At an announcement today, Auckland Transport have said that the AT HOP card will be start going live on buses in June with Urban Express buses the first to go live.
AT HOP roll-out planned for buses in June
Following its introduction on trains and ferries at the end of 2012, the AT HOP card has now completed testing on buses. Testing commenced in April, ahead of the planned, public rollout to all Auckland bus services from June this year.
Auckland Transport’s Chief Operating Officer, Greg Edmonds says, “This final stage of the roll-out of AT HOP is the largest piece of one of the most transformational transport projects in the city. Auckland has 1100 buses in its fleet and carries 80% of public transport users which equates to 54 million passenger journeys a year. This means the roll-out is significant and must be handled carefully”.
Mr Edmonds says that in order to manage the scale of the roll-out Auckland Transport will be phasing the introduction of AT HOP on buses to ensure the smoothest transition possible for customers.
The roll-out is planned to start with Urban Express bus services in June. Birkenhead Transport, NorthStar, Ritchies, Northern Express, Metrolink, Go West and Waka Pacific are planned to follow through to November.
Howick & Eastern, Bayes, Fullers Waiheke Bus Company, the Airporter and Airbus are planned in the final phase to the end of the year.
”As each bus service begins its roll-out we will be providing more detailed information to customers.” Mr Edmonds says.
“The AT HOP card will bring Auckland in line with many other international cities by providing an integrated public transport ticketing system”.
The AT HOP card can be topped up online, at an Auckland Transport Ticket & Top Up machine or in person at a ticket office. Purchasing an AT HOP card may save up to 10% off single trip cash fares (excluding the NiteRider bus service). An AT HOP card also allows free unlimited access to ride on the City LINK bus service.
Registering an AT HOP card online helps to protect your card from unauthorised use should it be lost or stolen, while also helping to protect the balance stored on the card within 24 hours from the time it is reported missing. Cards can be registered online at ATHOP.co.nz.
Based on what we saw when the Snapper HOP card rolled out and when the system went live on the trains, there are obviously going to be a lot of communications to go out and that process will start next week. They also said that ticket machines would be going in at Northern Busway stations and that they would be rolling out a network of at least 55 locations where people can purchase and top up their cards if people don’t want to use the online facility. I will post a map once AT are able to provide it.
The process for changing over to HOP sounds like it will be very similar to what happened when NZ Bus launched the Snapper Hop card. There will be free HOP cards for those with existing operator specific cards and the balance will be able to transferred to the HOP card however it will be easiest if the cards are run down as much as possible. If you have a Snapper card and want to keep it for micro transactions then you can do so. There will also be plenty of ambassadors at bus stops to help out too.
It is expected that all bus companies will be operating using HOP by the end of the year and in 2014 Auckland Transport will start the processes needed to move to integrated fares.
Many readers have already noticed that the HOP readers are starting to be installed on buses and quite a few of you have sent in photos of them. Here is one example from Andrew.
What was also interesting and extremely positive, was to see the NZTA at the announcement too supporting the need for integrated ticketing. They have also issued a press release regarding it.
Auckland’s HOP card extension good news for NZ says NZTA
The NZ Transport Agency says the rollout of new electronic ticket readers on Auckland buses will also be good news for people using public transport well beyond the boundaries of New Zealand’s largest city.
“Auckland, because of its size, is the foundation of this extended electronic fare-paying system. We’re confident that this is a well designed system for the city that can be easily modified and adapted for use in other centres,” says the NZTA’s Group Manager for Planning and Investment, Dave Brash.
The installation of the ticket readers on buses from next month means Aucklanders will need only use their HOP smartcards once to pay for a multi-mode trip on all public transport services – ferries, trains and now buses.
The NZTA has partnered with Auckland Transport and its predecessor, the Auckland Regional Transport Authority, since 2005 to develop the city’s integrated ticketing programme, with an estimated funding contribution of $59.5m and the development of a parallel national ticketing programme, including the development of a national ticketing standard which enables integration with ticketing equipment and transport service providers in other centres.
Earlier this month, the NZTA awarded its first national ticketing standards compliance certificate to Thales New Zealand after the successful certification of the company’s new ticketing devices for Auckland’s buses. Mr Brash says NZTA investment in the development and implementation of the Auckland Integrated Fare System (AIFS) to create national ticketing standards delivers several benefits for public transport users all across the country.
”The central processing system developed for Auckland can be re-used by other regional councils as part of a national framework. As regions upgrade their ticketing systems, they will be able to purchase equipment which complies with the national standards and plug into the central processing system, ensuring that they will enjoy the benefits of a shared national systems approach, rather than having to pay a premium to develop separate ticketing systems.”
Mr Brash says the national standard could eventually mean people being able to use the same smart card in more than one centre, and the information about travel patterns in different cities collected by the NZTA’s central processing system would also provide a wealth of data that can be used to make better informed public transport decisions.
“Cities around the world with effective integrated ticketing systems have seen strong growth in public transport patronage, a better return on new public transport investments, and better road transport efficiency.
“We are aiming to achieve the same results here in New Zealand. Our growing cities mean more people rely on easy to use, effective public transport to get around. A key feature of successful public transport networks around the world is an integrated ticketing system that allows people to transfer easily between bus, train, ferry on a single ticket, making public transport a more attractive option.”
It’s good to finally have some solid information about this. There were lots of questions asked about the project so if you want to know something, ask and I will try and answer.
*** This is a collaborative post by Peter Nunns and Stuart Donovan ***
One criticism of road pricing is that it is merely a regressive method for raising revenue that will widen existing social inequities. That could be true – except that we would suggest road pricing is not in fact a revenue-gathering measure at all, but instead a method for increasing the efficiency of our road system.
In this post we argue that – when implemented for the “right” reasons and in the “right” way – road pricing should not only reduce the costs of congestion – and thereby allow us to avoid the need to expand transport capacity at great expense – but do so in a way that does not necessarily worsen social inequities.
So what is the right reason to introduce road pricing? It’s understandable there is some confusion about this question, which was not helped by the “Keep Auckland Moving” discussion document. That document presented road pricing as a way to raise revenue for costly road projects; its effects on the demand for travel was mentioned only in passing:
Rather than being a measure intended to raise revenues by charging a “captive audience” of road users, we view road pricing as a measure aimed at improving the efficiency of the transport system. When you look at it in this way, it becomes possible to implement road pricing without necessarily widening existing social inequities. In fact it could even, under the right conditions, be relatively progressive.
First, it is worth mentioning that economists, such as ourselves, often try to distinguish between:
- Measures designed to improve the efficiency of the economy, and
- Measures designed to improve the equity and fairness of the economy.
Most people (including us!) aspire for an economy and society that is both productive – in the sense of allowing us to get the maximum aggregate reward for our efforts – and equitable – in the sense of ensuring that people are neither reduced to poverty nor alienated from the rewards of their labour. However, it’s generally possible and often desirable to consider these two issues separately.
People have come to accept this logic in many areas of life.
Food, for example, is a basic necessity of life if there ever was one. Food is currently priced by the market, which means that farmers and retailers charge the highest price they are able to get, even if it means that some people can’t afford the food they’re selling. We accept this state of affairs because it often results in more efficient outcomes compared to alternative approaches, such as food subsidies.
On the other hand, most people generally don’t want their fellow New Zealanders to starve to death.
For this reason New Zealanders have individually voted for a social welfare system that uses progressive taxation and transfer payments as a way of ensuring equitable access to food (and housing and other necessities of life). We allow food to be sold in response to price signals, but then redistribute some of the economic gains that results to ensure everyone has access to food.
We would argue that what’s true for tomatoes is true for transport. In the words of the UK’s Eddington Transport Study:
Similarly, a 2010 study by the Australian Treasury, titled “Australia’s Future Tax System”, recommended the introduction of road pricing – but not primarily to raise revenues. The study was quite clear that the main gains, or economic benefits, arises from reduced congestion and a more efficient transport system:
In fact, this study explicitly recommended that road pricing be revenue-neutral and that all revenue collected should be recycled back into the (public) transport budget:
Hence, in most other places the primary objective of road pricing has clearly not been to raise revenue. Instead, it seeks to improve efficiency, which in turn improves aggregate well-being: Less time wasted in traffic, more productive businesses and workers, and less need for costly public investment in road capacity.
Notwithstanding these benefits, we accept that road pricing is likely to have an adverse impact on some low-income households.
This is largely because transport demand is relatively inelastic in the short run. People have chosen to live in certain places and work in certain jobs, and as a result will need to travel at peak times. As a result, the short run effect of road pricing would be to impose costs on everyone who needs to travel at peak times, regardless of their income, and some low-income households will be adversely affected.
In the long run (say 5+ years), these households are likely to adjust their behaviour in response to road pricing. People would choose to live closer (or further away) from work and school, businesses would adjust work hours, and transport agencies would (hopefully) provide more public transport and walking and cycling infrastructure.
But it takes time to change those patterns – to change jobs and homes, or to create new transport options on given routes. It’s understandable that economists’ halcyon “long run” is little comfort to the people facing unsupportable costs in the here and now. So this brings us to our second question: What is the right way to implement road pricing?
We agree that the distributional effects of road pricing – or any pricing mechanism, for that matter – are an important consideration. However, when confronted with the risk of adversely affecting low income households it seems to us that the most appropriate response is not to persist with an inefficiently managed transport system, but instead to identify supplementary mechanisms that can compensate affected low-income households.
That means using the financial gains from road pricing to offset potential negative impacts on low income households. This could be done in a number of ways. For example, we could:
- Expand public transport services and walking/cycling infrastructure, particularly in low-income areas. This would give people more transport choices and hence increase their ability to respond to road pricing.
- Provide direct financial compensation to households adversely affected by congestion charges, by increasing transfer payments to low-income workers or reducing taxes on lower incomes.
- Reduce the cost of travelling at off-peak times, e.g. lower fuel prices and an off-peak public transport discount. Low income households tend to travel disproportionately more at off-peak times.
These options are only possible if road pricing is not seen primarily as a revenue-gathering exercise, but first and foremost as a way of improving the efficiency and productivity of an urban transport system. Thus, when implemented for the right reasons and in the right way, road pricing might help us to achieve a society that is both more efficient and more equitable.
About the authors: Peter Nunns and Stuart Donovan are friendly bearded economists based in Auckland. They have a passionate interest in transport (past, present, and future), smoked salmon, and beards. The opinions expressed here are our personal views and do not reflect upon the position of any organisation with which we are associated, or constitute professional advice.
In this recent post on Auckland’s transport funding gap, Peter Nunns espoused the merits of time-of-use transport pricing as a way of increasing the productivity of the transport system. Peter came up with this analogy to help highlight the merits of time-of-use transport pricing:
Let’s say you’re managing a factory. Your machines are running at 100% utilisation ten percent of the time, and 20% utilisation the rest of the time. This is constraining your ability to produce more, so you ask the chief executive for money to buy more machines. His answer, if he’s got any sense, will be: “Get knotted. You need to manage your workflow better.”
As some of you may know I also support time-of-use transport pricing (articulated in posts here and here). Notwithstanding my general support, I do accept there’s important design and implementation issues to work through. For this reason I’m relatively relaxed about timing and would prefer that – instead of rushing headlong into a particular solution (as the NZCID would have us do) – we instead took the time to have a decent/informed public debate about the concept. I hope that such a debate would end with the majority of people supporting the idea in principle, which would then enable political/technical leaders some space to work out exactly what we should do, how we should do it, and by when.
In this post I simply wanted to reflect on two of the dissenting comments raised in response to Peter’s post. For example, one person commented:
My understanding is that NZTA and the government are principally opposed to a discriminatory tax on assets that have already been paid for.
This statement suggests that time-of-use road pricing is a “tax”. From what I understand, taxes are typically used by governments to fund any number of activities that are largely unrelated to the activity being taxed. Income tax and GST, for example, are used to fund a whole manner of things, such as education and health. In contrast, revenue raised from transport activities (at least in New Zealand) are hypothecated to operating, maintaining, and improving the transport system (the MED website provides a breakdown of the various duties, taxes, and levies that are applied to liquid motor fuels in New Zealand for those are you who are interested).
The second part of the aforementioned comment part inferred that time-of-use transport pricing was wrong because the “assets have already been paid for“. I don’t think this is a credible argument for several reasons.
The first reason is that it presumes new roads do actually pay for themselves, insofar as the fuel duties paid by drivers are adequate to cover the lifetime costs of construction and maintenance. This is patently not true of local roads, where costs are part-funded by rate-payers, not road-users. I suspect it’s also not true of many of the RoNS, which would certainly struggle to cover their costs. Hence, it’s not really the case that new roads are paying for themselves, it’s just that their financial ass is being covered by old roads that have more than paid for themselves. I don’t know when roads actually “break-even” (and suspect it varies a lot from place to place), but suspect that many of our recent improvements don’t come close.
But the more critical issue with the suggestion that the “assets have already been paid for” is that the costs of a road do not end with construction and maintenance.
More specifically, roads incur ongoing congestion costs, which tend to arise at peak times. Now I do understand that congestion is a less tangible economic costs than construction and maintenance costs, which must be funded directly out of the transport budget. In contrast to these costs, congestion is an external, non-monetary cost. When we say “external” we are referring to the fact that the person who chooses to drive in congested conditions does so without having to bear the additional delays they cause to other drivers that are stuck in the queue behind them. Hence congestion is an external cost that arises from our individual decisions to drive. Despite being less tangible, it’s nonetheless real – as any commuter will know!
So rather than being a tax, time-of-use transport pricing is, I think, better seen as a targeted user-charge. One which seeks to place the costs associated with travelling at peak times at the feet of the people who are making those decisions. And given that much of our transport budget is currently being spent on transport projects that are designed to cater for people that are travelling at peak times, then it makes sense to charge more for these trips than for trips that take place at off-peak times.
Having raised those two issues, the same person went onto state:
The charge is a mechanism to force people to change the mode they use to travel. In the case of congestion charging it makes PT more attractive in comparison to driving … In effect you are shifting the equilibrium in favour of the poor using PT and the wealthy driving.
My first issue with this statement is the presumption that the primary benefit of time-of-use road pricing is that it changes existing behaviour. Naturally modal shift from cars and to PT would occur and result in less congestion. Such a benefit can be thought of as a “static efficiency“, in that the benefit arises from improving the efficiency with which people currently travel. In saying that the experience with time-of-use road pricing overseas is that 80% of people keep driving, i.e. the majority of people kept doing what they have always done, and there is very little change in PT use.
So I would argue that the primary economic benefit of time-of-use road pricing lies less with it impacts on people that are currently driving, and more with how it impacts on people’s future decisions about where they live/work/play; it impacts on our future land use and transport decisions.
Benefits from more efficient decisions being made in the future can be thought of as “dynamic efficiencies“. By sending a price signal about the relative scarcity of road space at peak times, time-of-use road pricing will progressively encourage people and businesses to make choices in the future that help them to avoid situations the need to drive at peak times. Thus, the dynamic efficiencies of time-of-use transport pricing will accrue progressively over time, by discouraging people from making decisions that result in inefficient transport and land use outcomes.
I would suggest the dynamic efficiencies of time-of-use transport are more important in a city like Auckland, which is expected to grow rapidly over the coming decades.
As an aside, the potential for time-of-use road pricing to deliver dynamic efficiencies is a major reason why I don’t buy the line that “we need to invest in alternatives first” before we consider implementing a time-of-use transport pricing scheme. The reality is that we already have the primary “alternative”: We simply need people to exercise more discretion about where they live/work/play to ensure they don’t end up driving so much at peak times. And the longer we go without time-of-use transport pricing, then the fewer people who make transport/location decisions in consideration of their true costs and the harder it will be to implement such a scheme in the future.
Consider, example, the Auckland Plan’s proposed greenfields development around Hobsonville and Pukekohe. Do you think such locations would be equally attractive with time-of-use road pricing? And do we think that implementing time-of-use transport pricing will be more or less easy once these suburbs have developed and lots of their residents are now driving elsewhere to work? Personally, I think the answers are “no” and “much less easy” – which is why I suspect the dynamic efficiencies of time-of-use transport pricing would quickly dominate the static efficiencies associated with (relatively small) mode shift.
The second issue that I would like to address is the suggestion that “the equilibrium will shift in favour of the poor using PT and the wealthy driving“. The point that is being made here is that time-of-use transport pricing is likely to result in our transport system being prioritised for high-value travel. And it is true that the latter is positively correlated with income.
In saying this, I think it’s important to consider the following issues:
- Income is not the primary/sole determinant of people’s willingness-to-pay for travel. I would argue that many other factors determine how much someone is willing to pay for transport, e.g. the purpose of a trip is more important than someone’s income. Speaking from personal experience, I know that if am travelling for work purposes then I am more prepared to pay more than if I travelling for recreational purposes. The key point to note here is that willingness to pay varies greatly depending on the reasons why someone is travelling and while income is likely to play a role (if only for framing their perspective on relative costs), it’s not as straight-forward as the comment above makes out.
- It makes presumptions about how a scheme would operate. As mentioned in some of my earlier posts, the degree to which a time-of-use road pricing scheme impacts on low/high income households depends very much on its design and wider policy decisions about how the resulting revenues are used. If the scheme was designed to be revenue neutral, for example, then the additional revenue could be used to lower fuel excise duties and/or improve public transport – in this way resulting in a situation where low income households were much better off (remembering of course that low income households tend to drive less, especially at peak times, and own less efficient cars – hence they pay more fuel tax per kilometre).
Before I wrap up, I should say that I think the whole time-of-use transport pricing debate could be flipped on its head if it was presented as 1) revenue neutral and 2) linked to lower prices for off-peak travel. In fact, what we should actually be discussing is not “higher peak charges”, but higher peak charges that are used to fund lower off-peak charges.
Finally, some of you may have noted my preference for “time-of-use transport pricing” rather than “time-of-use road pricing”. The reason I prefer the former terminology is that it emphasises the general concept, rather than its specific application. Indeed, very similar arguments apply to the use of public transport: Maybe we should consider charging public transport users more to travel at peak times, with the additional revenue in turn helping to fund lower off-peak travel? I think so.
This is a guest post from reader NCD
The above graph is a cumulative series for two causes of death in New Zealand 1921 to 2012. Can you guess what the data series for the blue and green lines are?
One of the challenges we face as a society is responding well to events that happen repeatedly as a series of smaller events that added together result in a major crisis. In contrast we respond dramatically to an event that concentrates the trauma into a short time span. The green line is earthquake deaths, the blue line is road traffic accident (RTA) deaths.
- Total deaths from earthquakes in New Zealand since 1921: 464
- Total deaths from traffic accidents since 1921: 37542 (at the end of 2012, although it seems that someone left the meter running).
You’re roughly 100 times more likely to be killed in a RTA than in an earthquake.
I wonder if our minister of Earthquakes and Traffic accidents, having a foot in each camp as it were, has ever paused to consider that he’s presiding over a much bigger disaster than Christchurch, but that hardly anyone’s noticed.
The 2 world wars are a bit different to an earthquake, in that there’s human causation. So we have sentiments like “never again” and “lest we forget” attached, the implication being that we mustn’t let such terror happen again. Total New Zealanders killed in the two world wars: around 28500 – several thousand less than have been killed in RTAs over the last century.
Over the next decades we’ll spend billions of dollars strengthening buildings for an earthquake that will likely kill dozens or hundreds. And while we’re willing to throw considerable sums at road safety, the sentiment is not the same. One gets the feeling that in spite of the rhetoric RTAs are considered by politicians as more like collateral damage- a necessary cost of doing something more important.
We have a lot to thank the airline industry for, not least an approach to safety that leads to astounding stats like this for 2011:
- USA large commercial airline deaths: zero
- For comparison, USA RTA deaths: 32,367 (You can see why a bar chart here wouldn’t be particularly useful!)
By the way, those airline safety stats weren’t a fluke: they were repeated in 2010 and 2012 and Q1 2013.
Now compare the (very helpful) fixation we have with the battery in a Boeing 787 that has yet to cause a crash, with our willingness to let cars travel in a way where we know they will frequently crash and kill. One might say that the airline industry has a bit of a Bob Newhart approach to safety. If it’s dangerous you just stop it.
The issue is increasingly on the radar for public health research and initiatives. In fact 2011-2020 is WHO’s Decade of Action for Road Safety. Worldwide we get the equivalent of a holocaust death toll every 5 or so years.
As for the economic cost of RTAs, NZTA has come up with some figures (because you can’t really get excited about a crisis until you put a dollar value on it, right?). Currently they’re estimating about $4 million per fatality. Including injury we’re at $3.70 billion dollars per year .
$37 billion dollars a decade. That’s quite an economic benefit you’ve got to produce by driving before you countered the cost of the damage done, let alone actually added to the positive side of the ledger (and don’t get me started on the pollution that isn’t counted!). Should we frame the debate differently by investigating the huge costs of inaction?
Once again, the Christchurch earthquake provides an interesting comparison: the scale of the trauma has caused us to re-evaluate the way we do things in New Zealand. Although there is huge economic cost in compliance with new standards, we (The Property Council excluded) accept this is needed, and we’re prepared to take the hit.
As for air transport, if we were having 300 commercial airline deaths per year, it would be all planes grounded with no protest brooked as to the economic cost of such action.
Behind the numbers and dollars we shouldn’t forget that there’s a society with disability, loss, loneliness and pain- measure that NZTA!
Given our current fatality rate, in the next hundred years we’re still on track to kill 20,000 to 30,000 New Zealanders. Which alternative universe are our politicians occupying where this is acceptable?
Before we have a debate about solutions (there’s another post for that), it might be worth considering if we need a different approach to the problem- one that allows for drastic action, one that challenges the core assumptions on which current acceptance of the status quo is based.
Nerd alert; this post is chock-full of graphs. Plus a few “hypotheses”, just to keep things exciting. And a dog, because I like dogs.
For those of you who are new to the data game but want to participate in the nerdy excitement, let me first explain the rules. The game starts when an economist, such as myself, formulates a “hypothesis”. In doing so we’re basically statistical crystal-ball gazing. Not only is this fun, but it’s actually essential.
It’s essential because formulating a hypothesis sharpens/hones subsequent analyses. It’s also essential because of what it reveals about our own internal biases. Economists have long recognised that we’re at least as biased as anyone else (and typically more selfish) – so it just seems kosher to clearly state our biases from the outset. That way other people know what game we’re playing.
I’d encourage you to play the economics game sometime, with just one word of caution: Be prepared to be wrong. I’m 100% certain, for example, that I will – at some point in the near future – be wrong. Keep that in mind whenever you are tempted to believe your own EBS (economic BS). I might also add, however, that economists don’t care much for being right, we just try and make damned sure we’re less wrong than the engineers.
Professional happiness is, after all, largely a relative frame of mind.
The primary hypothesis (it’s not really “mine” – we’re all standing on the shoulders of nerdy giants here) is something that has been articulated in previous posts here and here. Kent recently talked about it again here, where he also came up with the crazy notion that I should write a follow-up post. Thanks for that hospital pass. But other people have also asked for it, so I finally pulled finger and cranked this out. Unfortunately the cacophony of requests for follow-up posts misses an important issue: Not much additional data has been released since my last posts on the topic. Nonetheless, even in covering well-trodden ground I did find some interesting new nuggets.
The hypothesis is this: The demand for vehicle travel in NZ (when measured in terms of vehicle-kilometres travelled per capita) is falling in response to powerful wider forces, including:
- Demographic trends, such as an ageing population (which has both age-related and income-related effects)
- Socio-economic preferences, such as reduced attachment to private vehicles or increased awareness of health/environmental impacts of driving
- Technological developments, such as smart phones, PT journey planners, tablets (which help to demystify public transport and lower the perceived costs of in-vehicle time)
- Trends in transport costs, most notably sustained higher fuel prices but also reducing costs of air travel (Air New Zealand recently launched $29 late night fares between AKL-WGN)
Stylized facts support this hypothesis. In the graph below, for example, I’ve plotted VKT per capita p.a. in New Zealand over the last decade (source). You can see there was a trend towards higher VKT per capita until circa 2004, after which the trend turned negative. Since it’s peak VKT per capita has fallen by about 6% (NB: I’ve base-lined results to 2001 levels, so the graph measures the % change from that year onwards. Doing so makes it easier to identify and compare trends, which will be useful later in this post).
The good news is that this graph suggests I’m not a complete moron. But nor does this mean my hypothesis is necessarily correct.
An alternative hypothesis, which has been advanced by the Government, is that the drop in VKT per capita that has occurred since 2004 is a temporary aberration caused by post-GFC economic malaise (which sounds suspiciously like a budget form of mayonnaise). Well, let’s investigate what I call the “budget mayonnaise” hypothesis by adding (indexed) real GDP per capita to the same graph (source).
Hmm. On the basis of this evidence it’s fair to say that the Government is more wrong than me: Budget mayonnaise does not seem to explain VKT per capita trends very well. The data actually contradicts their hypothesis; unless they’re going to suggest that drivers started preparing for the 2008 GFC way back in 2004. Now it is true that the GFC has a negative impact on GDP per capita, but this impact was relatively slight and has since been more than wiped out. In fact, since 2004 – which was the peak in per capita VKT – our GDP per capita appears to have increased by about 12%, whereas per capita VKT fell by about 6%.
At this point, ardent purveyors of the budget mayonnaise hypothesis might suggest GDP per capita is not the only indicator of economic activity, and dog-yarned it they’d be right. Wages, in particular, tend to “lag” movements in GDP, such that it is possible that post-GFCNZ is experiencing suppressed wages. But why bother asking when we can get busy answering – in the figure below I’ve added inflation-adjusted hourly earnings (source).
Here we see earnings rising steadily from 2001 to 2009, since which time they have fallen. This drop probably reflects the lagged effects of the GFC plus the Christchurch Earthquakes. I should say that 2012 data shows earnings rebounding back up to 2009 levels, which is good news. But overall these indicators do not provide much evidence to support the view that a slowdown in economic activity is primarily responsible for declining VKT per capita. It seems fair to conclude that the budget mayonnaise hypothesis does not cut the mustard (how does one actually cut mustard?).
That’s not to say economic activity in general does not impact on VKT per capita; I definitely think it does. And I certainly expect that as the economy gathers momentum (as it seems to be) VKT per capita should “rebound” somewhat. Whether this rebound is sufficient to counteract factors that are causing it to decline is hard to say. My hunch is that if fuel prices stay low then we may see some VKT growth, but that’s not really something the Government can point to and say “we told you so”; that just strikes me as getting lucky.
So for now at least, I’m sticking to my story – even if I look forward to the MoT updating their vehicle fleet spreadsheet with 2012 VKT data so that I can finally be proven wrong, and in turn get to start the game again with a new hypothesis (plenty more where that came from).
But I’m also sticking to my story because, in writing this post, I uncovered another little piece of data that seems to support my hypothesis. But it does so in a somewhat unusual way, in that it suggests that VKT per capita should have actually grown in the last decade. The source of this indicator is this delicious data set from Statistics NZ,which presents New Zealand’s population from 1991 to the present. You might think that’s not particularly exciting or novel. Think again – because in this data set Statistics NZ has split the population by their precise age at the time. It’s rather useful I think.
Using this data you can estimate the number of people of driving age (which I’ve defined to be 16-70 years). You can then calculate the ratio of people of driving age per capita, which measures the proportion of the population who are of an age where they could get a drivers license, if they were so inclined. I’ve plotted this ratio below for the period from 1992 to 2012.
Holy bandages. What this graph shows (if the Statistics NZ data and my calculations are correct) is that the proportion of people of driving age in New Zealand is now at the highest level it’s been for two decades. Moreover, most of the growth in this ratio has occurred within the last decade. The very same decade that has seen a fairly significant decline in VKT per capita.
Thus in the same decade when the proportion of people of driving age appears to have increased, we have witnessed declining VKT per capita.
Fairly interesting stuff. And well worth chucking into a regression model, if we have more than 10 years of data.
Where this ratio may head in the future I just don’t know, although Statistics NZ might be able to tell us. Perhaps I’m over playing it’s importance – after all the ratio only changes by 2.5% over a period of ten years (note the graph’s truncated vertical axis). But I would have intuitively thought (here we go again with the same old EBS) that the proportion of people of driving age would have a relatively large impact on VKT per capita. Actually, in a situation where young people behave exactly like their parents you might even expect an elasticity approaching 100% (i.e. a 1% increase in the proportion of people of driving age would cause a 1% increase in VKT per capita).
Of course, the proportion of people of driving age is only one part of the VKT equation. One useful (albeit incomplete) way to visualise the VKT equation is to consider a Russian doll of overlapping circles, where each circle captures related but distinct demographic and socio-economic variables, which ultimately combine to determine VKT per capita in any given year, like I’ve shown below.
The outer-most circle is population, which is important only in a “multiplier” sense. That is, we can forecast total travel demands by multiplying VKT per capita by NZ’s total population. What the previous graph showed is that the lilac-coloured circle has increased in size relative to the outer circle, i.e. a greater proportion of the total population are now of driving age per capita.
We also know from our previous analyses that the inner-most (orange) circle labelled “DRIVE” (i.e. VKT per capita) is currently declining. These two results thus suggest that the reduction in VKT per capita is most likely to have arisen in response to either 1) a reduction in proportion of people with drivers license per capita (green) and/or 2 ) a reduction in vehicle ownership per capita (blue circle).
The graph below shows the latter (per capita vehicle ownership) superimposed on top of the previous VKT trend.
So it has declined, by not by much. And what is most interesting about this graph is that the peak in vehicle ownership occurs a couple of years after the peak in VKT per capita. Does this suggest that travel demands are actually the egg and vehicle ownership is the chicken? Could it be that NZers are choosing to reduce their VKT first and only subsequently reducing the number of cars they own? Or maybe it’s both – maybe lower VKT results in lower vehicle ownership, and lower vehicle ownership results in lower VKT. I should say that 2012 data shows a small rise in vehicle ownership per capita back to 2010 levels, but it’s still down on the 2005 peak.
The final piece of my little diagram is the proportion of the population with drivers’ licenses. I don’t have this data on hand, although I’m sure it’s out there (please point me to it if you know of good data sets). Anyway, I think that’s quite enough statistics (and lies) for one day, so let’s finish with something that is 100% certain: Puppies that try to chew tennis balls even when lying down are 100% adorable.
As I have mentioned before, Waterview is a roading project that I do support, unlike many of the dubious roading projects both nationally, and locally. Whether you like it or not, it is under construction and in time is likely to have a massive impact on the city and as discussed previously, in some ways it will probably even be useful for the CRL. At $1.4 billion the project is dubbed the most expensive roading project ever undertaken in New Zealand and the NZTA have released some images of progress so far on the project. While the majority of the project is actually underground where it won’t be seen, the sections above ground help to show just how massive the project is.
Northern portal works
Northern Portal Works
Looking North with Maioro St in the foreground
A closer look at Maioro St (front) and Richardson Rd (rear)
The TBM starts here – The trench at the southern end
While the council and government battle over when the CRL, a project that will create transformational change in the city, the NZTA is pushing on with building a motorway on the edge of town. The NZTA has just announced that an alliance of companies are about to spend $17.5 million on getting the preparation done so that the agency can start the process to obtain consent later this year. Here is the press release:
The NZ Transport Agency has taken the next step towards construction of the Pūhoi to Warkworth section of the Ara Tūhono – Pūhoi to Wellsford Road of National Significance by naming a special alliance that will prepare the NZTA’s case for the consents its needs for the new highway.
The Further North Alliance, which includes both engineering consultants and lawyers, will support the NZTA’s application to the Environmental Protection Authority (EPA) for the Notice of Requirement to obtain the necessary land.
The NZTA plans to lodge its Notice of Requirement with the EPA in the third quarter of this calendar year, and is seeking to be ready to start construction on the Pūhoi to Warkworth section as early as the end of 2014, subject to property purchase and funding.
The NZTA’s Regional Director for Auckland and Northland, Stephen Town, says alliances to construct projects are common but this is the Transport Agency’s first planning alliance and the $17.5m contract is a sensible option.
“The alliance reflects the ambitious timetable we have set for this project, and It makes good sense to have our specialists working together in a team rather than as individual companies. The combined experience and expertise of the Further North Alliance will help us meet our timetable for a very complex project and at the best possible price.”
The planning alliance comprises Sinclair Knight Merz (SKM) and GHD, who are both engineering consultants the legal firm Chapman Tripp, and the NZTA.
Further geotechnical investigations are already underway between Pūhoi and Warkworth and the Alliance thanks property owners for their co-operation and patience with the on-site teams. A range of environmental specialists are also walking the entire alignment for initial surveying with sampling scheduled to take place in coming weeks.
There is this little note for editors
The four-lane, 38-kilometre Ara Tūhono – Pūhoi to Wellsford RoNS is crucial to supporting growth in Northland and improving transport links between economic centres in the Northland, Auckland and Waikato/Bay of Plenty regions.
Ara Tūhono – Pūhoi to Wellsford is part of the NZTA’s roads of national significance programme (RoNS for short), which represents one of New Zealand’s biggest ever infrastructure investments. Once completed, the seven RoNS routes will reduce congestion in and around our five largest metropolitan areas, and will move people and freight between and within these centres more safely and efficiently.
This route will only really help congestion problems that exist at holiday times, when everyone tries to leave the city at the same time. The rest of the year it will allow vehicles to get from Warkworth, or further north to the congestion on the Northern Motorway a little bit easier so far from easing congestion this will likely add to it. And here is the statement from the minister, Gerry Brownlee.
Transport Minister Gerry Brownlee is welcoming the creation of a new planning alliance which marks another step forward in the process to construct the 18km Puhoi to Warkworth section of the 38km Ara Tuhono – Puhoi to Wellsford Road of National Significance.
“The value, innovation and flexibility of the alliance approach, bringing together companies with different engineering and other skills working together as one team, has already been demonstrated in the construction of large projects which this Government has prioritised and progressed,” Mr Brownlee says.
“Auckland’s Victoria Park Tunnel is a great example – where the innovation of the alliance approach combined to construct a much improved highway and preserve the city’s heritage – a project that came in early and under budget.
“The Government welcomes the decision to extend the alliance concept for the first time to the planning process of a project to improve transport connections between Northland and Auckland, and the rest of New Zealand.”
The planning alliance, to be known as the Further North Alliance, comprises engineering firms Sinclair Knight Merz and GHD, legal firm Chapman Tripp, and the NZ Transport Agency.
The new highway between Puhoi and Warkworth is the first stage of a four-lane motorway project that will eventually extend to Wellsford, replacing the existing State Highway 1 and expected to cost around $1 billion to construct.
“This project was identified by the Government as one of seven Roads of National Significance, to help stimulate economic development in Northland, and provide a safer and more reliable transport connection between Northland and Auckland and into Waikato and the Bay of Plenty,” Mr Brownlee says.
“Northland is blessed with great agricultural, mineral, tourism and other resources but has been starved of proper infrastructure investment for too long, something this Government is addressing.
“Northland’s economy currently accounts for just 2.5 per cent of GDP, even though the region has 3.8 per cent of New Zealand’s population.
“Investment in new highway infrastructure through the Roads of National Significance programme will help Northland’s economy to grow, rather than simply responding to growth.
“Investment and innovation go hand in hand to ensure projects of this scale and importance are delivered successfully,” Mr Brownlee says.
One thing that I always find really odd is just who this project is meant to benefit. As Brownlee, and his colleagues like to tell us, it is about unlocking Northland. Yet the road doesn’t even go into Northland, it stops well short of the border. Yet oddly, because the road itself sits within the Auckland region, it gets added on to all of our plans, whether we want it or not. If we really wanted to spend money on improving transport in Northland then spending the $1 billion that is planned for just this section alone on upgrading and even sealing some roads actually within Northland would likely have a far more positive impact. This was even acknowledged in some OIA documents I received last year.
We also learned last year that to get the time savings promised on the route, vehicles would need to be travelling at speeds of up to 250kph. What is particularly interesting is there is still no mention about any intention to build the section from Warkworth to Wellsford. We have learnt in the past that the terrain though there is particularly challenging plus has extremely low usage by vehicles currently. I wonder when they will finally tell us they are dropping that section?
A Herald article last month highlighted strong support for more Government spending on public transport improvements in Auckland. It included the following quote:
But a spokesman for Transport Minister Gerry Brownlee said that with $890 million budgeted for public transport in Auckland over three years “it would be grossly unfair to suggest the Government hasn’t given this mode of transport the priority it deserves”.
The story was analysed in a bit more detail in this post, but the question of where the $890m figure came from remained unresolved.
It is a figure that is repeated on the NZTA fact sheet, and in a press release from Transport Minister Gerry Brownlee’s office in relation to the opening of the Newmarket viaduct replacement:
A total of $3.4 billion is being invested in the Auckland region’s transport system between 2012/15 through the National Land Transport Programme alone, including $1.6 billion for state highways, $968 million for local roads and $890 million for public transport.
In the above context it looks like NZTA is investing $890m in public transport in Auckland, funded through fuel excise and road user charges. I sought clarification from Gerry Brownlee’s office on how the $890m figure was arrived at. My request was referred to the NZTA, who responded earlier this week:
So almost half of the $890m figure actually comes from Auckland Council ratepayers, and the remainder also includes public transport service operating costs as well. (From memory I think the transport services figure includes repayment of the EMU loan). Very few people would know that the National Land Transport Programme includes local council contributions.
This leaves an actual public transport infrastructure spend of $39m from fuel taxes and road user charges over the next three years in Auckland. This really is a pitiful amount compared to the hundreds of millions being spent on new roading projects. It would seem more than fair to suggest that central Government hasn’t given public transport the priority it deserves.
Edit: Sacha suggested a simple column graph would add some clarity. Here it is:
In 2010 Len Brown campaigned on three major rail projects, the CRL, rail to the Airport and rail to the Shore. If there was one issue with them though, it is that to some they are too bold. Despite getting strong support among many members of the public, vocal opponents point to primarily to their price tags as a reason not to build them. However when it comes to the second and third of the projects I mentioned above, I also wonder how much of the opposition to them comes from the mental block of getting over or under the harbours. If we had a rail line to Mangere Bridge or to Akoranga, how different would the argument for extension of the network be?
History and common sense has shown us that when it comes to building expensive infrastructure, it is best to break it down into smaller more manageable projects. There are a couple of prime examples. Earlier attempts at building the CRL also included double tracking and electrification. They fell over in a large part due to the massive cost of doing it all at once. More successfully we have seen the tactic employed across the motorway network where the system has been expanded one project at a time. With the Western Ring Route for example, lots of smaller projects have been much more palatable to the general public yet by the time it is completed, the cost could reach $4 billion. Had the NZTA or its predecessor attempted to build the whole thing at once there would likely have been a lot more opposition.
I guess what I am getting at is that we need to find ways to break down projects and reduce costs wherever possible. In the case of the two rail projects mentioned at the start, getting rail across each of the harbours would likely change these projects from looking massive and expensive, to ones that we could break down over a period of time, extending the network one station at a time. At this stage the thinking about rail to the shore seems to be focused on integrated it into the same tunnels as a road crossing. For rail to the airport you may remember hearing that the recently completed duplicate Manukau Harbour crossing was future proofed for rail. But was it really?
Well it kind of was, but it turns out not in a way that seems to be that useful.
The story goes something like this. Transit, the predecessor to the NZTA, wanted to build the duplicated harbour crossing. They, acting with their motorway only blinkers on, came with with designs and proceeded to try and get consent for the project. It was then that the Campaign for Better Transport and others became aware of just how mono modal the project was and challenged Transit to include provision for rail the the airport, something that had been on high level plans for some time. It took the threat of legal action for the agency to concede and start investigating how they could be done.
I have now been provided with documents from the time (7MB) which discuss the level of future proofing that was included in the project. It started with a high level investigation into what the potential route options were. They consisted of two routes on a separate bridge to the east of the motorway, one through the middle of the bridge piers, sharing some of them, and one to the west of the motorways. That was then narrowed down to two routes, the route through the middle piers (B) and the route to the west (C) as shown below.
So far so good and option B is what has been promoted to the public. However in my opinion, here is where things start to go wrong. Engineers found that because the bridge hadn’t originally been designed with rail in mind, that for option B, there simply wasn’t enough space to include a double tracked line. By this time the bridge had now been consented and the construction contract awarded. Changing the design enough to allow for a double track line was considered too costly. However it wasn’t only financial costs, but the need to get consents changed and that it would have caused delays to the construction.
That means the only option available if we are to use the newly built bridge is a single track line as shown above. You may notice it is called option B3. The reason for that is based on the engineering standards, the original route option was not only a single track but due to the curves it and issues should a collision occur, it would have seen trains limited to 25kph. By strengthening some of the piers and a few other changes, engineers were able to improve the option enough to allow the design speed to be improved to 70kph.
As the line not only serves the Airport, but also the commercial areas surrounding it and the residential areas of Mangere and Mangere Bridge, I suspect that we will eventually need to be running frequencies of at least 6 trains per hour in each direction. I simply can’t see a single track section being sufficient to handle that kind of service level without causing potential delays. That means that despite all of the talk of the new bridge being future proofed for rail, the only realistic option appears to build a double track crossing on a brand new bridge. Unfortunately there doesn’t seem to be any estimates as to what the cost differences between the two options are but I would have to imagine that double track option would be much more expensive.
More than anything, I think what this case highlights is the result we get when we plan infrastructure in isolation. Transits role was to build roads, yet if they taken a little bit of time to think about what the city might need in the future, they could have made changes to the bridge design early on that could have avoided this problem. Instead, as a result it appears that to fulfil the vision of getting rail to the airport, we will have to stump up for another bridge across the harbour. It also means that we are going to have to be extra vigilant when agencies describe a project as future proofed. It appears that what the engineers and planners call future proofed, isn’t necessarily what us, the general public would expect.
We spend a lot of money each year trying to “fix” congestion in Auckland and across New Zealand. In fact, it seems that the bulk of transport spending in this country has “fixing congestion” as its ultimate aim – which is a little odd as research from the USA shows that the most congested cities are the cities with the highest levels of economic productivity. But even if we decide that traffic congestion is a bad thing, the next question that comes into my mind is “how bad?”
What level of impact does congestion have on the functioning of Auckland? To what extent would Auckland’s economic performance be improved by the reduction or elimination of congestion? What does “uncongested” actually mean? If traffic congestion ‘costs’ us a particular amount each year, what is the comparison with – empty roads?
A research paper prepared for NZTA helpfully attempts to answer a lot of these questions and to structure a much better informed debate over the true cost of congestion – particularly in Auckland. A lot of this debate, as the paper notes, comes down to definitions – what is congestion?
The purpose of this research was to develop improved approaches to assessing the costs of urban traffic congestion and to make corresponding estimates of the costs of congestion in Auckland (New Zealand).
Various definitions of congestion were reviewed and it was found that the concept of congestion is surprisingly ill-defined. A definition commonly used by economists treats all interactions between vehicles as congestion, while a common engineering definition is based on levels of service and recognises congestion only when the road is operating near or in excess of capacity. A definition of congestion based on the road capacity (ie the maximum sustainable flow) was adopted. The costs of congestion on this basis are derived from the difference between the observed travel times and estimated travel times when the road is operating at capacity.
It is interesting to look at this ‘definitions’ issue in more detail to gain an understanding of what congestion actually is. I find the debate between the economist’s definition and the engineer’s definition – as noted above – pretty fascinating because the economist’s definition potentially leads to the construction of more roadspace (as the threshold for congestion is lower) whereas most transport economists would probably feel more nervous about building additional road capacity than traffic engineers would.
I actually agree with the engineering definition because building a transport system to ensure that no vehicles impact on others is just plain stupid and impossible, while the real impact of congestion beyond a certain level is a reduction in the efficiency of the system – that is once you pass an optimal level the number of people/vehicles that can pass across a certain point begins to reduce. As the research paper notes, at zero speed there is zero flow. This is shown in the graph below:It’s only the bottom half of the graph above (speeds lower than about 42 kph) which actually indicates congestion in my opinion – where the efficiency of the network is reduced because it has become completely overloaded. The research paper takes the same viewpoint.
Applied to Auckland, we actually find that the current speeds on parts of the network analysed are pretty damn close to the most efficient (i.e. maximum flow) speeds – as shown below:Using this information, the pieces of the puzzle about how much congestion really costs Auckland can start to be put together:I’m not entirely sure how relevant the “schedule delay cost” is to working out the economic impact of congestion on Auckland, because it seems like these trips were still taken in an efficient way just not necessarily at the most desirable time. But in any case, using a reasonable definition of congestion highlights that while $250 million a year is quite a bit of money, it’s perhaps a bit less than is often spouted (that $1 billion a year figure which apparently comes from a 1992 survey that unsurprisingly looked at comparison to free-flow (i.e. empty motorways) traffic.
What would be really helpful is to get an idea of where this $250 million of congestion impact happens and who it happens to. If it’s largely impacting on people in far flung suburbs who would just sleep in if their commute was a bit shorter, then I don’t think Auckland’s likely to benefit too much from eliminating/reducing it. However, if the impact is on commercial vehicles (trades vans, couriers, time-sensitive deliveries etc.) then there might be a benefit from reducing congestion.
So overall, I think what I take away from this research is a couple of things: firstly, that congestion is probably not as bad as we had thought if we use a more sensible definition. And secondly, that perhaps we still don’t really know much about the linkage between congestion and Auckland’s actual economic performance. While nobody likes being stuck in traffic jams, for some reason we seem happy to throw billions of dollars a year at trying to fix this problem without even working out whether it’s a problem in the first place, how bad a problem it is or even whether what we’re doing is making things better or worse. To me that seems pretty reckless and dumb.