An article on Planetizen a few months back highlights an issue often missed in the debates over roads versus public transport or sprawl versus intensification – the fact that for the last century most government spending and policy has supported car use and lower density development. Yet this is seemingly often ignored by those moaning about how planners are supposedly ’forcing’ people into dense living environments while transport planners are supposedly ‘forcing’ people onto public transport.
Michael Lewyn, the post’s author, asks an interesting hypothetical question to set up his argument that really public investment and policy (essentially public sector intervention) has for an incredibly long time been tilted towards urban form and transport outcomes epitomised by car dependent urban sprawl:
After reading yet more blather about the “war on cars” or “density-pushing planners” I recently had a thought: what if government really did favor transit and compact development as aggressively as they had favored sprawl in the 20th century? How different would planning and transportation rules be?…
For example, in the first half of the 20th century, government at all levels spent public money on roads for automobiles, while giving limited or no support to streetcars (which at first were private). As transit providers began to lose money, government took them over, and the federal government started to support public transit in the 1960s. Today, the federal government spends about four times as much on highways as on public transit. As a result of these policies, many cities have weak public transit systems, while many people and jobs have moved to suburbs served by highways.
This cartoon from Andy Singer springs to mind (he has a heap of other great cartoons on many of the issues we talk about on the blog)
Some examples are then outlined to give us a bit of an idea about how extremely pro public transport and urban intensification policies would need to go in order to truly counter-balance what has existed for around a century in the USA (and in New Zealand). For transport funding:
So if government completely reversed course in the 21st century, it would reverse funding ratios: that is, spend half a century spending several times as much on public transit as on highways, and then spent another half century completely defunding highways (much as it ignored transit in the early and mid-20th century).
For how mortgages for greenfield development were subsidised:
In the 1950s, government heavily subsidized suburbia, through Federal Housing Administration (FHA) lending criteria that favored suburbs. For example, FHA refused to subsidize mortgages in racially diverse urban neighborhoods, and favored new single-family homes (which tended to be in suburbs) over renovating existing homes- a policy that encouraged middle-class homeowners to move to suburbs. So to completely reverse course, the FHA would have to spend a couple of decades refusing to insure mortgages in any neighborhood built after the New Deal, while subsidizing mortgages in older neighborhoods.
For density controls:
Since the 1920s, most American zoning codes have mandated that huge swaths of land be limited to low-density residential use, ensuring that many Americans do not live within walking distance of public transit. To truly reverse this policy, government would have to spend the 21st century mandating that new development be at densities sufficient to support transit, and would require a mix of residential and commercial uses to the extent possible.
And how about parking?
Since the 1950s, most zoning codes have also required that commercial landowners and multifamily dwellings provide visitors with parking lots and garages, thus effectively subsidizing driving by making parking more abundant. And because zoning codes also required buildings to be set back from the street, these parking lots were usually in front of buildings, thus ensuring that pedestrians must waste time walking through ugly parking lots in order to reach their destinations. To reverse this policy over the next 60 years, government would have to establish maximum parking requirements (as a few cities have in fact done) and require buildings to be in front of sidewalks so pedestrians could reach them more easily.
Of course this is just a series of hypothetical questions, which highlight that many of the changes to land-use and transport planning that we promote on this blog: things like removing parking minimums, removing/lessening controls that limit development density and promoting a better balance between public transport and road spending are really pretty mild and attempt to shift planning policy and transport spending back much more towards a ‘neutral’ situation. If we really were promoting bias towards intensification instead of sprawl, public transport instead of road spending, that was to the same extent (but opposite direction of course) as what has happened in the past century – we’d have to be WAY more extreme.
In this recent post Matt mapped census journey to work data across Auckland.
I will now use this data to draw some high-level inferences about returns on Goverment investment in transport infrastructure in Auckland in the period from 2007-13, i.e. between the last two census. The specific question I want to answer is: Given the level of Government expenditure in different transport modes in Auckland in the last 7 years, which mode(s) appear to have delivered the best returns in terms of their ability to accommodate growth in journey-to-work (JTW) travel demands?
Let’s look at the data. Total number of JTW trips by mode for the last two census are summarised in the table below, along with the change (growth) between census.
- Note 1: “Private vehicle” combines JTW trips for private/company cars, trucks, passengers, and motorcycles.
- Note 2: Public transport combines JTW trips for bus and rail.
