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By admin, on August 14th, 2010
The excellent Captain Transit blog has a very interesting post on the fundamental question that all those interested in transport need to have a good think about – what is the best way to fund improvements, maintenance and upgrades to transport infrastructure.
Here’s a part of what he says:
Transportation is a challenge, because it’s a common-pool resource, that benefits everyone but can be hogged by a subgroup. You could fund it from general taxes or conscription, as sidewalks are funded here in New York. But some who don’t walk much object to funding sidewalks; for example, in North Carolina property owners are not required to provide or maintain them, so in many places they are nonexistent. The problem is even clearer if we imagine making all air travel free of charge: we would get people flying from New Jersey to Tahiti every week and using up all the oil.
If you fund transportation as a private good, where the user pays every aspect of transportation including energy, operations, capital construction, capital maintenance and security, then only the very rich will be able to afford it all. The closest example we have to this is in the Dark Ages, when the only people who could safely travel long distances were knights and those under their protection.
If you fund transportation as a club good, then you necessarily exclude the poor from enjoying its benefits, and the members of the club also pay for the economic benefits that are shared by everyone.
Obviously, the solution is some kind of hybrid funding system. You could have transportation security funded out of general taxes, but the construction of highways paid for by vehicle registration fees (club-type funding), and the purchase of vehicles and compensation of operators funded by individuals. The part that’s funded out of general taxes is often controlled by the government, but the parts funded by club taxes or individual resources can either be collected by the government and used to benefit the club or individual. Alternatively, it can be left up to independent organizations to collect the club and individual fees and spend them on transportation.
One problem is that it’s really hard to get the mix right. Should the users pay a single fee, or a fee per unit consumed? If it’s a single fee, that does nothing to encourage conservation. If it’s a fee per unit, that doesn’t take into account the fact that a dollar means a lot less to a rich person than it does to a poor person. This is the classic “regressive” argument against the gas tax or a per-mile tax: why should the government charge a poor person a much larger percentage of their income per unit of energy or road consumed? And why charge a percentage of what someone paid for gas, rather than a fee per unit?
If you ever do get the mix right, it’s not likely to stay right. As cars are becoming more fuel-efficient, people can travel more per gallon of gas, which means that they put more wear and tear on the road than they’re paying for. The cost of asphalt, steel and labor have all varied significantly over the years, not to mention fuel.
In New Zealand different transport projects are funded in different ways. Generally here’s the breakdown:
- State Highways are 100% funded by petrol taxes, road-user charges and vehicle licensing fees (this money goes into the National Land Transport Fund (NLTF)).
- Local roads are funded from a combination of city/district council rates and NLTF funds.
- Public transport subsidies are funded from a combination of regional council rates and NLTF funds.
- Public transport improvements (like ferry terminals, railway stations, busways etc.) are funded in a variety of ways depending on the situation. Often they are funded through a combination of city council rates, regional council rates and NLTF funds.
- Rail capital projects (like electrification and track upgrades) are funded through KiwiRail, and therefore at the moment out of general central government taxation.
- New local roads are generally built by developers when they subdivide an area, before being vested with council whose job it is to maintain them.
- Public transport fares also help fund public transport operations, improvements and expansion.
So we have the general “mix” of funding options, or the “hybrid funding system” that Captain Transit talks about in his post. This makes sense too, as the benefits of transport are enjoyed both directly by users (whether they be petrol tax paying drivers or fare paying public transport riders) but also indirectly through the wider benefits brought by enabling people to get around towns, cities and country as a whole and be economically productive. The fact that users don’t fully cover the costs of providing the transport network, requiring a top-up (or that dreaded word, a subsidy) is OK, because there are significant indirect benefits from a functioning public transport network: whether those benefits be economic – through enabling economic activity; environmental – by encouraging modeshift to more environmentally friendly transport options; or social – by providing transport options for those unable to drive or unable to afford a full user-pays system.
Where the debate starts getting interesting is if we look at matters such as whether someone driving at peak times should pay more for the privilege than someone driving at 3am – because the extra roadspace they require is much more costly to provide and if that roadspace isn’t there they impact hugely on others trying to get around by contributing to congestion (remember, you’re never just in the traffic jam, you are the traffic jam). I think there is a good argument for a more fine-tuned method of pricing in that respect, although the practicalities of implementing it seem very difficult. Furthermore, petrol tax actually has a number of advantages in that the more you drive, the bigger your car is and the more you pollute the environment, the more you pay. Secondly, collecting petrol tax is extremely easy compared to collecting any other form of road pricing.
The other interesting point of debate is whether road users should contribute to spending on non-roading projects – particularly projects such as rail capital projects. In the May 2009 Government Policy Statement, the government made the decision that rail capital projects should not be funded by road-users through the NLTF and instead would have to be directly funded through general taxation. Oddly enough, they also decided that because road users benefit from people using trains (as they’re not congesting the roads), NLTF funds would still be available for rail operating costs. In my opinion, there is little logic to this argument – as clearly new rail projects such as the CBD rail tunnel will have significant benefits for road users (for example, it is logical that the petrol tax that I pay driving around on below-capacity roads at the weekend go into a project to provide me with a congestion-free way to get to work during the week when the roads are at capacity).
I’m curious to see what others think on this issue. What is the best, fairest, most efficient and most logical way to pay for transport projects? Have we got the mix right? Does “time-based” road pricing have a place in funding transport projects? Do the benefits of time-based road pricing outweigh the benefits of petrol tax? Does it make any sense to exclude rail capital projects from being funded by road-users? What equity issues may arise from all of this?
