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New Waikato and Bay of Plenty motorways confirmed

The NZ Herald reports:

This afternoon Transport Minister Gerry Brownlee is expected to announce funding for two transformational roading projects. A $4 billion four lane motorway between Cambridge and Taupo, extending the Waikato Expressway a further 100 kilometres to the south and an $8 billion 50km motorway from Cambridge to Tauranga which includes a 14km road tunnel. Both projects were hinted at in the 2012 Government Policy Statement for Land Transport Funding. He will announce the projects at a ceremony to celebrate the extension of rail electrification into Britomart station. 

“These are critical projects for improving freight efficiency in the North Island,” says Mr Brownlee in a leaked copy of his speech. “While we realise a near $12 billion investment in two roads that each carries fewer vehicles than the Kopu Bridge did when it was still one lane may appear to some as slight overkill, we think that those opposing the project just oppose progress and want us to return to dirt tracks and horse carts.”

NZ Transport Agency Regional Director Harry Wilson said his office was in celebration mode over the Minister’s announcements. “Once the Waikato Expressway project is finished in a few years’ time, we really didn’t know what we’d do with ourselves as we’ve lived and breathed that project for the past decade or more. We’re so pleased to see the government commit to the future of the Southern Waikato and Bay of Plenty regions – even though combined they’re not really growing – which will keep us in work for many years to come!”

Mr Wilson also noted that his organisation had been instrumental in pushing for the inclusion of the two projects in the 2012 Government Policy Statement and were “enthused” the project had been given funding approval. “We’ve learned a lot from our Wellington office in the past few years about the tactics of getting unnecessary projects in parts of New Zealand that aren’t growing over the line. We’re just so proud to have come up with the two biggest and most expensive projects ever imagined in New Zealand and now have funding approval for it!” Mr Wilson added.

Minister Brownlee noted in his speech that “Much like other Roads of National Significance, the Cambridge to Taupo and Tauranga motorways will duplicate an existing route where upgrades to that road could achieve most of the benefits for a fraction of the cost, but frankly upgrading what we’ve got is just boring – I want more motorways!”

Traffic counts between Tokoroa and Taupo on State Highway 1 show a slight increase in daily vehicle volumes from 6500 in 2009 to 6700 in 2013. Mr Wilson noted that “our traffic modelling suggests traffic volumes will increase to 60,000 cars a day in the next 5 years – almost all of which will be trucks!”

On State Highway 29 over the Kaimai Ranges traffic had also slightly increased, growing from 9200 vehicles per day in 2009 to 9300 in 2013. In the next five years this route is expected to increase to over 80,000 vehicles per day. The high number of trucks is said to be a key part of the decision to construct a tunnel under the Kaimai Ranges which was first investigated by the NZTA in 2010.

Local politicians unanimously supported the project when spoken to.

South Waikato District’s mayor Neil Sinclair said the projects would boost the economic productivity of his region significantly and wasn’t worried about the impact of the new motorway bypassing Tokoroa. “Look at Pokeno, it recovered a mere 15 years after being bypassed by the Waikato Expressway,” stated Mr Sinclair.

Taupo District Council’s mayor David Trewavas also stated his strong support for the project. “We’re about an hour and a half south of the thriving metropolis of Hamilton. This motorway will cut that time by at least a minute or two, which will be transformational to our economy. A local resident walking past added that they “didn’t care what was built, as long as it meant the money couldn’t be spent in Auckland.”

New Zealand Road Transport Forum chief executive Ken Shirley said the two roads were great news and would allow trucks to even compete better with Kiwirail, especially on the Tauranga to Auckland route. “Everyone knows that the wider population and other road users subsidising trucking is a great investment and these two projects will be great for that” he said.

Details of the project’s exact route, the timing of construction and how it will be funded have yet to be determined but when questioned, Mr Brownlee said he was optimistic the money could be found for such important additions to state highway infrastructure in the Upper North Island. “Hey we could always push that silly rail loop under Auckland’s city centre back a few more years,” Mr Brownlee shouted at reporters while leaving the airport for Britomart station in a Crown limousine.

A business case for the motorway projects is expected to be presented to Cabinet for funding approval next Monday.

Cambridge to Taupo and Tauranga motorways

Does building roads harm the economy?

Most proposals to build new roads or widen existing ones seem to boil down to an ultimate belief that it will “help the economy”. Whether it’s by improving freight reliability or getting people to their jobs faster or helping business travel or whatever, there seems to be a fundamental belief among many that quite a strong relationship must exist between building more roads and improving the economy.

Clearly this is a contestable assumption, and some recent research in the USA details some pretty interesting trends – as reported on in Planetizen:

University of Minnesota professor David Levinson has written in the past that, because of the relative completeness of our national highway network and the cost of construction, the return on investment for additional mileage is approaching zero. One study estimates the return on investment for highway construction was just 14% between 1990 and 2000.

I recently decided to follow up on this line of research, so I dug through some Census data. What I found was shocking, though not altogether surprising. It seems that, besides wasting billions of taxpayer dollars, road-building may actually be holding back economic growth overall: from roughly 2000 to 2010, states that built the fewest urban road miles grew an average of 64 to 94 percent faster than their asphalt-enamored neighbors. Rather than increasing productivity through increased mobility and reduced congestion, as politicians and lobbyists so often promise, all this mindless road-building could be depressing statewide economic growth!

Let’s look at the details a bit more:

Looking at the numbers in aggregate, we see some interesting trends that seem to hold up just about any way you slice the pie:

  • States that increased their urban road mileage by less than 30% grew by an average of 14.40%, while those that increased mileage by greater than 30% grew by an average of just 8.77%.
  • If we set the cutoff at 20% mileage growth, states that built less grew by 17.97%, and states that built more grew by 9.24%.
  • At a 10% cutoff, states that built less grew by an impressive 20.70%, compared to just 10.66% for those that built more.

Statistically, analyzing the correlation between road-building and economic growth gives us an r-score (correlation coefficient) of -0.34, which implies that about 10% of a given state’s economic growth can be explained by how much urban road-building they did over this time period. Many things influence the overall health of any economy, obviously, so we shouldn’t expect the quantity of roads to wholly predict statewide economic growth by itself, but this does indicate a negative correlation between the two variables: more roads equals less growth. (As always, please remember that correlation does not imply causation.)

And for a graphed comparison:

roads_vs_growthThe post’s author, Shane Phillips, doesn’t think that these results are particularly surprising:

None of this should be particularly surprising. While politicians and advocates love to tout the job-creating value of new road and highway capacity, congestion reduction rarely lasts more than five years and widened roads ultimately only succeed in extending the boundaries of wasteful, unproductive sprawl. In the case of road widenings, it’s entirely possible that the disruption caused during the construction phase completely erases — or even exceeds — the fleeting benefits of reduced congestion.

Then there’s the opportunity cost: think of all the good that could have been done with the hundreds of billions of dollars spent on roadways over that period: more responsible transportation spending, education, renewable energy … take your pick.

I think it’s probably unlikely that building roads directly harms the economy, but there are logical reasons to think that it might cause indirect harm: particularly due to it not the best use of public funds and encouraging dispersed land-use patterns which undermine agglomeration. New Zealand’s heavy dependency on private vehicles also forces us to spend a lot of money each year importing cars and oil – basically cancelling out wealth that we create from exporting dairy to the the world.

The next version of the Government Policy Statement will be released some time later this year. If it’s anything like the current version it will stress the importance of transport’s role in improving the economy and then make a giant leap of faith in assuming that building more roads is the best way for transport to improve the economy. It’s time to fundamentally question that assumption.

Is the government trying to take over Auckland Transport?

In his column this morning, Brian Rudman covers an area we haven’t been paying enough attention to, how the changes to the Land Transport Management Act will affect the governance of transport in Auckland. Rudman starts out by explaining the situation:

By sheer weight of numbers, elections are won and lost in Auckland, so it would seem suicidal for a government to declare war on a third of the population. But that seems to be exactly what the Key Government is doing.

Of course it’s not the first government to see Auckland as “the enemy”. Labour’s finance spokesman, Michael Cullen, once infamously quipped to a Taranaki election audience that “Auckland now sits atop the nation like a great crushing weight”.

But National’s current behaviour has a pattern to it that goes beyond pre-election hyperbole. Having created the Super City less than three years ago, it is acting as though it was all a big mistake and the aim is now to emasculate the monster it created.

In recent times, the mortars have been lobbed across the Bombay Hills from Wellington in a near-continuous barrage. Last week, at a post-Budget meeting with Wellington businessmen, Finance Minister Bill English warned: “We cannot let 20 planners sitting in the Auckland Council offices make decisions that will wreck the macro economy. We cannot let that happen, and we won’t let that happen.”

This was hot on the heels of the charade of the Auckland Housing Accord. This was supposed to signal the working-out of a mutually agreed solution to the city’s housing shortages. Yet a few days later, Housing Minister Nick Smith was threatening to “intervene by establishing special housing areas and issuing consents for developers”.

The idea that the government is lobbing verbal and policy mortars over the bombays seems like quite an apt description. I suspect that there are much more than 20 planners sitting in the council offices, although perhaps Bill is just referring to the senior staff. Rudman continues:

Sailing below the radar is the most concrete example of the Government’s efforts to sabotage Auckland’s local democracy. The tool being used is the boring-sounding Land Transport Management Amendment Bill, which will become law early next month. It will usher in a significant transfer of power in the area of transport planning, from the Auckland Council to the Government.

The new law strips Auckland councillors of their power to decide how the $459.5 million of ratepayers’ money – 33 per cent of total rates income – spent on transport each year is targeted. Instead, the final arbiter will be the unelected board of Auckland Transport, which will have to follow the Government policy statement (GPS) on land transport. The only sanction the Auckland Council will have to control the board of Auckland Transport – a council-controlled organisation – if it goes feral is to sack it. But the new law insists the board’s first loyalty in setting transport priorities must be to the government GPS, so what would a replacement board do differently?

This is quite concerning, the GPS effectively sets out governments funding priorities and ranges. At the moment they have focused almost entirely on the building of new roads and specifically the Roads of National Significance at the expense of other state highway improvements, local roads and of course public transport. Being fair, the current government didn’t set up the GPS as it was brought in by the previous government. This also shows one major flaw when complaining about it, it can be changed by a future government. A change in government could see funding priorities for which we may be thankful should we ever have an anti PT council.

Its also funny how Bill English complains about a handful of planners sitting in Auckland making decisions that could wreck the economy but doesn’t object to probably a similar number sitting in the MoT offices in Wellington making decisions that will wreck the cities future transport network and economy. But it gets worse:

The new act also ignores another statutory document, the Auckland (Spatial) Plan, which sets out Auckland’s direction and policy, including the integrating of land-use with transport.

Speaking to the select committee on behalf of the Auckland Council, transport committee chairman Mike Lee complained of the impending loss of democratic accountability to Auckland ratepayers, pointing out that Auckland would be the only part of New Zealand where elected representatives would not set the local land transport plan.

He said that by law, the principal objective of a council-controlled organisation such as Auckland Transport was to “achieve the objectives of its shareholders, both commercial and non-commercial”. He said the situation “would in effect be creating two local governments in Auckland”.

It was “appropriate in terms of its statutory responsibilities and as owner, major funder and sole shareholder of Auckland Transport, that the Auckland Council continues to set the long-term direction for transport”.

The select committee did the reverse, noting that it had gone out of its way to recommend changes “to ensure that Auckland Transport may not delegate its responsibilities for regional land transport plans and passenger transport plans to the Auckland Council”.

It did this by repealing the Local Government (Auckland Council) Act 2009 clause that says the governing body of Auckland Council is responsible and democratically accountable for setting transport objectives for Auckland.

So not only are we being forced to have to follow the governments transport agenda but our elected representatives won’t even have the chance to set the high level strategy any more. This is effectively taxation without representation and is shameful. To me it also suggests that the government are scared of the amount of power the council has. They were expecting a different result 3 years ago but it backfired so now they are trying to back pedal as much as possible to regain control of the city.

In saying all of this, while it is a concern that the council is being shut out of the process for setting policy, I know that there are many very good people at Auckland Transport who are not about to quickly jump on the more roads agenda. Hopefully they will be able to keep things going in the right direction until such time as a future government can resolve this – although it is very rare for a government to give up acquired power so we will just have to wait and see.

If we did start to see some really bad projects being progressed ahead of much needed ones – well more than they are already – I wonder what ability the council will have to withdraw funding for them? If they say that they won’t provide any rates funding unless the projects proposed meet the councils goals then we could end up in a very public power struggle.

Kiwis want more spent on Public Transport

Well the title says it all really and it comes from a survey done by UMR Research, included in their Mood of the Nation Report for 2013:

New Zealanders are much more likely to support Government funding to go to public transport than they were 20 years ago. In 1992 they plumped for motorways by a 43% to 25% margin over public transport. In 2012 public transport is preferred by a 48% to 37% margin.

UMR Road vs PT poll


Going from 25% to 48% is a sizable change and ties in with how our transport preferences are changing.  The reality is that the government simply isn’t listening to public perception on this issue, as our current transport spending is woefully lopsided. Spending is dictated at a high level by the Government Policy Statement, the NZTA then takes that guidance when coming up with the National Land Transport Plan. Below is a breakdown of the NZTA’s share of transport spending for the 2012-2015 plan:

NLTP 2012-15 Investment Levels

And here is graph showing how much is going to roads and how much to PT (incl. walking and cycling):

NLTP 2012-15 Roads Vs PTThat is a big disconnect between what the public want, and what the government is doing.


Submit on the LTMA Amendment Bill

There have been a few posts on this blog over the past year or so on the Land Transport Management Act Amendment Bill. Looking through the “LTMA tag” I come across the following:

According to information from the Ministry of Transport, the changes to the LTMA will focus on the following:

  • Put in place a clearer, more straightforward, statutory purpose for the LTMA to drive better decision-making
    significantly reduce the number of assessment criteria used throughout the LTMA
  • Rationalise national level strategic documents and clarify their relationships with lower level documents, to allow for clearer national guidance
  • Extend the role of the Regional Land Transport Programmes so they identify the outcomes, objectives and interventions proposed for at least 10 years, and remove the requirement to produce a separate Regional Land Transport Strategy
    provide more flexible, less prescriptive consultation requirements
  • Enable Regional Transport Committees (RTCs) to be smaller and more focused by removing the requirement to have appointed members to represent various transport objectives. RTCs can still use external advisers if they wish but this will not be prescribed by the legislation
  • Create more flexibility in the LTMA to use borrowing to support land transport investment should future circumstances make this desirable
  • Improve the tolling and public private partnership (PPP) provisions in the LTMA to reduce barriers to their use
  • Repeal the provision for regional fuel taxes.

Since the Ministry of Transport put together its summary of the bill it seems some further changes have been made. These are largely around enabling NZTA to borrow a whole pile more money, as explained in more detail in one of the posts above. Essentially it looks like most of the changes are really bad, except perhaps for the inclusion of the PTOM public transport contracting system will is getting rolled into the LTMA, making the PTMA a redundant piece of legislation (and therefore it gets repealed).

Let’s now go through the bill in a bit more detail – from the explanatory statement

This is the first rubbish part of the Bill. By removing the Regional Land Transport Strategy we effectively lose any long-term transport planning in New Zealand as these new Regional Land Transport Plans will be focused much more on which projects will get funded rather than setting a long-term vision. In Auckland perhaps this problem will not be so great because there’s the Auckland spatial plan, but nowhere in the legislation do we see reference to any RLTP having to give effect to the Auckland Plan. In terms of changes to the GPS, as no national land transport strategy has ever been prepared (presumably the Ministry of Transport couldn’t be bothered) perhaps there’s no huge change there, although I’m wary of the GPS getting even more power and influence as the last two have been so completely horrific.

Looking at the provisions of the Bill in a bit more detail on this issue of the GPS and the RLTP, it does seem as though the Bill attempts to require greater alignment of these regional plans with the government’s GPS – another example it would seem of ramming the government’s unpopular transport policies down the throats of the regions, whether they like it or not.

Moving along we see the changes to the structure of Regional Transport Committees, the people who will come up with these new Regional Land Transport Plans:

I don’t have so much of an issue with this change as some of the Regional Transport Committees got pretty unwieldy with having so many members. The real issue is that in Auckland it will be the unelected Board of Auckland Transport which acts as our RTC whereas throughout the rest of the country it will be the Regional Councils who co-ordinate this work. As I noted above, perhaps this isn’t a problem if there’s a link requiring the regional land transport plan for Auckland to give effect to the Auckland Plan, but as far as I can see there isn’t such a connection proposed.

Now things start to get really ugly:

The fact that NZTA currently have to fund their transport programme out of the money they take in through fuel taxes (give or take a bit) is a really really good check and balance on any government going insane with transport spending. It’s largely for this reason that we aren’t seeing projects like Puhoi-Wellsford or Transmission Gully kicking into action just yet: because the money is all going on the Waterview Connection, remaining sections of the Waikato Expressway and the Tauranga Eastern Link. Allow NZTA to borrow masses of cash and this check disappears. We could see all the RoNS (and whatever other projects the trucking lobby can dream up) shifting into construction activity all at the same time spending a simply vast amount of cash and then limiting our ability to do anything in the future because most of the transport budget will be going into repaying the vast amount of debt for these white elephant roads that are hardly being used.

And then things go a bit absurd:

As I explained in this recent post, there’s absolutely no need for the regional fuel tax provisions to be removed as the government already has the ability to say no to a scheme (or to even cancel a scheme already in place). Plus regional fuel taxes are pretty efficient ways of the regions raising additional money for transport. As my previous post noted this is all about power: the government doesn’t want local councils to have much say at all over what happens to transport and certainly doesn’t want them to have additional revenue sources which would reduce councils’ utter reliance upon central government for approving subsidies for each and every local project.

There are some changes to the procedures for toll roads which seem fairly minor and also the necessary legislative changes to enable the PTOM contracting system for public transport, which seems largely OK but with a few potential fish-hooks (that I should look at more in future posts). However the big issues are as outlined above:

  • The removal of long-term (30 year) transport strategies
  • No reference to giving effect to the Auckland spatial plan
  • More power to the Government Policy Statement (GPS)
  • The unelected board of Auckland Transport become our Regional Transport Committee, whereas everywhere else in the country it is the Regional Council
  • Enabling NZTA to borrow so they can complete the RoNS projects and curtail our ability to build more sensible projects in the future as money will largely be going on debt repayments
  • Repealing the ability to apply for a Regional Fuel Tax

There’s also a change to the purpose of the act, which narrows down the focus and removes references to things like sustainability, because who’d want a transport system that was actually sustainable?

Pretty much all of these changes will have a negative effect on trying to create a better, more balanced transport system. The changes centralise even more power over transport decisions, away from local councils and towards the government (even though people never vote on transport matters in national elections but very much often do in local elections). Plus they potentially stuff up the transport budget not just in the near future, but potentially for a very very long time to come if NZTA goes truly berserk in its borrowing (which I think the government will pressure it to do).

In short it’s an utterly rubbish piece of legislation. Something well worth opposing in a submission before October 25th (scroll down to the bottom and click “Make an Online Submission”).

NZTA Gives Auckland Some Roads

Some news out of the NZTA today that they are revoking the state highway designation on a number of roads in the Auckland region. To be fair this isn’t something that is new and it has been signalled for some time and is even logical but the cynic in me can’t help but think that it is also partly in response to the belt tightening that the agency needs to be doing due to the effective cuts to maintenance in the government policy statement. Here is the press release:

Some 50 kilometres of Auckland roads have had their State Highway status uplifted and their ownership has been transferred from the NZ Transport Agency to Auckland Council, and they will now be maintained and operated as local roads by Auckland Transport.

At the same time, the city gains 14 kilometres of new State Highways as a result of the NZTA’s extensive motorway building programme.

The official process to uplift or revoke State Highway status affects six different sections of highway across the city – SHs 16, 17 18, 18A and 20.

The biggest change affects SH17 – also known as the Dairy Flat Highway and the Hibiscus Coast Highway. All 31 kilometres – between Albany, Silverdale, Orewa and Puhoi – loses its State Highway status.

”With the opening three-and-a-half years ago of the of the Northern Gateway Toll Road as part of SH1, there is now no need to maintain two State Highways so close to each other,” says the NZTA’s acting State Highways Manager for Auckland and Northland, Steve Mutton.

Other sections that have been revoked are:

  • SH16, Parnell (Shipwright Lane and part of Parnell Rise) – 200 metres approximately
  • SH16, Westgate (Hobsonville Rd, Don Buck Rd roundabout, Fred Taylor Drive) – 4 kilometres
  • SH18, Hobsonville Rd (Westgate overbridge to Monterey Park) – 5.5 kilometres
  • SH18A, Greenhithe (part of Albany Highway and Upper Harbour Drive) – 4 kilometres
  • SH20, Manukau (Redoubt Rd overbridge, Manukau Station Rd, Wiri Station Rd, Roscommon Rd to the new section the SH20 motorway) – 5 kilometres

The four sections of roading that have been declared as State Highways are:

  • SH16, Parnell (intersection of The Strand/Shipwright Lane to intersection of Parnell Rise/Stanley St) – 200 metres
  • SH16, Brigham Creek Extension (Westgate to Brigham Creek Rd) – 3 kilometres
  • SH18, Hobsonville Deviation (Westgate Shopping Centre to Monterey Park) – 6 kilometres
  • SH20, Manukau (SH1/20 interchange to Puhinui Rd overpass) – 5 kilometres

“All these new sections of State Highway reflect the huge roading investment in Auckland in recent years to complete the Western Ring Route as an alternative to SH1 and to improve the flow of traffic through central Auckland – the most heavily used section of our motorway network,” Mr Mutton says.

“The NZTA and Auckland Transport are committed to working together to rationalise the State Highway and local road network for the benefit of all drivers in Auckland.”

The NZ Transport Agency works to create transport solutions for all New Zealanders – from helping new drivers earn their licences, to leading safety campaigns to investing in public transport, state highways and local roads

As mentioned some of it pretty logical like Hobsonville Rd or the areas around Manukau due to the new sections of motorway that have opened up in those areas in the last year or two however other seem a bit more strange. The motorway that freed up Upper Harbour Dr has been open for years now while perhaps the strangest of the lot is SH1 between Orewa and Puhoi. I find that one strange because it was retained as the free route required as part of the development of the toll road so would have thought it would need to remain in NZTA hands. By transferring these roads to Auckland Transport, the NZTA are no longer responsible for maintaining them and while they would still provide some funding to help pay for things, at most it would only be 50%. That means that Auckland ratepayers now have 50km more worth of roads to look after while the NZTA has at worst cut its costs by half. I suspect they are going through their portfolio to see what other roads they can off load to local councils as an easy cost saving measure.

Transport – It’s the Economy, Stupid

I came across a well crafted piece about the Government’s transport policies on Scoop, by Dr Glen Koorey (presumably the same person who comments here occasionally as “Glen K”) a senior lecturer in transportation at the University of Canterbury’s College of Engineering. Here it is in full:

In New Zealand, transport is a very hot topic in local government yet barely features at the national level. A number of mayoralties have been won and lost in the past on the back of controversial transport projects (road through Hagley Park, anyone?) but I have yet to see it become one of the defining issues in a general election.

It is ironic therefore that the majority of transport funding in this country is so tightly controlled at the central government level. Local cities and districts can talk all they like about what they and their residents would like to see for transport in their area, but they are ultimately beholden to the whims of the government of the day.

And so it is that the latest National Land Transport Programme (NLTP) just released (The Press, 30 Aug) continues to propose a distribution of funding that appears to be at odds with the wishes of the general population, and also best-practice international evidence.

When the current Government came into power in 2008, they made fairly sweeping changes to the pattern of transport expenditure. The revised Government Policy Statement (GPS) on transport substituted “Roads of National Significance” (RoNS) funding for many other sustainable transport and road safety programmes. At the time, the Government claimed that these investments were needed to address the economic crisis facing the country.

Last year’s updated GPS for the coming 10 years repeated the RoNS mantra even more strongly. Given the fact that the economy still needs some spending prudence, and the evidence for future constraints on oil supply and price is stronger than ever, it was incredibly galling to see that the new plan is essentially more of the same.

New state highway construction (mostly RoNS) already consumes 40c of every transport dollar (excluding policing). This is over seven times as much as is spent on local road construction, four times as much as public transport expenditure, and over 50 times as much as walking/cycling. But this is not a short-term blip: over the next 10 years the GPS proposes that half of all transport investment will be spent on new road construction, with worryingly decreasing proportions of expenditure in road maintenance and safety, public transport, walking, cycling and travel demand management.

The stated goals for the NLTP are “economic growth and productivity, value for money, and road safety.” Every Government agency is struggling to trim “fat” from their budgets, but still $9 billion of RoNS projects remain on the table. These seven major roading projects are touted as being needed to “encourage future economic growth”, yet the evidence doesn’t support that hypothesis.

The best performing RoNS project has already been built: Auckland’s Victoria Park Tunnel, returning $3 of benefits to the country for every dollar invested. Of the remaining six projects, five have benefit-cost ratios of no more than 2:1 and three of those don’t even have a ratio of 1:1. When most road safety or walking/cycling projects routinely have benefit-cost ratios of well over 5:1 (if not 10:1), it is difficult to see why we are investing in so many expensive projects with such poor returns.

A recent study at Auckland University found that completion of the entire Auckland cycling network (a cost of about $600 million, or one small RoNS project) would generate benefits in the order of 20 times as great, in terms of health (by far the biggest benefits), safety, and reduced driving costs. It’s not hard to envisage that similar investments throughout the country would have equally impressive economic returns.

To make matters worse, the economic predictions for the RoNS project have been based on typical historical assumptions about future traffic growth creating more benefits from growing congestion. However, since 2005 state highway traffic volumes have been stagnant. Traffic congestion isn’t growing, so why do we need to build more motorways?

The national cost of congestion (less than $2 billion annually) is considerably less than the annual cost of road crashes to our country – over $4 billion. Yet the investment in road safety initiatives pales in comparison with the amount of money being spent to save a few seconds of travel time.

Perhaps a focus on roading projects can be justified in terms of jobs created? Research from the UK and US however shows that investment in sustainable transport projects generates more new jobs than road construction, up to twice as many. Road maintenance was also found to produce more jobs than new road construction. Even the much-maligned NZ Cycle Trail has produced more jobs per dollar than the RoNS programme to date.

So why hasn’t all this attracted major news coverage and discussion? Is it because transport is seen as only a minor portfolio? This is taking the wrong approach, because the underlying problem is actually about our economy and how we reboot it.

Our highest categories of imports by dollar value are motor vehicles and the fuel to power them (which is currently causing plenty of pain at the pump). A roads-focused programme does nothing to reduce this reliance and help balance our deficit. At the same time it puts a huge burden on our health system. Unless something dramatic happens soon, that will mean a continuing strain on our country’s transport system and finances.

Maybe transport will finally become a big issue at the 2014 election?

The Upcoming NLTP: trying and failing to put lipstick on a pig

There will be a lot of discussion over the coming weeks and months about transport funding – how much is going to be spent on what types of transport projects over the next three years. This is because NZTA’s “National Land Transport Programme” (NLTP) is in the final phases of being put together, and it is the NLTP which guides how NZTA spends your petrol tax and road user charges over the next three years. The NLTP is a very important document for listing all the projects that they will, and won’t, help fund between now and 2015. But it’s not really a political document in the same way that the Government Policy Statement and the Auckland Plan are – rather something that focuses much more on the details of what does and doesn’t happen within the funding constraints already set by central government.

It seems likely that much of the debate around the NLTP will be based around a few key issues:

  •  is enough money being set aside to maintain and renew our current state highway and local roading network?
  • how much of the “new state highways” budget will be eaten up by the various Roads of National Significance (RoNS) and how much will be left for smaller, generally more cost-effective, projects?
  • what is the actual increase in funding for public transport services and where’s that money going?
  • what’s happened to funding for public transport infrastructure?

A background document on the NTLP provides a few answers to the questions above. First, in relation to looking after the current network:

Greater efficiencies will be required because in many cases the allocations for road maintenance and renewals will not keep up with inflation and growing networks in some regions, and may therefore be reductions in real terms.

This investment will achieve the highest possible return for New Zealand road users if road controlling authorities continue to set clear priorities across their networks…

…The Road Maintenance Task Force will complete its work mid-year. It is expected to identify opportunities for longer term efficiency solutions. We’re looking for a step change in the approach to maintaining networks to deliver a long-term benefit.

The following factors might deliver a step change:
• Road Maintenance Task Force.
• Better targeting of network levels of service.
• Asset management planning.
 • Collaboration.

It’s about learning from others who are doing it well, and thinking about maintenance costs when scoping out project affordability.

We have targeted renewals to roads with heavy dairy, forestry and delivery freight. This is in response to some industries who told us that they could grow faster if we invest even more money into the routes they need to get their product to market.

I do get a bit worried when the funding of looking after our existing roading network, what arguably should come before pretty much anything else, has to rely upon yet to be identified efficiencies to ensure our roads don’t fall to pieces. Also, bits of ‘bureaucratise’ like the better targeting of network levels of service sounds like ‘pointy-head-speak’ for allowing parts of the network to fall into disrepair. I sincerely hope we don’t fall into the trap the USA finds itself in, where politics leads to new roads being opened so ribbons can be cut in front of cameras, while behind the scenes the existing infrastructure crumbles into complete disrepair.

The document also provides some further detail on the public transport funding numbers that we saw reported so inaccurately the other day. It would seem as though Lane Nichols, writer of the original Stuff article, didn’t get past NZTA’s heading of “Huge Increase in Public Transport Funding”. If you do get past that headline and dig into what’s actually happening to PT funding, it’s a little bit more complicated:

At a minimum, investment in all public transport networks is being maintained at current levels. Funding is being boosted to cover increased rail charges in Wellington and Auckland, and all other funding increases are targeted at peak services that help to relieve severe congestion.

A significant increase in funding for passenger rail operator services will improve the reliability and punctuality of commuter rail in Auckland and Wellington.

Much of this increase is for existing additional commitments, including running costs associated with the Auckland integrated fares system, rail operationalised rolling stock costs and rail track access charges. 

So once we dig a bit deeper we find out some real truths. Firstly, that basic PT funding is being held at current levels. Secondly, that most of the increase in funding for PT services is actually going into increased track access fees (which is just a giant money-go-round back to KiwiRail) or into paying off Auckland’s electric trains (another giant money-go-round back to the government). Thirdly, we find out that all non-rail increase in PT service funding is being targeted at providing more services on the road at peak times – even though we know providing peak services are extremely expensive (you gotta buy that extra bus or train), whereas it would actually be way smarter to provide better off-peak services to encourage more people to travel outside the peak periods and make better use of existing resources. My word NZTA are stupid at times.

The whole “PT funding is increasingly hugely” looks like a misleading lie in the end, with pretty much all the “extra” money finding its way back to the government – either through increased KiwiRail track-access fees or through repayments for the electric trains the government takes credit as supposedly having funded (even though they’re actually making a profit off the repayments).

At the end of the day it’s a bit unfair to blame NZTA for too much more than trying (and I think failing) to put lipstick on a pig when it comes to the two key issues in this NLTP: insufficient funding to look after the current network and insufficient funding to respond to growing public transport usage (especially in terms of PT infrastructure funding). These big decisions were made by the government almost a year ago in the Government Policy Statement, and it’ll probably take a change of government to fix them. In essence, everything is being squeezed to build the Roads of National Significance – kind of weird when so many of them don’t make economic sense.

The final NLTP gets approved by NZTA at the end of August.

PT Funding Announcement Full of Spin

The NZTA is out busily spinning stories about how much money it is going to be spending on PT in the next three years  but as usual the the reality isn’t quite as good as they make it out to be. An article on Stuff (most likely written for the Dom Post) states:

Frustrated Wellington rail commuters will benefit from a massive Government investment in public transport designed to reduce congestion and delays.

The announcement of nearly $900million for national public transport projects will buoy proponents of Wellington’s costly proposed light-rail system.

The New Zealand Transport Agency announced yesterday it would pump $9billion into upgrading existing local transport systems over the next three years.

The money includes nearly $900m – a 33 per cent hike – devoted to public transport, “with a particular focus on improving the reliability and punctuality of commuter rail services in Auckland and Wellington”.

NZTA chief executive Geoff Dangerfield said it was the biggest investment in public transport under the National Land Transport Programme.

The investment followed discussions with councils about their transport priorities over the next three years and would give them certainty as they prepared long-term infrastructure programmes.

Details of exactly what would be funded would not be released for several months. But the increased spending on public transport was targeted at “improving peak-time services which help to reduce severe congestion”, Mr Dangerfield said.

$900 million is obviously a lot of money but it seems that it might be a case of someone not knowing how to round properly as the Radio NZ story on this says:

The agency’s board has outlined investment levels for five key areas in its $9 billion National Land Transport Programme for 2012 – 2015.

Public transport will receive $830 million in the next three years, an increase of 33%.

Its a bit odd to round $830m up to $900m but I guess it helps them to make it sound better and they know that journalists don’t bother checking the facts of these things.  You will also notice that this PT funding is out of a total pool of $9 billion so only really represents about 10% of all transport spending. But where does this money come from, the funding comes from the National Land Transport Fund (NLTF) and spending of the money is dictated by the Government Policy Statement (GPS) which sets a funding range for various transport activities. This old post by Josh explains the GPS but here are some of the key tables:

Current GPS funding ranges

The NZTA has to fit funding into the various activities into the groups above but one of the key things is that the exact figure for each category isn’t set in stone but rather a range is set.  To try and make a bit of sense of that Josh took the midpoint of each activity and grouped them together which gives us the table below

We see that based on the GPS the midpoint of PT spending over the next 3 years was $925 million, the NZTA has now decided that it will spend $830m which is almost $100m less than what the midpoint number is and as a percentage is actually about the same as what we spent in the 2011/12 year. My reading of this $830m of funding is that it is also to cover all PT infrastructure and services

I also notice that in the Radio NZ report they mention that funding for maintenance and renewal of State Highways and local roads will increase by about 2% to $2.7b however that also is less than its midpoint of $2.9m. Most likely these activity classes are being squeezed to help prop up the money for the “New and Improved State Highways” group which doesn’t even get a mention yet is the biggest single category. I wonder if that is because if the general public saw just how much more we were spending on a handful of motorways vs everything else then perceptions will continue to change.

Briefing to the Transport Minister – Part 1

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

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

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

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

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

but later on the same page they say

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

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

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

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

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

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

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

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

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

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

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

(c)  Efficiency which measures the BCRs

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

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

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

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