This shows how an additional 23,223 JTW trips were undertaken on census day. Of these trips, 10,200 (44%) were undertaken by car; 9,118 (40%) were undertaken by public transport; and 3,825 (16%) were undertaken by walking/cycling.
Matt has helped pull together a spreadsheet of government transport investment by mode from 2006-13. This includes investment by NZTA (nee Transit) and local government. In the table below I have added total expenditure by mode, and then used this to calculate an average cost per (new) JTW trip and (additional) JTW-km.
Note 3: Average trip length was calculated as the weighted average trip length using HTS data.
Now we start to see some interesting trends. From these numbers it appears that Government investment in public transport and walking/cycling has been approximately 2.6 and 6.7 times more cost effective than investment in roads during this period, at least when measured on a per JTW-km basis (the differential is even greater when you use the $ per JTW trip indicator). This in turn suggests that it would be more cost-effectively to cater for growth in JTW travel demands by shifting investment away from roads and into public transport and walking/cycling.
This raises the question of how much should our current investment levels shift in order to deliver approximately neutral investment outcomes for each mode? To help with this I have calculated what I call a “neutrality factor”. For each mode this is calculated as the ratio of 1) it’s share of growth in JTW-kms divided by 2) its share of total expenditure. This tells you how much expenditure on a particular mode would have to change to have achieved a ratio of 1.0, i.e. a mode’s share of JTW-km growth was equal to its share of Government investment.
In the table below I have calculated the neutrality factor for each mode.
When calculated on this basis, it would suggest that we should increase government investment in public transport and walking/cycling expenditure approximately two-fold and five-fold respectively, while reducing investment in roads by approximately 30%.
Of course, this analysis is a “partial analysis” because it assumes demand (number of new JTW trips and kms) is held constant. In fact, if we were to see such a shift in transport investment priorities over a sustained period of several years then you would expect the demand for each mode to respond accordingly. More specifically, shifting government investment away from roads and into public transport and walking/cycling would be likely to encourage more people to use those modes, which would in turn warrant greater government investment. Hence, the changes in transport investment priorities suggested by this analysis are likely to be relatively conservative.
This is obviously a back of the envelope (“BOE”) analysis.
The most obvious issue is that JTW trips account for only a proportion of total travel. Education travel is another major contributor to peak period congestion. However this tends to be slanted in favour of public transport and walking/cycling – such that including these trips in the analysis seems likely to confirm these outcomes.
The other is that we are lumping together capital and operating costs. While this makes sense in the long run (because after all, capital investment is really just a very lumpy operating cost!) it may be distorted in the short run. Hence it might be useful to extend our analysis by calculating the effectiveness of transport investment from 2001 to 2013. Indeed, the period from 2001-2006 seems to have been associated with less dramatic changes in travel demands than the period from 2006-2013.
While this analysis certainly could be improved, even now it seems to provide a useful indication of the relative returns from Government investment in different transport modes from 2006-13. I also feel somewhat justified using it because members of the current Government frequently justify their transport investment priorities on the grounds of raw 2006 JTW mode share. I’ve followed their lead and focused on JTW trips, but instead looked at the change in demand over time and then compared it to relative expenditure levels.
This tells quite a different story than if you look at raw JTW mode share.
On this basis I’d suggest that Government investment in public transport and walking/cycling in Auckland has typically delivered more cost-effective returns than investment in road based transport infrastructure. So the next someone tries to argue that we should invest more in roads because “86% of Aucklanders drive to work by car”, please challenge them on the basis that relative potential for growth – rather than the level of existing demands – should be the primary determinant of our future investment priorities.
Footnote: In the most recent census private vehicle mode share appears to have dropped from 86% in 2006 to 83% in 2013. Given that we’re yet to see the effects of electrification, new EMUs, integrated ticketing, and the New Network, one would have to think that the relative returns from Government investment in public transport might be similar high if not higher by the time the next census rolls around.
In NZ, we don’t have many diesel cars. They make up around 8.4% of the “light passenger vehicle” fleet,1 similar to Japan (where most of our cars come from) and the US, but much lower than most European countries. Diesel engines are more common for “light commercial vehicles”, i.e. small goods vans and trucks. They account for 68.9% of these vehicles. Overall, across the entire light fleet – defined as all vehicles under 3.5 tonnes – diesels make up 16.2% of vehicles.
Diesel light vehicles pay Road User Charges of $53 per 1,000 km including GST, or $46.08 excluding GST. This charge goes straight to the National Land Transport Fund, paying for road maintenance and construction (and a token amount to public transport and other things).
Petrol vehicles don’t pay Road User Charges. Instead, they pay an excise on petrol, which currently equates to 53.524 cents per litre, excluding GST.
As I’ve written previously, the Ministry of Transport estimates that petrol light vehicles have an average on-road fuel efficiency of around 10.1 litres per 100 km. So, to travel 1,000 km, petrol cars use around 110 litres, and pay $54.06 into the National Land Transport Fund. That’s quite a bit more than the diesels – 17% more per kilometre.
That’s not really fair, especially considering that diesel light vehicles tend to be heavier than petrol ones (since many of them are vans, light trucks, big SUVs etc), and so they do more “wear and tear” on the roads. Plus, the diesel vehicles travel further on average – 14,580 km a year vs. 10,850 for petrol vehicles.2
Overall, a light diesel vehicle, travelling 14,580 km a year, will pay $672 into the NLTF. An average petrol car doing the same distance would pay $796 – even though it does less damage to the roads it’s driven on. The difference is a bit over $100, which may not sound like a lot – but it adds up over hundreds of thousands of vehicles.
The government could level the playing field by lowering the excise for the many petrol cars by a tiny bit, or by raising Road User Charges for the fewer diesel vehicles by quite a bit. Given that there’s currently a bit of a funding issue for the National Land Transport Fund – thanks, Roads of National Significance! – there’s a strong argument for picking the latter option.
I emailed the Ministry of Transport to check the figures I’ve used above, and they provided the following additional context:
Until 1 July 2008, light diesel vehicles contributed more to the National Land Transport Fund (NLTF) per 1,000km than petrol vehicles, because a large portion of petrol excise duty was being directed into the Crown consolidated fund, while all road user charges revenue went into the NLTF. When the Government fully hypothecated petrol excise duty to the NLTF from 1 July 2008, this resulted in petrol vehicles contributing considerably more to the NLTF per 1,000km than diesel vehicles.
I would note here that, even pre-2008 when diesel vehicles were paying more into the NLTF than petrol vehicles, the petrol vehicles still paid more overall per kilometre – it’s just that some of those funds were diverted for other purposes. In 2008, the Labour government shifted transport funding towards more of a user-pays system (still not entirely user-pays), changes which I think makes sense, and which National also supported.
The Ministry of Transport also mentioned in their email:
The rates of petrol excise duty and light road user charges are slowly being brought together. However, this is a gradual process, as recent Government decisions have capped the maximum increase in any road user charges rate at around 10 percent for a given year. For example, on 1 July 2013, the rate of petrol excise duty increased by 3 cents per litre, or 5.9 percent. The rate of road user charges for light vehicles increased by $5, or 10.4 percent.
As such, it seems the government is well aware of the issue, but at the current rate, it will still take several more years before this long-standing imbalance is fixed entirely.
There are other equity issues around the excise vs. Road User Charges system – for example, with petrol cars, there’s a greater incentive to choose more fuel-efficient models – and I’ll look at those another time. These kinds of issues will become clearer if we ever end up moving to a universal Road User Charges system – which is quite possible, although unlikely to happen for a few years.
1 “2012 New Zealand Vehicle Fleet Annual Spreadsheet”, tab 8.1a,b,c, Ministry of Transport
2 My calculations using “2012 New Zealand Vehicle Fleet Annual Spreadsheet”, tab 3.1,3.2,3.4,8.3, Ministry of Transport
Late last year we illustrated how easy it is to afford to build the Congestion Free Network across Auckland over the next 17 years. Despite investing over $60 billion in our transport system over 30 years congestion is still expected to get worse and we believe that is predominately because overall the current plans prioritise investment in roads well ahead of investment in alternatives that can help improve mobility and encourage a shift in mode share.
Essentially, because the CFN provides such a comprehensive alternative to congestion, we think it’s definitely possible to reduce the proposed spending on new roads infrastructure between now and 2030 from around $22 billion to just under $6.5 billion.
It’s one thing to be able to afford the CFN programme over 17 years, but what’s just as important is how we have staged the CFN’s implementation to ensure that it is affordable in each and every year between now and 2030. Much of the problem with our current transportation plans seem not to be about what happens in 2024 or 2031, but the enormous trouble affording the huge number of projects we want completed before about 2030. This was shown in the Consensus Building Groups report – note the expenditure includes operating costs.