Overall, I think that one pot of funding for all projects makes the most sense. The funding pool should be contributed to by all the funding sources at the moment: road-users, public transport users, local councils, regional councils, developers and central government. Each project should be analysed in terms of its benefits – how great will they be and who will enjoy those benefits, and then the projects should be prioritised in a logical manner which ensures what I think should be the most fundamental principle of transport policy:
“The most necessary project gets done first, regardless of type”
We may well wish to have wider criteria for determining “necessity” than just the cost-benefit ratio, but the fundamental principle would be that each project competes against every other project for access to funding. You wouldn’t end up with the silly situation where cycling projects compete only against other cycling projects for a tiny share of funding, while motorway projects only have to be better than other motorway projects to get enormous funding. We would be able to stack up the CBD Rail Tunnel against the Puhoi-Wellsford road to really see which project is the best way to spend that $1.5 billion.
By admin, on July 3rd, 2010
In the ongoing process that is the development of the Auckland CBD rail tunnel project, there’s a giant “elephant in the room” that nobody seems particularly willing to touch – I’m guessing because nobody really has much of a clue about what the answer would be. That question, of course, is “how are we going to pay for this?” Best estimates for the cost of the project are at around $1.5 billion – which would put it on par with the holiday highway, but less than the Western Ring Route completion. So while it obviously is an expensive project, it’s not an “out of this world” type of expense.
But unlike those other two projects, the funding stream for the CBD rail tunnel simply does not exist. Thanks to the May 2009 Government Policy Statement, the funds that will be used for the holiday highway and the Western Ring Route simply aren’t available for the CBD rail tunnel. Before I explain that matter a bit further, let’s note what changes were made in the May 2009 Government Policy Statement that make funding the CBD rail tunnel that much harder than it was before:  I guess at face value the concept seems fairly logical. The National Land Transport Fund is funded by petrol taxes, road user charges, vehicle licensing fees and so forth. In short, it’s funded by road-users in one way or another. So there is a certain logic, at least at a very basic level, that all money raised from roads should be spent on roads.
However, there is a flaw in this argument, and it comes through in the very first paragraph of the extracts above: and that is that road users benefit from the ability of public transport (including rail transport) to reduced congestion, so therefore it makes sense for public rail transport services to continue to receive funds from the National Land Transport Fund. So we have a level of “roads paying for rail” already – and on a completely logical basis (ie. it benefits the road users).
Now the thing that I find odd to comprehend is why this very same argument doesn’t extend to rail capital projects. Surely just as subsidising a train’s operating costs helps reduce congestion, so would building a new railway line or upgrading some train stations to encourage more people to use the service – for example. Looking into the way benefits from public transport expenditure are actually calculated, my assumptions are confirmed: a pretty large proportion of benefits arising from public transport projects that generate additional patronage (which would obviously include new capital expenditure projects) are enjoyed by road users: If we look at rail in Auckland, each additional trip taken during peak time on the rail system has been calculated as generating a $17.27 benefit to road users. While I’m unsure about whether this table truly reflects induced demand or not, I’m guessing that if NZTA truly started taking into account induced demand it would probably impact fairly evenly on reducing the congestion easing benefits of new road and rail projects – so the argument would still hold.
The point is that spending money on rail clearly has massive benefits for road users. If we once again look at the CBD rail tunnel project, that project has the capability of doubling the capacity of Britomart – and therefore generally doubling the capacity of the whole rail system. Let’s say that the current system (post-electrification but not including the CBD rail tunnel) has a maximum capacity that would allow around 15 million rail trips per year, while the CBD rail tunnel would allow that to increase to around 30 million trips a year. You can start to get a feeling about how massive the benefits of that project to road users might be (I would do the sums but I don’t know what proportion of Auckland’s rail trips are peak and what proportion are off-peak).
Ultimately, as I have said before, there is probably only one agency in the country that really has the cash to stump up for a big chunk of the CBD rail tunnel’s project cost – and that is NZTA and their National Land Transport Fund. It will be very interesting to see if the business case for the CBD rail tunnel specifically identifies the level of benefit the project will create for road users, and I hope that figure is specified so a good argument can be made about why it is logical for NZTA to stump up a decent chunk of this project’s cost. However, unless the Government Policy Statement on transport is altered, it won’t be possible for NZTA to help fund the CBD rail tunnel – and if that’s the case I really can’t see it being built anytime soon.
The argument that NLTF funds should only be spent on roads is flawed in my opinion, largely because it is clear that road users themselves benefit significantly from investment in public transport – including rail. If road users are going to get greater benefit back from each dollar of NLTF funds spent on the CBD rail tunnel than they would from each dollar spent on the Holiday Highway (for example), then it is actually completely illogical for that money to be spent on the Holiday Highway. It just makes good sense, even for road users themselves, for roads to help fund rail.
By admin, on April 24th, 2010
There has been an interesting debate in recent days about a speech that Steven Joyce gave at the 2010 Australasian Rail Association Conference. In particular, I think that the controversy relates to these parts of his speech:
The fourth group we need buy-in from are the regional councils in Auckland and Wellington which, along with the Transport Agency, are responsible for the commuter rail services in their respective cities.
The Crown has invested a huge amount in improving metro rail in the last several years, with much of the change just now becoming apparent.
