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.
Data visualisation specialist Jonathan Callahan has produced by far the most interesting response to the death of Margaret Thatcher I’ve yet to see, originally posted as a comment on The Oil Drum and reproduced below. Using his Energy Data Browser he has linked significant points of Thatcher’s career to the North Sea Oil boom. This connection is useful to further unpack issues around the vulnerabilities of nations [and governments] more generally to oil dependancy.
Before having a look it is worth noting a couple of things. The Data Browser turns the figures from the annual BP Statistical Review into visualisations of where regions and nations sit on the Energy Import/Export seesaw. As such it depends on BP’s policies and accuracy. For instance the oil category is an ‘all liquids’ measure not crude oil only [the best stuff], so biofuels, lease condensate, bitumen and all sorts of products with different energy content and utility are all included. The key issue, however, is illustrated very clearly: North Sea Oil gave the UK some 25 years as a net exporter of liquid fuels. And that’s now over. Thatcher’s achievements, whatever your view of them need to be seen in the context of this temporary boom, as do Blair’s. For example; it is easier to close down one energy industry [coal mining] when you happen to have a new one just coming on stream [North Sea Oil].
UK Liquid Fuels and Thatcher. J Callahan
This approach should also be extended to include the Prime Ministers that followed Thatcher: Major and Blair both also had the good fortune to preside over the North Sea oil bubble. And Blair, like Thatcher, took his country to war and failed to plan for the decline of this energy windfall. Neither of these following PMs deviated from Thatcher’s line; taking the short term opportunity offered by this finite resource with no attempt to either husband it nor use it to invest in its replacement [unlike the other beneficiaries of the North Sea resource; The Netherlands, Denmark, and Norway, all of whom have been more circumspect with their shares]. Also the focus through this period in the transport sector was all on privatisation, PPPs, and other financial rearrangements but nothing on core issues like energy security [part of what is meant by the term sustainability] just gaming the market. In the UK the North Sea hydrocarbon riches have been used by both Parties to pursue social agendas and to fund foreign adventures.
This energy-centred analysis can also be extrapolated to the present which is looking increasingly like a direct continuation of the difficult economic crises of the 1970s in Britain [energy supply costs as cause of economic and social problems]. It’s almost as if the North Sea bounty never happened. Much harder for Cameron to continue Thatcher’s social confrontations without the happy boon of both the oil and its excise revenue. With North Sea production now increasingly in the rear view mirror, it looks very much like a wasted opportunity, most of it sold, after all, at around $10-15 a barrel. Nothing like an unrestrained free market to efficiently strip a resource as quickly as possible [again; compare and contrast to the more controlled exploitation by the other beneficiaries of this same resource]. So whenever I read praise of Thatcher’s or Blair and Brown’s financial management with no mention of the North Sea largess I find it hard to take seriously.
Given the example of Thatcher’s long hold on power and the lasting changes her government was able to make to British society it is easy to see why our current government is so keen on the idea that there must be oil under our land or seas somewhere; bending over backwards with sweetheart deals and law changes to try to entice oil companies to look for it. The search for oil has been going on for many decades here yet New Zealand has always been a net oil importer and the gap between production and consumption [see below] has widened considerably over the last 20 years. Our entire economy is extremely vulnerable to either restrictions in supply or rises in price of this commodity [two sides of the same coin].
NZ OIL 1974-2011
Therefore I would argue, and the example of the UK North Sea resource supports this, that the far better direction for any government is to work on reducing our dependancy on this very hard to replace input. With urgency. To work towards a situation where the quantities we are either producing or importing are used in the most value-added and vital parts of the economy and not simply squandered on more inefficient and wasteful uses.
Oil can be replaced by other energy sources in many applications [like electricity generation, which largely happened after the 1970s oil shock] but this is most difficult in the transport sector, oil is by far the best and most efficient source of liquid fuels: Oil issues are transport issues and visa-versa.
