Government Says No To Napier – Gisborne Rail

Minister of Transport Gerry Brownlee, along with Economic Development Minister Steven Joyce, issued a press release on Wednesday stating there is little evidence to support the reinstatement of the Gisborne – Napier railway line:

Transport Minister Gerry Brownlee and Economic Development Minister Steven Joyce today released a study of the East Coast region’s economic potential over the next 30 years.

The East Coast Regional Economic Potential Study assesses the region’s economic performance and barriers to development, and models five economic growth scenarios along with their implications for transport infrastructure and the skills needed.

Mr Brownlee says the study shows the economic importance of maintaining and boosting the road network in the East Coast, particularly in Gisborne.

“There will be an increase in logging freight over the next decade and improved roading will be vital to support that and other industries,” Mr Brownlee says.

“The study illustrates the need to develop further capacity for heavy vehicles on State Highway 35 north of Gisborne and to maintain the quality of State Highway 2 between Gisborne and Napier, and northwest of Gisborne to the Bay of Plenty.

“I will be asking the New Zealand Transport Agency to review its plans for these highways in light of this study.”

The report also concludes there is little evidence to support the case for reinstatement of the damaged rail line from Gisborne to Napier.

“When operational, rail only accounted for 2 to 3 per cent of freight from the region and the report finds no clear evidence of a significant economic impact following its closure,” Mr Brownlee says.

To provide context, a map of the area shows the distances involved in the region:

Hawke's Bay and Gisborne

Hawke’s Bay and Gisborne

 

It is a distance of 214 km from Napier to Gisborne, and it takes about 2 hrs 40 minutes to drive according to Google maps.  Tolaga Bay to Gisborne is 55 km.

The study referred to in the press release comes in two parts.  The first is a desk-based review of available research and analysis of economic data, which runs to 197 pages. The second is a relatively lightweight 141 page document called “Economic forecasting and transport and skills implications“.  The Transport and freight section of the second document on page 33 contains an analysis of heavy commercial vehicle (HCV) use, and also talks about proposed plans to use Tolaga Bay as an inland port for Gisborne’s Eastland Port.  Bear in mind that traffic counts on the state highways in the area are low, with around 3,000 veh/day or less away from the main urban areas of Gisborne and Wairoa.

report-hcv2

Storage space at both Napier and Gisborne is an issue for logs, but it isn’t clear from the report why Tolaga Bay has been chosen as the inland port for Eastland Port, who made the decision, or why the Government has effectively chosen to subsidise Eastland port by upgrading the road to HPMV (“big truck”) standards. The last sentence looks like consultant-speak for “upgrading SH2 between Gisborne and Napier to support heavy trucks will be bloody expensive and will have ongoing high maintenance costs”.

The report states that logs currently make up 97% of export traffic through Eastland Port.   There are very few imports.

The Port of Napier exports a slightly less volume of logs and timber than Eastland Port – 1.4m tonnes vs 1.9m tonnes annually. However Port of Napier imports a significant amount of fertiliser, lime and cement.

The report sets out rail freight flows between Gisborne and Napier, before the line was mothballed in 2012:

report-rail-freight

Note that 2011 rail freight volumes were less than half of the 2005.

The report goes on to make assumptions about future economic growth over the next 20 years, including oil and gas production encouraging between $11bn and $85bn worth of investment.  The report does not analyse how likely either of these scenarios are.

Page 75 of the report looks at the role of the railway between Napier and Gisborne:

report-rail-role

The report’s conclusion on rail is:

We also emphasise that, even if rail services are reinstated, the majority of freight traffic and surface passenger transport will continue to travel by road. The possible resumption of rail services does not detract from the need to improve the road network to ensure the resilience and reliability necessary for providing attractive linkages in the region and minimising the effects of distance from the neighbouring cities and the rest of the country.

Not everyone shares KiwiRail’s pessimism about the viability of the line, however.  A  report by BERL in December 2012 called KiwiRail’s analysis “very conservative”, and there are fundamental flaws with the way KiwiRail have determined profitable freight volumes. That report states that the cash flow neutral tonnage is only 226,000 tonnes per year.  The same report also states:

The spending on the Napier to Gisborne road in the last ten years has totalled $102 million. In the last four years it averaged $14.8 million per year. If the number of trucks, and heavy trucks at that, increased by 33% to 38% because the rail line is not available for wood freight, the annual spend on the road can be expected to increase at least proportionately, namely by $4.9 million to $5.6 million per year. This indicates that it would likely be in the national interest to make the capital expenditure required on the rail rather than having to increase spending on the road, and suffer the negative externalities on the road.

In their Draft Annual Plan, the Hawke’s Bay Regional Council is proposing to invest $4.5m in the Napier Gisborne Rail Establishment Group, which estimates that $10.7 million will be needed to finance capital and operating budgets, including $5.3 million to buy rolling stock, $2.4 million for working capital and a $3 million disaster contingency reserve.

A 51 per cent shareholding from the regional council is proposed, with a contribution of about $5.46 million through to the 2018-2019 year, with investors from Hawke’s Bay and the Gisborne region holding the remaining 49 per cent interest in a holding company, which would be formed especially for the purpose.

Submissions on the HBRC Annual Plan close on Monday 12th May.  You can find out more and make your own submission here.

Steven Joyce on the CRL in Parliament

Julie Anne Genter questioned Steven Joyce in Parliament today about the City Rail Link. Perhaps the most laughable comment is when Joyce claims they are speeding up the project, not slowing it down. If they were speeding it up then at the very least they would be looking to have it started at the same time the council is wanting for it to happen.

Transport’s not a left/right political issue

As I discussed yesterday the debate on big urban issues of housing and transport far too frequently descends into left/right debates and today I’m looking at transport.

One of the reasons this has come up is that we’ve had some interesting conversations on Twitter in the last few days with a couple of Nationals MPs, which apart from highlighting a scary lack of understanding about transport, inevitably touched on the issue about whether the transport policy that we generally advocate on this blog fits into the traditional “left-right” political spectrum. Here’s what the fairly new National MP Paul Foster-Bell said on Twitter:

We have a fairly diverse range of bloggers on this site: a couple of economists, a transport planner, an urban designer, an architectural photographer, a planning student etc and of course myself who most recently working in banking and from our discussions I think we have some reasonably broad political viewpoints.

Furthermore, many of the key changes to transport and planning policy that we have advocated for strongest over the past few years hardly align with any traditional definition of a “left worldview”. Let’s take a look a few of our most common arguments:

  1. Cut back or cancel some of the Roads of National Significance that do not provide value for money. This seems to me like basic fiscal conservatism – as some of the RoNS projects are simply a huge amount of money being spent on a problem that really doesn’t warrant such high investment. Puhoi-Wellsford could be replaced by Operation Lifesaver, Transmission Gully is just overkill for a city that’s hardly growing in population, the Kapiti Expressway has a cost-benefit ratio of 0.2, the Hamilton bypass will carry fewer vehicles in 20 years time than the Kopu bridge did when it was a single lane… and so on. This seems like cutting wasteful spending, something that those on the right of the political spectrum say they want to do?
  2. Built the Congestion Free Network instead of the Integrated Transport Programme. Ultimately the CFN proposal is at least $10 billion cheaper than the current transport programme for Auckland. It probably has a much higher chance of achieving the many targets that Auckland has set for its future transport outcomes than the ITP is able to meet (although that’s not hard as the ITP failed to achieve just about any of its targets). Similarly to above, this is achieved through chopping out an enormous amount of wasteful spending on unnecessary projects (both road and rail) – yet again, something that those on the right of the political spectrum say they support?
  3. Built complete Streets. Democracy equality and choice are meant to be good things aren’t they? Most of our roads focus solely on the task of moving as many vehicles as possible and give scant regard for anyone not in a car. Building complete streets that treat each user equally and allow people to have a real choice in how they get around is the ultimate form of transport democracy.
  4. Improve walkability. We’ve seen both locally and internationally that when there is a focus on improving the walkability and the pedestrian environment (that includes wheeled pedestrians) a couple of significant things happen. One is that people shop more boosting local retail, perhaps the best example of this is the upgrade of Fort St to a shared space which has seen the hospitality retailers revenue increase by a staggering 400%. The second thing is that people walking (and cycling) more is good for them, improving health and therefore reducing long term costs to the health system. This is further enhanced as often these improvements also see a reduction in traffic crashes. So once again we see a case where we can lower costs while also increasing revenue and therefore tax at the same time.
  5. Get rid of Minimum Parking RequirementsThis key proposal is to get rid of a current regulation that causes more harm than good, that adds significant cost onto developers (thereby discouraging development and growth) and often just adds regulatory churn cost for no gain (as it seems most applications for parking waivers appear to be granted). I would have thought this aligns quite well with a “right of centre” political ideology where reducing regulation (especially regulation that harms economic activity and growth) is a very very good thing.
  6. Relax Planning Rules to give people more Housing Choice. This was covered yesterday but worth repeating again. Most planning rules limit development potential in existing urban areas: whether that’s through height limits, yard setbacks, density controls, parking requirements, minimum unit sizes or whatever. Through the Unitary Plan process we have advocated for (and will continue to do so) the relaxation of planning controls – particularly in areas where it makes good sense to allow high density developments to make best use of existing infrastructure. Similarly to parking controls, this is a relaxation of current regulation that significantly limits development potential and the prospects of economic growth through making better use of inner parts of the city. The relaxation/elimination of economically damaging regulation should be music to a right-wingers ears you’d think.

There are probably many more examples than above, but they give a good overview of why transport policy (and land-use policy) really doesn’t fit well into a traditional “left-right” ideological spectrum. We could easily point out how bizarre it is that our current supposedly centre-right government has significantly increased petrol taxes to spend on a series of very dubious mega-projects in the form of the RoNS. That seems rather more “tax and spend” than fiscal conservatism.

Furthermore, if you look internationally there are many examples of centre-right political parties taking public transport seriously. In Britain, the current Conservative government is making a big contribution to the £15.9 billion Crossrail project in London and is also likely to spend even more money on the High Speed 2 rail project. That government seems to understand the economic importance of having good rail infrastructure. For example, Crossrail massively increases the residential catchment of the Canary Wharf employment area – somewhat similar to how the CRL vastly increases the residential catchment of the city centre. London Mayor Boris Johnson is a big champion of not only Crossrail but also getting more people to ride a bike and is planning to invest huge amounts of money in cycle infrastructure. In Australia, the centre-right New South Wales government is championing and making a massive funding contribution to the North West Rail Link project. Even in Auckland we have business groups who politically are considered “right of centre” supporting projects like the City Rail Link and improved cycling infrastructure.

It’s interesting to try to understand this political divide through other lenses than a traditional “left-right” spectrum. Pro-urban and suburban/anti-urban is perhaps a better lens in my opinion – particularly because it seems to explain better why some right-wing parties (like the Republicans in the USA, the current Liberal Government in Australia and the National government here in NZ) appear to be sceptical at best about public transport, while others (e.g. NSW government and UK government) seem to really understand the importance of public transport.

Perhaps this “pro-urban” and “suburban/anti-urban” divide even exists within the current National Party. It was interesting that John Key (an Aucklander who has lived in big overseas cities for much of his life) was the person who changed the government’s position on City Rail Link while Steven Joyce (grew up in New Plymouth and now lives on a lifestyle block in Auckland) and Gerry Brownlee (from Christchurch) were apparently the biggest opponents of that change. Or how we get current Associate Transport Minister Michael Woodhouse saying this on auto-dependency:

From Dunedin, in case you were wondering.

Steven Joyce claims it’s the trains fault

Steven Joyce has made some pretty crazy statements over the years however his answer in parliament yesterday surely has to rank as one of craziest. He was being questioned by Labour MP Jacinda Ardern in relation to how the film industry is performing and the odd part starts at about two minutes in.

The key part is also in the transcript below:

Jacinda Ardern : Why are venues like Studio Auckland, which was 100 percent full until a few years ago, now the quietest it has ever been, and why is Studio West, which was fully tenanted for much of the past 12 years, now getting one booking query a month with the owner, stating that this is the worst he has seen the local industry in 20 years?

Hon STEVEN JOYCE : As I say, I acknowledge that some companies are finding it a little bit difficult. I understand, though, in relation to one of the venues the member raises, that one of the particular issues is that it is associated with a railway line nearby, and, of course, Auckland Transport has increased the frequency of trains hugely so it is not as popular as it once was. But I have to say it is a little ironic to be questioned by that party on the health of the screen industry when it was that party that wanted—

Now just so everyone is clear, the studio he is talking to is out west near Glen Eden and is located near to the rail line. You can see it on the map below.

Film Studio West location 1

I’m also not claiming that the train noise isn’t having an impact as I’m sure our noisy diesels can definitely cause problems. What I did find odd is the claim that the issue has come out due to increased frequencies. The reason for that out west we still have only 15 minute peak services – the same as we have had for years – and off peak we only get half hourly services.

So in the graph below I have added up from old timetables how many trains go past the studio within each half hour period of the day. What it shows is that the number of trains going past the studio on a normal weekday is not that different from what it was over 5 years ago with the only difference being that the peaks have been extended slightly.

Trains past Studio West

If we were getting 15 minute frequencies through the middle of the day (which would be great) then yes that would be a dramatic change but until that time it seems like Steven Joyce is just using his dislike of trains as an excuse for what are likely to be other issues. I guess the good news is that in a few years things will be much quieter with the new electric trains running around. I wonder if the benefits to the film industry was listed in the business case for electrification?

The Decline of Car Culture in the West

We’ve covered this before, but it’s worth repeating. The OECD nations are all driving less, while developing nations are all driving more. Basically, and I bet almost 99% of westerners will be shocked at this thought, but people in China, India, and, yes, Iran, are increasingly more able to do what we used to do without thinking about it: They are outbidding us for oil. More on that later, but first here is a nice summary of the US situation from the New York Times:

Here are some quick points from the article:

1. decline preceded financial crises by 2 to 3 years [but that crisis intensified it]
2. US Vehicle Miles Travelled is now 9% below peak and equivalent to 1995 percent level per capita.
3. it definitely reflects a generational shift:

‘From 2007 to 2011, the age group most likely to buy a car shifted from the 35 to 44 group to the 55 to 64 group, he found.’


4. and seems to be related to new technology:

‘The percentage of young drivers is inversely related to the availability of the Internet, Mr. Sivak’s research has found.’

Perhaps Joyce’s investment in Ultra Fast Broadband will be the complete undoing of the longed for great economic outcomes from his other and much much more expensive idea; The RoNs programme?!

A couple of charts from Advisor Perspectives:

VMD_June 2013

VMD +gas price_June 2013

 

Anyone still think that pushing up the petrol price won’t or can’t influence driving behaviour? More contradiction in government policy; the recent and continuing fuel tax rise is in order to fund their lavish road building programme but those extra nine cents are adding to the incentive to park the car and find another way around. This government is over investing in the wrong mode for the times.

These charts also make it clear that this is no blip; this is a discontinuity. A once in a lifetime shift in direction by our culture. We really, really, need to be designing policy with this fact in the front of our minds. It seems there is a problem here, because if there is one group that haven’t got the memo it’s the older wealthier male, that’s right, the group that makes all these kinds of decisions for us:

The Driving Boom — a six decade-long period of steady increases in per-capita driving in the United States — is over. 

Americans drive fewer total miles today than we did eight years ago, and fewer per person than we did at the end of Bill Clinton’s first term. The unique combination of conditions that fueled the Driving Boom—from cheap gas prices to the rapid expansion of the workforce during the Baby Boom generation — no longer exists. Meanwhile, a new generation — the Millennials — is demanding a new American Dream less dependent on driving.

From the Frontier Group, PDF here  [my emphasis]. And here’s how they illustrate this change to the American Dream:

Frontier Group cover image

Nevermind, cos all that fracking business is going to make petrol as cheap as chips again isn’t it? Er, No. Here is a link to a long [50mins] interview with a Texan Oil Geologist, Jeffery Brown, who explains the technicalities and economics of this in a straightforward language just why, despite all this talk of abundant supply, the price of oil stubbornly stays high and will almost certainly keep going up:

Jeff Brown and JH Kunstler

In short, we are scrapping the bottom of the barrel; not in total, there’s still a lot of oil in the ground, but for the rate at which we are consuming it the corresponding production flow is too low because all the easy to get fields are diminishing. The supply demand balance is now determinedly hitting into geological and practical limits. We have to use less.

But we are aren’t we? Well if that ‘we’ is the OECD then that’s true, the US and Europe certainly are. In fact these two areas have shed about 5million barrels a day in consumption at just the same time that China and India have increased their imports by this amount and then some:

oil-consumption-by-part-of-the-world

The developing world is outbidding the ‘west’ for this most crucial of commodities. Listen to Jeff Brown above for how this can be. Basically the developing countries can put that same oil to more productive use than we can. Because they are only beginning to base their economies on liquid fuels their uses of this valuable resource are more useful than ours. Jeff Brown’s example above is that the fuel an Indian farmer uses to run a pump to irrigate his fields is a more productive use of that fuel than us westeners burn driving to the mall to pick up a latte in an SUV.

While this is true for now these countries will also hit a limit to what they can afford as well, especially as they are beginning to use it less efficiently too [many there are pursuing last century's lifestyle too] and that includes the producing countries, especially when, because of either rising consumption or falling production or both, they flip from being net exporters to becoming net importers. As have the UK, Indonesia, Vietnam, Egypt, and a few others recently.

Egypt seems topical so here’s the oil history, note it’s much more the rising consumption than the decline in production that is troubling them. But still that’s half a million barrels not on the global market for other net importing countries like New Zealand to buy and burn. It basically is not good for social harmony to run low on energy:

Egypt energy data browser

 

From here: The Energy Data Browser

Here’s a brilliant comparison. Italy has been hard hit by recession, in 2011 apparently more bicycles were bought there than cars, but there’s a different story in Iran, despite the US sanctions:

per-capita-energy-consumption-italy-vs-iran

 

Both of these charts are from Gail the Actuary on The Oil Drum, in a fascinating article on the politics of oil, here. And basically illustrate how the old postwar definitions of the world are being inverted.

It is true that the US/Canada are in different shape compared to Europe because of the Shale and Tar Sands resource, as Gail’s charts below show. But while that uptick in US production is significant the really good news is that drop in consumption. Europe’s chart is showing the rapid decline of the North Sea fields swallowing any new production. And remember Shale Oil faces swift almost immediate declines unlike conventional fields and is extremely expensive to extract. The US production honeymoon is only half the story and will not be permanent.

 

united-states-liquids

 

europe-liquids

What matters now more than ever is what sources and forms of energy we have available and especially what uses we put it to. If only the US were putting more of that Shale resource into transitioning away from oil-dependency, and from other fossil fuel sources for electricity, then it would be of even greater value. And here in New Zealand if only we understood our wealth in electrons and our relative poverty in hydrocarbons must shape the way we live more if we are to prosper through the coming century. Unfortunately those in charge are determined to cling to old models despite of the facts.

And the key to people understanding that this shift is necessary and is not to be feared is that prosperity and happiness are not dependant on us all burning ever more amounts of oil and other fossil fuels, in fact quite the reverse is clearly the case. I do believe as a society we are going to power down, but that will not necessarily mean a step back in time to a less comfortable existence, but if we do it well it will mean a more sophisticated society just one based on less brute force.

There is a Saudi proverb I really like [for they too, despite their current riches, face the same problem, perhaps even more so]:

“My Grandfather rode a camel, my father drove a car, I fly a plane; my son will ride a camel”

It seems to me that the son’s camel will be different from the grandfather’s one:

solarcamel_transporting vaccines across the desert

[Solar Camel: delivering vaccines in the desert]

 

The government’s annoying funding myth

Over the last few weeks there has been a renewed media focus on Auckland’s transport issues. This has been spurred on by  two main events the first was the Green Party launching their Reconnect Auckland campaign and the second was the announcement of alternative funding options to help pay for future transport projects.  Along with that it has seen a resurgence of an annoying myth that members of the government like to perpetrate. In an effort to try and make their transport policy sound more balanced than it actually is they love to state that the government has invested $1.6 billion into the rail network. Government MPs talk about it on social networks or at meetings, Gerry Brownlee mentioned it in his recent interview on Campbell live and Steven Joyce, repeated it this morning on The Nation (on TV3).

Now $1.6 billion certainly sounds like a lot of money and of course it is. It is also true that it the amount of money that central government has, or will be spend on rail up until the electrification project has been completed. The issue I have is that a decent proportion of the money was approved or spent before the current government even came into office. So let’s look at the figure a bit more closely, the $1.6 billion can be boiled down into three key areas:

  • $600 million for Project DART
  • $500 million for the electrification infrastructure
  • $500 million for the new electric trains

As the government are using the total figure to suggest that they are investing in a more balanced transport system, the question becomes whether the money was invested by the current government or not, so lets have a look.

Project Dart

Amongst other improvements it included double tracking the western line, various station upgrades, the Newmarket Station and changes to the junction, the New Lynn trench and station, reinstating the Onehunga Line, building the Manukau branch line. Kiwirails page on the project also states:

The 2006 Budget included funding of up to $600 million for rail infrastructure improvements to speed development of the Auckland network.

So yes this was paid for by central government but as you can see, funding started before the current government came to power which was late in 2008. Of course not all funding is spent in one year and as Brownlee said the other day, they didn’t cancel it. But even if they wanted to, how much could they have cancelled anyway?  Well probably not much.

Interestingly the funding for this project was kept out of the normal transport budget and instead is listed under the finance budget. The government’s budget documents for the  2006/2007 financial year shows that the money was to be spent over a four year period and it was only the fourth year that National had any control over the budget. By then pretty much all of the various aspects to the project were either already completed or well under way meaning it was probably impossible to cancel anyway.

DART Funding

To me there is no way that the current government can claim the $600 million spent on Project DART as their spending or that they had anything to with it.

Electrification

This includes new signalling, modifying existing infrastructure like bridges and of course the wires themselves. Funding for electrification was initially included in the 2007 budget and was separate to the funding allocated for Project DART.

Electrification Funding

Now from memory the government intended to pay for the Auckland work via a regional fuel tax which would work in conjunction with one the region would also impose to fund other projects, including new trains. When National came to power they stopped the regional fuel tax and put a hold on the electrification project. They eventually agreed to let it go ahead and paid for it out of the nationwide fuel tax increase. It is however quite clear that funding for the project was initiated in 2007, over a year before National came to power.

Electric Trains

There is obviously not much point in paying $500 million for electrification without trains to run under the wires. As mentioned, the original electrification proposal was to see Auckland pay for the trains out of a regional fuel tax imposed by the regional council. The national governments cancelling of that fuel tax took that funding option off the table. When they finally agreed to let the project go ahead it was announced that the trains would be paid for by way of a loan that Auckland would have to pay back (without the extra source of funding). Worse still was that even after paying back the loan the proposal meant that Auckland still wouldn’t own the trains, Kiwirail would, however this has now changed and Auckland will own the trains directly.

Since then there has been some positive news, it was announced that Auckland would end up getting more electric trains that first proposed, that was partly possible due to better than originally expected exchange rates along with the government kicking in an extra $90 million. The NZTA are also going to contribute to the loan payments in the same way they provide money for PT operating costs however oddly it turns out that the government appears to be clipping the ticket on the loan by charging a margin on top of their cost of funding.

EMU painted 3

The first EMU will be here in a few months time

So when the government states that they have invested $1.6 billion in to rail in Auckland, it is frankly untrue. In fact the only new funding they seem to have provided is the extra $90 million they provided to buy extra EMUs and the 50% share of funding for loan repayments. Other than that all of the funding is the same as what was agreed to before they came to office.

Govt sponsored report backs the Auckland Plan

Interesting news out this morning of a report, paid for by the government and Auckland into the economic competitiveness of the NZ economy. While the whole report hasn’t been released yet, information has emerged about a chapter in it relating to Auckland. The report has been put together by Hong Kong-based Professor Michael Enright and another expert, Michael Porter. It appears that the report has been fairly critical of the current state of Auckland however positively it does suggest that we are going in the right direction, just not fast enough. The report follows on from a similar one from him done in the 90’s on the same issue.

Auckland, Professor Enright said, lacked entertainment and cultural facilities, still depended on cars to get around and needed to move the container port off the most important piece of land in New Zealand for an iconic building.

“We should ask, ‘What is the value of the Sydney Opera House to Sydney, or the Eiffel Tower to Paris?’

“While foreign impressions of Auckland are positive, very few foreigners can name a single thing that is distinctive about the city,” the report said.

Some of his strongest criticism was directed at the CBD, calling the $45 million upgrade of the Aotea Centre a “concrete jungle” and bemoaning the lack of a world-class entertainment or nightlife district, like a Times Square.

“Queen St, which should be the Champs Elysees, the Fifth Ave of Auckland, is deteriorating … there is limited outdoor cafe culture near the city centre.”

Professor Enright said Auckland’s first priority should be a mass transit system, including the city rail loop, followed by revitalising the CBD – calling the $45 million upgraded Aotea Square a “concrete jungle” – and an end to urban sprawl in favour of an “overall denser Auckland”.

That would lead to a “complete change” in what Aucklanders consider the ideal lifestyle, including giving up the house in the suburbs and the car.

Many of these ideas are contained in the Auckland Plan – a 30-year blueprint for the city – but Professor Enright said the plan was not bold enough and Auckland might arrive in 2040 prepared for 2022.

Personally I’m not convinced for the need for an iconic building on the waterfront, but in general I agree with many of the sentiments. As with my post this morning, I think that many of the projects in the Auckland plan are good but do need some re prioritisation. You can also hear a report on this from Radio NZ below.

Or listen here.

But naturally a report like this, which generally supports the council in the key areas of housing and transport doesn’t sit well with the Government. Steven Joyce has already criticised the report and blamed officials for organising it.

Or listen here.

Intensification and the Rail Network

Included with the City Centre Future Access Study documentation released late last year were the answers to a number of questions that the previous Minister of Transport, Steven Joyce, had asked in mid 2011. As well as requesting the preparation of what turned into the CCFAS, Joyce requested the following:

  1. “Finalisation of the spatial plan and master plan including establishing achievable growth projections for the CBD
  2. Demonstration of a commitment to resolving current CBD issues, for example by improving bus operations and addressing capacity issues
  3. Evidence of rail patronage increases, particularly in the morning peak, residential intensification and CBD regeneration as a result of current investment
  4. Beginning implementation of large scale residential developments along the rail corridors
  5. Implementation of additional park and ride sites, and changes to bus feeder services” 

There’s a lot of really interesting information in Auckland Council and Auckland Transport’s response to these questions, but for this post I’m going to look at an element of the third question: evidence of residential intensification as a result of current investment.

To help get an understanding of the level of intensification past/current investment in the rail network might have stimulated, the report compares growth since 2001 in areas with good proximity to the rail network with growth in other areas that were already urbanised in 2001 These are the areas looked at: rail-caus

A couple of years back Steven Joyce suggested that most intensification in recent years had actually occurred away from the rail corridors, by saying this:

Yep, we should allow the city to increase in density (watch councillors run a mile when it comes time for the district plan changes), and we should support cost-effective transport options that support that. But we also have to understand that people like to live where they want to live, and provide cost-effective transport options (roads even!) for those people too. Amusingly, Auckland has increased in density in recent times. But largely not where the central planners said it would, (along the transport corridors) and instead in the beach-side suburbs. Fancy that.

I suspect that Joyce asked Auckland Council the question about where intensification occurred because he thought he’d be able to say “gotcha!” then the results showed that investment in rail had not had any impact on development patterns.

Comparing the level of growth in Census Area Units near the rail corridors with the level of growth elsewhere in Auckland would test Joyce’s assumption and also help answer his question – of whether the investment in rail upgrades had coincided with higher rates of growth in nearby areas (recognising of course that correlation does not necessarily mean causation.

The results are quite interesting: intensification-rail-corridor

These results are reinforced by analysis of consents by type (looking just at the Auckland City Council area this time): consent-types

This shows that almost all “higher intensity” housing typologies like apartments and terraced houses constructed within the old Auckland City Council area over the past five years have been in the rail CAUs.

The report concludes that it would seem Steven Joyce was wrong and intensification has definitely been occurring at a higher rate in areas close to the rail system compared to other parts of Auckland:

Both population trends and building consent data indicate that intensification has occurred at a faster rate within the rail CAUs than elsewhere in Auckland since 2001. Development within the rail CAUs has occurred in a variety of different ways, reflecting different development markets in different parts of Auckland. Some important trends include:

  • Significant construction of apartments in the city centre.
  • A number of larger-scale intensive developments around inner parts of the rail network (e.g. Newmarket, Mt Eden, Kingsland and New Lynn stations).
  • New development areas around stations in the outer parts of the network (e.g. Sturges Road and Takanini stations).
  • General infill and small-scale intensification across the network.
  • Increasing household sizes in the outer Southern Line part of the network.

Combining analysis of population trends and building consent information with economic analysis suggests that improved rail services boost property values and therefore makes intensification more economically viable. It would appear that this process has happened in Auckland over the past decade, although in different ways in different areas – reflecting varying market characteristics across Auckland.

I think the way in which the report notes how intensification has occurred differently in different areas is quite important. I suspect the assumptions made by Steven Joyce (and others) around ‘apartments next to railway lines’ is an over-simplification of how intensification can occur. Apartments are clearly only market attractive in some locations and it’s unrealistic to expect them to be built right throughout the rail corridors any time particularly soon. However, other forms of growth such as general infill, new growth around some stations, small-scale intensification as well as apartments and terraces have happened and overall it seems clear that there has at least been a correlation between the rail corridors and a higher level of development over the past decade.

Not for the first time, it seems that Steven Joyce was wrong.

What really happened with Snapper/HOP – Part 2

Following on from my post yesterday on the Snapper/HOP mess, I felt that a lot of further questions remained unanswered. Phil Twyford attempted to get some answers out of the Minister of Transport in parliament:

While questions around why Auckland Transport decided to allow Snapper to become involved in the HOP scheme remain frustratingly unanswered (perhaps until I read a bit further into the mountain of information I have), a question that I want to look at in this post relates a bit more closely to the title of this post – why did things go wrong?

A useful starting point for looking at the answer to that question is the presentation to NZTA’s board I linked to yesterday. This covers the vexed issue of what’s called “treatment of third-party systems, kits or cards”. Before we get into the details it’s useful to remind everyone that an integrated smartcard ticketing system has three components:

  1. The back-office “system” which handles all the transactions and keeps track of everyone’s balance plus the trips they take.
  2. The ticket machines on the bus, including the card readers
  3. The cards themselves

There’s also a further layer sitting between the machines and the system but my understanding is that’s a relatively simple part of the system which just collects information from the vehicles/stations and then passes it onto the ‘proper’ system. It was clearly ARTA/AT’s preference for all elements of the system to be controlled by one party and this has been in the request for tender for the system. The presentation deals with this below:

As noted, there are different extents to which third party elements can be introduced, but each step leads to increased risk, complexity and therefore potentially cost. The first option is obviously to have everything provided by the one party – ironically what ARTA originally wanted and what we’re going to end up getting:

The most basic way of introducing 3rd party elements is the “device” or card reader. In early 2009, when the Regional Fuel Tax was cancelled and funding for the integrated ticketing system was put in jeopardy and then reduced, there was an acceptance that third-party devices may be required for buses – although Thales equipment would still be used on trains and ferries as part of the funded system. So the second option looks something like this: 

Essentially the bus operators being able to decide what devices to use left the door open for NZ Bus to “choose” its sister company Snapper. But Snapper wasn’t interested in just providing the card reading devices, they wanted (at the very least) to also be able to use their card – so we shift along to option 3, with increased risk, complexity and therefore potentially cost:

I never liked the idea of this system because it would effectively undermine the whole concept of an integrated ticketing system where operators become irrelevant in terms of paying your fare. Instead you might end up with the an equivalent debacle to our mobile phone industry where you can pay different rates depending on the network of the person you’re calling or texting. I can imagine NZ Bus and Snapper also doing deals so that there were cheaper fares available on the exclusive Snapper Card rather than the Thales card, further undermining integrated ticketing.

Finally, the fourth option creates something like our current EFTPOS system with a whole pile of different ‘clearing houses’ and cards and devices. While this option is probably great for retail purchases and other uses for contactless “e-money”, the complexity and messiness would not be well suited to public transport:

The different options, as well as more detail on the system (such as which bits of it are centrally controlled and which bits are controlled by Auckland) is outlined in the NZTA board paper that sought funding approval for integrated ticketing (nearly $100 million of funding including operating costs).

It seems like NZTA preferred option 1 due to its lower cost, but was mindful that some operators (presumably this means NZ Bus and their close connections with Snapper) would not like this option. It’s a pity that some of this slide is blanked out – wonder what it says? Some reference of the Minister?

Interestingly, there’s then some discussion about a pre-emptive Snapper rollout – exactly what did end up happening. The presentation notes that while it’s not possible to show that the Thales system is better value for money than Snapper without “starting again”, it was possible to show that Thales was “better” and “internationally competitive” and that Snapper would not be free – rather around $75 million over 10 years (compared to around $135m for the Thales system).

To summarise what is quite a lot of detail it seems to me as though NZTA warned against making the system overly complex through Snapper’s involvement – because that would add risk and add cost. Yet because Snapper went ahead and launched and somehow talked ARTA/Auckland Transport into involving them, we ended up with the messy mixed system that NZTA had always feared. Of course then things started to unravel, rather like NZTA had predicted:

  • The Snapper/HOP (SNOP) Cards struggled to connect with the Thales “system”, meaning that they would need to be “swapped out” for normal AT HOP cards once the Thales system was up and running.
  •  Even using a Thales card and the Thales system, the Snapper readers weren’t up to scratch, leading Auckland Transport to eventually bite the bullet and go back to the original plan of having Thales supply all the equipment: cards, readers and the system itself.

Perhaps what all this really highlights is the mystery of why ARTA allowed Snapper to join the HOP scheme. This is where the issue of political interference from Steven Joyce sounds like it comes in – as referenced in yesterday’s post.  ARTA and NZTA had both wanted to keep the system as simple as possible because they were worried adding in third-party elements would add cost and delay. Ironically they were both absolutely proven right in the long run with Snapper – as a third-party – struggling with exactly the issues that had been foreseen.

It seems simply staggering for ARTA to go against the very thing they had been fighting for – a single system, or “Option 1″ as described above – unless they were under considerable pressure to do so. Furthermore, it seems like ARTA went against their previous position even though they had both NZTA and the Ministry of Transport (I’ll get into their documents in future posts) supporting “Option 1″ as the most cost-effective and low-risk approach. If ARTA’s change in position wasn’t due to political pressure from the Minister, I’d love to know what it actually was caused by.

What really happened with Snapper/HOP?

Back in August Auckland Transport kicked Snapper out of helping to deliver integrated ticketing in Auckland. Subject to any legal battles over whether compensation is due or not, this was the final line in a very sad and sorry tale about Snapper’s involvement in Auckland’s integrated ticketing system. A tale that goes back quite a few years.

The NZ Herald, and ourselves, have recently received a huge amount of information on the whole Snapper/HOP debacle – released under the Official Information Act. It may take a while to dig through the details of this all, but we shall give this task a go – because a huge amount of public money has gone into integrated ticketing plus a huge amount of time seems to have passed while we debate the whole issue. The Auditor General’s investigation into this whole shemozzle, which should provide us with some final answers around the whole sorry saga, is apparently on hold until Snapper’s legal battles with Auckland Transport have been resolved. So for now let’s just take a look through what we have – in particular looking at these two questions:

  • What were the reasons for Snapper originally not being chosen as the preferred tenderer for Auckland’s integrated ticketing solution?
  • What pressure, if any, did the government end up putting on Auckland Transport to allow Snapper to launch the Snapper/HOP (from now on referred to as SNOP) card early last year?

We’ll see what other interesting stuff we come across on the way.

A useful place to start is an NZTA Ministerial Briefing from September last year which provides some background information on integrated ticketing generally, but in particular the issue of branding and the inter-relationship between the SNOP card and other, future (at that point) HOP cards. Helpfully, the briefing summarises some of the technical details of the Thales system and how it differs from the Snapper system – so from the start we can begin to get an understanding of the potential difficulties in integrating the two:

From reading a bit more detail in other documents it seems that DESfire is what’s typically used for public transport based smart-cards. It does what is a reasonably simple job really really well and really really quickly. The Java JCOP is more commonly used for contactless cards purchasing small items. Like what Snapper does in terms of micro-retail payments.

Looking at another, more detailed, document – a presentation to the NZTA board – this distinction is highlighted further. The Thales system is designed around providing a really good solution for public transport and provides very fast read times by not complicating things too much.  The presentation, from 2009 and as part of the process of informing and educating the board about integrated ticketing before NZTA signed off on their pretty significant financial contribution towards the project, noted that the Thales system was of excellent quality and didn’t raise any concerns about ARTA’s choice of them as the preferred supplier:

The presentation has quite a lot of discussion around the extent to which third party equipment should be allowed in the system. There are a range of ways in which third-party equipment can form part of the integrated ticketing system – from different machines, different cards right through to separate systems and ‘clearing houses’. NZTA’s preference was to have as little third party equipment as possible, because this made the system a lot cheaper and a lot simpler.

So to answer our first question, it seems like Thales was probably chosen as the preferred supplier because their technology delivered better on the core goal of the integrated ticketing project: a smartcard for public transport purposes. Snapper’s different technology was more based around micro-retail. My experience with my SNOP card is certainly that it feels really really slow in using the card to have it register properly. I can put the card in front of the reader while still walking and find that it only registers when I’m just about to get beyond easy arm’s reach. With public transport efficiency so intertwined with reducing dwell times, slow readers are something you want to avoid.

The second question is perhaps the most politically sensitive, as touched upon in an NZ Herald article yesterday – the question of how much involvement central government might have had in persuading Auckland Transport to allow Snapper to become involved in the system even after they had lost the tender to Thales for being the preferred supplier. Here are the key points from yesterday’s article:

Labour transport spokesman Phil Twyford says correspondence between Wellington smart-card supplier Snapper and the Beehive shows the Government forced the former Auckland Regional Transport Authority to let the company join the Hop ticketing scheme after awarding the main contract to its rival, Thales.

Auckland Transport has since dumped Snapper for allegedly missing performance deadlines, a claim which the company denies.

Mr Twyford says Government denials of political interference are contradicted by a letter from Snapper chief executive Miki Szikszai to former Transport Minister Steven Joyce after a meeting in 2010.

Mr Szikszai wrote that he understood Mr Joyce’s “expectations are that … NZ Bus should be free … to implement Snapper equipment and join the Snapper scheme in Auckland.”

Here’s the letter that Mr Twyford is referring to. With the key extracts below: Perhaps reinforcing the likelihood of Steven Joyce wanting to get Snapper involved (perhaps hoping that the Thales solution would fail and Snapper would be able to take over the whole thing?) are a series of questions Joyce asked back in late 2008, when he had first become Minister of Transport and was obviously just coming to grips with the project for the first time. His questions were:

  • Why do we need a nationally transferable integrated ticketing system?
  • Why do we need to spend $100 million on an integrated ticket system for Auckland when Snapper has been provided for free and privately?
  • Can this project be stopped?

I think we obviously need to give Ministers a bit of leniency in their first couple of months – as without knowing the details these seem like reasonable questions to ask. But they certainly do give us the impression that Joyce was favourable towards Snapper and unfavourable towards the ARTA preferred Thales solution right at the start of his time as Minister. Fortunately the Ministry of Transport recommended strongly against stopping the project – and obviously that never happened.

I’m still working my way through the documents, which are in chronological order, and I imagine there might be quite a lot of more interesting stuff in recent times when it became clear that Snapper was failing to get things working with the Thales system – leading to them being cut from the project. But that will have to be the subject of another blog post.