Steven Joyce really is beginning to annoy me as Transport Minister. Not only has he trodden all over the people of Mt Albert and Waterview, in deciding to can the Waterview tunnel, but he lives in a bizarre dreamland where he thinks that funding for future transport projects should be dependent upon the current amount of people using a particular type of transport method, rather than the future trends of where the split in transport modes is going.
Now this should be a simple issue, but clearly there’s a complexity in people’s heads that enables Steven Joyce to hide behind his answer of “84% (or sometimes 86%, depending on how he feels) of Aucklanders use private cars to get to work, so that’s where most transport funding should be doing”. To clarify, I accept that most people use cars to get to work, and to get around Auckland – that’s not debated. And in fact, it’s not really surprising considering that probably around 84% (if not more) of the current transport network is pretty much dedicated to cars. The railway lines, the Northern Busway and the various bus lanes across Auckland could be considered as the only current parts of the transport system to not be dedicated to private vehicles. However, when it comes to transport funding what we’re talking about are projects for the future, not projects for the past.
I feel that a metaphor is necessary here for this to make sense. Let’s say that I run a company which sells two different products: red socks and blue socks, for example. 84% of what I sell are red socks and 16% of what I sell are blue socks. Therefore, 84% of my current machinery is dedicated to making red socks and 16% dedicated to making blue socks. Now, over the past few years my sales of red socks have been pretty constant, in fact they haven’t increased since 2004. Over that same time period my sales of blue socks have increased significantly – by around 20-30% even. Furthermore, I know that 5-10 years into the future my main ingredient for making red socks is going to increase dramatically in price, and my prices will need to go up significantly to reflect this. Therefore my likely future sales of red socks are going to stay constant or perhaps even decline. As people will still need to buy socks, blue socks will become comparatively cheaper and more popular.
Now, a few questions:
- Over the next 5-10 years is it more likely that my sales of blue socks will increase, or my sales of red socks?
- Given that my sales of red socks haven’t increased since 2004 and because I’m mindful of future price increases in a very important ingredient, should I build another machine that makes red socks?
- Given the recent increase in my sales of blue socks, should I add capacity to the production of them instead?
- Would it be wise, in a business sense, for me to focus the vast majority of the money I have to spend on capacity increases on red socks?
In case anyone got lost in the metaphor, private vehicles are red socks, public transport is blue socks. Steven Joyce is proposing to spend the vast majority of transport funds for new infrastructure on roads, even though the number of vehicles using the roads is not increasing. Meanwhile, our “growth sector” of blue socks/public transport is getting ignored and deprived of necessary funds.
Geez I thought this guy was a successful businessman. He sounds like numbskull to me.
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If a diet of almost exclusively porridge were fed to a population of monkeys for 50 years and then a claim was made that on the basis of this that the monkey population prefers porridge to other foods, one would think the person making such a claim might look rather stupid.
Indeed! I like G.Blog’s metaphor too:
http://greenvoices.wordpress.com/2009/03/28/eightyfour-percent/
1. Let’s be clear, the Waterview bored tunnel project was not economically efficient. It has been canned in favour of a cut and cover tunnel for the majority of the route. It is a better use of resources, but does raise issues of private property rights. Or do you think wasting scarce resources is a good thing?
2. You don’t know that fuel prices are going up dramatically. If you think that go off and prepare to make your fortune, but funnily enough most people who claim it don’t do so, suggesting that this “knowledge” is more wishful thinking.
3. Roads provide virtually all of the country’s land transport infrastructure, carrying most freight and people, including most public transport users. There is a considerable backlog of economically efficient projects to improve safety and route efficiency of those roads, and funnily enough those roads generate plenty of revenue to enable this to be done. It’s called user pays, something far too many transport planners regard as quaint.
4. Public transport should grow revenue itself, from fares. I find it curious that environmentalists think pouring money into a system that is grossly underutilised most of the time is a good idea. Around two-thirds to three-quarters of New Zealand’s public transport capacity sits idle between morning and evening peaks. The economic case for public transport subsidies lies only in the underpricing of peak road capacity at the moment, which justifies some subsidy to reflect what the differential between buses/trains and cars should be at peak times in congested cities. It is widely known as “second best” by economists, but public transport subsidies in many places go well beyond that for political reasons, creating waste and inefficiency.
If roads were priced efficiently (and car parking supply not subject to planning dictates or restraints), then public transport (and walking and cycling, both still largely ignored by planners and too many environmentalists) would find roles which reflect cost, demand and supply. You would also see much less congestion, better environmental outcomes, and land use decisions reflecting transport costs. Expenditure on new road capacity would only happen if the users would pay for it, and public transport fares would generate revenue to spend on services.
Sadly Joshua, I fear you’ve adopted the neo-Stalinist Green Party approach which wants to plan and dictate how people move around, worshipping public transport (which can result in moving people from walking and cycling, and a lot of empty vehicles), and treating cars and trucks as the transport of the devil. It shouldn’t matter to anyone when, where and how people move about, as long as the pay for it, and the governance structures around it are efficient, transparent and open.
Thanks for your input Liberty, and you do raise some interesting issues:
I am not a fan of the bored tunnel option or the cut & cover compromise. I think that both options are a waste of resources.
I do know that fuel prices will go up dramatically. What I don’t know is when they will do so. I also don’t know how long we will end up in oil spike – recession – oil spike – recession cycles. Once the world’s economy starts to recover you just watch what happens to oil prices. And then once oil prices spike again watch what happens to the global economy.
The backlog argument is perhaps the only justifiable one for roading expenditure. However, let’s look at the backlog of public transport projects for Auckland. Why don’t we start with the 1920s proposed Morningside Deviation, which has been reincarnated as the CBD rail loop? Surely that must be the longest overdue transport project in Auckland. The issue about funding that you raise is an interesting one though and I agree that public transport needs to be more self-funding (just as roads should be, let’s get rid of the hidden subisidies and requiring local rates to pay half of local roads). The best way to fund public transport would be from a capital gains tax around an area in which improving public transport would increase the land value of that area. This is how public transport was traditionally funded (the tram suburbs) and how it should be funded in the future – as property near a newly built train station or bus station does appreciate in value due to that new train line or busway.
Do you have any idea how many hidden subsidies road uers enjoy though? Parking is one, the local rates that pay for local roads is another, the fact that there is no cost on the CO2 emissions or the other air pollutants that come out of cars is a third. Take away ALL those hidden subsidies for the car and then let’s talk.
See above. Let’s take away those hidden subsidies for the car and then talk about things. The latest Regional Land Transport Strategy, which is currently being formulated by the ARC, does have options which relate to “push” factors such as road pricing and cutting back on the supply of parking. However, there are huge equity issues that would result from putting road pricing in place unless you build a good public transport alternative first. Oh that’s right, Libertarians don’t give a shit about equity – I forgot.
That’s the whole point of my post above – if we remove the fact that we’re talking about cars and public transport, but just consider them to be two “things” then it becomes obvious we should invest in the “thing” that is gaining popularity and not the “thing” that is declining in popularity.
Jarbury, I appreciate the analysis you put into your posts.
My view on Waterview is that the project should be built one day, when it reaches the funding threshold. I see little point on construction starting until the Hobsonville Deviation is completed, only then will we really know the relative value of the project. I’d designate the land for it, and undertake investigation and voluntary property purchases so it can go when it is appropriate. Sadly the whole funding process was corrupted under the last government by shifting from economic efficiency to “strategic priorities”. Victoria Park tunnel (should be a duplicate viaduct), for example, is far more desperately needed.
My point on oil is that it is wrong for the state to direct funding from road users to projects based purely on speculation about oil prices. The oil age will not end due to a lack of oil, it will end because alternatives are more efficient and appropriate. Remember part of the last spike was speculation on oil futures which badly backfired for those who hedged on the basis of oil prices going up excessively – some airlines have been burnt by it. However, it is nonsense to assume that there will be a shift from personal transport and road freight to alternatives. The inexorable trend since the 1920s has been towards private car ownership with that growth only slowing during WW2 and the three oil price shocks. It is associated with affluence, flexibility and comfort. The fuel may change, but that’s it. What’s the evidence people will want to shift to public transport? I USED to think that would happen, I love railways and know far too much about buses, but it wont.
Your backlog of public transport projects implies these projects have net value and address a real problem. The road projects do, and don’t get started on unbuilt public transport, as there are umpteen motorway projects in Auckland that are unlikely to ever see the light of day (Henderson motorway which is now just the Avondale bypass, Central motorway which you can see remnants off at the Dominion Rd/New North Rd interchange, and the Eastern motorway). Why is the CBD rail loop overdue? Why are rail commuters to the CBD so important that other people should pay for their commute? Note CBD workers are typically the best paid in Auckland, and the share of PT for CBD commuting in Auckland is already quite high by new world city standards.
Glad you agree on roads being fully funded. In the late 1990s it was calculated that it would be around a 7c/l increase in fuel tax to fully fund local roads (with proportionate RUC increase), which is perfectly reasonable as long as governance of local roads is reformed as well. There is no good reason for public transport to be fully commercial at off peak times, with subsidies at economically efficient levels for peak services. You suggest developer contributions for public transport, which is worth exploring, although arguably rates do this by appreciating property values. Besides, wouldn’t it simply be better for those benefiting to pay the full fare instead of being taxed on property?
I do know more about the costs and charges of roads vs PT and rail than most in NZ. Parking subsidies are neither here nor there in the scheme of things, and could be addressed if councils were required to operate parking on a commercial basis, and by removing planning minimum and maximums for parking, then land use decisions around parking would be commercial. Note that buses benefit from free bus stops and bus lanes that they don’t pay a premium to use (although all road users pay for them). The rates point we agree on, but it works for public transport too, so eliminate rates funding of all modes and we’d agree.
A carbon tax would add less than 10c/l to fuel, so that’s hardly going to make a big difference, and the rest of pollution? I think you’ll find diesel vehicles are the biggest issue, and much of that was addressed when sulphur in diesel was progressively cut from 1500ppm to 50ppm. The STCC study indicated that a bus would need to carry over 8 people minimum continuously to have a neutral impact compared to those people travelling by car, because of the emissions. Electric trains don’t have an issue, but then at what cost? It would probably be cheaper to pay for all the cars in Auckland to be tuned annually than pay for an electric train set. Read the full STCC study and you’ll see the big issue for cars, in marginal cost usage in cities, is congestion.
“there are huge equity issues that would result from putting road pricing in place unless you build a good public transport alternative first” this is a myth. What are the equity issues now of letting people queue in congestion, wasting fuel and time? What are the equity issues in making all motorists pay similar amounts regardless of time and location? We already have road pricing in a very aggregated average form, and there is no right to transport. Professor Stephen Glaister of Imperial College London will tell you that there simply wont be alternative modes available for many trips especially outside commute trips. I would introduce road pricing to replace current charges, the easy option is to upgrade RUC with new technologies already widely used in Europe, to charge by distance, location and time. Transition all heavy vehicles and all non petrol powered light vehicles so they pay the least to use motorways, and the most to use unsealed local streets, with discounts between 9pm and 6am. Offer it to petrol cars in exchange for paying no fuel tax, and require all new vehicles to go on a road pricing scheme. In due course you can charge more at peak times and less off peak, but the net revenue from road users will be the same as it would be otherwise. What are the equity issues with that? After all, why should people who drive off peak (typically elderly, mothers at home, unemployed) pay the same as those who are employed?
Oh and let’s be clear about equity. The most subsidised public transport users in the country are people who work in the CBDs of Auckland and Wellington that use rail. Many of them are on average salaries and above (the Johnsonville line in Wellington is a huge subsidy to middle/high income public servants and their kids mainly) By contrast, thousands of Aucklanders share vans every morning to commute to factories and warehouses in South Auckland and get no subsidies. By being rail fixated the Greens ignore the people who are on lower incomes, as they rarely work in the CBD, so rarely fit the plans of local government for fixed transport to and from the CBD. Remember 88% of employment in Auckland is not within the CBD, what does rail do for them?
Well I understand your point, but I am saying that the “thing” that is gaining popularity is doing so thanks to massive subsidies from those who are paying it – motorists – and private car driving is not declining in popularity, it is just flat. If public transport users paid economically efficient fares then your argument would hold water, because since public transport is underpriced it is inappropriate to subsidise it further as it encourages further wasteful spending on largely unused capacity.
Thanks for the huge reply Liberty. I’ll work my way through it and try to be fair in pointing out what I agree and disagree with.
I would agree in not rushing into building the Waterview Connection. It is a VERY expensive project and therefore we should make sure it’s needed before we throw $1.4 billion towards it. Given the criticism of time savings benefits in international transport literature I think we need to question whether the proposed $2.6 billion of time savings benefits would actually exist. What if traffic volumes using the route were over-stated due to the modelling not taking into account higher future petrol prices? What if uptake in public transport also helps contribute to continued flat-lining of traffic volumes on state highways? Wouldn’t it be better to find all this out before we’ve spent $1.4 billion rather than afterwards?
The last spike wasn’t just speculation, it was caused by a real peak in oil supply that happened in 2005 and hasn’t been exceeded since then. Personally I think it’s reckless to be spending billions on projects that people may not be able to afford to use 5-10 years down the track. Of course we may end up with cheap electric cars for everyone, but then that could take decades. I assume you’re smart enough to realise that biofuels and hydrogen powered cars are not really long-term solutions. In contrast, electric trains are powered by something that we know is available at the moment and will be available in the long-term future. It’s a safe choice for an uncertain future.
The CBD rail loop doesn’t just benefit CBD commuters, it benefits everyone on the rail system and also allow for future expansion of the rail system. Without the CBD loop you can never get rail to the airport, you can never improve frequencies along the existing lines much beyond what they are now, you can never build a line out to serve the Howick/Botany area. Essentially Auckland’s rail system can never grow from what it is now without the CBD rail loop. With patronage growing we’re going to hit a ceiling in the next few years. Auckland’s share of PT for CBD commuting is NOT high by international standards. I think we’re around 40%, compared with around 70% for Melbourne, for example.
Yeah I mean what’s 7c? Petrol has gone up by 10c in the last week and nobody’s noticed one bit. Surely there is a logic for petrol taxes paying for road based public transport though, in that road users benefit from there being a full bus as that’s 50 fewer cars on the road and therefore less congestion than would be the case without that bus running.
I think developer contributions are an excellent way of funding rail based public transport. Everyhwere within an 800m radius of a railway station would become a special “rail zone” and be allowed to develop at much higher densities than elsewhere, but with the capital gain (on the property value) due to the rezoning helping to pay for the rail system.
Regarding parking, have a watch of this video: http://www.youtube.com/watch?v=l_O6dR7YfvM
There are also a number of interesting studies on the sidebar of that video. But you don’t really need to read them just open up Google Earth and have a look at Albany, New Lynn, Manukau City or Botany Town Centre and see for yourself how much valuable land is wasted on parking. I would agree that getting rid of parking requirements is a good idea, however I think it would have a more significant effect than you do.
Cabon tax of 10c/L plus 7c/L for paying for local roads plus far less free parking available…. we’re starting to get some serious push factors going here!
Old diesel buses are definitely some of the worst polluters I agree. Some of the newer ones are much better though, and in the future we could end up with fully electric buses far more easily than replacing our 3 million car fleet.
I do see the importance in providing good public transport to those other than CBD workers. I think that 70% of trips taken on Melbourne’s train system don’t actually enter the area covered by their CBD rail loop, so it’s definitely possible for public transport to suit those outside the CBD. Regarding road-pricing I think that once we have a decent public transport alternative established it would make a LOT of sense to introduce peak hour congestion charging on roads throughout Auckland.
This is where land-use planning needs to align better with transport. Most plans for future growth in Auckland are getting there in that respect, focusing growth around the RTN so that a larger and larger proportion of people do have a good public tranport option for their trips.
If I were to redesign Auckland’s public transport a bit, I would have a lot more “through” routes, both rail (once the CBD loops is built) and bus. It is stupid that someone going from Takapuna to Manukau City has to change buses in the city – why can’t the bus go the whole way? These kinds of routes would provide for people working outside the CBD a lot more. Removing minimum parking requirements would also hopefully end the over-proliferation of carparking we see in suburban areas where people work. This would also make public transport a more viable option.
What I am saying is that the subsidies we give to roads are much greater than those given to public transport. I want to level the playing field here, and perhaps even tip it in favour of public transport given its environmental benefits. Furthermore, building more and more motorways and ever-wider roads creates cities that are more horrible to live in.
I want to live in a nicer Auckland, and making us more car-dependent will not achieve that. I want to see Queen Street pedestrianised, I want to be able to get around the city easily without having to own a big piece of metal which depreciates by thousands of dollars each year (another cost of private transport that is generally ignored). In the end, the general rule is that the more car dependent the city we live in the more of our income/GDP that we spend on transport. The less car dependent, the less we need to spend on transport. I will get the studies to back that up!
In the end, in some ways it is irrelevant whether private transport is more “self funding” than public transport. Private transport may individualise the cost of transport more, but that doesn’t mean that is it a better and more economically efficient solution. I know that’s something hard for a Libertarian to accept, but most people realise that it makes a lot more sense to pay taxes and have a military to defend us when necessary, as opposed to each individually hiring private armies to protect us. The same rationale can be applied to transport: focusing on the private vehicle may require less cross-subsidisation but that is only because the cost is more individualised, not because it is any less.