Because the vast majority of the use [and waste] of oil products is in the Transport sector this is the area that desperately needs new thinking and leadership from all levels of government. This is not easy but there are significant things that can be done now, changes that do not require currently unavailable or unaffordable technologies. For example the provision of much more effective urban public transport and in the electrification of as much of freight and passenger transport systems as is possible. As well as much more imaginative management of alternatives systems like our legacy rail network that are almost certain to become part of the answer to this problem.
The more we can bring that pink line in the chart above down, and in a structural way, the better. Consumption has plateaued since around 2004 but it will take a great deal more effort than just hoping people will buy smaller/hybrid/EV cars or spending enormous sums [virtually the entire transport budget] to straighten out some State Highways to get it meaningfully lower. This is true whether someone gets lucky and finds significant new oil or not; the less we are wasting the more beneficial any find would be [as well, of course, helping to reduce the production of the negative externalities that comes with burning all these fossil fuels]. The key metric for every country is the net figure; imports minus exports and the closer consumption is to zero the better this this sum will always be.
We are, unlike the UK, in a very much better position with regards to electricity generation, and there is still a great deal that can be done to improve from the current 80% renewable figure. 100% renewable generation is an important task; it certainly would be better to not be burning gas and coal to make electricity. [Although they are making some good moves in the UK now too].
Unfortunately I guess our extremely short election cycle is one thing that works against longer term views, but then the UK’s five year cycle didn’t help them plan better for the future either. So the lack of any vision simply beyond trying to maintain ‘business as usual’ for a just little bit longer is really the problem. Shame.
And there is less excuse now with the very clear example above.
We tend to focus on issues related Auckland however a recently a video from the NZTA caught my attention. The main purpose of the video is to show some very pretty animations of what stage 2 of the Christchurch Southern motorway will look like. The project is part of the Chistchurch RoNS and is currently going through the Environmental Protection Authority process to get consent, it’s open for submissions. I guess the video was put together for to help show the impact.
I don’t know enough about the project to say if it is needed or not so won’t comment on that aspect. What struck me in the video is the amount of sprawl that is suggested will occur over the next 30 years. This is highlighted as occurring in Rollerston, Lincoln and Prebbleton. Showing each area separately helps to reduce the impact but when you look at the the areas shown, you see they all merge together forming one large continuous mass in an area that it appears would almost rival Christchurch for size. Here are the images I’m referring to:
Now perhaps the video is just trying to show the potential area where growth could occur but if that is the case then it just seems sloppy. If that much land is actually planned for growth then I am very very worried for Christchurch and it would be another case of them making many of the same mistakes Auckland has made.
The NZTA have also put this video out showing what the road may look like from the drivers seat. Do they really have that much money floating around for crap like this? Silly question, of course they do.
In an opinion piece in this morning’s Herald Michael Barnett of the Auckland Chamber of Commerce expresses his most unequivocal support for the City Rail Link [CRL] yet. It seems that the Centre City Future Access Study [CCFAS] has given Barnett and the Chamber’s members the final nudge needed to not only see the need for this project but also confidently call for it against the government’s expressed position:
“I represent a group of business leaders who strongly support the principle of the city rail link and accelerating other long-agreed key transport projects. If it is going to require new faces at the table with central Government to explain their urgency to helping drive Auckland’s economic growth agenda, then we would welcome a meeting with Transport Minister Gerry Brownlee to find a solution.”
“…the view within business is that it needs to happen sooner rather than later. It therefore doesn’t help that a central government agency becomes a roadblock to its progress.”
It really shows that it is only this government that sees improving Transit in Auckland through a party political lens. Perhaps such strong support for the CRL from a group that can generally be expected to agree with National Party policy and that they express their frustration with what they see as its political ‘blockage’ should lead to a rethink in Wellington.
“By putting political parameters around our decision-making, all we end up achieving is to deny ourselves the chance of making progress to confirm a solution and accelerate action.”
“The recent transport report showing Auckland faces a looming congestion crisis in the city centre if we don’t invest in improving rail and bus systems once again reinforced what has been abundantly clear for a number of years. We need more people out of cars and into public transport. In order to do that, we need a good and efficient network.”
It is great to see such an influential group calling for the CRL expressly in order to support the economic performance of the city because this government’s policy has always seemed one that at very best shows little understanding of the economics of cities. Largely conceiving them as nothing other than obstacles to the movement of bulky goods from the countryside rather than as centres of economic value and wealth creation in themselves.
“Removing roadblocks to allow for decisive action on Auckland’s critically important economic growth agenda is emerging as the top issue facing the city in early 2013.”
The rest of the article shows an interesting softening in attitude to the Green Party too by this business group so perhaps in their frustration they are casting around for other parties they feel they may be able to work with…?
Preceding Barnett’s column was a media release by another business group the Employers and Manufacturers Association: Auckland’s Central Rail Loop Must be Fast Tracked. Again the support for the project is because of its economic impact.
“Without far more investment in Auckland’s transport infrastructure there’s no way we can lift exports from 30 to 40 per cent of GDP by 2025.
“Auckland’s GDP is growing at 2.4 per cent a year currently, but long before 2025 the people we need to house and transport to and from work for our export campaign will be stuck in the traffic far from where their jobs are.
“But more than this, the CRL is itself an engine of growth for the coherent development of the city.
Again emphasising a very large gulf between what business people in Auckland believe is needed to support a successful economy and our government’s view.
From another perspective yesterday’s Herald on Sunday ran this piece from opinion writer Kerre Woodham: Nats Run out of Petrol. While she falls short of connecting the dots between the aggressive pace and high cost of the RoNS programme and the recently announced petrol tax increases she does point to an increasing level of frustration among ordinary New Zealanders with the policies of the Key Government, suggesting that this tax rise might just be a bit of a last straw for a number of people.
I thought John Key said that by cutting income tax rates we would be able to stimulate the economy. Guess that didn’t work. I thought Key said that he would be able to stem the flow of New Zealanders to Australia by building a competitive economy and offering after-tax earnings on a par with those across the ditch. Well, that hasn’t worked, either.
I guess the problem is that having so politicised transport investment it may be all but impossible for Brownlee and Joyce to change their position on the CRL now. Especially after Brownlee’s petulant reaction to the CCFAS as surely this was the best opportunity to shift position with grace; the report was made in response to their request and involved central government agencies and ministries. They could have, with some justification, claimed ownership of this process that led to such a clear outline of the need for the CRL if they had only responded with objectivity and openmindedness.
But then there’s the real problem: The RoNS, and in particular the pace of the programme, as it is sucking every penny out of a declining fund. The Road User Forum’s quiescence over the rise in RUC and FEDs shows how completely on board this assertive lobby group are with the government’s policy of total investment in State Highways. I doubt there is any room for the government to waiver in their promises to big trucking by moving even 10% of the funding to the CRL and away from the trucking subsidy. And that’s all we are talking about too, around 10% of the recently announced RoNS programme.
Lastly we come to Brian Rudman’s somewhat grumpy little complaint about terminology also in today’s Herald. The L in CRL does stand for Link and not Loop but Rudman, perhaps in a fit of silly season column filling, goes to some length to explain his insistence on inaccuracy . Even going as far as appealing to the ‘L’ system in Chicago as precedence. Sorry to be a pedant Brian, but it isn’t know as The Loop, that is the name of the central city area contained within the loop of the tracks; the system itself is called the ‘L’ [for Elevated]. But I think we can all agree with Rudman when he says this:
If I thought changing the name would persuade the naysayers to change their minds, I’d happily abandon the offending word. But it wouldn’t, and anyway, gaining popular support is not the issue. A poll last month says 64 per cent of Aucklanders support the loop/link. It’s the Prime Minister and his Transport Minister who need convincing, and somehow I don’t think it’s the name that’s holding them back.