In Auckland alone we’re investing $1.6 billion to modernise and extend the network.
That means double-tracking the Western line; a process that will be complete by June, plus new stations and facilities in places like Newmarket, Grafton, Kingsland, Morningside and New Lynn – all of which I have visited in various guises in recent times.
It also means half a billion for the infrastructure of electrification, with contracts underway for new signalling systems, and the poles and lines to provide the motive power.
And the further half billion for the new electric units to run on the network which I announced in November last year, and which Kiwirail is currently tendering for in the market for delivery commencing 2013.
And in Wellington the government has committed $258 million through a Crown appropriation to the Greater Wellington Regional Council towards the project and further sums directed to KiwiRail.
So the infrastructure is improving at a great rate, but the reality is this: neither Auckland or Wellington are currently paying the actual amounts required to maintain and renew their share of the network.
By that I mean they’re not paying enough to enable KiwiRail to maintain the tracks and ensure services are reliable.
Because of this, we are in the ironical situation where, here in Wellington, KiwiRail is constantly bagged because of its run down and sometimes unreliable services but no one has yet been prepared to fund the full amount to have the network adequately maintained.
Well – for a KiwiRail Turnaround Plan to work, all customers, including those regions that provide metro passenger services, and their co-funder NZTA, will need to stand up.
The metro operations will have to meet the actual fair costs for the renewal and maintenance of the networks that they use going forward. And discussions on that responsibility will start shortly.
Basically it seems like Joyce is saying that NZTA and the Regional Councils are responsible for paying for rail operating costs, while KiwiRail is only responsible for paying rail capital costs (ie. new stuff). Now I find that a rather bizarre separation myself, in that I don’t see why NZTA funds can’t be applied to rail capital costs, but that’s another issue which I shall return to later.
Now I don’t necessarily disagree with what Steven Joyce is saying here. After all, KiwiRail is primarily a glorified freight company – why should a freight company be responsible, and have to pay for, the maintenance of railway lines primarily used by commuters? A very good question, and one that cuts to the heart of a very interesting matter – whether it really is a good idea lumping together the ownership and management of our rail network (the work that used to be undertaken by Ontrack) with the operation of a glorified freight company that just happens to run trains along it (the bulk of KiwiRail). It’s almost like saying that a particular road-freight company should have to maintain and develop the road network, and ideally can only use the money that it gets from doing the freight work to fund the maintenance and development of that network. Crazy, right?
Ultimately, our rail network should be viewed, in my opinion, in a very very similar way to our state highway network. It should be owned and managed by NZTA, be funded by track-access charges paid by KiwiRail and whoever operates the passenger rail system, plus – where there are indirect benefits to road-users from having more passengers or freight on the rail network, or indirect benefits to all of us through lower environmental effects of the transport system – by petrol taxes and RUCs collected into the National Land Transport Fund and general taxation. Having OnTrack wrapped into KiwiRail is, I think, a step backwards for our rail system and the cause of many of the problems Steven Joyce has referred to above.
Of course the Auckland Regional Council has justifiably screamed and yelled about the insinuation that it should have to pay a far greater amount:
Auckland Regional Council (ARC) Chairman Mike Lee says that in case the Minister hadn’t noticed, in terms of investing in rail transport, the Auckland region stood up many years ago and for a lot of that time stood alone.
“In terms of fighting for a first-world rail infrastructure, Auckland is still standing and we are still fighting,” says Mr Lee.
“The Minister needs to be told that over the five years to 2006, some $363 million was invested in upgrading the Auckland rail network.
“Of this, about $288 million or 80 per cent was provided by the Auckland region and its ratepayers. This funding provided for the construction of Britomart, upgrading of stations, double-tracking and the purchase and refurbishment of trains.
“The ARC initiated the first stage of double tracking the western line, funded by an Infrastructure Auckland grant, because the Government refused to do so.
“Between 2006 and 2009, the ARC funded the costs of purchasing and refurbishing trains and upgrading stations, and received no Government subsidy for this at all.
“The ARC also funded the costs needed to get the electrification project off the ground and 40 per cent of the costs of passenger rail services.
“In 2009/10, the ARC provided $25 million in operating funding to the Auckland Regional Transport Authority (ARTA) for rail passenger services and $66 million for investment in refurbished trains and upgraded rail stations.
It really was the initial investment by the ARC, and also by Auckland City Council in the construction of Britomart, that led to the rail revival in Auckland. The previous Labour government did eventually stump up with the big money for Project DART and the infrastructure side of electrification, while this government has stumped up with the $500 million for electric trains. But, it was mainly kick-started by Auckland itself. Looking forward, it will be interesting to see the extent to which the Auckland Transport CCO prioritises public transport spending – as ARTA’s budget of $150 million-ish will increase to a budget for Auckland Transport of $650 millionish. So there is theoretically more money available at a regional level to fund the rail system in the future, if it gets prioritised.
Overall, I find the whole debate rather bizarre and Steven Joyce’s position somewhat contradictory. Obviously KiwiRail’s budget needs to be brought under some sort of control – and hopefully the freight part of their business left to look after itself (which it apparently does quite well and reasonably profitably if you exclude depreciation of the track network) without its financial situation being burdened by the need to also look after the rail system for the wider benefits that having a rail system brings. KiwiRail shouldn’t have to stump up with the money to provide new railways tracks for passenger trains in Auckland, or have Auckland’s electric trains being a burden on their balance sheet, when this has absolutely nothing to do with their freight business.
The obvious two agencies (as well as commuters themselves) that should be paying for rail in urban areas are:
- Local Government – because the city benefits from better public transport through better social, environmental and economic outcomes.
- NZTA (ie. petrol tax and road-user charges) – because road users themselves benefit from there being fewer other road-users congesting the streets and roads of the city.
Rather bizarrely, the Government Policy Statement for transport specifically bans the use of NZTA money on rail improvement projects (even though obviously building the CBD rail tunnel for example would benefit road users enormously through the reduction in congestion) but says that NZTA funds are OK for rail operating costs (on the basis that when people use the rail network there are congestion relief benefits). This contradictory situation means that KiwiRail has effectively been forced to fund the upgrades to the Auckland and Wellington rail networks – even though their core business is actually running a freight company.
Which once again begs the question of why is a freight company running a core part of our infrastructure? The core of this messy debate revolves around that question, and until it is answered or until NZTA funds can actually be used for rail upgrades (like it seems Steven Joyce is actually wanting) we will continue to have this bizarre and complicated debate.
By admin, on March 30th, 2010
A rather worrying article in today’s Herald that funding for the upgrade to Bayswater Wharf, and the construction of a wharf suitable for ferry services at Beach Haven, have been delayed. Here’s part of the article:
Extra Government investment in roads is being blamed for the disappearance of funding for two new Auckland ferry terminals.
The deferral of terminals for Bayswater and Beach Haven until the Government’s next three-year funding cycle – for 2012-15 – has been confirmed by the Auckland Regional Transport Authority.
That has prompted a claim by North Shore City’s representative on the Auckland Regional Transport Committee, Chris Darby, that ferry transport is being affected by the Government’s extra allocation of money to new roads.
The authority’s confirmation of the terminal deferrals came after Mr Darby complained of inaccurate information in an authority report to the transport committee.
The report said funding for a long-awaited $6.6 million ferry terminal for Bayswater had been approved and construction of a $2.8 million facility for Beach Haven had started.
This would seem to be yet another sad result of last year’s government policy statement, which shifted millions upon millions of dollars away from public transport and into building the seven roads of National significance.
Ferris are a pretty under-utilised method of transport for many parts of the city – particularly in Beach Haven I reckon, and therefore it’s a huge loss to see that ferry services between Beach Haven and the CBD will now not be able to be introduced for another few years. Beach Haven is linked to the CBD via Onewa Road, which is probably one of the most congested arterial routes in the whole of Auckland. Giving people there an alternative to Onewa Road is surely a good idea.
Surely?
By admin, on March 8th, 2010
Auckland City Council released their “Draft Annual Plan” last week, and looking through it there is some interesting stuff on what capital investment in transport there will and won’t be. For example, if you are curious to know where the money’s coming from to do the various transport upgrades ‘necessary’ for the Rugby World Cup, then this plan is the place to find out. And that’s an interesting point actually, because if one has a look through the list of funds allocated to capital transport projects, there are some clear differences between what was proposed in the 10 year plan, and what’s happening in the actual Annual Plan.
This is outlined in the table below: I have highlighted the figures that I find particularly interesting. Figures in brackets indicate a funding cut compared to the ten year plan, while figures without brackets indicate a funding boost compared to what was previously anticipated. What initially stands out to me is that the walking and cycling improvements budget (which was already dramatically reduced by the 10 year plan) has been cut further, from around $1.5 million a year to just over $1 million a year. That’s a pretty pathetically low amount in my opinion.
Other places where money has been “saved” in order to spend it on the World Cup improvements include footpath renewals, road maintenance, wharf developments in the Gulf Islands and – perhaps most horrifically – safety around schools. One wonder how many children will die as a result of this funding cut?
Many of the funding changes are explained in the notes outlined below. In some ways what these notes detail is even more worrying, as once again it shows the effects of the Government Policy Statement changes starting to have an impact – less money for maintaining roads, less money for school safety. There’s lots of “talk” in the Draft Annual Plan about improving sustainability and improving transport choices. However, one look at the nitty gritty funding indicates that it’s all pretty much hot air.
By admin, on March 7th, 2010
Put simply, 2010 has been a pretty shocking year so far for rail in Auckland. Despite two significant milestones: the opening of Newmarket station and the New Lynn rail trench, I think generally things have been worse than last year. This is illustrated in the problems faced around when Newmarket station opened, long waits suffered by Western Line travellers while drivers change ends at Newmarket, shocking performance statistics for January, numerous breakdowns occurring (including on Monday last week on the first day university was back) and poor press resulting from shocking customer service.
It seems to me that there are ultimately three issues:
- KiwiRail still seem to be doing a terrible job at avoiding points and signalling failures. There were 406 such failures on the Auckland Rail Network alone within the last year. I realise that it’s tricky to avoid such events with crappy outdated infrastructure, but a lot of the problems seem to happen in areas that have been more recently upgraded – like Britomart and Newmarket.
- The structural separation between the various agencies involved in running the train system means that nobody takes ownership of the problems. This is particularly evident when comparing things to Wellington, where recent problems there led to big public apologies from KiwiRail. Where’s our public apology for the 36% on-time performance on the Western Line for January?
- The trains themselves seem particularly unreliable of late. Discussion on the Campaign for Better Transport Forum, with input from staff working in the system, suggests that an unusually high number of trains aren’t even operating because of mechanical problems.
I have discussed the first two issues at length previously, so for now let’s focus on the third matter – increased mechanical failures. While the main reason for these problems is the fact that the newest engines driving our trains around Auckland are almost 30 years old, and naturally these will become more unreliable over time, it would seem as though one reason for increased mechanical problems would be if the amount of maintenance being undertaken had been cut back.
Now I don’t know if there has been a cutback on maintenance, but what does become obvious if you have a good dig through ARTA’s financial statements is that there has definitely been a funding squeeze put on them in recent times. Let’s have a look at their “income statement” for January 2010: I have highlighted what I consider to be particularly interesting parts of it: Looking at the income side of things first, it is clear that ARTA’s budget has been revised from an original, with the result being a cut back of about $15 million. Most of this cut back was from reduced NZTA funding – most probably the result of the roads-obssessed Government Policy Statement, which revised down the amount of money NZTA were allowed to spend on public transport. The ARC also seems to have reduced its funding of ARTA from what was previously anticipated.
Unsurprisingly, a $15 million reduction in income is likely to result in some pretty significant consequences. And this comes through most drastically in the “Rail Contract” part of ARTA’s budget expenditure, where $11 million has been cut back from the original budget. Now I don’t know what that $11 million cut has actually meant in real terms – but it seems as though some of the money “saved” has come from a reduced amount of maintenance on the trains , hence the current problems. I also suspect that if we hadn’t had this $11 million cut we might be seeing more weekend and evening trains.
When I moaned about the Government Policy Statement back in May last year, this was the kind of thing that I was worried about.
By admin, on January 23rd, 2010
A rather strange lead story on One News tonight about ‘roading jobs around the country being under threat’. Here’s the video for the story, and TVNZ’s full story is included below:
There is more grim employment news with roading jobs around the country under threat because of a lack of local government funding for planned projects.
This comes after images of thousands of south Aucklanders queuing for a handful of jobs has reminded New Zealand that unemployment is still rife.
Roading New Zealand says regional bodies are pulling money out of planned roading projects, despite central government plans to boost infrastructure funding.
In February last year, the government announced a $500 million dollar stimulus package, with $142 million of that for roads alone.
Meanwhile around the country councils were shutting their wallets.
Transport Minister Steven Joyce says it is a concern.
“We are putting a huge amount of additional expenditure in all adding several hundred jobs, so obviously it would be a concern if we were losing jobs out the other end,” says Joyce.
The government-funded New Zealand Transport Agency matches local government spending on local roads dollar for dollar.
So the agency set aside over $350 million to match what councils planned to spend on roads for the year. But the transport agency spent $40 million less because local government spending came short by $40 million.
That means a total of $80 million that should have been spent on local roads was not.
Chris Olsen from Roading New Zealand says it is quite a significant impact.
“If you think that the government’s stimulus package was $142 million over three years then $80 million in one year is quite substantial,” says Olsen.
And that means job losses.
The thousands in south Auckland queuing for only 160 supermarket jobs have already illustrated the dire employment situation right now.
At least 100 roading workers in Auckland lost their jobs last year and Robert Reid from the National Distribution Union says this could increase.
“We are facing considerable more redundancies in the future and we’ve already been told that by the major road construction companies,” he says.
But local government says roading projects are prone to delays and it is trying to create jobs.
Geoff Swainson from Local Government New Zealand says local government are involved in a broad range of infrastructures and projects.
“One only has to look at the investment that’s occurring around the country in terms of, for example at the moment, building new stadiums,” he says.
Roading New Zealand says more local government money needs to be committed to roading projects to keep people fully employed.
Joyce told ONE News he has met with the interested parties and he is aware local government has under spent on its roading budget for years now. He says while it is too early to tell how this financial year will turn out he will keep his eye on it and if one region under spends then that money will be relocated to another region to use on their roads.
For a start, I did think that the main idea of investing in transport infrastructure was to improve the state of the country’s infrastructure so that we can get around more easily and more sustainably, rather than it being a giant “make-work” programme, but I guess that’s a useful secondary benefit.
But the main question that came into my head was “why the heck’s this a story now?” An excellent table put together by Cam Pitches of the Campaign for Better Transport clearly shows that the May 2009 Government Policy Statement cut a lot of money out of local road funding compared to what had been expected under the August 2008 Government Policy Statement – $225 million less over three years in actual fact. Quite close to the $80 million a year that’s mentioned in the new story above. Over the past few years councils have struggled to fund their share of the cost of improving and maintaining local roads as they’ve been doing everything they can to keep rates down – so it seems a little unfair to criticise councils for not spending enough on building more roads when at the same time they’re being criticised for increasing rates by too much.
Before the Government Policy Statement was changed in May 2009, the previous iteration had realised that local governments were struggling to fulfil their half of the funding share when it came to necessary local road improvements, and that NZTA funding (from petrol taxes etc.) would be necessary to make up the short-fall. Unfortunately that ‘making up the shortfall’ money is now being ploughed in to the roads of national significance – and therefore we have ended up in the current situation. It’s hardly a surprise, and certainly not the fault of local government in my opinion (I hardly think Local Government Minister Rodney Hide would be particularly happy about Transport Minister Steven Joyce telling local councils to raise their rates to spend more money on local roads).
By admin, on January 17th, 2010
There is widespread support for the Auckland CBD Rail Tunnel project – including both candidates for mayor of Auckland’s super city: John Banks and Len Brown. ARC Chairman Mike Lee is obviously a significant advocate for the project, as are many local MPs, perhaps most notably Auckland Central National MP Nikki Kaye. The reasons for this support are pretty obvious:
- The CBD Rail Tunnel, by providing a railway link between Britomart and Mt Eden Stations, will turn Britomart into a through-station and dramatically increase its capacity.
- Without the tunnel, Auckland’s railway system is likely to reach capacity by around 2016. No more trains will be able to be run at peak hour, so trains will become much much more crowded.
- By having two additional stations serving the Midtown and Karangahape Road areas of the CBD, a far greater proportion of the CBD (including the university to some extent) will be within easy access of the rail system.
- By bringing much more of the CBD within easy access of the rail system, it is likely that development around Midtown and Karangahape Road stations will occur, leading to significant economic benefits (just look at all the development that’s happened around Britomart).
- By increasing the capacity of Britomart, it will be possible to expand the rail network in the future. On the flip-side, without a CBD Rail Tunnel there’s no chance of having rail to the airport, rail out east to Botany Town Centre or Flat Bush, and so on.
The map below shows the most likely alignment of the tunnel. It is from ARTA’s website.  Now of course a project like this is going to be rather expensive. Rail tunnels of this length are never cheap, and underground stations (quite far underground in the case of the K Road station) are also very tricky (and therefore expensive) to build. A 2004 study in the project came up with an estimated cost of $515 million, but that is regarded as being extremely conservative. A more likely cost is between $1-2 billion. Which leaves the obvious question of “how the heck are we going to pay for this?”
One of the big problems with funding transport projects in Auckland (and the rest of the country for that matter) is that different types of projects have different funding mechanisms. For a project like this, under the current system we would probably expect ARTA to contribute to the funding of the stations (perhaps with some assistance from NZTA) and KiwiRail having to fund the trackwork itself – which I would expect to constitute the majority of the project’s cost.
And this is the problem, that I don’t think KiwiRail is the right organisation to have to do the trackwork funding. For a start, KiwiRail is largely a freight shifting company – and its success or failure seems very dependent on whether it can make enough money out of its freight shifting business to cover its cost. A project like this has absolutely nothing to do with that. The other problem is that capital works for rail are now funded directly by the government – by way of a Crown Grant – rather than from the pool of funds that NZTA uses to build state highways or help contribute to other roading projects. This means that instead of the CBD Rail Tunnel competing against other transport projects for funding (such as the Puhoi-Wellsford “holiday highway” or a future Harbour Crossing) it will be competing against tax cuts or the health budget. I somehow doubt that it’s going to win favour against those other spending options. Rail projects weren’t always funded this way.
It was the May 2009 Government Policy Statement on transport that seems to have shifted funding for capital funding (new projects) of rail from the “National Land Transport Fund” (NLTF) to being simply from the general government slush-fund. The argument for doing so was that the NLTF is funded by road activities (petrol taxes, road-user charges etc.), so therefore money from it should go to road activities only. This is outlined in the two paragraphs below – which come from the May 2009 GPS:
Now I must say I simply do not get the logic used here. It would seem as though the “principle” of hypothecation (meaning that all money from roads should be spent on roads) has been used to justify the removal of funding rail infrastructure from the NLTF. But then the first paragraph says that NLTF funding should also be used for projects where road users will benefit, and therefore it is justifiable to use this money for “public transport services”, which basically means subsidies for public transport – including rail services. I agree with the logic that NLTF money should be used for public transport services, because road users benefit from a good public transport system. It is quite obvious that should all public transport cease to operate, the roads would be pretty damn clogged with traffic – so therefore even people who drive rather than take public transport benefit from it operating. There are also other benefits, such as reduced environmental effects, and influences on land-use patterns (among others), which everyone benefits from.
However, what I don’t get is what the GPS seems to be arguing: that road users won’t benefit from “rail infrastructure” development – which I take to mean things such as building the CBD Rail Tunnel. Surely the same logic that applied to operating costs for rail applies to capital costs for rail projects? Surely by building this important project, and increasing the capacity of the rail system, we will see more of the future growth in trips be accommodated by the rail system – thereby reducing future congestion and greatly benefitting road-users? I would think that you can either make the argument that investment in rail does benefit road-users, or it doesn’t (I would obviously argue that it does). I don’t see how you can make a viable argument that some rail investment (in operating costs) benefits road-users, while other investment (in capital costs) doesn’t benefit road-users.
It may seems as though I am labouring on this point a bit, but it’s absolutely critical in terms of whether the CBD Rail Tunnel goes ahead or not. Under the current funding system, its $1.5 billion will be competing directly against the health budget and tax cuts for funding. It quite simply will not happen if that situation continues. Funding for this project has to come from the pool of funds for transport projects – so that we can work out whether it or the Puhoi-Wellsford “holiday highway” will provide a greater benefit for the money spent on them (or any other transport project that it’s competing against). There is already a big pool of money set aside for transport projects of one kind or another over the next decade (which is the timeframe we must be looking at to build the CBD Rail Tunnel), and I think the only possible way we will ever see the rail tunnel built, is if its funding comes from within that pool.
This means that the Government Policy Statement needs to be altered, so that funding for rail infrastructure is able to come from the NLTF. It seems self-evident that road-users would benefit from investment in rail infrastructure such as the CBD Rail Tunnel – so the “principle of hypothecation” would still be adhered to. And quite simply, if we do not make this change, the CBD Rail Tunnel will never be built.
By admin, on January 1st, 2010
Well I suppose as it’s now the New Year we can roll out that crystal ball and have a bit of a think about what will happen this year – 2010. As an aside, I’m still not sure whether we’ll the year “twenty-ten” or “two-thousand-and-ten”. I suppose I’m more of a fan of the former, as it’s shorter, but for some reason everyone always said “two-thousand-and-six” rather than “twenty-oh-six”, so I guess we’ll have to wait and see on that one.
But anyway, bringing things back to transport matters I think that 2010 (however one pronounces it) will be a very interesting year. We saw a lot change last year on the transport scene, mainly because of the new government, while this year will be one where those changes start to take effect, but at the same time many of the projects started previously will come to fruition finally – which may well offer a bit of a counter-balance to the “roads-centric” direction that we certainly spent most of last year turning towards. Perhaps I should split this post up into “good thing” and “bad things” that I think will happen in 2010 in terms of transportation – and finish on uncertain things, or things that might just throw a big spanner into the works of ongoing plans.
Good things:
Most of the good things that will happen throughout this year (at least from my perspective) relate to the completion, or advancement, or long-running projects. In just a few weeks time we’ll see the Newmarket Station open, while in the upcoming months we will also see completion and opening of the Onehunga Line and the New Lynn station redevelopment. There should also be quite significant progress made on the Manukau Branch, which I think is due to open in early 2011. Grafton Station should also open in the first half of this year, coinciding with the completion of double-tracking of the Western Line, this will mean that Project DART is basically complete.
We should also start to see electrification of the rail network really start to take shape over the course of this year. The contract for electric trains will be awarded at some stage this year, while the necessary works to electrify the system will continue throughout the year, and (I suspect) become increasingly visible.
I imagine that we will also start to see the first signs of integrated ticketing throughout this year as well. It will be interesting to see whether Snapper does proceed with their plans to roll-out on all NZ Bus buses, considering all the events of the last couple of months seem to have generally worked against them. I don’t necessarily think it’s impossible for them to do so, or actually a bad thing as long as the systems are fully interoperable.
We should also see the completion of the current study into the CBD Rail Tunnel. This study is an absolutely essential first step in the process of getting this critical project built, although I do worry that it will come back with some impossibly high price and we’ll throw the project onto the back-burner for another twenty years.
Bad things:
The effects of changes made to the Government Policy Statement for transport should start to really kick in this year. That means less money than expected for public transport projects, road maintenance, local road improvements and pretty much everything else except for new motorways. This policy is a bit of a “quiet killer”, as it did actually raise public transport funding from previous pre-2008 levels, just not nearly as much as had been planned for (and is necessary). Undoubtedly masses of money will be thrown at the roads of National significance.
The proposed changes to the Public Transport Management Act also have the potential to significantly undermine the co-ordination of public transport in Auckland most particularly, which is likely to result in the continuation of the system being rather inefficient and uneconomic (due to masses of parallel services). Ironically, while the proposed changes to the PTMA are likely to mean that more public subsidisation of public transport is necessary, NZTA’s Farebox Recovery Policy looks to chop funding from the other side – potentially leaving a very nasty middle ground for any attempts to improve public transport in Auckland (or any other part of NZ actually).
Not long ago, I would have called the establishment of the Auckland Transport Agency a good thing. However, in recent times it has become increasingly clear that the fine print of legislation establishing this organisation has been worded in such a way as to effectively make it the Auckland branch of NZTA, rather than the transport branch of the future Auckland Council.
Unknown elements:
I think what will make 2010 particularly interesting from a transport perspective are the unknown elements. We really just don’t know how the establishment of a Super City in Auckland will change things. We just don’t know where petrol and oil prices are headed this year, and what effect that will have on transport matters (I think the only thing that will possibly ever convince Steven Joyce that building motorways is a bit silly would be a sustained period of time where petrol is over $2.50 a litre). We don’t know the extent to which the improvements to the rail system will boost patronage, or the extent to which having integrated ticketing will also make public transport in Auckland more attractive.
It should be an interesting year.
By admin, on December 22nd, 2009
One of the most interesting aspects of following transport this year has been the emerging divide between what central government in Wellington wants to be the direction for transport to take, and what the Auckland Regional Council – and increasingly other local politicians – want. Perhaps most obviously, this difference shows up in the respective transport strategies of the two parties – the Government Policy Statement and the Regional Land Transport Strategy. Let’s compare paragraphs from their respective introductions to get an idea of the gap we’re talking about here.
First, the Government Policy Statement:
The GPS closely reflects the modal choices that are realistically available to New Zealanders. Approximately 70 percent of all freight in New Zealand goes by road, and 84 percent of people go to work by car, truck or motorbike, so we need good roads to move freight and people. The government supports some mode shift over time, especially in our major cities of Wellington, Auckland and Christchurch, but considers that this should not be accelerated to the point where the outcomes are economically inefficient.
And the Regional Land Transport Strategy:
There will inevitably be scepticism over perceptions that this is a ‘green’ transport strategy because it places increasing importance on developing public transport and anticipating and responding to sustainability challenges such as ‘peak oil’ and climate change, despite the Government’s priority of developing national roads. Roads have their place in any transport system as do trains, ferries and buses particularly in urban areas. A balanced investment is needed to ensure Auckland and Aucklanders are able to achieve their full economic and social potential with minimised environmental costs.
