It has been difficult to figure out what Auckland Council thinks of the Puhoi-Wellsford “holiday highway” project. Obviously the council’s Transport Chair Mike Lee is not a fan, as he was the one who coined the “holiday highway” name in the first place. But there are signs that this is not the position of the council as a whole.
Firstly, working out what Mayor Len Brown’s position on the project is has always been a bit tricky. Back in October last year, just after he had won the mayoralty, he seemed to suggest that at the very least, he wasn’t likely to publicly oppose the project. Then a few months later the council put in a fairly neutral submission to the Puhoi-Warkworth section, seeking a lot of further information from NZTA rather than saying they fell one way or the other with regards to it.
While the project is one that would be fully funded by NZTA, and therefore the council’s position on it wouldn’t necessarily dictate whether it happens or not, it has always seemed reasonably important to me for the council to “show its hand” a bit more in relation to what it thinks – especially because of the project’s environmental effects, significant cost and its impact on land-use development patterns to the north of Auckland. There nothing as effective at undermining your attempts to curb urban sprawl than building a motorway out into the countryside.
Former ARC councillor Joel Cayford has picked up on this point in a recent blog post about some of the early things we’ve learned about the upcoming Auckland Spatial Plan – and in particular its identification of Warkworth as a satellite centre growth node:
But the bit that’s a real worry is the inclusion of Pukekohe and Warkworth. These are both outside the MUL. I can’t speak much of Pukekohe – but I do know a little about Warkworth. Not only is it outside the MUL – the Metropolitan Urban Limit – it is beyond the end of Alpurt B2 – the new Northern motorway. In fact it’s slap bang on the proposed route of Minister of Transport’s “holiday highway”.
If I was him I’d be pinching myself a little. “what’s going on here, don’t tell me theat Auckland Council is giving me another reason to support the motorway extension…”
Because that’s what a growth strategy for Warkworth will require. Roads. Transport. It’s like Auckland Council knowingly intends pricking its own MUL strategy.
I could understand a growth strategy for Orewa, or even Silverdale. Both on good state highways, and even got the Northern Busway running up there now.
But not Warkworth.
Unlike Pukekohe, Warkworth is nowhere near the rail line and therefore its growth is likely to generate many more vehicle trips. At the moment Warkworth doesn’t even have a bus service connecting it to metropolitan Auckland. Given its poor transport options to the rest of the region, as well as the quite sensitive natural environment around Warkworth, it’s somewhat of a surprise to be identified as a satellite centre.
So one has to come to the conclusion that there’s little to be achieved from making Warkworth a satellite centre other than helping to justify the Puhoi-Wellsford holiday highway. Which does beg the question of why Auckland Council would want to do this. Are they now strongly supporting this project?
I have (rightfully I think) hassled Labour for not paying enough attention to transport in recent times, letting Steven Joyce get away with a lot of the poor transport decisions that he’s making. So it was good to see them put together a few challenging questions today:
(Zip past the first minute or so, which is just silly stuff). You can read the transcript here.
I guess if we analyse this, one thing that I found quite interesting was Joyce’s approach to the City Rail Link. Although he continues to believe Ministry of Transport officials who say the BCR of the project is 0.3 to 0.4 (despite the absurdity of many of MoT’s assumptions that lead to the low result), I wonder whether there’s some acceptance that the politics of continuing to stubbornly oppose the project are getting a bit dicey. It’s this answer which I find quite interesting:
Hon STEVEN JOYCE: I think the difficulty we are in with the central business district rail loop is that quite obviously the council has gone to that solution without looking at all the other options that are possible to improve public transport access in Auckland. I point out to the member that all the independent analysis by the Ministry of Transport and Treasury on the central business district rail loop says it will do very little to improve congestion. I am prepared to say that it is possible that the central business district rail link is the next project in Auckland, but, rather than bolting towards it without any consideration of the costs, as the Labour Party is doing, I think we have to ask some tough questions.
However, there’s still a lot of rubbish being spouted – particularly around the business case for the Puhoi-Wellsford “holiday highway” route. It was good to start to see some of that rubbish being pulled apart:
David Shearer: Given the Minister’s answer to written question No. 1515 that the calculation of the wider economic benefits on the holiday highway is not consistent with New Zealand Transport Agency’s own economic evaluation manual, has he asked for the business case to be re-evaluated; if not, why not?
Hon STEVEN JOYCE: What I can confirm for the member is that the two projects—the central business district rail loop and the Pūhoi to Wellsford road—have been measured using the same ruler and have been found to be very, very significantly—
Hon Shane Jones: Oh, rubbish.
Hon STEVEN JOYCE: Well, it happens to be true. I know it is sometimes difficult to face the truth when one is in the Labour Party, but it is actually true that it is over 1 versus 0.3 to 0.4.
There are many areas where I hope there are future followup questions. Exploring Joyce’s claim that this government’s spending $1.6 billion on rail projects in Auckland (which is rubbish) would be a great start.
Reading through the twoHerald articles last week that related to the Puhoi-Wellsford “holiday highway” really got me wondering why the government is so utterly determined to ram through this road. It’s very unpopular, with only 24.8% of Aucklanders and 19.2% of non-Aucklanders supporting the project, plus the Warkworth to Wellsford section of the road appears to have exceedingly difficult geotechnical issues to resolve. What’s particularly difficult to understand is why the government is so unwilling to look at a ‘staged’ way of improving the road – along the lines (but obviously informed by more technical analysis) of the Campaign for Better Transport’s “Operation Lifesaver” alternative. After all, solving the majority of the road’s problems for a fraction the price would seem to be very consistent with the government’s stated objectives of getting better ‘value for money’ from transport spending – or does that requirement only apply to non pet projects?
It is quite challenging to try to put myself in Steven Joyce’s shoes and comprehend why he’s so determined to push forwards with this project. One possible reason is that he thinks that in the long-run his role in creating a “real inter-city motorway network” for New Zealand will be celebrated – a king of ‘monument building’ complex that most politicians seem to suffer from. Perhaps he also truly believes that a road which slices a mere 10-15 (and I am very skeptical of the higher figure) minutes off a trip between Auckland and Whangarei will truly revolutionise the Northland economy. It’s a pity for him that earlier work on the project pretty much ruled that out.
But to look deeper at the reasons behind the obsession with this project, one must start to consider the issues of “who benefits”? And an interesting article from a newsletter Transit NZ put together back in 2000 when the Albany to Orewa motorway had just opened, sheds some interesting light on that matter: Now I’m generally not one for conspiracy theories about campaign contributions from property developers, so I’m not suggesting anything direct like that. But it is interesting to note the surprisingly great interest that Steven Joyce took in critiquing Rod Oram’s suggestions that the spatial plan needed to curb sprawl, with projects like Puhoi-Wellsford undermining those attempts.
In the end, I think that perhaps Steven Joyce sees a huge benefit of Puhoi-Wellsford being the ‘opening up’ of North Rodney to further urban development. This would have both the effect of enabling development in a potentially pretty huge area while also having that development ensure the road is well-used and isn’t considered a ‘white elephant’.
Environmental concerns (and there are pretty big ones) aside, I’m doubtful whether massive future development in North Rodney is in Auckland’s best interests. Not only does it require this enormously expensive and destructive motorway to ‘enable’ the development, but it seems to completely undermine efforts to create a quality compact city, it requires hugely expensive infrastructure (providing sewerage services in this area is eye-wateringly expensive, for example) and it further entrenches Auckland as an auto-dependent city. Not really my reason for building a hugely expensive road, but clearly Joyce seems to think differently.
There was an interesting article on the Puhoi-Wellsford “holiday highway” in the NZ Herald today – which notes the enormous difficulties NZTA is facing in finding a route that is feasible for the Warkworth-Wellsford section through Dome Valley.
Unstable ground around Dome Valley north of Auckland threatens to rip the wheels off the Government’s “road of national significance” from Puhoi to Wellsford.
Transport Agency northern highways manager Tommy Parker has admitted concerns about the feasibility of completing the road as a four-lane expressway past Warkworth.
“There are alternatives outside the Dome, but you are still going the other side of the valley and we have a lot of ground movement,” he told the Herald.
“Every time you put a spade in the ground up there you’ve got to put in retaining structures, or tunnels or something.
“The level of ground movement is more than we had anticipated, which makes huge problems and huge costs.”
While I don’t know the geotechnical details, it is pretty obvious from simply driving through the Dome Valley that it would be hugely difficult to construct another, expressway standard, road through there. With the majority of the project’s funding being allocated to the Puhoi-Warkworth section, it seems that NZTA are being left to achieve something that’s pretty impossible with the section further north.
Tommy Parker later on outlines something quite interesting – that NZTA are considering whether the road really needs to be four lanes:
Meeting a target for starting the 20km Warkworth-Wellsford leg in 2016 would be tougher.
Asked how it could be completed within a $670 million estimate, when the shorter Puhoi-Warkworth leg would cost $980 million, Mr Parker said it depended to what standard it was built. That included whether it was built with four lanes or two.
Of a suggestion that the agency should settle for providing safety upgrades to the existing State Highway 1 through Dome Valley, he said: “That is an option that is being considered along with the others.”
But this doesn’t seem to have pleased Trucking Transport Minister Steven Joyce, who says that it needs to meet the standard of all RoNS: a four lane expressway. Although interestingly even he is now considering whether it might be smarter to stick with the existing route rather than trying to find another alignment:
But Transport Minister Steven Joyce insisted later that nothing short of a four-lane road would do.
“I don’t have a strong view as to whether the road between Warkworth and Wellsford is built on the current route or a new alignment,” he said.
“But it is crucial for it to be built to roads of national significance standard – a four-lane divided expressway – and that remains the Government’s expectation.”
The article also talks in some detail about “Operation Lifesaver“, which I helped the CBT put together and present to the ARC’s Transport Committee last year:
The safety upgrade idea was raised last year by the Campaign for Better Transport, which suggested choosing between two sets of improvements to the Puhoi to Wellsford route costing $160 million and $320 million. Both included a $50 million bypass of Warkworth and safety upgrades including extensive median barriers for Dome Valley and other black spots on a route where 44 people have died since 2000.
The more expensive would include a realignment of the difficult Schedewys Hill north of Puhoi.
Campaign convener Cameron Pitches noted a cash-flow problem which the Transport Agency says has forced it to delay $15 million of improvements to Warkworth’s Hill St intersection with SHI, a traffic bottleneck, by at least 12 months.
“For us the obvious solution is instead of spending $1 billion on a new toll road to Warkworth, let’s just look at working with what we’ve got and making that safer,” he said.
One thing that I find really amusing is, as part of the review of the City Rail Link project, government officials absolutely slammed what they considered to be a lack of proper assessment of alternatives to the rail project. Yet when it comes to their own (pretty unpopular) pet project, where’s the robust assessment of alternatives?
As I mentioned in this post recently, I feel that generally the public understands Auckland’s transport situation and wants better public transport. However, the big problem is that they generally only consider transport when voting in local elections (not national elections), whereas it’s central government that holds most of the transport purse strings. A poll undertaken by the NZ Herald – comparing the public’s attitude towards the City Rail Link and the Puhoi-Wellsford project – further highlights what became so clear in last year’s Auckland Council election results: that there is really strong support for improving the rail system:
Public backing for a central Auckland rail tunnel is more than twice as strong as for the Government’s proposed new “road of national significance” north from Puhoi.
Although a Herald-DigiPoll survey has found support for the tunnel strongest in Auckland, the $2.4 billion project is also enthusing other New Zealanders, who are taking an even dimmer view of the highway proposal than the city’s residents.
The 3.5km tunnel proposal between Britomart and Mt Eden won support from 63.3 per cent of Aucklanders, compared with the highway, which was backed by 24.8 per cent.
Although tunnel support weakened to 48.1 per cent among non-Aucklanders, only 19.2 per cent said they believed the highway should get higher priority. That compared with 27.5 per who did not know and just 5.2 per cent who did not back either project.
The support for the City Rail Link from people living outside Auckland is particularly interesting. I think perhaps there’s a general understanding of how critical the project is for helping Auckland to fulfil its economic potential, or perhaps people understand the need to shift away from such auto-dependent transport policies. In any case, it is a pretty big advantage for the City Rail Link over Puhoi-Wellsford – and a particularly low level of support for the ‘holiday highway’: especially from people outside Auckland.
Unsurprisingly, Auckland Council politicians are pretty pleased about this:
Auckland Mayor Len Brown said from France, where he is combining a holiday with his wife with inspections of public transport systems, that he was not surprised by the findings.
“Aucklanders know that the inner-city rail link will help unclog our roads, deliver economic transformation and means our region will be easier to move around by effectively doubling the capacity of rail lines to the west, east and south,” he said.
Council transport chairman Mike Lee said the poll revealed a “sea change” in public support for rail transport over roads.
“It seems the public are way ahead of the National Government on this issue, not just in Auckland but across New Zealand,” he said.
“And it seems to me that the Minister of Transport [Steven Joyce] in particular is still taking a very conservative roads-first, urban-sprawl approach which is out of step with the views of the average New Zealander.”
The great thing about where the City Rail Link project is at now, with Auckland Transport pushing on with the designation, is that the project can continue to gain momentum. Of course Steven Joyce doesn’t quite take the same position:
But Mr Joyce said there could be no valid comparison between the two projects and the results were “not a massive surprise. Those surveyed will no doubt be looking for a solution for the city’s traffic problems,” he said.
“No one is pretending that Puhoi-Wellsford is a solution for Auckland’s traffic problems – it’s a link between Auckland and Northland.”
He said there was no single silver bullet for Auckland transport, and the Government was overseeing a huge range of work both through motorway developments and rail upgrades, including electrification.
“The CBD rail loop is potentially one part of the puzzle, but all the evidence says it’s a reasonably small part with a big price tag.”
I’d disagree with Joyce on two counts here: firstly the Puhoi-Wellsford project doesn’t even touch Northland, whose major population centres are still going to be a long way from connected with the motorway network even after the project’s completed. And secondly, the City Rail Link is a pretty massive piece in the puzzle of improving transport in Auckland – unless you believe (like the Ministry of Transport) that it’s feasible to run 200-300 buses an hour along most of our city centre’s streets.
I suppose what I find frustrating about Joyce’s approach is that we could easily have close to both these projects – or at least the vast majority of the benefits of Puhoi-Wellsford at around $300 million instead of $1.6 billion. Simply build a Warkworth bypass and do some serious safety upgrades of the existing road and you would have fixed most of its problems. Then flick around a billion over to help fund the City Rail Link and use what’s left to really assist Northland’s transport issues – perhaps by building the Marsden Point rail spur, perhaps to upgrade a number of its roads, you could give Northland the opportunity to make that decisions themselves.
Hopefully common sense will eventually prevail, as it’s starting to become pretty politically difficult for the government to keep opposing the City Rail Link so vigorously.
There was an interesting media release from NZTA a couple of days ago, in relation to their decision to delay moving ahead with a reconfiguration of a major bottleneck in Warkworth – the Hill Street intersection. Somewhat unsurprisingly, NZTA have made the decision to delay this project – presumably because they’re working on advancing the Warkworth bypass section of the holiday highway and it would be pretty crazy to continue to spend tens of millions of dollars on upgrading the existing road when you’re going to bypass it soon. However, rather surprisingly NZTA give as one of the main reasons for delaying the project the fact that they don’t have enough money to do it quite yet:
Mr Parker says three key reasons behind the NZTA’s decision: reduced revenue for all transport projects across New Zealand; rapid progress on other Auckland roading projects that need to be paid for earlier than anticipated; and increased costs for the Hill Street upgrade.
“We are committed to the project but the costs for improvements have increased 50 percent (to $15m) since they were originally estimated in 2006 and growth in Warkworth has slowed down coupled with the construction of larger projects in Auckland we need to delay this work” says Mr Parker. “We will still continue to negotiate with landowners around Hill Street over property purchases and property access rights so that we will be in a position for a quick start when we do go ahead with construction.
Interestingly, the mega-expensive RoNS projects don’t seem to be suffering from this funding shortage:
Mr Parker says the Hill Street decision does not affect work on the Puhoi to Wellsford road of national significance.
“I can assure people that Puhoi to Wellsford is still underway in the area, and has the changes at both the Hill Street and Hudson Road intersections incorporated in its planning. Funding for this RoNS project has not affected anything in Warkworth as it is still in a planning stage and most of NZTA’s allocation is spent during construction” says Mr Parker.
But what’s really interesting is the first reason that Mr Parker gives for the delay: reduced revenue for all transport projects across the country. There can only be one reason for this – people are driving less than expected, buying less petrol than expected and therefore NZTA are getting less money from excise taxes and road-user charges than expected. For regular readers of my blog, this is hardly unexpected – just look at traffic levels over the past few months – April as an example:
All of the government’s transport spending plans have a giant assumption in them – being an expectation that revenue from fuel taxes and RUCs will increase over time. If you look at the expectations of revenue in the draft Government Policy Statement, the assumed increase is pretty significant – from around $2.9 billion at the moment to $4.2 billion in 2021.
While I like the simplicity of fuel tax as a way of generating revenue (and the fact that it punishes fuel inefficient cars), it would seem to me that it certainly has a limited lifespan as an effective way of raising money to spend on transport. Over time, as petrol gets more and more expensive, we are surely going to see either (and probably both) a dramatic increase in the fuel efficiency of vehicles and a significant uptake of other transport modes such as PT, walking and cycling.
I suppose what will be interesting to see is which projects get the chop from NZTA if there simply isn’t enough money available from road users to fund the optimistic transport project list that government has. As long as this government is in power, it seems unlikely to be the massively expensive RoNS projects. With local councils (particularly in Auckland) putting a greater emphasis on public transport than ever before, one doubts that the government can practically cut much more from the PT budget (there’s almost nothing left in the PT infrastructure budget anyway). Maybe it will be the smaller state highway projects that miss out, or will NZTA start to skimp on maintenance?
Until we figure out a new way of generating revenue from transport that’s independent of these long-term trends, it seems a pretty inevitable process that we are going to have very constrained transport budgets.
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.
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.
It was good to read in yesterday’s NZ Herald that the Labour Party has committed to cancelling the Puhoi-Wellsford “holiday highway” if they’re elected at the end of the year. While the polls indicate that the chances of Labour actually being elected are reasonably remote, if we assume that they retain this policy into the future, the long timeframes for actually planning, consenting and eventually constructing Puhoi-Wellsford should mean that the project never goes ahead in its current form, as eventually Labour will become the government again. For those opposing the highway, it would seem now that the key is trying to delay it until there’s a change of government.
Already $11.4 million has been spent on the project, while NZTA have committed to many more tens of millions being spent furthering the design, purchasing property (a spend that I suppose can always be recouped) and getting all the documentation prepared for the consenting process. So it seems inevitable that more money will disappear into a project that now seems unlikely to ever be completed – a bit of a waste when there are so many competing demands for transport funding at the moment.
It’s inevitable that Labour’s commitment to cancelling the project will annoy some. The NZ Council for Infrastructure Development is already scaremongering that Labour’s policy will destroy Northland’s economy (I never knew saving 10 minutes would have such an impact). I suspect Labour won’t get much gain from the decision until they do the obvious: which is to say that the billion or so saved from the holiday highway (assuming that they still do operation lifesaver or something similar) will be redirected into paying the government’s share of the CBD Rail Tunnel project. That might still leave sufficient funding available to upgrade the North Auckland Railway Line or even complete the rail branch to Marsden Point. $1.7 billion can go a pretty long way when redirected to a series of more sensible projects.
Given that the holiday highway has now become a major political football, it’s probably worthwhile putting together a lot of the background information I’ve looked at with regards to this project and clarifying exactly why it’s such a stupid project. Ultimately there are six key reasons why I think Puhoi-Wellsford is a waste of money. Broadly, they are:
It is not cost-effective and has a low (though still inflated in my opinion) cost-benefit ratio.
It will have significant adverse environmental effects.
It works against Auckland’s planning strategies and will encourage urban sprawl.
Its justification is based on unrealistic traffic growth expectations.
It uses up a lot of money that could be far better put to use on other projects.
It takes far too long to implement and will mean people continue to die on the existing road over the next decade or two.
Obviously there are many connections between these broad points, and I’m not going to work through each one of them individually – but as you can see there are a number of serious issues with this project that mean it’s a stupid idea.
Starting first with the cost-effectiveness of Puhoi-Wellsford, this has been informed by a business case put together for the project in late 2009, which informed the January 2010 “Project Summary Statement”. That statement noted the project had the following cost benefit ratio (depending on whether wider economic benefits were in or out, and what discount ratio you used):It’s worth remembering that projects are assessed on an 8% discount ratio, with the lower discount levels only used for comparative purposes. In terms of the “Wider Economic Benefits”, its interesting to note that the Project Summary Statement makes a fairly big deal of them, but barely a year earlier the same company that put together the 2009 business case had this to say about what it termed “Regional Economic Impacts”: Labour MP David Shearer did a bit more digging, through a series of written questions, about the exact nature of the wider economic benefits – and in particular whether they complied with NZTA’s standard manual for how WEBs are calculated. He got this response from the Minister of Transport:
David Shearer to the Minister of Transport (23 Mar 2011): Were the wider economic benefits used in the cost-benefit analysis of the Puhoi-Wellsford road of national significance calculated in a manner consistent with the New Zealand Transport Agency’s economic evaluation manual?
Hon Steven Joyce (Minister of Transport) replied: The NZTA’s Economic Evaluation Manual contains procedures for assessing agglomeration benefits, which are one type of wider economic benefit, and agglomeration benefits have not yet been assessed or included within the Puhoi to Wellsford business case BCR. Therefore, the NZ Transport Agency did not assess wider economic benefits for the Puhoi to Wellsford BCR as per the Economic Evaluation Manual.
Even more intriguingly, an independent assessment of the economic benefits of all the roads of national significance, which was undertaken by SAHA consultants, made a number of adjustments to the cost-benefit ratio of the Puhoi-Wellsford project (along with a number of other RoNS):
Business cases are generally calculated over 30 years, and as the Minister wants the Puhoi-Wellsford project completed by 2020, that means the benefits should be truncated at 2049 rather than 2059. My understanding is that that 2059 date came from NZTA’s initial assumption that 2029 was a more realistic completion date. This was confirmed by the Minister in an answer to another question from David Shearer:
David Shearer to the Minister of Transport (23 Mar 2011): Further to the Minister’s answers to questions 01514 (2011) and 01506 (2011), why did the business case for the Puhoi to Wellsford road measure the opening date of the Warkworth to Wellsford section as being 2029 when NZTA are proposing to complete the section of road by 2022?
Hon Steven Joyce (Minister of Transport) replied: The New Zealand Transport Agency advises me that the opening date of 2022 for the Warkworth to Wellsford section of the route represents an aspirational completion date for the project, reflecting the desire to make a substantial start on all the Puhoi to Wellsford RoNS sections within 10 years. The Business Case opening date of 2029 for the Warkworth to Wellsford section represents the Agency’s estimated timeframe for the project when the Business Case was completed.
I’m not quite sure the extent to which the GPS4 updated funding total made much of a difference, but it certainly seems as though the actual BCR for this project is closer to 0.4 than to what NZTA have been telling the world.
The bizarre thing is that even then I think that the benefits of the project are being grossly overstated. The business case relied on an assumption that in the “do nothing” scenario the average speed of vehicles along the route would be merely 60 kilometres an hour – which seems bizarrely low. As Warkworth is the major source of delay points, one would think that a bypass would solve much of the congestion issue there at a fraction the price. Furthermore, the business case relies upon massive increases in traffic volumes that seem a bit out of whack with what’s been happening in recent years. To finish the point off about cost-effectiveness, perhaps the final word should go to something Martin Gummer (former head of transport funding agency Transfund) said in a December Herald opinion piece:
This is one big difference between the projects. The CBD rail loop is an all or nothing project. A loop that stops halfway is not a loop but a dead-end – or loopy.
The holiday highway, however, has a lower cost alternative – improvements to the existing road, that could defer replacement for a further 20-30 years. Corners could be smoothed, alignments improved, maybe a short bypass built around Warkworth, and three- or four-lane sections with a central wire barrier built in the Dome Valley.
If one is truly interested in cost-effective improvements to State Highway 1 north of Auckland, the answer is pretty obvious: bypass Warkworth, extend some passing lanes, do some safety improvements in Dome Valley and then take a look at things. The fact that the Minister of Transport is unable to see the advantage in such an approach really does suggest that the project is more about monument building than actually about responding to what’s needed.
The next big issue I have with the project is in relation to its environmental effects: both in terms of its actual impact on the environment it will pass through and also how it will encourage urban sprawl in the northern part of the former Rodney District. A detailed analysis of the project’s environmental effects can be found in this post but to summarise we’re probably looking at another three or four of these: Plus a simply massive amount of earthworks, as shaded blue in the diagram below: I’m sure there will be plenty of battles over the project’s environmental effects when it gets to the consenting stage, and judging by what has happened with the Waterview Connection project, NZTA shouldn’t simply assume that they will be able to get consent easily: my feeling is that the board of inquiry for the Waterview Connection (subject to the release of their final decision of course) have set the bar pretty high in terms of avoiding/mitigating adverse effects if projects pass through the “fast-tracking” process.
Another aspect of the project’s environmental effects is less easy to pin down, but potentially more significant over time: and that is the way the project will encourage urban sprawl north of Auckland. This works against Auckland’s growth strategies that have been seeking to maximise the growth of Auckland through intensification and limit urban sprawl – yet another potential example in Auckland’s sorry history of having transport and land-use development strategies that are completely at odds with each other.
If we now turn to safety concerns, this is where the holiday highway proposal really annoys me, because it is literally leading to lives being lost. There is no doubt that much of the Puhoi-Wellsford road is very dangerous at the moment. Between 2000 and 2009 there were 41 fatalities along State Highway 1 between Puhoi and Wellsford, along with 31 serious injuries (between 2004 and 2008) and 118 minor injuries between 2004 and 2008. 25 of the fatalities were between Warkworth and Wellsford, through the notorious Dome Valley, while 16 were between Puhoi and Warkworth. Most of the deaths were from head-on collisions, suggesting that they could be prevented by simply putting a concrete median barrier down the middle of the road.
But with the holiday highway proposal, chances are we’re not going to see any further improvements to the road for the next decade or so: meaning another 40 or so people are likely to die as a result of Steven Joyce choosing to proceed with the holiday highway instead of immediately making safety improvements to the existing road. When I helped put together the Campaign for Better Transport’s “Operation Lifesaver” proposal this was top in our mind: how can we improve safety along the road quickly and cheaply. There’s quite a lot you can do for a fraction the price of the holiday highway.
And finally, perhaps the main reason (along with safety) I oppose the Puhoi-Wellsford project is the opportunity cost of it: what can’t we fund because we’re sinking $1.7 billion into this pretty dodgy project? The obvious one is the government’s contribution to the CBD Rail Tunnel: of let’s say around a billion dollars – which would make up half the cost of that project. Other projects could include a series of road upgrades throughout Northland, improvements to the North Auckland Railway Line, potentially constructing the Marsden Point rail spur and so forth. As I said above, you can do a lot with $1.7 billion. In this blog post I tried my best to stack up the CBD Rail Tunnel against Puhoi to Wellsford, being as generous to the holiday highway’s business case as I possible could – but even then I came up with the following comparison: The graph below shows how Puhoi-Wellsford stacks up against the other roads of national significance (and the CBD Tunnel, which I put in): Perhaps what’s most interesting is the comparison between the benefits of the Victoria Park Tunnel and the Puhoi-Wellsford road: with the VPT’s benefits looking around four times that of the holiday highway – even though it’s one quarter the price. In fact, Puhoi-Wellsford’s benefits look minuscule compared to all the other RoNS: even though it’s one of the more expensive ones!
Overall, by any measure I am convinced that Puhoi-Wellsford is a stupid project. It’s a waste of money, it will ruin the area’s environment, it will cost lives because it takes too long and it will prevent far more worthy projects from proceeding. Which is why I am very glad to hear that Labour opposes it.
It was heartening to open up the newspaper this morning in Wellington and read this opinion piece on the poor economics of the “Roads of National Significance” (RoNS), prepared by Dr Michael Pickford, the former chief economist at the Commerce Commission and now an independent economic researcher.
Transport Minister Steven Joyce announced the Roads of National Significance programme in March 2009, before knowing what the return on the proposed investment might be.
Nine months later, a final report from consultant SAHA International raised serious doubts about the programme.
The Government never published the report, and later sent it back for reworking. However, a copy of the original was obtained by an expressway action group on the Kapiti Coast.
And then that Kapiti group kindly sent me a copy of the report, which can be read here.
Though the programme as a whole could have a positive return, above-average returns on some projects can mask negative returns on others. Projects with negative returns should not be built.
The SAHA Report shows that three of the expressways had negative returns when assessed conventionally – the value of the benefits generated, in terms of travel time, fuel savings and reduced accident costs, is less than the sum of the costs to build and maintain them.
Among these is the Wellington to Levin expressway. It has a benefit-cost ratio, or BCR, of only 0.6, meaning that the project would generate benefits amounting to only 60 per cent of the costs.
The table below shows the results of SAHA’s economic analysis of the various RoNS. You can see why the government has tried to do everything it can to bury this report – given that some of the projects have absolutely pathetic cost-benefit ratios:
I’m not quite sure of the exact reasons SAHA’s assessments differ from NZTA’s assessments – and it would be interesting to find out a bit more information on that fact. But anyway, the article continues:
Mr Joyce has repeatedly claimed that building the roads would promote economic growth. This was tested in the SAHA Report, which attempted to incorporate the indirect or growth benefits of the roads.
These were measured in two ways, one being as “wider economic benefits”, or WEBs. When the “low” estimate for the WEBs was added, the BCR of the Wellington-Levin project remained below one, but it rose above one using the “high” figure.
The WEBs concept is relatively new internationally. The SAHA Report urged caution. It made repeated caveats about the poor quality of the data and the uncertain accuracy of the estimates. It cited the British Government’s Eddington Report, which found that “agglomeration benefits” of the type included in the “low” estimate could be up to 30 per cent of the conventional benefits in highly congested urban areas in London.
Yet the estimate for even the “low” WEB figure is much higher than 30 per cent. The Kapiti Coast is hardly a centre for economic growth in the country. The largest employer is thought to be either the local district council or the Pak’n Save supermarket.
The contentiousness of evaluating “wider economic benefits” is something that really needs to be resolved in my opinion. There are some projects that it would appear obvious will result in wider economic benefits – such as the Auckland CBD Rail Link – as it will encourage the concentration of economic activity in the CBD and therefore generate agglomeration benefits. For other projects, with the Puhoi-Wellsford road and the Wellington Northern Corridor Road, the veracity of these WEBs seems highly questionable. I’m yet to see how Puhoi-Wellsford does anything other than undermine agglomeration by encouraging the dispersal of economic activity.
The article sums up:
IN SHORT, the addition of so-called growth benefits fails to tip the scales in favour of building this road. The SAHA Report concluded that “accelerating the Roads of National Significance . . . may not be the optimal investment and funding outcome when considered in its broadest context against other roading projects and/or other government portfolio areas”.
After the unhappy experience with the Muldoon-Birch “Think Big” energy projects of the 1980s, New Zealand could be burdened with massive new debt to fund the Key-Joyce “Think Big” roading projects of equally dubious merit.
Although it will (justifiably so) be quite some time before we get past the initial human tragedy of last week’s Christchurch earthquake to think about the financial cost of the disaster, clearly it will be an extremely expensive disaster to recover from. This is outlined below, from a Scoop Article on the quake’s financial cost:
Last Tuesday’s quake, which killed at least 154 people, will cost as much as $15 billion, adding to the September disaster’s $5 billion bill, and equating to about 7% of the nation’s gross domestic product. Reinsurer Validus Holdings estimates the cost of the quake to the insurance industry will be as much as $10 billion.
A lot of the money will come through insurance companies, and their ‘reinsurance’ through the wider industry. That will be to the tune of around $10 billion. EQC also has money available to spend, but above and beyond that it seems the government will need to spend at least a few billion on works that are not covered by insurance schemes: generally in the form of welfare assistance packages in the short term, plus infrastructure rebuilding in the longer term.
Now that’s a lot of money for a government currently borrowing around $300 million a week just to stay afloat. Let’s remember that the Waterview Connection project and the widening of State Highway 16 to complete the Western Ring Route comes to around $2 billion. So if the government spends a few billion on infrastructure fixes in Christchurch, that will need to come from somewhere.
The Scoop Article linked to above has a few quotes from Finance Minister Bill English on the matter:
Finance Minister Bill English says the government will reshuffle its priorities to make sure Christchurch is rebuilt, and will look at all options, including curbing interest free-student loans and Working for Family tax credits which it previously said wouldn’t be changed.
Prime Minister John Key had already signalled the government will cut its new spending by as much as $300 million as it deal with a high level of foreign indebtedness that’s raised the ire of ratings company Standard & Poor’s.
The government will keep its spending focus on front-line services, and income support for people on low incomes, and continue to spend on “infrastructure and productive investment.”
“The earthquake means (tighter spending) is now absolutely necessary and we need to produce definitive results from that process,” English told a media briefing in Wellington. “We won’t change that recipe significantly, but we are going to have to test the limits of it.”
Whether the extra money should be found through more borrowing, spending cuts or an additional disaster levy (like what Australia’s doing) is a matter for debate that’s probably outside the scope of this blog. However, what is relevant are the potential effects on infrastructure projects – notably transport projects. This is discussed further:
English said spending on major infrastructure projects, such as Auckland’s central business district rail loop, may get pushed out, though the government won’t change its general approach.
“With the infrastructure projects, you’ve got some choice about the timing, such as the CBD loop in Auckland, and a year or two can make, over a longer period of time, a significant enough difference for us,” he said. “We’ve got some fairly big commitments we’d like to maintain, such as the ultra-fast broadband.”
To be honest, that’s about the most positive thing I’ve ever heard Bill English say about the CBD rail tunnel – that he actually foresees it happening in the future, it’s just a question of “when”.
In my opinion, the earthquake does change things quite significantly. There is no doubt that Christchurch will require a lot of expenditure when it comes to fixing up the infrastructure – and that’s fine. What it means is that we need to be really careful about the money spent on transport infrastructure – in short, we need to ensure we get good ‘bang for our buck’. Time for Operation Lifesaver instead of the holiday highway, time to take a good long pause to think about how badly we really do need another harbour crossing, time to think about more cost-effective solutions than Penlink. And so forth.
However, I think we need to be careful about scaling back on infrastructure investment in Auckland too much. Over the next few years it seems very likely that Christchurch’s economic activity will be reduced as a result of the quake (although there should be a fairly good construction sector there for a while to come). In order for the country to pull itself out of the current economic downturn, I think there will be an increased reliance on Auckland to “pick up the slack”. While we may be able to do that without some of the previously proposed infrastructure investment, I think it would be short-sighted to stop or delay too many of Auckland’s projects.
All of the government’s transport spending plans have a giant assumption in them – being an expectation that revenue from fuel taxes and RUCs will increase over time. If you look at the expectations of revenue in the 
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:
Labour MP David Shearer did a bit more digging, through a series of written questions, about the exact nature of the wider economic benefits – and in particular whether they complied with NZTA’s standard manual for how WEBs are calculated. He got
Plus a simply massive amount of earthworks, as shaded blue in the diagram below:
I’m sure there will be plenty of battles over the project’s environmental effects when it gets to the consenting stage, and judging by what has happened with the 
The graph below shows how Puhoi-Wellsford stacks up against the other roads of national significance (and the CBD Tunnel, which I put in):
Perhaps what’s most interesting is the comparison between the benefits of the Victoria Park Tunnel and the Puhoi-Wellsford road: with the VPT’s benefits looking around four times that of the holiday highway – even though it’s one quarter the price. In fact, Puhoi-Wellsford’s benefits look minuscule compared to all the other RoNS: even though it’s one of the more expensive ones!
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