So in summary; 2013 looks like a very interesting year, the logic behind the CRL is just going to keep building yet the government seems to be painting itself into more and more of a corner on transport policy. Are they capable of a u-turn?, have they left themselves enough space to do so even if they see the need? Or will this and their determination to cling to other increasingly unpopular policies just lead to a fractious and even more polarised year?
Lastly I’m a little appalled at putting up a post with no pictures so here’s a little festive number; some drinking but no driving was involved in its creation-promise….
Merry Christmas from the ATB editorial team, thank you for all your comments and contributions in 2012 [which has been a huge year for readership] and remember to avoid driving north on SH1 on the 27 December or you will be both in for a hot and dull time in your car and be adding to the Herald’s annual front page Holiday Highway pump piece. And we look forward to *seeing* you all again next year. Onward.
This had to happen eventually, in fact I’m surprised it took this long:
After a long night of discussions, the Wellington City Council has voted in favour of exploring alternative options to the proposed Basin Reserve flyover.
The decision came the same day Auckland architect Richard Reid announced he has drafted a solution to the traffic congestion, without needing the $90 million dollar flyover proposed by the New Zealand Transport Agency.
Councillor Justin Lester said the council will apply $50,000 toward looking at different options including Mr Reid’s idea of a second tunnel.
The vote was won eight to seven.
The flyover proposal is straight out of the 1950s transport engineering handbook – the kind of thing that most cities around the world are tearing down. Let’s check what it might look like:
There has also be a bit of a row break out about this process as the NZTA sent a letter to the council effectively saying that if the council changed its mind then it would re assess a whole host of other transport projects in the region, this has led to accusations that the agency is trying to bully the council into accepting the deal. This part in particular is probably what is causing the most offence and I had to particularly laugh at the line saying that the NZTA won’t invest in sub-optimal transport developments.
My understanding of part of what has caused both the regional and local council to start reconsidering their support of the flyover has been the governments decision to underground Buckle St to remove traffic from between the National War Memorial and Memorial park, a project I believe the NZTA weren’t previously keen on.
I think out of all the Roads of National Significance projects, the Wellington Northern Corridor is probably the worst – for a variety of reasons:
- Wellington’s population is hardly growing so there unlikely to be massive future demand for transport improvements, unlike Auckland which may grow by up to a million extra people over the next 30 years.
- The cost-benefit ratios for sections of the Wellington RoNS are simply terrible: 0.6 for Transmission Gully and 0.2 for the Kapiti Expressway.
- The urban impact of many sections of the Wellington RoNS are horrific, with the Basin Reserve flyover being the worst example of this.
I don’t know Wellington’s transport situation that well, but it seems that there must surely be better and more sensible options available than the $3 billion proposed to be ploughed into an unnecessary and destructive motorway?
Myth: The Fuel tax increases are just to pay for Auckland motorways
The announcement a few days ago that petrol prices are set to rise by 3c per litre each year for the next three years was pretty quickly latched onto by the media and one of the traditional tools they use is the vox pop to go and get some sound bites from people. Whenever this is done outside of Auckland there always seems to be person who then goes on to blame the increase Auckland with something to the effect of “Why should we be paying more for Auckland’s motorways”. Most of this is probably purely out of a hatred, or jealousy, for Auckland while but I suspect there is also an element of misunderstanding partly due to people simply not realising just how much bigger Auckland is than their town/city. As an example of that last point, here is a map showing the cities that are close to or above having 100k people in them. Auckland is bigger than the rest combined and what’s more its growing faster than them all too. That means a $100m interchange project like say Lincoln Rd is likely to be much cheaper on a per capita basis than say a bypass or bridge upgrade in a small town.
All urban areas above 50k people
But back to the myth at hand. One of the things I found interesting about the governments announcement is that they very clearly identified that the increase was primarily to pay for the Roads of National Significance. The total RoNS programme is costing around $10 billion spread out over the next decade or so. Of that nearly $3 billion is being spent in the next three years on them and that represents roughly 80% of the budget for new state highways around the country. That budget in itself is far larger than for any other funding category as shown below.
But where are the RoNS and how much are they costing. Well its a bit hard to get exact figures as the NZTA don’t clearly state on their website but after a bit of searching around the numbers below should be roughly right.
Now I don’t really count Puhoi to Wellsford as an Auckland project as there are very little benefits in it for Auckland and the government keeps telling us, they think it is primarily about improving access to Northland. That means that there are only really two RoNS within for Auckland, Victoria Park Tunnel which has been completed and the Western Ring route, the final pieces of which are now under construction. Combined they represent roughly $2.5 billion, less than a quarter of the RoNS spending. In fact many of the projects are in rural areas with low nearby populations.
Even more ironic was the vox pop that I heard that prompted me to write this post was from Wellington, on of the regions doing best out of this road building binge and which also has the dubious honour of some of the worst projects from an economic standpoint with the Kapiti Expressway having a benefit/cost ration of just 0.2 and Transmission Gully rumoured to be at similar level.
Further Auckland has traditionally received less transport funding that it provides in taxes as Brian Rudman pointed out a few months ago when the NLTP was announced.
But what’s new. In 1991, after an earlier battle for a light rail service, regional councillors calculated that Aucklanders then paid $150 million a year in fuel taxes but only got $84 million back in central transport funding. More recently, Green Party researchers have calculated that in the 15 years to 2005, Aucklanders paid $7.022 billion in fuel taxes and the like but only got back $3.222 billion in transport-related expenditure – less than half what they put in.
The levels have come back a bit following some increased investment in recent years but I suspect Aucklands level of investment is still well short of the amount of taxes provided. Of course those anti Auckland folk around the country are probably not that likely to read this blog so perhaps this is just a useful reminder for if the petrol price increases or Aucklands motorway investments come up in conversations with friends or family over the holiday season.
Yesterday in Parliament Julie Anne Genter asked Bill English about the PPP that is going to be used for Transmission Gully. I think the thing I am most concerned about from the answers is just how little he appears to know about the deal, something you would think he would have a good understanding of due to being the minister of finance.
NZTA were pleased to announce on Wednesday that they are making good progress on the “Tauranga Eastern Link” road, a Road of National Significance that we haven’t paid much attention to in the past. Given our general disdain of the justification for projects given this title (Victoria Park Tunnel and Waterview Connection excepted) I thought I’d look in a bit more detail around what the Tauranga Eastern Link road actually is – and whether it falls into the category of pointless and stupid RoNS (like Puhoi-Wellsford, parts of the Waikato Expressway and most of the Wellington Northern Corridor project) or more reasonable RoNS (like the aforementioned Auckland projects and perhaps part of the Christchurch projects though I’m not too familiar with them).
The Tauranga Eastern Link project, according to the NZTA website, is a four-lane median divided highway between Tauranga and Paengaroa (don’t worry, I’ve never heard of Paengaroa either), which bypasses Te Puke and shortens this route quite considerably. Its route is shown in the map below:
Interestingly, this road will be a toll road, so the economics of it are somewhat more dependent than usual on getting traffic predictions right. Something we’re notoriously bad at. They’re also very much dependent upon getting future growth predictions for the general Papamoa area correct – something that comes through pretty strongly in NZTA’s justification of the project:
Why we need it
Planning for the future and addressing the need to manage growth, ensure economic development and traffic safety issues for the region are key objectives for building the Tauranga Eastern Link.
Western Bay of Plenty – growth snap shot
- One of New Zealand’s fastest growing residential areas.
- Population is expected to double over the next 30 years to 286,000.
- By 2051 Papamoa East is predicted to be a city the size of Nelson with 40,000 people and the total population of the eastern corridor itself will be upwards of 60,000.
- Set to become the fourth or fifth most populated region in New Zealand.
- As the population continues to grow, this will increase pressure on existing infrastructure.
- The key drivers of this growth will be increasing use of the Port of Tauranga, New Zealand’s largest port, and the development of new residential, commercial and industrial land to the east of the city.
Planning for future land use and transport in the Western Bay of Plenty has been considered in an integrated manner under the SmartGrowth Strategy developed by local authorities and road controlling agencies. This strategy has a focus on corridors – known as SmartTransport Corridors. The Tauranga Eastern Link is a key priority within the development of the Eastern Corridor, and is an essential component of an integrated transport network.
The urban areas within the eastern corridor, including Papamoa East, Te Puke and Rangiuru, by 2051 are expected to grow with around 60,000 new residents anticipated to move to the area. Development of the eastern corridor will support and complement the existing developing areas located south-east of Mount Maunganui.
In broad terms, future development along the eastern corridor is expected to contribute around $8.5 billion to the Western Bay of Plenty sub-region economy. This includes:
- 17,500 new homes
- 450 hectares of industrial development
- up to 100,000 square metres of shops, office and commercial activity.
From a growth management and planning perspective, the Tauranga Eastern Link is integral to the development of the eastern parts of Tauranga and will form a transport network that will support and enable the anticipated growth.
In terms of road safety the Tauranga Eastern Link will provide safer traffic flows. The section of State Highway 2 between Tauranga and Paengaroa, is the second-worst state highway under the New Zealand Road Safety Assessment Programme, based on fatalities and serious ongoing crashes per kilometre.
The troubles of Mangawhai Heads always make me a bit sceptical of huge population growth projections in somewhat peripheral areas, plus I do wonder whether building new motorways to enable a whole heap of coastal sprawl is really the kind of land-use and planning integration the country actually needs. But let’s set that issue aside for a bit.
One of the main criticisms this blog has had of the RoNS projects is that they very much ignore the significant changes in travel trends over the past few years – with a pretty dramatic tapering off of traffic growth. Obviously volumes are still going up in some places and down in others, so I thought I’d take a look at what’s happening along this existing State Highway 2 corridor – using NZTA’s helpful state highway traffic volume data. I’ve taken annualised average daily traffic totals between 2007 and 2011 for the points (approximately) along SH2 shown in the map below:
These points should give us a fairly good overview of what’s happening generally along the corridor as they cover points still kind of in the wider Tauranga metropolitan area to Te Puke and then beyond Te Puke. So let’s take a look at what the data shows us:
Much like the general trend across New Zealand for the past five years: a bit of bouncing around but a general trend of slightly downwards. Looking at the data a bit more closely highlights that assumption: I’m going to hold back, for the time being, on passing final judgement on this project – perhaps because the SAHA report on the RoNS projects actually suggested the Tauranga Eastern Link had a reasonable cost-benefit ratio (especially compared to most of the others). However, I really struggle to see why building a duplicative road across open countryside next to an existing state highway with falling traffic volumes really warrants being one of the country’s top priority transport projects. With falling demand along the corridor, plus the fact that this road will be tolled, it seems to me that there’s quite a possibility that this will be one extremely empty road come 2016 when it’s finished.
I suppose at the very least it’ll be an amusing road for the next government to make fun of and use as justification for cancelling a whole pile of other RoNS projects around the country.
Pretty much every single time we hear the government talk about the Puhoi to Wellsford road of national significance they say that its crucial to Northland’s economy, even standing up and saying so in parliament here are a few quotes from different exchanges:
Dated 15 August 2012
Phil Twyford: Does it make economic sense to borrow to fund the Pūhoi to Wellsford “Holiday Highway”, which has a benefit-cost ratio that barely breaks even and costs $1.7 billion, when a $400 million upgrade would fix the congestion and safety problems?
Hon GERRY BROWNLEE: Although I disagree with many of the assertions made in that question, I would say that I think that providing a stronger link to Northland, where there is so much poverty yet so much economic potential, is a good idea.
Dated 30 August 2012
Phil Twyford: Has any assessment been done comparing the impact on Northland’s economy of spending $1.7 billion on a roading project that is not even in Northland with other options such as upgrading the North Auckland rail line, more quickly and cheaply improving safety on State Highway 1, actually upgrading roads in Northland, or a regional economic development package?
Hon GERRY BROWNLEE: It may surprise the member to note that people cannot get their goods out of Northland unless there are roads outside of Northland. It sort of makes sense that if you want to get from Northland down to some other part of New Zealand, you need a road to get there. Eighty percent of all freight in this country is carried on the road. That is why we are putting the money into the road transport programme and the roads of national significance. Tell us, which of the roads in the programme would Labour stop?
Phil Twyford: Will he confirm that the proposed spend of $33 million on the Pūhoi to Warkworth design and property purchase while downgrading Warkworth to Wellsford to being a possible road of national significance confirms that the project has nothing to do with improving Northland’s economy, and everything to do with making it faster to get to the Prime Minister’s holiday home in Ōmaha?
Hon GERRY BROWNLEE: Well, firstly, I reject that last statement; I think it is outrageous that the member has been so stupid as to make it. Let me tell you this: the programme has always had the Pūhoi to Wellsford road being designed, the designations put on it, the properties acquired, etc., in the current land transport period. It will be built in the 2015-18 period, unless we get a Labour Government, which will can it.
Yesterday Campbell live revealed that the benefit cost ratio for the Mackays to Peka Peka part of the Kapiti Expressway to be only 0.2, well it seems that isn’t the only project to see its BCR fall. First this document which is undated but the NZTA tells me was sent to the ministers office on 16 August 2012.
But how much is it meant to cost again, this from a document that was sent to the minister dated 03 August 2012 which is still using figures from 2009.
But putting aside the benefits and costs, is the Puhoi to Wellsford route the best way to improve the Northland economy? Well if improving the Northland economy is the goal then even the NZTA don’t seem to believe that the road is the best way to achieve that. Also from the document dated 3 August they state that the best thing we could do is to improve access to Marsden Point and getting goods to other destinations clearly comes in second.
Wow, who would of thought that the best way to get transport to improve the economy of Northland is to actually spend money on infrastructure in Northland. Of course these aren’t the first issues we have raised, the 2008 study showed there was little benefit in upgrading the route while we also showed that based on Gerry’s answers to written questions you would have to travel at up to 250kph to achieve some of the time savings that the benefits above are based on.
As Mr Anderson said yesterday, its really time for an independent inquiry into the NZTA and transport priorities, there is just far to many issues cropping up.
A great scoop by Campbell Live tonight showing that the cost-benefit ratio of the Mackays to Peka Peka part of the Kapiti Expressway – a key section of the Wellington Northern Corridor RoNS project – has been recalculated recently as being 0.2. That is, for around $630 million worth of spending we’re only going to get roughly $120 million of benefit. Click the picture below, or here, to watch the video:
To be honest I’m not surprised that more detailed analysis has shown that this project makes no economic sense. In some respects it is a solution in search of a problem – much like Puhoi-Wellsford. The Wellington region simply isn’t growing in population very much, plus it has a pretty effective existing rail system. There simply isn’t the need for a vastly oversized piece of infrastructure like what is proposed.
However, I think the real story becomes clear when we start putting the pieces of this puzzle together. Recently we’ve found out that NZTA are happy to fudge the numbers on their $5 billion harbour crossing project and that they generally vastly over-estimate the benefits of their motorway projects. One wonders whether they just typically bury reports – like the one obtained by Campbell Live – which don’t give them the answer they’re after and shop around for something more palatable. In any case I think it’s time for some sort of independent investigation into NZTA as clearly they’re doing a rubbish job at assessing the merits of transport projects and there are, literally, billions of dollars at stake to get this right.