Put more simply, I just struggle to see how Auckland can afford to build the City Rail Link, AMETI, the East West Link (in whatever form), Penlink, the first stages of the Mill Road Project, the Dominion Road upgrade and many many other projects over the next few years. So we’ve been careful how we stage the implementation of the CFN to not fall into the same trap as the current plans – to ensure that in each and every year we keep the investment in capex to not much more than a billion dollars – significantly less than what will be required in some years under the current plans.
Broken down by project type, here’s our plan for implementing the CFN as well as other major capital expenditure works over the next 17 years that we think are worthwhile projects. We’ve also tweaked the costings of some of the projects from what we have published previously. For example we’ve increased the cost of rail to the airport as we believe the ITP costing is probably too low but we’ve lowered to cost of buying extra trains as the figures we used included the costs of the current EMU purchase.
(Note the project title is what’s listed in the original ITP, hence reference to Airport Eastern Rail Link, which in the CFN is actually a busway).
Because we don’t know exactly how long each project would take to build we’ve obviously had to make a few assumptions. Generally single projects have a slower start to their spend (because it’s on things like design, consenting and property acquisition) then they ramp up once construction is underway before having a slowish end again. For project categories (for example “other urban arterial upgrades” we’ve generally focused the higher amounts for later years because it’s likely the necessary projects aren’t well known at this stage, but as required in some years we squeeze down the funding a bit if there are other large projects on at the same time.
Looking at the above table in more detail it’s amazing to see what can be achieved:
- Southeast busway finished by 2020
- Mt Roskill rail extension finished by 2022
- City Rail Link finished by 2021
- Northwest busway finished by 2020 and SH18 busway by 2026
- $250m upgrade of Southern Motorway done by 2021
- Western Ring Route completed by 2021
- North Shore Rail (at the fairly generous price tag of $3b) done by 2030
And many others obviously.
Looking at the grand totals for each year, it’s clear that over time there’s a significant decrease in spending on motorway projects – but this makes sense with the Waterview Connection being sold as “completion of the motorway network” for so many years.
While the CFN does dominate capex spending in some years (especially in the big spending years for building North Shore Rail), generally there is plenty of money in other categories – particularly local roading projects – for worthy improvements.
We will continue to do more work detailing the affordability of the CFN over the coming weeks and months – hopefully informed by better costing information as Auckland Transport release it as part of their work on the Integrated Transport Programme (version 2). Our goal is to continue to refine the details of the network, to better understand its cost, affordability and timing and to highlight its many benefits for Aucklanders.
What becomes obvious from the exercise above is that Auckland can afford the Congestion Free Network. Sure, constructing the network will dominate capital expenditure on transport over the next 17 years but we are building a pretty massive high quality PT system from near scratch.
As I discussed yesterday the debate on big urban issues of housing and transport far too frequently descends into left/right debates and today I’m looking at transport.
One of the reasons this has come up is that we’ve had some interesting conversations on Twitter in the last few days with a couple of Nationals MPs, which apart from highlighting a scary lack of understanding about transport, inevitably touched on the issue about whether the transport policy that we generally advocate on this blog fits into the traditional “left-right” political spectrum. Here’s what the fairly new National MP Paul Foster-Bell said on Twitter:
We have a fairly diverse range of bloggers on this site: a couple of economists, a transport planner, an urban designer, an architectural photographer, a planning student etc and of course myself who most recently working in banking and from our discussions I think we have some reasonably broad political viewpoints.
Furthermore, many of the key changes to transport and planning policy that we have advocated for strongest over the past few years hardly align with any traditional definition of a “left worldview”. Let’s take a look a few of our most common arguments:
- Cut back or cancel some of the Roads of National Significance that do not provide value for money. This seems to me like basic fiscal conservatism – as some of the RoNS projects are simply a huge amount of money being spent on a problem that really doesn’t warrant such high investment. Puhoi-Wellsford could be replaced by Operation Lifesaver, Transmission Gully is just overkill for a city that’s hardly growing in population, the Kapiti Expressway has a cost-benefit ratio of 0.2, the Hamilton bypass will carry fewer vehicles in 20 years time than the Kopu bridge did when it was a single lane… and so on. This seems like cutting wasteful spending, something that those on the right of the political spectrum say they want to do?
- Built the Congestion Free Network instead of the Integrated Transport Programme. Ultimately the CFN proposal is at least $10 billion cheaper than the current transport programme for Auckland. It probably has a much higher chance of achieving the many targets that Auckland has set for its future transport outcomes than the ITP is able to meet (although that’s not hard as the ITP failed to achieve just about any of its targets). Similarly to above, this is achieved through chopping out an enormous amount of wasteful spending on unnecessary projects (both road and rail) – yet again, something that those on the right of the political spectrum say they support?
- Built complete Streets. Democracy equality and choice are meant to be good things aren’t they? Most of our roads focus solely on the task of moving as many vehicles as possible and give scant regard for anyone not in a car. Building complete streets that treat each user equally and allow people to have a real choice in how they get around is the ultimate form of transport democracy.
- Improve walkability. We’ve seen both locally and internationally that when there is a focus on improving the walkability and the pedestrian environment (that includes wheeled pedestrians) a couple of significant things happen. One is that people shop more boosting local retail, perhaps the best example of this is the upgrade of Fort St to a shared space which has seen the hospitality retailers revenue increase by a staggering 400%. The second thing is that people walking (and cycling) more is good for them, improving health and therefore reducing long term costs to the health system. This is further enhanced as often these improvements also see a reduction in traffic crashes. So once again we see a case where we can lower costs while also increasing revenue and therefore tax at the same time.
- Get rid of Minimum Parking Requirements. This key proposal is to get rid of a current regulation that causes more harm than good, that adds significant cost onto developers (thereby discouraging development and growth) and often just adds regulatory churn cost for no gain (as it seems most applications for parking waivers appear to be granted). I would have thought this aligns quite well with a “right of centre” political ideology where reducing regulation (especially regulation that harms economic activity and growth) is a very very good thing.
- Relax Planning Rules to give people more Housing Choice. This was covered yesterday but worth repeating again. Most planning rules limit development potential in existing urban areas: whether that’s through height limits, yard setbacks, density controls, parking requirements, minimum unit sizes or whatever. Through the Unitary Plan process we have advocated for (and will continue to do so) the relaxation of planning controls – particularly in areas where it makes good sense to allow high density developments to make best use of existing infrastructure. Similarly to parking controls, this is a relaxation of current regulation that significantly limits development potential and the prospects of economic growth through making better use of inner parts of the city. The relaxation/elimination of economically damaging regulation should be music to a right-wingers ears you’d think.
There are probably many more examples than above, but they give a good overview of why transport policy (and land-use policy) really doesn’t fit well into a traditional “left-right” ideological spectrum. We could easily point out how bizarre it is that our current supposedly centre-right government has significantly increased petrol taxes to spend on a series of very dubious mega-projects in the form of the RoNS. That seems rather more “tax and spend” than fiscal conservatism.
Furthermore, if you look internationally there are many examples of centre-right political parties taking public transport seriously. In Britain, the current Conservative government is making a big contribution to the £15.9 billion Crossrail project in London and is also likely to spend even more money on the High Speed 2 rail project. That government seems to understand the economic importance of having good rail infrastructure. For example, Crossrail massively increases the residential catchment of the Canary Wharf employment area – somewhat similar to how the CRL vastly increases the residential catchment of the city centre. London Mayor Boris Johnson is a big champion of not only Crossrail but also getting more people to ride a bike and is planning to invest huge amounts of money in cycle infrastructure. In Australia, the centre-right New South Wales government is championing and making a massive funding contribution to the North West Rail Link project. Even in Auckland we have business groups who politically are considered “right of centre” supporting projects like the City Rail Link and improved cycling infrastructure.
It’s interesting to try to understand this political divide through other lenses than a traditional “left-right” spectrum. Pro-urban and suburban/anti-urban is perhaps a better lens in my opinion – particularly because it seems to explain better why some right-wing parties (like the Republicans in the USA, the current Liberal Government in Australia and the National government here in NZ) appear to be sceptical at best about public transport, while others (e.g. NSW government and UK government) seem to really understand the importance of public transport.
Perhaps this “pro-urban” and “suburban/anti-urban” divide even exists within the current National Party. It was interesting that John Key (an Aucklander who has lived in big overseas cities for much of his life) was the person who changed the government’s position on City Rail Link while Steven Joyce (grew up in New Plymouth and now lives on a lifestyle block in Auckland) and Gerry Brownlee (from Christchurch) were apparently the biggest opponents of that change. Or how we get current Associate Transport Minister Michael Woodhouse saying this on auto-dependency:
From Dunedin, in case you were wondering.
Given the recent publicity about cycling investment it is interesting to see how Auckland stacks up to other cities in New Zealand.
The real leader at the moment is Christchurch. In June they signed off on a $69 million plan to construct a major cycleway network over the next 5 years. In the 2014/2015 year they will spend $13.5 million. Even better these will almost exclusively be separated cycleways. Earlier this year reconstruction of a major road near the University led to the construction of a great separated cycleway, see details on the excellent Cycling in Christchurch blog here.
New separated cycleway on Ilam Road, Cycling in Christchurch 2013
Christchurch is also showing the way with great Cycle Design guidelines, inspired by one of the world leaders, Copenhagen. For example this is the preferred layout for major cycleway intersections, called the ‘Dutch intersection’. The work to be done in Christchurch trialling these will make it much easier for Auckland Transport to roll out these designs in Auckland.
Christchurch City Council 2013
Christchurch is not the only city boosting spending. In December Wellington City Council announced they planned to triple cycling spending from $1.3million to $4.3 million. Dunedin also boosted their cycle spend a few years ago and they plan to spend $1.9 million per year on cycling.
Well how does Auckland stack up. Here is the recent data from Auckland Transport.
- -2011/12 – $7m (prior to 2012-15 RLTP)
- -2012/13 – $9.967m spent
- -2013/14 – $10.3m planned
The Draft 2014/2015 Annual Plan was discussed at the Governing Body meeting in December, and I found a copy online. This will be open for public consultation for a month starting from January 23. Looking through the list of transport projects found these cycle projects-
|Browns Road Bridge
|Station Road Manurewa
|St Georges St
|Glen Innes to Tamaki Drive
|Mangere safe routes
|Mount Roskill safe routes
|Tamaki Drive, Takaparawha Pt – Millenium Bridge
|Waterview cycleway connection
Adding in the $1.5 million budgeted for New Footpaths (clearly not part of the cycling budget) gets us to the $10.4 million identified in the Regional Land Transport Plan, and similar to this years budget.
Generation Zero thought it would be useful to compare the 2014/2015 capital spending plans for these cities on a per capita basis, and came up with this graphic.
Note Auckland looks very sad compared with other New Zealand cities, and we really need to up our investment if we are serious about getting people cycling.
In Part 2 of my 2013 year in review I’m going to look at transport other than PT so that includes walking/cycling and roads.
2013 has been a bit of a mix when it comes to active modes. There have been some good things happen however in my opinion simply not enough has been done and from what I’ve heard (but haven’t confirmed) Auckland Transport spent well less than they had in the budget for cycling which is extremely disappointing.
Most recently we’ve seen that the council has agreed to allow the Skypath to move to the next stage where the council officers will come up with an agreement on the project with the financial backers before going to a vote some time in 2014. If that part is approved the project will still need to go through a formal resource consent process. The project isn’t without it’s challenges however with some members of the local communities on either side of the bridge determined to fight the project at every stage.
We’ve seen work begin on the Grafton Gully cycleway and Westhaven promenade and cycleway. Along Beach Rd Auckland Transport have finally proposed a proper separated urban cycleway which will probably the first one in Auckland. My understanding is the consultation saw the project get a lot of support so it is likely to go ahead which is great. There have also been some great new pedestrian (and cycling) bridges opened this year including the stunning Pt Resolution Bridge and the Westgate Pedestrian and Cycle bridge which includes quite a fun set of sweeping curves (which were to solve a grade problem).
In the CBD we’ve seen the shared space at the eastern end of Fort St completed while one on Federal St between Wellesley and Victoria St is now under construction. We also had it confirmed that O’Connell St would become a shared space which was a good result after what was initially proposed in 2012. I believe construction on the O’Connell St shared space will begin in early 2014.
Despite the slow progress of walking and cycling infrastructure we have continued to see cycling numbers increase in the city – it’s becoming much more noticeable all over the place. AT have a series of automatic cyclist counters around the city which show this increase.
Roads of National Significance
Waterview took some big steps forward this year and the project is really in full swing. The massive TBM arrived in July and starting its tunnel boring in November following quite a good public open day on the project in October. I’m not sure how fare in it is now but about 1.5 weeks ago it was about 70m in with the entire machine almost completely underground. The video below from the TBM’s facebook page from just before Christmas showing some of the progress
Also part of the Western Ring Route is the works along SH16 and anyone who has travelled on the motorway in recent months will have seen just how much work is going on. The motorway is almost a constant work-site from east of Carrington Rd through to west of Lincoln Rd. The one patch that isn’t – Te Atatu interchange – will likely start construction in 2014 while we will probably see work beginning on the St Lukes Rd interchange soon too.
Puhoi to Wellsford
Over 2013 we’ve seen the work on the Puhoi to Warkworth section advance culminating in the project being lodged with the Environmental Protection Agency late this year as the NZTA tries to obtain the designation. One of the funniest things I found about this is that despite all of the talk that the project was needed as a lifeline to Northland – all of the supporting documents effectively confirmed that the major traffic issues only really occurred at Holiday times (when many businesses are shut down anyway). We also found out this year the project will almost certainly be built by way of a PPP. There are different forms of PPP and not all are necessarily bad however the way this road (and others like it) will be built will see us paying huge ongoing sums to the private funders with little to no risk for them as they will be paid providing the road is open.
By contrast to the Puhoi to Warkworth section, there has been a deafening silence on Warkworth to Wellsford section. The last we heard the engineers were still unable to find a viable route for an expressway standard road. At this stage I would be quite surprised if it ever happened as originally envisioned and an operation lifesaver type solution is probably more likely – perhaps extending that kind of upgrade further north to Whangarei.
We’ve seen work continue on the other RoNS projects. In Wellington Transmission Gully is being pushed ahead despite performing poorly in economic assessments. It will be the first project to use the PPP model that will also be used on Puhoi to Warkworth and it is expected the NZTA will announce the outcome of the process in early 2014. Recently we’ve also seen more about the NZTA’s attempt to get approval to build a flyover around the Basin Reserve. An independent review highlighted a number of issues with how the preferred solution was chosen.
Much more quietly work has continued on the RoNS projects in Tauranga, the Waitako and Christchurch.
Government motorway package
In June alongside the announcement that they will support the CRL, the government also announced an entire package of other road projects for Auckland, some that saw motorway projects previously planned for 20-30 years-time brought forward. Like with all big road transport projects these days there are actually some useful projects in the mix but they invariably get lumped in with some real dogs
The first of the projects to come out of this fast tracked list of projects was officially kicked off a few weeks ago and will see an extra land added northbound between Upper Harbour Highway and Greville Rd. It is one of those projects that is actually worthwhile but some of the other parts proposed in the area including full motorway to motorway ramps fall into the overkill category.
We are likely to hear a lot more about the progress of these various projects in the coming year.
One of the projects on the fast tracked list that has had a lot of attention, especially in the last few months has been the East-West Link. This has been another excellent example of there definitely being an issue that needs to be addressed but with some of the solutions being equivalent to trying to smash a nut with a sledgehammer (or something even larger). Auckland Transport came up with four different options with the worst by far being Option 4 which would have seen a motorway rammed through the suburbs of Mangere at a cost of many hundreds of homes. AT were planning on going to public consultation on the idea in the middle of 2014 – after the time when it was planned they would go to the government for funding for the project.
Thankfully due to public pressure Auckland Transport backed down and has now agreed to talk to and work with the local communities that are affected, not just the business communities like they had been doing. I would expect the East-West Link to be fairly prominent over the coming year.
Funding – Consensus building group
Of course paying for the massive wish-list of transport projects is going to be a difficult thing – unless we change the wish-list. To try and work out how we might do a Consensus Building Group was set up by the Mayor. The idea was to get representatives from different parts of society – including various business and advocacy groups – to sit down and work through the various funding options. The ended up on the conclusion that the below two options were the best ones but that option two would probably be better at managing travel demand. It was also the option overwhelmingly supported in the public consultation.
In my opinion the process was fairly flawed as the CBG members were required to work off the assumption that the list of projects was not able to be changed to get the best outcomes, even if some of the options may have made some projects unnecessary e.g. if road pricing reduced travel demand then some of the roading projects might not be needed therefore reducing the overall amount we need to raise.
Like with the PT projects, we’ve also seen a range of smaller things going on:
- Work on Tiverton-Wolverton has continued and should hopefully be finished fairly soon (it’s looking fairly advanced already).
- AMETI has been quietly progressed, the primary focus has been on the new road alongside the rail line however next year I expect we will start to see work in other areas – for example I hear the Reeves Rd flyover will be fast-tracked
- Late this year we saw plans from AT for a massive upgrade and widening of Lincoln Rd. It’s a project I’m mixed about it, the road is a nightmare and needs improvement however some aspects are insane like intersections over 9 lanes in width.
- Penlink has once again risen on the agenda after being silent for almost three years. AT is apparently trying to hook the project into the same PPP as will be used for Puhoi to Warkworth.
- I don’t know if it’s just my perception but though-out 2013 there seemed to be a lot more crashes on motorways that ended up causing massive system wide meltdowns.
- A potentially $600m+ bridge between Weymouth and Karaka popped up during unitary plan discussions but was thankfully rubbed out with greenfield development being focussed around the rail line negating the need for it
Anything I miss?
As well as discussing SkyPath (and the Mayor’s recent dramas), tomorrow’s meeting of the Council’s Governing Body is also set to work through the 2014/15 Draft Annual Plan and adopt the Draft for consultation. There are a few unresolved matters in the Annual Plan discussions – particularly reference to an $18 million operational funding shortfall for Auckland Transport that is described below:
Officers reported to the 21 November 2013 Budget Committee meeting on Auckland Transport’s request for an additional $18 million of operational funding relative to the 2014/2015 projections in their Statement of Intent. Since then, discussions have been held with Auckland Transport to address their funding shortfall. It has been agreed that further scrutiny of Auckland Transport’s operating expenditure budgets is required. A joint group of officers will undertake this review over the next few months. Auckland Transport are also reviewing the shortfall in parking revenue where current charges appear to be below market.
This is a pretty massive request for additional funding – one which was previously rebuffed by the Mayor when he originally proposed the budget a few weeks back. Given that Auckland Transport slashed the price of its off-street parking rates in the city centre in recent times, it’s no wonder that has been identified as an area that could raise additional revenue. This should have an additional benefits too, for example there are times when I have needed to drive to town for a meeting (shock horror) only to find the car parking buildings full which indicates that the pricing is probably set too low. The buildings being full are also something you can’t tell before you enter as the parking info system seems about as reliable as the bus real time system.
It would also be nice to start to see some of the efficiencies from rail electrification and integrated ticketing (you know, how we don’t need 4 staff on every train to clip tickets any more) actually filtering through as well. Both should also help to increase patronage and therefore revenue too, especially once people start to see and experience the new trains. Patrick and I were lucky enough to get a trip on one of them last night and the quietness and quality of them is going to blow people away. Let’s just hope the last thing cut in any budget shortfall is public transport services.
Returning to the parking issue, if we look a bit closer at the number in the Annual Plan, it does seem like an extraordinary amount of operational expenditure is going into off-street parking in the 2014/15 Annual Plan:
What the table above shows is that on-street parking and enforcement is a pretty profitable activity: $62.4 million of income and only just over $10 million of expenditure. Yet off-street parking seems to be an absolutely enormous drain on resources with a crazy $133 million of operating expenditure and only $28.6 million of income. Something tells me this has to be either an error or some strange accounting trick that has led to such a giant number – one that’s way higher than in the 2013/14 Annual Plan.
Regardless of what’s led to a requirement of $105 million net subsidy of off-street parking being required, it appears that this is having a huge impact on Auckland Transport’s budgets. Off-street parking should be a profitable activity for Auckland Transport – particularly as many of the central city buildings use up some pretty prime real estate that could otherwise be put to a much better purpose. Removing the $105 million net subsidy to off-street parking would not only eliminate the budget shortfall, it would free up a huge amount of additional operational funding that could go to more worthy areas like improving public transport services, footpath quality and so on.
The other numbers in the Draft Annual Plan that caught my attention related to the level of public transport service expenditure by mode:
Presumably, the expenditure on buses and ferries have just been mixed up – it’s hard to imagine how you could have $160 million of operating cost for the ferry network and have buses being so incredibly profitable. It is a bit worrying though to see official documents like the Draft Annual Plan making pretty basic errors when it relates to levels of expenditure up to $100 million.
Finally, pages 188-197 of the Draft Annual Plan report outlines the capital expenditure programme for the 2014/15 year. Below is a list of some of the more interesting projects proposed for capital expenditure in that year:
There are still a few key gaps where projects will be required to deliver the new public transport network (Te Atatu interchange, Wellesley Street bus improvements are two that come to mind) which aren’t funded to any great degree in the 2014/15 Annual Plan. Whether this puts the new network’s delivery at risk perhaps depends on the timing of when different parts of the network are rolled out. Generally the capital programme for 2014/15 looks pretty good though – particularly exciting to see the next generation of city centre projects finally coming through.
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.