So yeah, quite a difference there. At times this difference has led to quite heated debate between Auckland and Wellington – particularly over the prioritisation of the Puhoi-Wellsford Road, known to most as “the Holiday Highway” (credit to Mike Lee for that name).
With Auckland becoming a “Super City” next year, the potential for this battle between Auckland and Wellington to intensify seemed to me as a fairly likely outcome. For as long as Auckland has been the biggest city in the country, yet Wellington remaining the capital, I think central governments have been quite happy to “divide and rule” over Auckland, to ensure that no Auckland local government would be strong enough to be a viable “counter-point” to what happens in the capital. The Super City is effectively an end to that tactic, as there is little doubt in my mind the future Auckland Council will be a very powerful body, and its future Mayor a very powerful person.
Bringing that same logic to transport matters, I would say that central government would have been pretty freaked out by the possibility of Auckland becoming a more powerful entity, particularly because of the diametrically opposed transport strategies that we have seen emerge over the past year. This would have presented a huge problem for the Minister and for NZTA, who are dead keen on spending around $11 billion on new state highways over the next decade, while Auckland’s local and regional politicians seem more focused on things like the CBD rail tunnel, rail to the airport and other public transport improvements. It would have been a pretty ugly and messy battle.
So what to do about this situation? Clearly there was a lot of discussion between those setting up entities such as the future Auckland Transport Agency, the drafters of the third Super-City bill, and others who find themselves involved in transport/local government matters. This is where ARC Councillor Joel Cayford, who has looked into the details of this bill in far greater depth than I have, provides some excellent analysis on his blog:
What Auckland Transport is, and how it differs from other CCOs
According to the Bill, this entity is “a body corporate with perpetual sucession” and “a council controlled organisation of the Auckland Council”.
But – and it’s a big “but” – various Local Government Act provisions relating to CCOs will not apply to Auckland Transport.
For example, Auckland Transport, does not have to comply with ss. 59, 60, 64 and 74 of the LGA. This means:
a) (s 59 does NOT apply) Therefore the principal objective of Auckland Transport is NOT to achieve the objectives of its shareholders (in this case Auckland Council), as specified in the statement of intent; and it is NOT to exhibit a sense of social and environmental responsibility by having regard to the interests of the community in which it operates….; (My interpretation: Auckland Transport does NOT have to deliver the objectives of Auckland Council – which might be embodied in annual plans, policy statements, spatial plans.)
(b) (s 60 does NOT apply) Therefore decisions relating to the operation of Auckland Transport DON’T have to be made in accordance its statement of intent; and its constitution…; (My interpretation: Even if Auckland Transport has a Statement of Intent – or Constitution – its Board can make decisions that are not consistent.)
(c) (s 64 does NOT apply) Therefore Auckland Transport DOESN’T have to have a statement of intent that complies with the detailed information requirements set out in clause 9 of schedule 8 of the Local Government Act…; (My interpretation: The SOI requirements for Auckland Transport are totally undefined. It appears to be able to decide its own direction, with little reference to Auckland Council. Strangely, however, s34 of the Bill requires that Auckland Transport “must have a statement of intent that complies with the LGA” – so – I don’t know. Can’t have it both ways…)
(d) (s 74 does NOT apply) Therefore the usual official information provisions of the Local Government Official Information and Meetings Act DON’T apply to Auckland Transport. (My interpretation: Auckland Transport will NOT be publicly accountable in the same way other CCO’s have been. However this is qualified by a specific provision which DOES make Auckland Transport subject to parts of LGOIMA.)
Those are important, although relatively technical matters, the real crunch is a bit harder to find:
One of the key functions of Auckland Transport is to “prepare the regional land transport programme for Auckland in accordance with the Land Transport Management Act 2003…”.
This is the area – as former chair of Auckland’s Regional Land Transport Committee, tasked with establishing Auckland’s Regional Land Transport Strategy – that I wanted understand. Took a little time to unwind. Not a happy experience….
The difference between the requirements for preparing the RLTP under the current system (on the left below) and the proposed system under “Auckland Transport” (on the right below) take a bit of analysis to figure out, but are quite telling:
You’ll see that s15(b) has gone. The key thing here is the loss of the power or influence of the Auckland Regional Land Transport Strategy to drive transport investment in Auckland. Previously, ARTA was required to “give effect to the RLTS”. Under these changes, the RLTS and the GPS are on the same policy level. Who knows how the Board of Auckland Transport will resolve any differences?
I think I know.
Once it’s all pulled together the consequences of this potentially minor difference in wording become clear:
What does it all mean?
Auckland Transport is not your usual “Council Controlled Organisation”. Because there are so many exceptions (noted above), and exemptions (noted above), and freedoms (noted above), really, Auckland Transport is a Crown Entity.
It is a Government Controlled Organisation.
If Auckland Transport is established as proposed, Auckland will lose something significant. It will lose its ability to determine its transport future. Auckland Council will become little more than an entity set up to extract rate revenues from Auckland ratepayers, and these revenues will then be directed to Auckland transport investments that central government considers are priorities in delivering its objectives, and not Auckland Council objectives.
So I guess that’s how central government has worked out how to avoid battling with regional and local councillors over transport matters. It will simply bypass them through the establishment of Auckland Transport, and the legislation which requires Auckland Transport to take into account central government’s policy directives as what the Auckland Council wants to do.
When we remember that Auckland Transport won’t have any say over what happens to state highways and railway lines anyway, it’s starting to become pretty obvious that the future Auckland Council won’t have much power at all when it comes to transport matters.
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