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By admin, on July 26th, 2011 Just a quick post for now – more detail later.
The final version of the 2012 Government Policy Statement has been released today – and yes, it’s unsurprisingly bad. Really bad. By my calculations, between 2012 and 2018 the policy will have the following spread of funding:
 When public transport use is booming, state highway traffic volumes have stagnated for a number of years and oil prices are high and likely to go higher (imagine the price of petrol if the NZ dollar was at its usual 60 US cents) having such a huge focus of spending on state highways (and $8b of the state highways total goes to new ones) is just downright stupid.
Read more in the Ministry of Transport’s Q&A section here. I just don’t quite know how they can pretend that this funding mix will boost economic growth (spending billions on motorways with low cost-benefit ratios) or represents good value for money. It also seems like every submission was ignored.
By admin, on July 17th, 2011 An article in today’s Sunday Star Times looks at the possible repercussions of NZTA’s decision (forced upon them by the upcoming government policy statement) to cut the funding assistance rate for public transport around the country. The results are potentially pretty ugly:
The government will cut up to $17 million from its public transport budget for the 2011-12 financial year.
Further costings compiled by Green Party transport spokesman Gareth Hughes estimate that figure could balloon up to $87m over the next decade.
Hughes said the big losers would be the growing number of public transport users, warning that local councils would have to either hike up prices, or cut the number of services they offered.
“The burden is squarely being placed on the shoulders of rate-payers and public transport users.
“The government is reducing the financial assistance rates to councils. This means that regional councils will have to find more money to run the same bus and train services.
Further detail on the funding shortfall was provided in the agenda to Auckland Council’s Transport Committee meeting earlier this month. The main changes are outlined in the table below: The big ones are the first two – the reduction in funding assistance for PT operations and infrastructure funding. In terms of the operations side, at least the GPS is proposing a general increase for this sector over the next 10 years (although that’s largely gobbled up by KiwiRail increasing its track-access fees enormously). For PT infrastructure, the proposed GPS proposes a horrific cut, from spending over $100 million in the 2009/2010 year to a spending range of between $20m and $60m for the next three years. It seems that NZTA have decided that the best way to manage the reduced funding levels is to ‘spread around the money’ to a greater number of projects by offering a reduced percentage of subsidy. This means that regional councils and PT users will need to pick up the slack if they want to continue funding public transport at the same level as now – let alone respond to increasing patronage by further improving the infrastructure and service provision levels.
What’s perhaps most frustrating is that PT infrastructure (and other things cut like transport planning and road safety community programmes) are a relatively small part of NZTA’s funding pool. In other words, huge cuts to them won’t actually free up much money at all for other areas – like building more motorways. This is a point picked up by Cameron Pitches of the Campaign for Better Transport, who is quoted further on in the article:
Campaign for Better Transport convener Cameron Pitches backed Hughes’ comments.
“We hope the government isn’t going to be too severe on the public transport spend. But we know they are cutting back on the infrastructure spend. At the moment, the national road transport fund, which is a petrol tax and road-user charges, is $2.8 billion a year.
“Of that, 1.8% is spent on public transport infrastructure. But the government is seeking to cut that back to 0.7%. What the government says is, with public transport, the ratepayers are going to have to pay it [almost] entirely themselves.”
Oh how I wish a politician would ask Steven Joyce in parliament what the logic is behind cutting PT funding and massively expanding state highways funding when PT use is booming and state highway traffic growth is static. I suppose it makes sense if you don’t like this trend and want it reversed – by choking off funding, forcing fares up and forcing service cuts.
By admin, on July 12th, 2011 Auckland’s poor transport outcomes over the years are probably the result of one over-riding factor: that while we vote on transport matters in local elections, local governments don’t have much money, central government holds the purse strings. Yet when it comes to national elections, we tend to have much bigger issues on our mind (taxes, health, crime, education, the economy etc.) than transport when casting our vote. Looking back into the past, we see many excellent transport schemes being floated by the local governments of the day, but ultimately they couldn’t find central government support – so all we got were motorways.
Transport is inherently seen as a local issue – and quite rightly so. The transport issues of Auckland are quite different to those in most parts of the rest of the country. When Aucklanders vote in local government elections, it would seem that they have transport matters quite high in their minds. John Banks lost the 2004 Auckland City mayoral election over pretty much a single issue: the Eastern Motorway. Ironically, he had also won the 2001 election on the basis of promising to fast-track a pile of motorways. Most obviously, it seems that Len Brown’s transport plans played a critical role in his election victory in October last year.
But the vast majority of transport funding comes from central government – because they control how all petrol taxes and road-user charges are spent. Through the Government Policy Statement, each Transport Minister of the day has an enormous say over which projects do and don’t happen. I doubt much of National’s vote at the last election came about because of their promises to throw $11 billion at building motorways over the next 10 years – in fact I can’t even remember hearing much about their transport plans before the election (aside from Maurice Williamson compulsively talking about tolling which eventually got him the sack as transport spokesperson).
This is an uneasy mismatch: the level of government that really gives a damn about transport and has been voted there because of their transport policies can’t do much because they don’t have the money; the level of government with all the money generally has transport policies developed largely insulated from public opinion. There seem to be two main ways of resolving this fundamental problem: either to give local government much more ability to make their transport decisions or to somehow make transport a bigger issue in national elections.
The Regional Fuel Tax enacted by the previous government, and cancelled by this one, is an example of the first option – as the regions take on the political risks for applying the tax, but then have another revenue stream to fund their transport priorities. The proposed changes to the Land Transport Management Act that will abolish the ability of any future regional fuel taxes to be enacted gives us a pretty strong signal about what the government thinks of the possibility of providing local government with greater autonomy to make its own transport decisions.
The other option is to somehow make transport an election issue. While I will probably end up choosing my party vote based on the quality of transport policies – I think it’s a pretty big call to expect many more people beyond transport nerds to do the same. Quite simply, there are bigger issues out there – something that even I can accept. Of course that doesn’t mean opposition parties shouldn’t have better transport policies (not like it’s difficult), but rather that they need to ‘tie in’ the messages of their transport policies to broader matters.
The Green Party has traditionally been quite good at this. They link transport policies into concerns about the environment and into concern about the profligate wasted spending on the various RoNS projects, and the contribution of that to our massive deficit. Labour seem to have struggled with this – and to an extent continue to do so. While they may have good transport ideas, they tend to both not say anything about them and also struggle to connect it in with their broader messages. Providing more transport choices when petrol prices area rising should be a core Labour “cost of living” issue. Similarly, constructing ‘lead infrastructure’ such as the City Rail Link to encourage broad economic benefits and support their environmental concerns.
One huge opportunity that I think both Labour and the Greens have is to play on an issue I’ve discussed recently: that of central government really not understanding Auckland when it comes to transport (and perhaps urban development) matters. It is interesting to note that while National consistently polls around 20% ahead of Labour, last year Auckland elected Len Brown (Labour Party member) as mayor; or that while Auckland Central has a National MP, Mike Lee managed to easily win his seat on the Council in the Waitemata Ward (which is arguably slightly more right-leaning than Auckland Central as it includes Parnell).
Even without trying, it seems that Labour are polling much higher in Auckland than in the rest of the country – at least according to this recent poll:
The gap between the two main parties is now 15.1 percentage points, down from 20.7 points in last month’s poll just after the Budget.
Labour’s support rose 2.4 points to 36.1 per cent and National’s fell by 3.2 to 51.2 per cent of decided voters…
…A breakdown of the party vote suggests Labour’s support has improved among Auckland voters and younger voters compared to the Herald-DigiPoll survey.
Support for Labour in Auckland at 40.5 per cent is higher than its overall party-vote support.
And its support in the 18 to 39 age group is at 42.3 per cent, again a lot higher than its overall party-vote total.
I do think that a “Vote for Auckland, Vote for Labour” style campaign could be quite productive. The formation of Auckland Council was largely designed to avoid the age old problem of nothing happening because all the old councils were too busy fighting each other. Yet now we find ourselves in a situation where there’s still a big fight going on about what should happen in Auckland – but now we are seeing Auckland Council on one side and central government on the other. In effect, we potentially have the same problem – and it appears reasonably unlikely that the ‘step-change’ investment that Auckland requires will eventuate as long as the big difference in opinion over Auckland’s vision for the city and the government’s vision remains.
Not only could Labour sell themselves as the party that will “work with, not against” Auckland Council, they could also play off the very real situation that it seems the government really doesn’t understand Auckland as a big city has very different needs to the rest of the country. In its spatial plan vision the government still sees Auckland as an overgrown town, rather than a real city. In its transport vision you could argue the same thing – more motorways works for smaller areas, so they think the same thing can endlessly work in Auckland. Traditionally I’m not sure the extent to which Labour has “got Auckland” either, but they seem to have a number of younger MPs coming through who seems a bit more ‘urban’ in their outlook and think of Auckland being a big city as a good thing, not a bad thing.
Overall, I think the trick to making transport an election issue is through associating it with bigger picture issues. How transport policy links to “smarter spending”, “being on Auckland’s side” or “giving choices at petrol prices rise” will be the key issue. I’m yet to see much evidence from Labour that they’ll be able to meet this challenge, though they still have a bit of time up their sleeves to do so.
By admin, on June 30th, 2011 The draft Government Policy Statement document, that was released for consultation a couple of months back, was a highly perplexing and depressing document. Focusing an even greater amount of money on building new motorways, slashing (already slashed) spending on public transport infrastructure and capping money for new local roads and even the maintenance of existing roads is just plain stupidity – and is completely ignorant of recent transport trends both here in New Zealand and overseas. However, even within a document as nonsensical and bizarre as the draft GPS, there was mention of one thing that completely took me by surprise by its sheer strangeness: the list of future Roads of National Significance (RoNS). Here they are: These future RoNS came pretty much out of the blue – similar to how Puhoi-Wellsford bizarrely appeared on the radar as a ‘necessary’ future project a day or two after the Minister got stuck in a traffic jam opening the Orewa-Puhoi motorway. So a reader of this blog did a bit of digging – where did the four new RoNS come from? The first response, to an OIA request to the Minister himself, wasn’t particularly helpful: Well it seems pretty clear from the above that the projects didn’t have to go through any particular ‘filter’ or ‘assessment criteria’ to determine that they were worthy of becoming RoNS. It somewhat confirms my suspicion that the only criteria for a RoNS is “does the Minister like it?” Fortunately, not long after this, the Cabinet Paper referred to above became available – and you can read it here.
Initially, it would seem as though a State Highway classification system and identifying the next RoNS would be two fairly separate tasks. The classification system seemed, at least initially, to be a fairly clever idea: highlight which routes are of national strategic importance and which routes have more regionally based importance. Which routes are tourist-focused, which routes are freight focused and so forth. This could potentially helpfully provide design cues in the future – highlighting routes where extra pavement strength might be helpful, routes where environmental impact should be kept to an absolute minimum etc. However, it seems to have turned into just another path towards building even more super-expensive and super-unnecessary motorways. Here’s the connection between the classification process and the new RoNS: In fact, if you look at the map of the classification system across the whole country, the four RoNS projects combined with the existing RoNS projects pretty much cover the whole of the “National Strategic High Volume” routes: When you see it like this, one does start to think there might be some method behind this madness. However, when you start delving into the details of some of these supposedly “high volume national strategic” routes, looking at both their existing traffic levels and the growth rates of traffic, there are some rather surprising results.
Let’s look at the North Island proposed RoNS, and how they compare against the already decidedly dodgy Puhoi-Wellsford project:
State Highway 1 Wellsford south of Centennial Park Rd (South of Wellsford)
2006 traffic volumes 9,851 VPD
2010 traffic volumes 9,885 VPD
Traffic growth = 0.086% per annum
State Highway 1 Palmer Mill Rd (Nth of SH5/SH1 intersection Taupo)
2006 traffic volumes 5,331 VPD
2010 traffic volumes 5,183 VPD
Traffic growth = minus 0.92% per annum
State Highway 29 (400m East of Waimou Bridge)
2006 traffic volumes 4,133 VPD
2010 traffic volumes 4,206 VPD
Traffic growth = 0.44% per annum
State Highway 50A Hawkes Bay Expressway (Maraekakako Rd South of Longlands Rd)
2006 traffic volumes 4,743 VPD
2010 traffic volumes 4,655 VPD
Traffic growth = minus 0.46% per annum
The bizarre thing is that we have arterial roads in Auckland carrying ten times the volume of some of these supposedly “high volume national strategic” routes. In terms of freight (something that the government does seem to care about), routes that form part of AMETI have similar numbers of heavy vehicles to the Auckland Harbour Bridge – yet funding for local roads has been capped for the next 10 years.
In short, there really is no logic behind the additional RoNS. Except, perhaps a desire to find a bunch of projects that make Puhoi-Wellsford’s cost-effectiveness look good. Which is a pretty tough challenge.
By admin, on May 20th, 2011 My opinions of the draft Government Policy Statement for transport funding were articulated in this recent post. Papers from Auckland Transport’s May board meeting outline the issues of concern to them in the document. Helpfully, Auckland Transport provide some useful tables that more clearly highlight areas of funding that are proposed to increase and decrease over the next 10 years.
Auckland Transport have put together a comparison between the expected spend in the current (2009-2012) GPS and the proposed draft one (2012-2015). Keep in mind that the current GPS itself reallocated a lot of money away from local roads and public transport, into building more state highways: Setting aside the small areas like transport planning and sector training and research, the biggest reductions in funding are felt in public transport infrastructure, new and improved local roads and road safety.
Public transport infrastructure and new local roads are a major area of transport expenditure for Auckland Transport. Constraints on their funding seem likely to significantly impact upon the likelihood of large Auckland based transport projects (aside from state highways) to proceed any time soon.
The next table highlights how the changes will directly impact on Auckland (as opposed to the country as a whole): As you can see, the big reductions in PT infrastructure and local roads come through most clearly. It is likely that these funding cuts will be devastating in terms of efforts to advance projects like AMETI and the Dominion Road upgrade.
Auckland Transport makes the following observations on the funding allocations:
In my previous analysis of the GPS I probably hadn’t quite known the extent to which the PT services increase is very much simply to cover metro rail costs. As I had suspected, the government’s promise to pay for Auckland’s electric trains in lieu of cancelling the regional fuel tax has not occurred – and we will end up having to pay for the trains after all: out of both increased rates and the reallocation of PT services funding that would otherwise be able to be spent on things like improving service frequencies on both the bus and train networks.
Given that the GPS absolutely guts Auckland Transport’s ability to achieve many of its long-term transport projects: particularly important PT and local roading upgrades like AMETI and Dominion Road, the proposed feedback that Auckland Transport will be sending off is, in my opinion, overly mild:
It is the third from bottom paragraph that I think is of most relevance here. By cutting back public transport infrastructure funding the government is making it extremely difficult for Auckland to improve the efficiency and effectiveness of its public transport system. Cutting back the ability to introduce bus priority measures seems short-sighted in the extreme, as it will make the public transport system more reliant on subsidies than ever: as the buses will be slower, less reliable and therefore less popular than would otherwise be the case.
Let’s hope Auckland Council’s submission not only highlights the same flaws pointed out by Auckland Transport, but perhaps has a bit more strength in the suggestions it makes on the GPS engagement document. One would think that the government will ignore Auckland Council at its peril.
By Guest Post, on May 17th, 2011 This is a Guest Post from occasional blog commenter Peter
Like many others I found myself rather depressed as a result of reading through the Government Policy Statement (GPS), which has been out for consultation over the past couple of weeks. As admin’s excellent submission pointed out, there’s a giant credibility gap between the overall desire for transport investment to boost productivity and economic growth – and the actual funding priorities. It’s surely just common sense to spend your money on areas where demand is growing, not falling, if you are keen on ensuring that money is well spent. Empty motorways and overflowing buses & trains seems in nobody’s best interests. Except for truckies, perhaps.
With the government having such a contradictory and illogical transport policy, wasting billions of dollars over the next decade, I must say how surprised I have been to see how little reaction this has got. Gareth Hughes from the Green Party has done a couple of clever posts – but sometimes I think having the Green Party being on the same side as you can be more trouble than it’s worth: as their ‘wacky’ image inevitably taints their more sensible policies. Meanwhile, Labour have generally been pretty quiet – aside from transport spokesman Shane Jones bizarrely calling for more support of ‘public sector transport’ in his Radio NZ interview. Aside from that, Labour seem more keen on sleepwalking to a massive electoral defeat by refusing to look at ways of reducing the budget deficit.
It is all rather depressing when one considers there’s an election later this year: on November 26 in fact. Unless something massive happens it seems inevitable that we’re going to be stuck with contradictory and illogical transport policy for another three years. The very voters that supported Len Brown and his rail-based vision for Auckland seem likely to, in November, vote in a National-led government that will do its best to undermine that very same vision. It’s truly bizarre.
It’s a hard pick judging who to vote for, if one is coming at it from a transport perspective. Traditionally the Green Party has had the more balanced and sustainable transport policies: they’ve done some good hard work over the past few months collecting signatures for the CBD Rail Loop – but they really need to ditch many of their “we’re more Labour than Labour” policies, along with their downright wacky image if they’re ever going to get more than 8% of the vote. One also feels that, aside from ensuring the Green Party gets to 5% and remains in parliament, there’s little real difference in which way you vote between the Greens and Labour – as it’s not going to make the slightest difference to who forms the next government.
Turning to Labour, it would appear as though their transport policies have significantly improved over the past few years. It wasn’t so long ago that Michael Cullen was rolling out the good old “but buses need roads too” sop, now heartily adopted by Steven Joyce and Bill English. But I think Labour learned from the 2008 petrol price spike, the boom in public transport patronage in the last few years, and the massive support Len Brown got for his rail plans. They now seem to strongly oppose the holiday highway and strongly support the CBD Loop. It’s just a shame that they seem so damn useless at getting that message out, and so damn useless at being a decent opposition providing an alternative vision for the country.
All of which plays into National’s hands quite nicely. If one is concerned about having a competent (at least on the surface) government that does seem to be worried about our mounting debt, actually has an economic plan (or at least seems like it does) then the idea of taking the ‘sensible’ option and voting for them seems logical. This is why their completely illogical and contradictory transport policy really sticks in the throat. Why would a government so seemingly obsessed about getting ‘value for money’ in all other parts of public spending be proceeding so recklessly with massive spend-ups on uneconomic motorway projects?
I was going to express some hope that ACT would at least adopt a ‘market led’ approach to transport: which would probably include tolling, road pricing, the removal of parking regulation (which is a giant subsidy to car drivers) and much greater care with transport spending in general. But then I read a Don Brash speech about transport a few years ago: where he does nothing but argue for more spending on motorways. So they’re out the window too.
Perhaps in the end it is necessary for a centrist, who wants smarter and more logical transport policy, to abstain from voting altogether – on the grounds of general uselessness from all parties concerned. On the bright side there’s six months for someone to change my mind.
By admin, on May 15th, 2011 Since the release of the “Engagement Document” for the 2012 Government Policy Statement (GPS) on transport funding I have written a couple of posts (particularly this one) on the document – and what I think of it. The Ministry of Transport have been pretty quiet about things (not surprising since I imagine they’re utterly embarrassed by it) but everyone actually has the opportunity to make a submission by May 27th. The details of that are outlined below: I have put together a submission on the engagement document that is outlined below. I’m happy for others to modify it as they please, adding bits in here and there, before sending it off. It’s really just a guide and a reminder of how utterly crazily stupid the proposal is.
1. Introduction:
This submission is on the Government Policy Statement on Land Transport Funding 2012/2013-2012/2022 engagement document.
This submission is made in my personal capacity and is broken into the following sub-sections:
• Background – current transport situation and trends
• Future transport challenges
• Comment on the Roads of National Significance
• Comment on local roads funding
• Comment on public transport funding
• Comment on the funding bands generally
• Suggestions about structure and additional information
• Conclusion and recommendations
Generally, I consider that the GPS needs to be significantly amended in order to achieve its stated goals of boosting economic growth and productivity. At the very least, the GPS needs to articulate more clearly how its investment will achieve the stated goals, while consideration of future risks facing the transport sector (particularly from rising fuel prices) should be outlined.
2. Background – current transport trends
Historically over the past 60 years traffic flows on roads in New Zealand have generally increased, while until recently public transport patronage on a per capita basis generally declined. However, over the past few years there appears to have been a significant change in this trend – most likely due to higher petrol prices and significant investment in public transport in some of the country’s largest cities. This section of the submission looks at transport trends over the past few years and how they may impact upon transport policy.
Traffic data from the NZ Transport Agency shows traffic flows on the state highway network on a monthly basis, as well as providing longer term trends. The table below comes from the March 2011 Traffic Volumes Monthly Report and outlines traffic flow trends on the state highway network between 1989 and 2010 – for both heavy vehicles and general traffic. The graph above shows that up until around 2004/2005 there had been around 15 years of steady traffic growth on state highways throughout New Zealand. The rate of growth from around 1998 onwards had been particularly high for heavy vehicles. However, since 2004/2005 the growth rates for vehicles (both heavy and general traffic) have fallen away, with – for example – the all vehicles index in 2005 being the same as that in 2010 (both 1.69 times as much traffic as in 1989).
Petrol prices have risen significantly since 2004/2005 and would appear to be a significant factor influencing traffic volumes. It is noted that in 2008, when petrol prices first increased past $2 a litre, there was a 2.9% decrease in state highway traffic volumes.
While traffic volumes on state highways in particular have ‘flattened’ over the past few years, there has at the same time been a significant increase in the number of public transport trips – particularly in Auckland. The graph below compares the level of increase for state highway traffic in Auckland and Northland with the level of public transport patronage growth in Auckland, for each month in 2007 against the same month in 2010. On average, a month in 2010 had around 22% more public transport patronage in 2010 than 2007; while on average a month in 2010 had around 1% lower state highway traffic volumes.
Even within the roading network, analysis by the Ministry of Transport shows that most traffic growth has been on the local road network rather than on the state highway network: It is submitted that the GPS should provide further analysis of recent transportation trends – in particular the lower level of traffic growth on state highways in recent years than had been the case historically, as well as the significant increase in public transport patronage in Auckland most particularly.
3. Future Transport Challenges
The Government Policy Statement provides strong direction for where transport funding is to be spent for the next 10 years. Therefore, logically the GPS should relate to future transport trends so that investment can be best targeted in ways to meet future demand and to enable economic growth and enhanced productivity.
As noted in the previous section, there has been a significant change to transport trends over the past few years – with the significant decline in the rate of growth of traffic volumes on state highways being the most obvious. If this trend is to continue, then there may not be the need to invest as much into enhancing state highways as previously thought – the important element being if the trend continues. It is very surprising that the GPS engagement document has not yet considered this issue, particularly as it proposes to spend an increasing proportion of the National Land Transport Fund on new state highways.
It would appear that one of the main reasons traffic volumes on state highways have “flattened” over the past few years is the rising cost of petrol. As noted above, in 2008 when petrol prices were higher than $2 a litre for the first time, there was a 2.9% decrease in traffic volumes compared to the year before. Therefore, it seems likely that if petrol prices were to continue to rise in the future, traffic volumes on state highways are unlikely to significantly increase. Analysing public transport patronage – which rose considerably in 2008 and then again in 2010 compared to the previous year – suggests that higher petrol prices may lead to further significant increases in patronage.
Over the past few years, from 2004/2005 onwards, the production of oil has not increased beyond around 75 million barrels a day. This is shown in the graph below: Analysts such as Chief Economist of the International Energy Agency Fatih Birol suggest that crude oil production may have already peaked, meaning that oil supplies appear unlikely to be able to meet growing demand in the future. An inevitable outcome of this is not oil shortages, but the potential for significantly higher oil prices.
If higher future fuel prices means that state highway traffic volumes continue their ‘stagnation’, then it seems likely that investing significantly in boosting state highway capacity will be poorly targeted and not extract maximum economic growth and improved productivity – as is hoped for by the over-arching goals of the Government Policy Statement.
4. Roads of National Significance
Page 5 of the GPS engagement document notes the identification of four additional “Roads of National Significance” (RoNS). These new RoNS are:
• Hamilton to Tauranga
• Cambridge to Taupō
• Hawke’s Bay Expressway further development
• State Highway 1 north and south of the current Christchurch motorway projects.
The stated justification for these RoNS is that they are of strategic national significance due to their high traffic volumes, their importance as freight routes and the need for safety improvements along the routes.
It is unknown whether business case analyses have yet been undertaken for these particular routes, but particularly for the Cambridge to Taupo route, it would appear as though the claim that it has high traffic volumes is somewhat incorrect. NZTA traffic data indicated that in 2009 around 6800 vehicles a day travelled along the portion of this route between Putaruru and Tokoroa, by way of comparison the single-lane Kopu Bridge carried 9800 vehicles a day that same year. Many arterial roads in Auckland carry up to 40,000 vehicles a day.
It is submitted that full business case analyses be undertaken of any additional RoNS projects before they are prioritised for funding. This is to ensure that they offer excellent ‘value for money’ – and contribute to boosting economic growth and productivity. A significant portion of the country’s population growth is occurring in the Auckland region and it may be more appropriate to direct funding towards projects in the country’s largest city.
5. Local Roads Funding
The upper bands for local road funding are generally being kept at around their current level. As noted above, the Ministry of Transport’s analysis suggests that most traffic growth is currently on the local road network, rather than the state highway network. In particular it would seem as though traffic flows on local roads in Auckland have been growing much faster than elsewhere in the country – and also at a much faster rate than traffic flows on the state highway network.
This is shown in the graph below, which compares local road traffic flows in Auckland with other regions. It is submitted that freezing the funding of local roads is likely to result in poor economic outcomes, as this is where much of the traffic growth is located. It is also submitted that funding for maintenance and renewals of local roads appears to be more tightly constrained than funding for new local roads. This is a dangerous path to proceed down, as a lack of funding for maintenance and renewals is likely to lead to the need for much higher spending later. The USA is currently facing this situation, as noted in a recent Economist article:
The Congressional Budget Office estimates that America needs to spend $20 billion more a year just to maintain its infrastructure at the present, inadequate, levels. Up to $80 billion a year in additional spending could be spent on projects which would show positive economic returns. Other reports go further. In 2005 Congress established the National Surface Transportation Policy and Revenue Study Commission. In 2008 the commission reckoned that America needed at least $255 billion per year in transport spending over the next half-century to keep the system in good repair and make the needed upgrades. Current spending falls 60% short of that amount.
It is submitted that the reduced percentage of the transport budget allocated to maintenance and renewals is a very risky long term policy.
6. Public Transport Funding
As noted earlier in my submission, over the past few years public transport patronage levels – particularly in Auckland – have increased dramatically. This appears to have corresponded with reduced traffic volumes on state highways and higher petrol prices over the past few years. The graph below shows public transport patronage in Auckland over the past nine years – clearly showing a significant rise since around 2007: Rail patronage in Auckland has grown particularly strongly over this period – from around 2.5 million trips in 2002 to well over 9 million trips in 2010: The GPS splits spending on public transport into two areas: services and infrastructure. The funding for public transport services is proposed to increase fairly significantly over the next 10 years, from an upper limit of $235 million in 2011/12 to an upper limit of $440 million in 2021/22. However, the funding for public transport infrastructure is proposed to be significantly reduced, from an upper limit of $100 million in 2011/12 to an upper limit of only $30 million in 2021/22.
The increase in funding for public transport services is supported, as this recognises the likelihood of significantly greater public transport patronage – particularly in Auckland – over the next decade. Auckland Council has set a target of doubling patronage within this timeframe and additional funding will be necessary to achieve goals such as this.
However, the significant reduction in funding available for public transport infrastructure is considered to at least require further explanation – and in my opinion should be reconsidered. In general, expenditure on public transport infrastructure is for things like bus priority improvements, ferry terminal upgrades, ticketing improvements and so forth. All of these infrastructure improvements are aimed at increasing the efficiency and effectiveness of the public transport network, enhancing its attractiveness to riders and improving operations so they can be undertaken in a more cost-effective manner. It seems highly likely that reducing spending on public transport infrastructure is only going to result in the need for higher subsidies – as the network will remain inefficient and potentially unattractive. As a result, lower spending on public transport infrastructure may well be a false economy, with a result being the necessity to spend far more on public transport services than would have otherwise been the case.
As a final point on public transport funding, it is considered that the GPS should allow rail infrastructure to be funded out of the NLTF. As is shown in the table below, rail passenger trips generate significant benefits for road users – up to $17 per trip in the Auckland area at peak times.
 This is logical, as a rail capital project which removes many cars off a road frees up the roadspace for other vehicles – typically vehicles such as freight movements that have no real alternatives. If road users benefit from rail freeing up roadspace and reducing congestion, then it is nonsensical for the NLTF to not be able to fund rail capital projects.
7. Funding Band Comments
Many of my comments have been outlined already in relation to the proposed funding bands. In terms of the overall size of the NLTF, I consider that the estimates may be somewhat optimistic – based on trends of increasing traffic volumes that appear to have failed to eventuate in the past few years. Furthermore, as fuel prices increase and more electric (or more fuel efficient) vehicles come online, the ability of the NLTF to raise the necessary funds to implement the GPS appears questionable.
It appears that generally the GPS proposes to spend an increasing proportion of the NLTF on constructing new state highways. This would appear to contradict recent transport trends, including much lower traffic growth rates on state highways, increasing public transport patronage and the focus of increased traffic flows being in Auckland. If the primary focus of the GPS is to use transport expenditure to maximise economic growth and productivity, then one would consider it logical to ensure spending is well targeted to areas where demand is growing – or is likely to grow over the course of the next 10 years. Unfortunately, the current document does not appear to do this, with less money available to build new public transport infrastructure and a cap on the amount of money available to look after (maintenance and renewals) both local roads and state highways.
Some of the smaller activity bands, such as road safety, walking and cycling, sector training and research and transport planning have also had their funding either capped or cut. Many of these funding changes appear likely to reduce the country’s ability to plan for and focus investment in the most economically productive areas. Investment in walking and cycling can generate significant wider benefits, such as health benefits from projects that encourage physical activity – that can lesser the burden on other budgets in the longer term (such as the health budget). Therefore, funding cuts or caps in this area may prove to be very short-sighted.
8. Document Structure and Additional Information
The GPS engagement document suggests that submitters identify areas where they consider changes could be made to the structure of the GPS and to also highlight what additional information should be included in the final document. I have a number of suggestions:
• Analysis of current transport trends: as noted earlier in the submission, transport trends over the past three years appear to vary significantly from what has happened in the longer term. There has been a significant reduction in state highway traffic growth rates, and a significant increase in public transport patronage. This should be examined in the GPS, as if future investment is not targeted to areas where demand is growing it may end up being very poor quality investment.
• Future uncertainties: as was also noted earlier, there are significant uncertainties in the transport sector over the next decade – particularly in relation to the potential for fuel prices to increase significantly. This should be discussed in the GPS, along with consideration of risk factors if fuel prices were to increase quickly.
• Justification for the new RoNS: the four additional RoNS added in the GPS should have a sound economic justification, especially as none of them are located in the part of the country with greatest population and travel demand growth (Auckland).
9. Conclusions and Recommendations
Overall, in my opinion the GPS engagement document is a disappointment and seems highly unlikely that transport investment will achieve its goals of enhancing economic growth and productivity if funding is allocated as proposed in this document. If the GPS engagement document had been proposed 5 or 10 years ago then it would have made a lot more sense, as at that time state highway traffic was increasing steadily while public transport patronage increases were relatively low. However, in the past few years there have been some significant changes to transport trends – with higher fuel prices contributing to far lower increases in traffic volumes, or even some years (like 2008) when state highway traffic volumes decreased by almost 3% compared to the year before.
If transport investment is to assist economic growth and productivity it needs to be well targeted, to areas where there are the greatest bottlenecks holding back the economy and also to areas where demand is increasing most rapidly. The GPS will guide the funding of transport projects in the next 10 years, not the last 10 years – so must look forwards and anticipate where additional capacity is required between now and 2022, or to set aside sufficient funds to keep existing infrastructure in a good state of repair so that it can be used to its maximum potential.
Some significant changes to the GPS are considered necessary in order for it to achieve its stated goals. These are:
• Ensuring that spending on state highways is relative to the increase or decrease in demand on those state highways. The proposal to significantly increase state highway spending even though volumes are static or falling is illogical and likely to lead to poor quality investment.
• Ensuring that sufficient money is available to keep all roads (state highways and local roads) in a good state of repair and to renew them as required. The proposal to effectively cap maintenance and renewal funding is likely to lead to a degradation of existing infrastructure and a false economy of having to spend much money in the longer term.
• Ensuring that any additional Roads of National Significance (RoNS) have a sound economic justification and are located in places where they are truly required. Some of the new RoNS proposed appear to be located in very low traffic volume areas and they are all away from the country’s largest area of population and traffic growth (Auckland).
• Enabling rail capital projects to be funded by the NZ Transport Agency out of the NLTF – to reflect their contribution to reducing road congestion.
• Increasing the amount of funding available for public transport infrastructure projects to reflect growing patronage and also to ensure that funding is available for projects that will enhance the efficiency and effectiveness of the public transport system. The proposed decrease in funding for PT infrastructure appears likely to be a false economy, meaning that far more will have to be spent on subsidies over the next decade.
• Increasing the amount of funding available for walking and cycling to reflect their wider benefits, such as exercise easing the burden on the health system in the longer term.
Overall, there appears to be a significant gap between the worthy goals of the GPS (to enhance economic growth and productivity) and the funding preferences to achieve that goal – in particular the emphasis placed on constructing new state highways at a time when traffic on state highways is static or declining. To ensure it is a credible document, the GPS should explain this connection far more clearly.
By admin, on May 2nd, 2011 An article in today’s NZ Herald picks up on the funding squeeze for transport that I posted about a couple of days ago. For a start, it points out the irony of potentially significant funding shortfalls at the very time we’re seeing public transport patronage skyrocket:
Auckland Transport faces a tight funding squeeze as it struggles to cope with unprecedented numbers of commuters switching to buses, trains and ferries.
After overseeing a record seven million public transport passenger trips in March, the organisation fears having to cut service costs by $31.2 million in the next financial year because of savings sought by its two main funders, the Auckland Council and the Government’s Transport Agency.
This is a little unfair on Auckland Council, as the decrease in operating funding of $31.2 million is caused by a $16 million shortfall in NZTA funding and the assumption that council will cut that amount too. Funding of local transport projects is generally funded approximately 50/50 between NZTA and the Council (previously public transport was regionally funded while roads were locally funded, but with Auckland Council the distinction no longer applies). So the Council could always choose to either continue its funding (in which case the only shortfall would be from NZTA) or even make up NZTA’s funding share – if it so desired. The table below seems to indicate a $2 million operational funding boost from the council in the Annual Plan compared to what had previously been expected: All of the $16 million decrease in operational funding seems to come from the reduced NZTA subsidy.
The $16 million decrease in funding for operations is peanuts compared with NZTA’s savage cutbacks in funding available for capital projects in the Auckland region:
A capital projects wish-list of $674 million of public transport infrastructure and local roading proposals inherited from Auckland’s former regional, city and district councils will also have to be hacked back after a gloomy Government subsidy forecast.
Chief infrastructure officer Kevin Doherty has told Auckland Transport’s board that although the list assumed Government subsidies of $274 million, there was unlikely to be more than $147 million available, and possibly even less. He said the Transport Agency had indicated a combination of previously strong regional spending and lower than forecast revenue into the national land transport fund had depleted the amount available for subsidy distributions in 2011-12, the final year of a triennial funding cycle.
As I said the other day, this reduction in available funds for capital projects isn’t all bad news. Hopefully it might mean some really dumb projects get the cut – like Penlink and new multi-level carparks in Manukau City and Takapuna. The surprisingly large amount of money Auckland Transport was planning to spend on capital projects also reflects a lot of the former councils promoting big expensive transport projects in the last couple of years, when they knew they wouldn’t end up being the ones who had to pay for them. Penlink is probably the most obvious example of this. Mike Lee picks up on this point:
But council transport committee chairman Mike Lee, who is an Auckland Transport board member, said the council would be very unwise to cut public transport spending after years of patronage growth.
“That doesn’t mean throwing money away or open slather for subsidies,” he said. “It means ensuring expenditure is in place to meet the rising demand to maintain the momentum of recent years. Because going through my inbox of issues, complaints and questions, transport seems to be the major issue that is concerning Aucklanders.”
Even so, Mr Lee acknowledged that the region’s former territorial authorities had caused budget difficulties by “front-end loading” their long-term plans with spending on local roads “which they themselves couldn’t really afford. Obviously they hoped that if they threw it over to the Super City, they would get those items paid for”.
The really big issue that will need a lot of thinking about is how major projects that do make sense, like AMETI (in its revised form) and some form of Dominion Road public transport improvements, are going to end up being funded. Looking forward over the next 10 years, the government doesn’t seem to see itself as enabling NZTA to contribute much to these large and rather expensive projects. Will NZTA’s contribution to AMETI’s rapid transit aspect be able to be funded out of the local roads budget, or will it have to come out of the “Public Transport Infrastructure” budget that just about disappears over the next decade?
These are the consequences of the various Roads of National Significance being prioritised so much. I just can’t see how, if NZTA is spending billions on the Waikato Expressway, on tunnels in Wellington and the Transmission Gully motorway, or on the Puhoi-Wellsford “holiday highway”, they’re going to be able to make much contribution to projects like AMETI, Dominion Road or any other major local project. Which may mean that those local upgrades simply don’t happen.
By admin, on May 1st, 2011 Over the past week I have written a number of posts about the upcoming 2012 Government Policy Statement for transport and its effect on the “funding bands” that guide the amount of money NZTA can spend on particular things. My general feeling about the GPS draft document is that it’s utterly stupid and illogical, but also that it’s not particularly more stupid and illogical than the current 2009 GPS – which I suppose isn’t really saying much.
The main thing to know about both the current and future policy statements is that they suck money away from pretty much everything aside from new state highways, so that the government’s selected “Roads of National Significance” can be given funding priority. While that is certainly the case, so far it would seem that the various transport bureaucrats have done a reasonably good job at ensuring these funding changes haven’t resulted in major negative effects on the operation of Auckland’s public transport system – for example. We have still managed to improve both the infrastructure and the operations of the PT network to an extent where it has supported an increase in total patronage of over 8% in the last year. Furthermore, as I reported a couple of days back, the improvements are ongoing – at least for the next few months. So at least from an outside perspective, we haven’t really seen any hugely obvious adverse outcomes from the ‘funding squeeze’.
However, looking at some of the papers presented at last week’s board meeting of Auckland Transport, behind the scenes it would seem as though the GPS is having a huge impact on the amount of funding available for Auckland Transport from NZTA. This issue is most clearly highlighted in this board paper, supported by this appendix. The infrastructure section of the April Business Report also contains information on the changes to available funding from NZTA that were not anticipated. While the papers mainly talks about the impact of Auckland Council’s annual plan funding decisions on what Auckland Transport will be able to do next year, the changes in available funds from NZTA have potentially vastly more impact on what will – and won’t – be able to happen in the future: both in terms of infrastructure and operations improvements.
These paragraphs from the business report outline quite clearly what I’m talking about: So the money NZTA has available for non state highway infrastructure projects in Auckland in the 2011/2012 financial year has declined from $279 million to $147 million – ouch that’s an utterly massive decline! It’s also interesting to note that one of the main reasons for the decline in available funds is the ‘timing of cashflow against revenue streams’. This suggests that they might be getting in a bit less money for fuel taxes than expected, yet have mounting bills to pay (for state highway projects?) and therefore have very limited funds available for local projects in Auckland.
The report prepared about the Annual Plan also says a bit about the lack of NZTA subsidy funds being available – although this time a far smaller figure (presumably relating to operating costs rather than capital expenditure): The detailed financial information attached to the Annual Plan report gives us some further information on what’s being discussed above: You can see the $16 million shortfall in NZTA operating subsidy in the Draft Annual Plan compared to what was expected in the Long Term Plan. Looking further down the tables, the difference in available subsidy for capital projects from NZTA can be seen too: Now if it weren’t for the enormous number of utterly stupid projects proposed to be funded by the Draft Annual Plan (Penlink, huge carparks in Takapuna and Manukau City etc. etc.) I would probably be more worried about this than I am. I’m somewhat hopeful, to an extent, that NZTA’s funding pressures will mean many of the stupid transport projects that the old councils advanced – and have just been carried over as Auckland Transport’s funding priorities – will not proceed.
However, as a longer term trend this is something to worry about and I think is a real indication of the massive funding pressure that will come on efforts to improve public transport and local roads over the next decade – if the 2012 Draft GPS becomes a reality. As I have noted many times before, 75% of the country’s population growth over the next 40 years is in Auckland – we simply can’t afford to continue to get a raw deal when it comes to transport funding.
By admin, on April 28th, 2011 Perhaps prompted by the various items on Radio NZ this morning, the Ministry of Transport has finally got around to publishing a discussion document for the next Government Policy State for transport funding. You can read the document here and you can also make submissions on it between now and May 27th by emailing: GPS@transport.govt.nz.
As I suspected this morning, the 2012 GPS is proposed to very much continue the “1960s thinking” basis of the current policy statement. The bulk of NZTA funding is to be spent on building new state highways (particularly new roads of national significance) even though traffic on them is steady or falling, while funding for just about every other transport activity class (except, interestingly enough, public transport subsidies) is going to be squeezed enormously.
The discussion document outlines the three main focus areas for the 2012 GPS:
Personally I can’t quite see how spending up large on projects with very low cost-benefit ratios and falling demand, plus taking money away from the road safety budget is likely to achieve these three main goals – but I guess it’s interesting to at least know what they are.
The engagement document talks quite a bit about the RoNS – and confirms the potential addition of the further RoNS that I discussed a few days back, including the bizarre Cambridge to Taupo route:
If 6800 vehicles a day along SH1 for much of the section between Cambridge and Taupo represent “high volume”, then the bar is set pretty low. Remember that the one lane Kopu Bridge carried nearly 10,000 vehicles a day back in 2009 – why wasn’t its replacement bridge a four-lane superhighway? (not that I’m saying it should be)
Most of the wording in the document is just fluffy words that generally appear to me as completely contradictory. What really matters are the funding bands that the GPS sets out – with the 2012 version highlighting the maximum and minimum expected spend on each particular funding class for 2012-2015. It also hints at the potential funding bands for years beyond 2015, right through to the 2021/2022 financial year.
But to start with the next three years, the funding bands are shown in the table below: The funding ranges are apparently put in place to give NZTA some ‘wriggle-room’ about what they choose to invest in, but what’s particularly important to look at is the upper limit of the funding range – as it’s my understanding NZTA find it very difficult to fund anything beyond that limit. However, there’s obviously not enough funding in the total ‘pool’ to fund everything at the upper limit, so inevitably some things will miss out and be funded much lower. It’s not hard to guess that state highway funding is unlikely to be the thing that misses out.
A few things stand out for me – firstly the reduced funding for pretty much all the “small things” that NZTA does, like research, transport planning, manging the funding allocation (which I think generally means NZTA staff numbers) and road safety. A lot of things also have their funding pretty much held level – which obviously means a cut in real terms. Those are major expenditure points like local roads and state highways maintenance. One truly bizarre thing about the priorities of this GPS is that we’re throwing money at building new state highways while at the same time being less able to look after the ones we already have.
In terms of public transport, the GPS is a strange mix of OK news and terrible news. On the positive side, a significant increase in funding for public transport services (translation: subsidies) is proposed. This is good as it will ensure Auckland’s rail network can be properly funded, and it should also allow a bit of breathing space to increase service provision levels in response to rising public transport patronage. But on the downside is the absolute gutting of the public transport infrastructure fund – which helps pay for things like railway station upgrades, bus priority projects, ferry terminal upgrades and the like. The gutting of the PT infrastructure fund comes through particularly clearly if we start to look a bit more long-term at the government’s proposed funding bands: To make a little bit more sense out of all these numbers, I have put together a couple of tables in Microsoft Excel, which look at which activity classes dominate the funding, and whether that changes over time throughout the course of the GPS. I’ve used the midpoint between the top and bottom end of the funding range to give a single number for what I think might be the “most likely” level of funding for that activity in a particular year. To simplify it a bit, I also created sub-totals of the various types of spending: state highways, local roads, public transport, road policing and “other”. It’s probably worth noting that the “grand total” available to spend in year in the table above is simply found by adding up the totals of all the mid-points (rather than the actual total of available funding, which as shown in the above tables is somewhat higher).
This shows some relatively interesting results. We can see that while spending on state highways as a whole remains relatively constant in the mid-50% of the total fund, the proportion of that spend one new state highways goes up a lot, while the proportion that’s spent on renewals and maintenance declines. Local roads remains around 20% of the fund throughout the whole period – although considering around 50% of vehicle kilometres travelled in the country are on local roads (the other 50% being on state highways) it’s probably fair to say that local roads in general are under-funded.
It is the public transport funding that probably confuses me most though – with the big increase in funding for PT services but the slashing of funding for infrastructure improvements. Considering that most PT infrastructure improvements (like bus priority measures, ticketing system improvements, ferry terminal upgrades etc.) will improve the efficiency of public transport as well as boosting patronage, some investment in PT infrastructure is likely to mean a lower reliance on subsidies further down the track. It would seem that the government’s deliberate public transport strategy is to withhold funding that would allow the system to be upgraded, while accepting the result of withholding infrastructure funding is the need to boost money spend on subsidies significantly over the next decade.
If we look at the changes to funding allocations over the 10 year period covered by the GPS, some of the changes proposed in this document start to appear a bit clearer (once again these take the midpoints):
The table above really highlights what I’m talking about in terms of public transport funding. Funds available for subsidies almost doubles over the 10 year period, while funding for infrastructure improvements is cut by three quarters. That just seems plain dumb – setting yourself up to have poor infrastructure in the future that will force you to pay out really high levels of subsidy.
In actual fact, there’s a lot in the GPS that’s actually just plain dumb. Like spending up large on building new state highways, but neglecting the ones you already have by cutting funding for renewal and maintenance. Like strongly limiting local road funding even though that’s where most of the traffic growth on the road network is. Like promoting further Roads of National Significance in absolutely stupid places, when you can’t even afford to fund your existing pet projects without stuffing up all other parts of the transport budget. Like cutting money for road safety when supposedly it’s a major focus on the policy statement. Like dramatically cutting public transport infrastructure funding so the PT networks can’t improve, but accepting that will lead to way higher subsidies in the future so making plenty of cash available for them.
I suppose to summarise, the GPS could be worse as there is some good news for public transport in the funding boost for services. However, I just can’t get my head around how utterly dumb much of the document is and how utterly contradictory the goals of the GPS are with what’s actually being promoted to achieve those goals. Surely it’s not hard to realise that, if one is trying to boost economic growth and improve road safety, it’s pretty dumb to spend more on the parts of your road network people are using less, cut money from funding parts of the network that are being used more, drastically cut funding from public transport infrastructure improvements while patronage in the country’s largest city is booming, and decrease funding for road safety initiatives.
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