yesterday we showed you our vision for the Congestion Free Network – and wow what an excellent response – so today I’m going to talk about the boring stuff like how much it will cost. Before I get into that though, one of our goals in designing the congestion free network has been to keep spending at the same level, or less, than is currently planned. The level of spending has been based off what is contained within the Integrated Transport Programme (ITP) which was also used to inform the debate around alternative funding.
The ITP doesn’t give specific dates for projects but does break down spending by decade. Over the 30 year period of the programme it is expected the city will spend approximately $34 billion on new or improved transport infrastructure, this is broken down as follows:
I have then broken down the funding to match each of the time frames we propose for building the Congestion Free Network, this gives us:
Many of you will also have seen the table below before however I have added some colours to it to show the decade that each of the major projects falls into.
So with the information above as well as a few other studies we can start to put together a picture of how much our Congestion Free Network might cost. Like with the maps yesterday, I’m going to break down the spending by into the groups of 2020, 2025 and 2030.
City Rail Link – The ITP lists this as $2.6 billion but we also know that the figure includes other items such as more electric trains – something also included in EMU line item. The most recent cost figures we have seen suggest that the actual cost is more like $2.2 billion including the extras and even that is likely to come down further, especially after the announcement earlier this week. For this we are going to use the figure of $2.2 billion.
Electrification to Pukekohe – Another project that seems to be over estimated in the ITP (there are quite a few of them). The recent business case suggests that this project will cost $102 million.
Mt Roskill Branch – This one is hard for us to say for certain as it isn’t on any plans and as far as we’re aware, not study has yet been done. The project does have a number of things in its favour however. The primary one is that the corridor is already designated and Kiwirail already own much of the land. Further as part of the motorway works in recent years the NZTA has already built many of the bridges with spans ready for the rail line to be placed under them. Perhaps the best example for us to use for estimating the cost is the new spur to Manukau. That was in a similar position as much of the work was done along with the associated motorway construction. It ended up costing approximately $50 million to do around 1.5km of track and a station in a trench. A spur from Avondale to Dominion Rd would be approximately 3.6km in length but wouldn’t need a trenched station. Accounting also for grade separation of New North Rd, we think that a total cost of ~$150 million would be about right.
Electric trains – The ITP lists the cost of trains and the depot at $980 million. We know that the current batch of trains is costing us around $540 million while the depot is another $100 million. The difference between these two figures and the $980 million quoted in the ITP would allow for around 37 more trains which is enough to run additional services needed for the CRL and proposed extensions so we will leave the cost as it is.
Northern Busway Extensions – This comes in two parts. At the Northern end we are proposing the busway be extended to Albany. A recent OIA request by one of our readers put the cost of that at $250 million (we will have a post on this in the next few days). At the city end there is definitely a need to improve bus access through the CBD and the ITP lists another $250 million for this.
North-Western Busway – Fairly extensive bus lanes already exist between the city and Waterview so little would be needed in this area. Between Waterview and Te Atatu much improved bus lanes are being added to SH16 as part of the motorway upgrade already underway. Between Te Atatu and Westgate we are suggesting a proper busway – like what exists on the North Shore. The ITP lists a busway from Constellation to Westgate to Waterview at $450 million. Like the Northern Busway extension, we will use a figure of $250 million for section from Te Atatu to Westgate
Upper Harbour Busway – As per above, the ITP lists a busway from Constellation to Westgate to Waterview at $450 million while we have estimated the Te Atatu to Westgate section at $250 million. That leaves us with the Westgate to Constellation section costing $200 million. Note this is most likely to be bus lanes, not a busway like on the shore.
AMETI/South Eastern Busway - This is a massive road and public transport project. All up it is expected to cost about $2.6 billion of which the busway from Panmure to Botany is estimated at $650 million. The section from Botany to Manukau, which would run down the massive available road reserve on Ti Irirangi Dr is estimated at just over $20 million. We have doubled that figure to give a total for this section of $700 million.
There are a number of roading projects that are needed to support some parts of this network, particularly AMETI and the works on the Western Ring Route.
Airport Rail from North – We feel that for the timeframe we have set only one rail connection to the airport will be possible and actually warranted. Of the two a connection from the north provides much greater due to it also passing by Mangere Bridge, Mangere as well as the employment areas to the north of the Airport. Interestingly the ITP lists it as the cheapest however we suspect the cost doesn’t include another crossing of the Manukau harbour. For that reason we are going to budget $700 million for this connection.
Manukau to Airport Bus from East – As per above, we feel that at this stage we feel that extending the bus route from the East down to the airport would provide the best option. The route from Manukau to the Airport is primarily along SH20B and the ITP suggests that widening that to four lanes would cost $235 million. We will use that as the basis for our bus connection.
Pakuranga to Howick – Much of the rest of this route will have been given priority in earlier stages however the section from Pakuranga to Howick will need priority. This is one of the hardest projects for us to put a cost on as it hasn’t been referenced in other plans or documents. To try and be conservative we will budget $150 million for this section.
North-Western extension to Kumeu – The ITP suggests it will cost $150 million widen SH16 to four lanes all the way from Brigham Creek to Waimauku. We have used this figure for the bus extension
Northern Busway extension to Silverdale – The figure for this project also comes from the report on the Northern Busway extensions mentioned in earlier. This suggests that the section will cost another $300 million.
Improved Ferries – The ferry routes will need additional investment in wharf infrastructure, we have budgeted $30 million for this. The boats themselves would be paid for through the service contracts with the operators in the same way we do for buses today.
Rail CBD to Albany – This would involve a rail only tunnel to the North Shore, conversion of the Northern Busway to rail as well as a spur to Takapuna. The most recent business case for an additional harbour crossing suggested a rail tunnel on its own would cost $1.6 billion however a report last year to the council suggested that rail to Albany from the city centre could be done for $2.5 billion. We have added the spur to Takapuna and want to be a bit safe so are using a figure of $3 billion for the whole thing.
Queen St/Dominion Rd Light Rail – Dominion Rd is one of our busiest bus corridors and so upgrading it for both capacity and place making reasons is likely to be necessary. The route from Britomart to Mt Roskill – where this would terminate – is approximately 8km and being a former tram route, would be very easy to install light rail on. We note that the 1.5km loop around the Wynyard Quarter cost about $8m to install which suggests a cost track km of just over $5 million. That means double tracked light rail from Britomart to Mt Roskill would be approximately $90m. Add in the cost of the vehicles themselves and maintenance and we are looking at a total of approx $140 million.
So where does this leave us? In total we expect that this plan could be built for less than $10 billion and that money would be spread over 17 years. That may sound expensive but is surprisingly cheap when you consider that another road based harbour crossing alone is expected to cost $5 billion.
By comparison, over the same time period as our plan we are currently expecting to spend over $24 billion on transport capital expenditure. The network we have shown in the Congestion Free Network represents just over 40% of the total predicted spending and does so by simply re-prioritising the current projects on the list. That means that some will happen later or some not at all. What is also worth mentioning is that the bill for the list of projects that the government announced support for last week totalled $12 billion.
While some of the projects announced include parts of what we are suggesting, many are further motorway upgrades that will just shift the problem further down the road. But the motorways are only part of the problem, a massive spend up on local roads is also being suggested. Projects like the Mill Rd corridor are hundreds of millions of dollars while the ITP lists the cost to upgrade Gt South Rd (I didn’t even know it needed upgrading) at over $800 million. So one of the questions we need to ask ourselves is if we want a few more upgraded motorways and local roads like our current plans push for?
The projects announced last week that the Government is supporting
Or do we want an Congestion Free Network that will transform the entire city?
I know what I’d rather choose.
In this recent post we highlighted how, despite $60 billion or more of transport spending over the next 30 years, congestion is due to get significantly worse. This is a pretty disappointing result – occurring both in the scenarios when all the projects are funded and also in the scenario when we spend less money and build fewer projects.There’s about $10-15 billion of spending difference between the two scenarios – to achieve what really seems to be a pretty minimal difference in outcomes. As noted in recent posts, most of that spending is in the form of road projects – many of which make little sense.
The real problem for Auckland, compared to so many cities around the world is not the severity of our congestion but the fact that we generally have no alternative. Most public transport trips are on buses which mix with general traffic – meaning they get stuck in the same congestion as everyone else. For most trips, public transport is a poor alternative to driving. Too slow (because it’s stuck in the same traffic jams), too expensive, too unreliable. While perhaps overblown a bit, transport modelling highlights how pathetically slow public transport currently is for many trips across Auckland:
Improving the quality of the alternatives to driving does help free up the roads by attracting number of people away from driving but really this isn’t the main role of Transit networks. All big cities have congestion – and Auckland will be no exception to this rule. But they also all provide alternatives. The streets of Manhattan are congested but most people avoid it by catching the subway. Nobody drives from Parramatta to downtown Sydney at peak times, they catch the train because it’s so much faster. London would collapse without its Underground. These cities all experience congestion, but it doesn’t matter nearly as much as in Auckland because an alternative, a network free of congestion, exists.
Decades of research show that you can’t build your way out of congestion. Widen a motorway and it fills up again. Build a new motorway and it fills up. Even the widest motorways in the world still get jammed up at peak times:What Auckland so desperately needs is an alternative to its congested transport network. A way to ‘opt out’ of congested travel. True travel choice that’s faster, more reliable and reduces the burden of getting around our city.
So we, in collaboration with Generation Zero, have developed an alternative plan for Auckland called the Congestion Free Network.
We have a limited congestion free network today: the existing railway lines, parts of the Northern Busway (Constellation to Akoranga) and some stretches of bus lane. In these locations no matter how congested up the roads get, there’s always a congestion free alternative available. But they’re relatively few and far between.
Over the next 20 years Auckland can, for the same price or less as what’s currently proposed in the ITP, construct a congestion free network which covers almost every corner of the urban area. Electrified rail to Pukekohe, busways to Silverdale, Kumeu, Botany to Panmure, Manukau to Botany, rail to the Airport, light-rail along Dominion Road, an extensive ferry network and even rail to the North Shore.
We think that this is a much better approach than what’s in the Integrated Transport Programme. We think that this approach takes the best parts of last week’s transport announcements by Central Government, the best bits of what’s in the Auckland Plan and creates a modern, world-class transport system that Auckland can be proud of. We think that a proper congestion free network will actually be so attractive for Aucklanders that it can be more successful in freeing up the roads than heading down a path towards our own 18 lane motorways.
A plan for a congestion free network must also be realistic. While in many respects we have a lot of money to play with, given the eye-watering sums proposed for spending on transport in Auckland over the next 30 years, we think that there’s probably no need to spend as much money. So we’re going to let you know exactly what transport projects we don’t think Auckland needs and how we can redirect that money towards the projects Auckland actually does need. And have no fear, of course Auckland’s going to have more roads in 2030 than it does today. As we’ve discussed previously a number of roading projects do make some sense – although perhaps not in their currently planned gold-plated form.
We have an idea about what should be in a 2020, 2025 and 2030 congestion free network. We think the projects that make up these networks are affordable, realistic and can deliver a transformational shift in the quality of Auckland’s transport system. But before we get onto what we think, we’re keen to know what you think.
- How would you phase in a congestion free network over the next 17 years?
- What do you think are the most important projects to have done by 2020?
- What do you think should be cut or wound back to free up funding for the congestion free network?
- What parts of the congestion free network should be provided by buses and what parts by trains?
- What do you think is the role of light-rail in a congestion free network? Or ferries?
Ultimately, the congestion free network is about giving people real and genuine choice. The choice to opt out of being stuck in traffic: