Last week, I took a look at the question of whether Auckland is too big. (Answer: Probably not.) However, there’s also another, related question that I didn’t discuss: Are other New Zealand towns and cities too small?
“Too small” is obviously a subjective concept – what’s just right for one person will be painful for another. So I’m going to return, briefly, to the theoretical model I discussed in the last post, which analysed city size as an interplay between agglomeration economies and congestion/crowding costs.
Most New Zealand towns and cities are not large enough to be congested or crowded in any meaningful way. They are more likely to face challenges with the sustainability of local businesses and the affordability of maintaining infrastructure. Even a reasonably-sized growing city like Hamilton has experienced struggles in this area. Fortunately, it seems to be improving, but it could still do with more customers within walking distance and more people starting up businesses
But it’s not just about the number of people – productivity also matters. When businesses are more productive, they tend to pay higher wages, which increases demand for local goods and services and strengthens the local tax base. This also makes it easier to address the challenges faced by many regional towns and cities.
Unfortunately, New Zealand has a lot of issues with poor productivity, and, as Motu Institute economist Dave Maré has shown, these issues are worse in smaller towns and cities even after controlling for differences in firm and worker characteristics:
Population growth in smaller towns and cities can enhance their productivity performance, if it’s managed well. Agglomeration economies also apply in smaller places. For instance, a town with a large enough population to sustain three restaurants rather than two will also tend to have better restaurants, as increased competition forces them to raise their game.
However, towns and cities also trade with each other. A factory in Hamilton may buy parts from an importer in Tauranga. A family living in Dunedin might take a day-trip to Oamaru to check out their steampunk society. And so on and so forth. When this happens, it expands the market available to firms in each location, giving them more opportunities to benefit from agglomeration economies.
In other words, good transport links between towns and cities can enable increased productivity (and in doing so, make them more desirable for new residents and businesses). There is some evidence that this process isn’t occurring in New Zealand towns and cities. In a new research paper from the Productivity Commission, economist Guanyu Zheng investigates “geographic proximity and productivity convergence across New Zealand firms“. It offers some important insights on what’s happening at the ground level of the NZ economy.
Zheng’s key conclusion is that:
The speed of convergence to the local frontier is greater than the speed of convergence to the national frontier. This indicates that geographic proximity is important in the diffusion of technology. One possible reason is that much information and technical know-how is tacit and non-codifiable. Geographic proximity facilitates information exchange between firms and enhances the capability of firms to absorb tacit technology.
Shorn of the economese, this means that firms in Wellington tend to compete with (and catch up with) other firms in Wellington, and firms in Nelson tend to compete with other firms in Nelson. There’s less competition and catch-up between firms in different cities, which impedes New Zealand’s productivity performance. However, there are a few industries, like agriculture and professional services, where convergence happens more rapidly. These industries differ in a lot of ways, but they are both relatively knowledge-intensive, with high returns for adopting new ideas, with outputs that are relatively easy to trade across distance.
What can we do to address this?
The first step is correctly diagnosing the cause of the problem. Aside from New Zealand’s long and hilly geography, the main reason that it’s so difficult to trade between cities in NZ is the perverse legacy of the 1930s-1980s approach to industrial and transport planning. As I’ve written before, this had two main components:
- First, there was a deliberate policy of making freight transport between regions costly and difficult. The Transport Licensing Act 1931 banned trucks from moving goods more than 150 kilometres until its repeal in 1982, while the Railways Department had all sorts of obscure rules about train loading and unloading to guarantee employment in rural depots.
- Second, industry location was regulated and subsidised to ensure a stable and “equitable” distribution of economic activities throughout the country. For instance, there were regulations that virtually prohibited the opening or closing of meatworks and other rural processing plants between the 1930s and 1980s.
These policies appear to have a long-lasting negative legacy. Firms that were required to locate in small towns, paying high transport costs to sell to the rest of New Zealand, have been at a disadvantage since then. They don’t have scale in their local market, and it’s excessively costly to ship freight to the rest of NZ. As a result, they’ve struggled to stay alive, let alone to grow.
Overcoming high costs to distance within New Zealand could potentially have large economic benefits by enabling faster productivity convergence between local towns and cities as well as between them. The problem is that there is no single “Think Big-esque” thing that we can do in order to sort these problems out.
Viewed from a certain angle, the Roads of National Significance were an attempt to reduce high costs to distance between regions. They’re likely to be successful in some cases – for instance, the Waikato Expressway will make travel between Auckland and the Waikato considerably faster, and boost the Waikato in the process. However, as a strategy for addressing a system-wide issue they are likely to fall short for two reasons:
- First, too much money has been spent on urban and urban fringe motorways that will have minimal impact on inter-regional connectivity. Puhoi to Warkworth and Transmission Gully motorways are prime examples.
- Second, they leave a whole bunch of other problems unsolved. For every kilometre of RONS, there are probably twenty kilometres of roads with dangerous curves, a lack of passing lanes, or other issues. And there are also opportunities to improve the speed and reliability of the freight rail network.
In other words, we can’t rely upon the RONS to sort out our problems with geography. In some locations, they may contribute to the solution, but in others they may crowd it out.
By way of illustration, the following chart shows the last decade’s worth of spending on new and improved roads in the Northland Region. This is an area where better internal road links could be quite beneficial, as travel speeds are slow. Between 2007 and 2016 a total of around $420 million was spent within the region. This is only around half of the cost of the Puhoi to Warkworth motorway, which means that you could cancel that, double funding on road links within Northland, and still have money to spare.
So, returning to the question that I started the post with: New Zealand’s towns and cities could benefit from more agglomeration and higher productivity levels. Population growth would help, in many places, but an equally important priority is to improve connectivity between towns and cities to enable more competition between places.
What do you think about the cost of distance within New Zealand?
On Friday Transport Minister Simon Bridges officially opened the Te Atatu and Lincoln Rd sections of the Western Ring Route.
Simon Bridges officially opening the two projects
The NZ Transport Agency says the official opening today of two upgrades to Auckland’s Northwestern Motorway kicks off a significant year in the city’s transport history.
The Lincoln Interchange and Te Atatu Interchange projects were officially opened by Transport Minister Simon Bridges at a ribbon cutting ceremony this morning.
They are the first of several improvement projects to be opened this year as part of the Government’s $2.4b Western Ring Route – designed to keep Auckland moving.
Both of these projects are crucial building blocks in the Western Ring Route, providing an additional route to State Highway 1 and the Harbour Bridge and changing the way people move around Auckland.
NZ Transport Agency Highways Manager Brett Gliddon says the improvements at Lincoln and Te Atatu are part of a series of projects being completed during the next year to ensure the Northwestern motorway is able to handle the growing demands from everyone who uses it – drivers, people using public transport and those who walk and cycle.
“Increasing the motorway from two to three lanes in each direction on this stretch of the motorway will help traffic to flow better leading to greater travel time reliability, and an efficient alternative route to use instead of State Highway 1,” says Mr Gliddon.
I was apparently invited to the opening but the NZTA sent the email to the wrong address – not that I would’ve been able to attend due to work commitments.
Regardless of what mode you use, for many out west the completion would be a welcome change as works and the disruption that came with it have been an ongoing challenge. But I wonder just how successful the project has been, especially the Lincoln Rd section. Here’s are some of the quick facts from the NZTA’s press release.
The $145million upgrade of the Lincoln Interchange has widened and realigned the onramps and motorway exits to improve safety and traffic flow. There are new dedicated, purpose built bus lanes providing a greater level of service than before. The Northwestern Cycleway has also been extended and improved.
The $65million Te Atatu Interchange project has added an extra lane in each direction between Te Atatu and Lincoln Roads, new motorway on and off-ramps as well as raising and widening the Te Atatu overbridge.
Work will begin later this year on the Lincoln to Westgate project to tie into this just completed work at the Lincoln Road Interchange. It will include widening the Northwestern motorway to three lanes, improved on and off ramps, creating bus lanes and extending the Northwestern Cycleway.
So let’s take a quick look back to when these two projects each began.
Lincoln Rd Interchange
The project started all the way back at the end of October 2010 and has seen the interchange vastly supersized, for example the bridge over the motorway was widened from two lanes to seven. At the start of the project the NZTA laid out these basic facts. The important ones for this post being that it would cost $100 million, be completed in 2013, include all four ramps and extend the cycleway as far as Huruhuru Road.
Immediately you can see a few glaring issues, these being that the project is $45 million over budget and three years late. To be fair, I understand the timeframe was deliberately delayed so that funding could be diverted to help deal with the immediate aftermath of the Canterbury earthquakes, three years late? I can also accept the idea that they slowed construction so it could better be tied into the progress of the rest of the Western Ring Route. Not much point adding lanes and capacity only for it to hid the queue not far down the road. As infomercials love to say “but wait, there’s more”.
As I mentioned the works were to include all four ramps and extending the cycleway to Huruhuru Rd – via a torturous four leg crossing of Lincoln Rd, no underpass here. Here’s a map of the interchange design. I’ve rotated it to better compare with the following image.
Here’s what it looks like as of the beginning of April.
You can see very clearly that the westbound onramp and the extension of the cycleway past Lincoln Rd are completely missing. That’s because they’ve been moved in with the project widening the section of motorway from here to Westgate – another ~$100 million project.
So all up it appears we’ve got a project that is $45 million over budget, three years late and they still haven’t even completed some of the work they said they would do.
Te Atatu Interchange
Thankfully the Te Atatu interchange doesn’t appear to have the delays that the Lincoln interchange suffered, but it does appear to have had its own cost blowout. This is from the press release when the project got under way.
Key features of the $50m project include widening the Northwestern motorway between the Te Atatu Road and Patiki Road interchanges, widening all five ramps on the interchange, enhancing existing facilities for walkers and cyclists and widening and raising the Te Atatu Road overbridge.
Work will start on the improvements at Te Atatu in the new year and is set to be completed in 2016.
Here’s the Te Atatu interchange from April
So the project was completed in 2016 like they said it would be but was $15 million over budget.
The Te Atatu project includes the fantastic cycleway underpass
So all up we’ve got projects over budget, late and missing components. Perhaps not quite the NZTAs finest hour. Imagine what kind of amazing local cycling network that extra $60 million could have delivered if spent within the area.
It’s quite likely that within the next decade we’ll be seeing the heavy machinery out in these sections once again, this time adding the piece of the puzzle that was absurdly left out of this project, the Northwest Busway.
The idea of continuing the Waikato Expressway all the way to Tauranga including a tunnel under the Kaimai Ranges has once again been come up after Transport Minster Simon Bridges suggested the idea has some merit. Now apparently called the Kaimai Connection it is being pushed by a number government MPs from the region.
The Kaimai connection – completing the golden triangle between Waikato and the Bay of Plenty – is being discussed at the highest levels.
On Friday, Transport Minister Simon Bridges said he is encouraged by the idea.
“It is pretty hard to argue against, at least in principle, the idea of carrying it on to some degree to the Bay of Plenty,” said Bridges. “It is a very compelling idea to continue.”
Early in January, Hamilton City Councillor Martin Gallagher and National MP for Taupo Louise Upston called for an expressway between Hamilton and Tauranga to be prioritised.
“Of course, I’m not digging myself into any election promises at this stage, because there is a whole lot of planning and investment required,” Bridges said.
An article on the call by Martin Gallagher and Louise Upston for the road is here.
Another Government MP is supporting the call and he was also calling for it around five years ago
National’s Hamilton East MP, David Bennett agreed it is time to turn concept into reality.
“The next phase for the Waikato is to connect with the Bay of Plenty,” said Bennett. “We have an existing connection, but it certainly can be improved.”
Tauranga is ready for the next step, said Bennett, and by 2020, the Hamilton and Huntly sections of the Waikato Expressway would be complete.
Of course this isn’t the first time we’ve seen this project be raised. Almost exactly a year ago a fourth government MP was saying also the same thing.
A vehicle tunnel under the Kaimai Range needs to be considered with the same weight as a second harbour crossing in Auckland was given, Bay of Plenty MP Todd Muller says.
He included an interesting analogy:
“I look at somebody like Sir Dove-Meyer Robinson. He looked at what Auckland could be “one million people by the turn of the century “and people scoffed at him.
And who was it that did the scoffing and cancelled Dove-Meyer Robinson’s plans again?
Five years ago when David Bennett was suggesting it he was also supported by the truck lobby – although they at least acknowledged it wasn’t something happening soon.
Road Transport Forum chief executive Ken Shirley said road transport operators thought a road tunnel could stack up economically within 20 years as freight grew and time and fuel costs were taken into account. “When we look at the future projections, all the modes of transport have to step up. The bulk will go by road. We believe it could well be that in the longer term a road tunnel through the Kaimais would be viable.”
So there’s a lot of support for the idea but does it stack up?
As I understand it the long term strategy from the NZTA is to make SH29 (and SH1) the main route connecting Tauranga, Hamilton and Auckland which is in part to get more trips on the Waikato Expressway which is currently being built. That would divert traffic off the SH2 route through the Karangahake Gorge and towns of Paeroa, Waihi and Katikati.
If built as an expressway it would require something to be done about the steep grades on some parts of the road over the Kaimai Range and that’s where the tunnel comes in. Reports from a few years ago suggested the NZTA were looking at a number of tunnel options in three locations,
NZTA regional director Harry Wilson says one option involves building a road tunnel near the existing rail tunnel, another is building a tunnel near Thompsons Track, between Katikati and Apata. The third option, known as a summit-level tunnel, involves building a tunnel half-way up the existing alignment of State Highway 29.
So far 10 options have been identified in these three locations.
“To date, high-level cost estimates indicate the price for each option including approach roading would range from $1.5 to 2 billion,” Mr Wilson said.
“While we are not discounting the possibility of building a tunnel, the early indication from the cost-benefit analysis shows that the cost of building a tunnel could outweigh the benefits of the project.”
I don’t recall ever hearing what option they chose as the preferred one however I have heard the cost could be more than double the $2 billion figure suggested back then. The last statement about the costs outweighing the benefits is likely a massive understatement. The NZTA’s traffic stats indicate that SH29 over the Kaimais has only just reached an average of 10,000 vehicles per day within the last few months.
It’s a project that would make the Additional Waitemata Harbour Crossing’s very weak business case look saintly and that’s with AWHC expected to induce up to 60,000 more vehicles a day to cross the harbour. The SH2 route through Waihi and the Karangahake Gorge just over 8,200 vehicles per day.
Back in 2012 the idea was added to the 2012-22 Government Policy Statement on transport as part of a list of potential future RoNS
28. Possible new routes have been identified through the State highway classification system. This system categorises State highways based on the function they perform, such as moving freight to and from ports or linking major population centres. The classification system provides a national consensus on the role and function of different State highways, and thus the levels of service that can be expected over a 20 year timeframe.
29. Routes that may be considered on this basis for future RoNS include:
- Hamilton to Tauranga
- Cambridge to Taupo
- Napier to Hastings
- State Highway 1 north and south of the current Christchurch motorway projects.
30. Based on the State highway classification system these four routes have high volumes of traffic, and are important for freight movements including port access.
Interestingly there was no mention of them at all in the 2015-25 GPS.
It seems to me that perhaps a key main reason these MPs are pushing for this project is that the Waikato Expressway will be completed in around four years and they are keen for more money to be poured into the Waikato which has had the second highest per capita spend on transport.
From driving the route a few times per year I suspect there are a lot of much lower cost improvements that could make a big difference to issues like safety and travel times.
The NZTA yesterday announced they’ve awarded a $1 billion contract to build another bypass of Hamilton and comes after they spent $200 million on the existing bypass at Te Rapa which opened three years ago. Construction won’t begin till next spring as the contract includes the detailed design work which will take place first.
A consortium of contractors and designers has been awarded a contract to build the biggest roading project to be undertaken in the Waikato, the NZ Transport Agency says.
The 21 kilometre long Hamilton section of the Waikato Expressway will be constructed by a group made up of Fletcher, Beca, Higgins and Coffey (FBHC), in an alliance with the Transport Agency.
The proposed design for the section includes five interchanges, 17 bridges and new connecting roads at Ruakura Road and Resolution Drive.
As usual with these things there seems to be a fair amount of artistic licence that goes into the press releases. For example
The project is one of seven sections of the Waikato Expressway, a Road of National Significance (RoNS)identified by the Government as key to unlocking New Zealand’s potential for economic growth.
Once all seven sections are complete, the expressway is expected to cut travel times between Auckland and Tirau by up to 35 minutes and significantly improving safety.
So how much of that claimed 35 minute savings comes from this project and how much from the other sections that have already been completed or are under way? Including the time savings of other projects was one of the key criticisms of the NZTA by the board of inquiry that rejected the Basin Reserve Flyover in Wellington.
“The expressway connects inter-regional traffic with local destinations which is vital for the economy and for our vibrant communities. We have to get these things right and we can only do that if we partner up,” she says.
Hamilton Mayor Julie Hardaker says the project is important to growth and development in Hamilton and the wider Waikato region.
“We have been waiting in anticipation for completion of the Hamilton section of the expressway and it’s great to have this work now locked in,” she says.
“It is a fantastic project that will deliver considerable value to Hamilton’s economy and lifestyle.”
I’m not quite sure how a rural motorway out past the edge of town is going to do anything to make communities in Hamilton more vibrant and isn’t the point to allow traffic to bypass the city and get to or from Auckland faster. The project also isn’t likely to do much to the economy either. Even by 2041 some sections are still expected to have fewer than 10,000 vehicles per day using them – and that’s likely using the NZTAs often over-optimistic assumptions. Another way of putting that is it’s on par with what the old Kopu bridge carried back when it was a single lane bridge.
I suspect that if this section was assessed on it’s own it might be lucky to scrape above a BCR of 0.2
I wonder how liveable and vibrant Hamilton would be if $1 billion was spent on projects that more directly benefited locals?
Fantastic news out of Wellington yesterday with the High Court rejecting completely the NZTA’s appeal of the decision by the Board of Inquiry to decline consent for the Basin Reserve Flyover
The High Court today dismissed the NZ Transport Agency’s attempt to overturn the rejection of its controversial plan to build a 300-metre concrete flyover alongside the Basin Reserve.
In a decision released this afternoon, the Court stated:
The Transport Agency has not established that in its decision the Board of Inquiry made any error of law … Consequently the Agency’s appeal is dismissed.
The Board’s decision does not contain any of the errors of law alleged.
The Transport Agency had appealed against the Board of Inquiry’s decision to decline consent for the $90m flyover alongside the Basin Reserve.
The Government set up the Board of Inquiry process as a way of fast tracking consents for large projects to stop them being held up in years and years of appeals. The only appeals were allowed on points of law.
Some of the key reasons consent was declined in the first place was
- That while the project would improve the cities transport system that it would do so at the expense of heritage, landscape, visual amenity, open space and overall amenity.
- They are uncertain how the plan would have actually accommodated for Bus Rapid Transit as proposed in the Spine Study.
- That the quantum of transport benefits were substantially less than what the NZTA originally said in lodging the NoR as they included transport benefits from other projects.
- That while North/South buses would be sped up, that the modelling doesn’t show any impact effect of this on modal change.
- That while there are some improvements for cyclists it’s mostly in the form of shared paths which will introduce potential conflicts between pedestrians and cyclists.
- That the dominance of the bridge would cause severe adverse affects on the local area and the mitigation measures proposed would do little to reduce that. They also found the new building proposed for the Basin Reserve would exacerbate this.
Some of these are likely to have massive implications for other projects such as the Additional Waitemata Harbour Crossing and the Reeves Rd Flyover. For example it likely means that the NZTA are going to have include not just the tunnel and direct connections in their consent for AWHC but also all the associated road widening of the Northern Motorway and Central Motorway Junction – which we understand is substantial. It could also stop the idea of building a combined road and rail tunnel across the harbour as the NZTA would have to consent the connections on either side. This will likely be why they’ve told us that they will not be including rail in current consent process.
Coming back to Wellington it will be interesting to see how the NZTA respond. It’s time they gave up idea and started thinking about other solutions.
This is the second post in a series on the Ministry of Transport’s working paper on New Zealand’s capital spending on roads, which was prepared as an input to the 2015/16 Government Policy Statement (GPS) on Land Transport Funding. It was released to Matt under the Official Information Act just before Christmas. Previous posts:
In the previous post, I took a look at the MoT paper’s findings on the economic efficiency of state highway spending. MoT showed that since 2008 spending on the Roads of National Significance (RoNS) has gone up, while benefit-cost ratios have gone down. As a result, we have almost doubled our spending on state highways without achieving any more economic or social benefits from that spending.
This week, I’ll take a look at a different question: Is it possible to spend our road budget more efficiently? If we chose to build other roads instead, would we get more benefits from them?
The MoT paper examines this issue quite comprehensively, and comes up with an unambiguous “yes”. But before I get into it, it’s worth reviewing the system that the Government is currently using to assess transport investments. Projects are ranked on three criteria:
- Strategic fit [i.e. is this project trying to do something that the Government cares about?]
- Effectiveness [i.e. will this project actually do what it’s intended to do?]
- Benefit and cost appraisal [i.e. will this project deliver more benefits than costs?]
In short, the BCR is only part of the picture. In practice, it’s less important than strategic fit. However, it’s still an important criteria for determining whether we are getting good value out of our transport investments, especially as many of the strategic outcomes that the Government wants are accounted for in a transport cost-benefit analysis.
With that in mind, Section 5.4 of the MoT paper compares BCRs for local road and state highway projects which have committed funding versus those that will probably receive funding or which will remain unfunded.
This analysis, summarised in the chart below, shows that BCRs for state highway projects tend to be lower than BCRs for local road projects whether or not they have committed funding or not. This might be an indication that too much money has been allocated to new state highways – effectively, there are worthy local roads that are going unfunded.
Another worrisome finding is that BCRs for “committed and approved” state highway projects are considerably lower than projects that are merely “probable” or which have not been given funding. This suggests that even within the state highway budget, funding isn’t going to the projects that offer the best returns.
However, the MoT paper notes that these figures include “significant spending on large strategic projects” – the Auckland Manukau Eastern Transport Initiative (AMETI) in local roads and the RoNS in state highways. Is it simply the case that a few big funding calls are skewing the results?
Here’s what the chart looks like with those projects removed. As you can see, “committed and approved” state highway projects other than the RoNS also offer a lower return than the “probable and reserve” projects that may or may not get funding. What the hell is going on here?
Elsewhere in the paper, MoT sums up the situation as follows, with a nod to the idea that traffic forecasts are over-predicting growth:
It also compares these figures with BCRs for other transport spending, including NZTA-funded PT infrastructure and services and walking and cycling projects, and concludes that:
In other words, the focus on big state highway projects means that the Government is passing up higher-value spending that serves other modes. Unfortunately, the paper doesn’t offer a lot of additional analysis. But it would be interesting to know how much analysis NZTA or MoT has done on the bus infrastructure projects that are needed to get good transport outcomes in Auckland, such as the Northern Busway extension, the Northwest Busway, extensions of the AMETI busway, and bus interchanges to support Auckland’s New Network.
With all that in mind, how would we be spending money if cost-benefit analysis was the key criteria?
Section 6.2 of the MoT report contains a number of colourful charts to illustrate how we could be doing things differently. Here’s the bit that stuck out for me. It classifies new state highway projects, excluding RoNS, according to their BCR (vertical axis), funding priority (horizontal axis), and total cost (size of bubble).
If BCRs were the key criteria for project funding, the black-coloured bubbles would be de-funded and the red-coloured bubbles funded in their place:
As you can see, if the Government were focused on getting the highest benefits out of its transport budget, it would have to de-fund most large state highway projects that are currently underway. Yikes.
It’s not clear what conclusions MoT’s drawing from this analysis, as the final paragraphs are entirely blacked out. However, I’d be surprised if they weren’t a bit skeptical of the way that public money is being spent…
Next week: MoT’s analysis of roads spending by region. Preview: Canterbury’s getting a raw deal.
This is the second post in a series on the Ministry of Transport’s working paper on New Zealand’s capital spending on roads, which was prepared as an input to the 2015/16 Government Policy Statement (GPS) on Land Transport Funding. It was released to Matt under the Official Information Act just before Christmas. Previous posts:
As I said last week, MoT’s paper suggests that there are big issues with the land transport budget. Current road spending does not seem to represent good value for money. To their credit, MoT appear to be acknowledging this. However, it doesn’t seem to have percolated up into the investment decisions being made by the Government.
This week, I want to look at what NZTA’s money (the National Land Transport Fund, or NLTF) is being spent on, and how economically efficient that expenditure has been.
Section 4 of the MoT report contains a lot of useful data on past and future spending on roads. Here’s what’s happened to the roads budget over the last 15 years, and what’s expected to happen over the next decade:
Basically, about a decade ago we started spending a lot more on new or improved roads. A lion’s share of new spending went to state highways, in spite of the fact that local roads carry more traffic. As we have previously discussed at length, this spend-up coincided with a flattening of growth in vehicle kilometres travelled. (It also coincided with an acceleration in price inflation for civil construction.)
In other words, we’ve spent a decade spending increasing amounts of money on roads for which demand is not increasing. And the last three Government Policy Statements plan for state highway spending to increase further.
In order to pay for state highway spending, it’s been necessary to divert money from other activities – local roads, maintenance, PT, and walking and cycling have all taken a hit. The Government has also raised petrol taxes several times. The MoT report offers some analysis of how spending priorities changed between the 2008 GPS and the 2012 GPS.
The following chart compares projected spending ranges for new and improved state highways (the darker uppermost bands) and new and improved local roads (the thinner, lower bands). It shows that funding for state highways – the Roads of National Significance – was raised by around half a billion dollars a year, while local road funding was cut back.
One would hope that the Government’s decision to allocate vast amounts of funds to state highway projects was based on a sound economic rationale. Unfortunately, there is no hard evidence of this in the MoT paper. Section 5 of the MoT paper analyses benefit-cost ratios (BCRs) for road spending. It notes some caveats with the data – BCRs for some projects had to be inferred from “efficiency scores” – but there is enough data to paint a picture.
Here is MoT’s picture. It is not a pretty one:
Essentially, MoT finds that average benefit cost ratios for state highway projects declined significantly in 2008/09 and have stayed low ever since. An eyeballing of the graph suggests that BCRs prior to 2008 averaged a bit over 3.5 – meaning that state highway projects were expected to return $3.5 in social benefits for every dollar invested. Since 2008, they have averaged a bit over 2 – meaning that state highway projects now only return $2 in social benefits for every dollar invested.
MoT’s analysis of this graph is entirely blacked out in the released document. Nonetheless, the implications are simple: we have almost doubled our spending on state highways without achieving any more benefits from that spending. BCRs aren’t everything, but it’s really, really hard to understand why the Government would want to spend money so ineffectively.
The answer is that they feel that the Roads of National Significance offer a better “strategic fit” with their overall objectives for the land transport budget. I’m not necessarily opposed to this evaluation approach. In my experience, cost-benefit analysis invariably has some blind spots. Using qualitative “strategic fit” criteria can allow policymakers to take account of broader goals that aren’t well covered in NZTA’s Economic Evaluation Manual.
However, I don’t think that strategic fit should override all other analysis. If you think that a project is important for supporting a productive economy, that’s fair enough. But if an evaluation of the project’s impact on freight costs and agglomeration effects in urban areas results in a low BCR, you should question your prior assumptions about its economic benefits. It’s foolish to think that four-lane divided highways are magical devices for creating economic growth. Economics simply doesn’t work that way.
Next week: Do we have better options for spending the transport budget?
In the third in my series of posts wrapping up the year I will look at what’s happened with roads this year.
Roads of National Significance
The RoNS have continued as they did last year with one notable exception.
Western Ring Route
The Western Ring Route works are in full flight now as will be evidenced to anyone who drives along SH16 with roadworks in place from east of Western Springs all the way through Northwest of Lincoln Rd from 5 separate projects.
- St Lukes Interchange
- Waterview Connection
- Causeway upgrade
- Te Atatu Interchange
- Lincoln Rd Interchange
The TBM working on the Waterview connection has broken through with the first tunnel and in December made a start on the second one. At the same time the most visible part of the project has been the large yellow gantry has been building towering ramps that will connect the tunnels to SH16 in each direction.
Over the next year we should finally see the Lincoln Rd section completed and I imagine significant progress on the other projects – although they are still a few years from completion.
Puhoi to Wellsford
In 2014 the NZTA were issued with consent to build the Puhoi to Warkworth motorway – a road even the NZTA’s analysis says is only really busy during holiday periods. Amazingly we’re still yet to see any real economic analysis for the project which is likely because it’s terrible based on the work we saw before the government named it a priority. The government of course continue to claim it’s all about the economic development of Northland despite the existing toll road – which saved more time than this motorway will – not making any difference.
Over 2015 we’re likely to see the NZTA working towards a PPP to get this project built however it’s not likely we’ll see any construction start.
Basin Reserve Flyover
Perhaps the biggest surprise of 2014 was the Board of Inquiry declining the NZTA’s application to build a flyover around the edge of the Basin Reserve. In the end the commissioners hearing the case concluded the impact on the local community from having a massive flyover was just too much after it was able to be shown that most of the benefits the NZTA claimed the road would provide were actually attributable to other projects. The decision was embarrassing for the NZTA and the government seeing as it was using the governments new fast track process which means the decision can only be appealed on points of law – which the NZTA are doing.
I’m not aware if a date has yet been set for the appeal but it is likely to be later next year.
Also in Wellington, the first transport PPP was signed in July for the construction and operation of Transmission Gully, another project with a horrific business case. Initial works should have started by now however won’t really ramp up till next year. The PPP will see the NZTA paying $125 million a year for 25 years once the project has been completed. Unlike many PPPs that failed overseas, for the consortium building the road there is little risk as all the demand risk sits with the NZTA, in other words we pay providing the road is open – and if it is damaged from a something like an earthquake we have to pay at least some of the costs of that too.
The other RoNS projects in the Waikato, Bay of Plenty and Christchurch have continued along. I’m not sure of the progress of all of them however the Tauranga Eastern Link is meant to be completed in 2015.
Auckland Motorway Projects
In 2013 the government announced a series of additional motorway projects for Auckland. The widening of the Northern Motorway between Upper Harbour and Greville Dr has just been completed and in November started consultation on ideas for further changes to that section including a motorway to motorway interchange between SH1 and SH18. Some of the ideas are absolutely massive in scale such as concept 3.
Of the other projects, works to grade separate Kirkbride Rd moved ahead and earlier this month the NZTA announced the contract had been signed with construction starting in January
We haven’t heard much about the other accelerated project which will see the southern motorway from Manukau to Papakura widened but I would expect we will do in 2015.
In addition to the accelerated projects the NZTA has now made a start on widening SH1 Northbound between Ellerslie-Panmure Highway and Greenlane – a project that’s been on the cards for a while and for which the Ellerslie Station platform was narrowed a few years ago to accommodate.
Accelerated Regional Roads
In addition to the RoNS, and to shore up their support from some rural communities, this year the government announced a spend up of over $200 million on a number of regional state highway projects that can’t get funding due to it being sucked up by the RoNS. The Funding for these projects is coming from the proceeds of asset sales the government has undertaken. Some of the projects appear to be of low value however not all are.
Auckland Transport started the year with the opening of the new Panmure station and in November they opened Te Horeta Rd which is the new road running alongside the rail line and Panmure station from Mt Wellington Highway to Morrin Rd.
In October both AT and the NZTA launched consultation on ideas for the East West Link after calling off a proposal for a motorway through Mangere right at the beginning of the year. They haven’t announced the results yet but I’m fairly certain either option C or D has been picked as the option they are proceeding with.
In November AT announced they have come up with a route for the Mill Rd corridor and will be working towards securing a designation for it. The most disappointing aspect for me about the project – other than some of the case for it has likely been destroyed by the fast tracking of the SH1 widening – is that even with a brand new corridor, AT are still designing a crap outcome with features like unprotected cycle lanes or shared paths and pedestrian/cycle unfriendly roundabouts.
We’re still driving less
One positive trend I have started to notice is our transport institutions are starting to take notice of is that we’re driving less. In the last few months in particular it’s started to be mentioned in publications such as the Briefing to the Incoming Minister and in research papers.
What have I missed?
The Architectural Centre’s Auction for the Anti- Basin Flyover Fund takes place tonight at 7:30pm St Joseph’s Church, 42 Ellice St, Mt Victoria, Wellington.
The auction is happening because NZTA are still trying to force this pointless and expensively hideous structure on little Wellington despite losing the case for it at the Board of Inquriry. More millions of our tax dollars on QCs…
Here is the catalogue of donated works.
There is a great range and something for all tastes, I have donated a print of my 1988 portrait of Ralph Hotere [selenium toned silver gelatine print], because I know which side he would be on:
Here’s a short description of my experience of meeting Ralph for the first time on the visit that I made the portrait:
In winter 1988 I had the opportunity to visit Ralph Hotere at Careys Bay near Port Chalmers for a few days and make this portrait of him. It was an extremely rich experience, he had a way of offering things in a simultaneously casual and formal way; looking back I can see now how lucky I was, although at the time I was principally concerned about whether I was ever going to get a chance to take the portrait.
I got to hang out at his house; major works by his own hand and others, including McCahon, stacked deep against the walls, and down at the pub, which back then was a seriously quotidian operation, focussed on serving the fishermen from the boats that tied up across the road. Ralph cleaned up all-comers on the pool table. The pub seemed to never close. Both buildings were freezing.
We drove around in one of his lovingly maintained old Jaguars, up to the cemetery on he hill where he said there was a headstone McCahon had painted I should see, and, where he suddenly turned to me and asked, almost accusingly; ‘got your camera?’ He clearly had decided this was where he wanted to be photographed, he then arranged himself apparently casually but in fact quite deliberately. He gave me the shot.
He also took me to a studio he kept in the stables of a Victorian estate up on Observation Point, overlooking the port. He spoke of the great sculptural qualities of the straddle cranes working below. He was at that time fighting to save the headland from the port company’s land eating expansion plans.
Thinking of an appropriate image to donate to this auction I immediately thought of Ralph: he often found himself at odds with the plans of powerful public institutions. And not because of a resistance to change or progress, but because so often those plans resulted in brutally clumsy outcomes developed through poor processes. In particular those that discount long lasting negative effects on people and place. So it is with this proposal.
From the Architectural Centre in Wellington:
The NZTA flyover and recent appeal
The NZTA have proposed building a flyover adjacent to New Zealand’s historic Basin Reserve. There are several complex aspects to the issue, but the basic chronology is:
- The Minister for the Environment established a Board of Inquiry in mid-2013 to decide if a flyover should be built by the New Zealand Transport Agency (NZTA) adjacent to the Basin Reserve cricket ground. The flyover is part of the government’s planned country-wide Roads of National Significance.
- The Board decided that the flyover should not be built. This was the result of a 72 day long hearing. The Final Decision is at: http://www.epa.govt.nz/Resource-management/Basin_Bridge/Final_Report_and_Decision/Pages/default.aspx(and there is a brief summary of issues attached). There were a number of non-profit community groups who opposed the flyover, and we worked together collaboratively to ensure alternative views were presented at the hearing.
- NZTA have appealed to the High Court asking for the decision to be overturned. The agency has also questioned a number of matters of law including issues to do with the evalution of urban design, heritage, and alternative options to the flyover.
Wellington is not a city of flyovers, and this proposal would place a flyover within a sensitive heritage site in our city, which includes an area of small nineteenth and early twentieth-century houses which would be dwarfed by the size of the 320m long concrete flyover, and become the dominant view for people living in Ellice St. The flyover would also block the view down the Kent/Cambridge Terrace boulevard, as well as obscuring views of the historic Basin Reserve cricket ground. We believe that a concrete structure of this large size, in this position, is not appropriate for this part of the city, which includes Government House, and the National War Memorial Park.
In addition to opposing the flyover, we believe that it is important that the alternative view to that of the NZTA is properly represented at the appeal hearing.
This means that we are off to the High Court.
It is no secret that the parties opposing the flyover have limited financial resources, and that the lack of an opposing voice in these proceedings will mean that not all of the relevant arguments will be put before the High Court. We consider it to be important for this to be a properly democratic process, which means that views from both sides of the argument need to be heard. It is for all of these reasons that the Architectural Centre will be a party to the appeal, and for these reasons we are asking for your support.
If you are supportive and would like to help there are a number of things that you can do.
- Spread the word. Circulate this email to anyone who you think would be keen to help.
- We’re holding a charity auction at 5.30-7.30pm Wed 3 December at Regional Wines and Spirits (15 Ellice St, by the Basin Reserve, Wellington)and are asking architects/artists/authors/designers/film-makers/poets etc. to donate drawings/paintings/designs/sculpture/poems/manuscripts/autographed books/film/anything – so if you can donate something that would be fabulous, and if you can encourage others to donate something that would be grand too. An auction poster is attached.
If you can donate something to be auctioned, please email us at firstname.lastname@example.org and/or post it to the Architectural Centre, P.O. Box 24-178, Manners St, Wellington, or deliver it to Cranko Architects, 81 Harbour View Rd (M-F 8am-6pm), and include your name, email etc. Additional information is at: http://architecture.org.nz/2014/11/01/architects-draw-charity-auction/
- Join the Architectural Centre. Information is at: http://architecture.org.nz/memberships/. More information about us is at: http://architecture.org.nz/
- Donate any amount you can. Our bank account details for internet banking are included on the membership form at: http://architecture.org.nz/memberships/
- Come to the charity auction… it would be lovely to see you there.
We really appreciate that there are many, many worthy causes that are likely to be taking up your time, energy and money, so we completely understand if you are too stretched to support this one with your time and/or money too. But if this is the case, your moral support and circulating this email to others, will be hugely appreciated by us.
nga mihi nui
Christine McCarthy, Victoria Willocks and Duncan Harding
on behalf of the Architectural Centre
The Architectural Centre is the most venerable advocacy group for better urban form in New Zealand. Formed in Wellington in 1946 by idealistic young architects and planners [including my parents] with aims of improving our built environment. The Manifesto includes clauses such as “Architecture must facilitate better living” and “Good architecture is elegant environmentalism.” A very good history of the Centre, Vertical Living, has just been published by AUP. Here is the full manifesto: