I have heard that there should be a final announcement on how Auckland’s electric trains are to be funded by the end of July. That means some time next week. With yesterday’s announcement of integrated ticketing, thankfully most of the mess Steven Joyce created when abandoning the Regional Fuel Tax has been cleaned up – which I suspect we are very thankful to Mike Lee from the ARC for.
Back in late May, Steven Joyce announced that he was going to look into a variety of options for funding Auckland’s future electric trains, that were previously to be funded through the ARC’s share of the Regional Fuel Tax. One of the options Joyce was looking at was a PPP: private-public-partnership, which have a nasty habit of constantly failing overseas. One hopes that he has abandoned that poorly thought-out idea, and we will see an annoucement in the near future that the government is going to step in and pay for the electric trains through KiwiRail.
Frustratingly, even if this “good news” does happen, we’re still in a poorer situation than where we were a few months back. Electrification has undoubtedly been delayed by these shennanigans, and the chance of having electric trains by the time of the Rugby World Cup has now disappeared. Let’s just hope our clapped out old trains don’t fail like they did a few months ago before a Super 14 Blues v Highlanders rugby match.
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I agree pre 2011 complete electrification is unlikely, but could it be done on just Britomart-Kingsland pre-2011?
Regarding PPP, while its failures are notable, it has the big advantage of directly increasing the amount of money avaliable for PT.
While there are failures overseas, some points should be noted:
1) there are some sucesses. A few bad cases should not rule its use out entirely.
2) the airport line in Sydney, you refered to is considered a failure simply because the $10 station access fee is far too high. It will revert to public ownership in 2030, when the seperate station access fee will be removed. As a result Sydney will get basically a free/cheap railway line, just one that has high fees for the first 30 years.
Generally the reasons why transport PPP fail are:
1) The levels of patronage fall below what was expected (the Sydney cross city tunnel being exhibit A here)
2) The company sets the fares too high, detering many users. The airport line in Sydney (and cross city tunnel) being an example here. One possible remedy would be for the state to pay a bonus to each person using the line.
3) They can lead to ad hoc, poorly integrated transport planning. The cross city tunnel should have been free, with a tol charged on motorists driving through the CBD, instaed of the status quo.
4) In some cases, ideological blinkers are used , based on a private sector good mentality. While PPP should be used where it is cheaper and other clear benefits exist, they should not be used blindly.
The goal should be learn leesons based on where PPP has gone badly, rather than just ruling it out. One possible example of where PPP could come in handy would be Auckland CBD loop rail tunnel, with a private company contributing some of the construction cost, in return for:
1) a SMALL station access fee, say $2. Not a high one like the airport line in Sydney.
2) in order to compensate for the above, a certain percentage, say 10% of fares paid by rail users Auckland wide on the trains. 20 000 000 anual trips, half to the CBD stations, with $1 per trip surcharge (point 2) would result in $40 000 000 going to the private company per anum. With a $500m construction cost this is a 8% profit, which is quite attractive for a private company. After a period of 30 years the CBD loop will return to public ownership, thus Auckland getting a free rail line (with extra fares for 30 years).
I gave this as an example of where a PPP could work wel, and how it could be arranged. POTENTIALLY if used well PPP could be used to significant benefits to Auckland PT. We just need to be carefull in how its used.
Extremely careful I think, often PPPs have resulted in massive cost overruns because the private party buries some nasty loophole into the contract and ends up being able to screw the public party over enormously.
I know that here in Melbourne the contracts over the city link freeway through the central area require the private partner to be recompensed by the state if the state decides to build any new freeway or public transport infrastructure through the CBD. “Sorry folks, we can’t do anything to ease the chronic congestion on the city loop for 30 more years because we’d have to pay punitive damages to a private tollway company”.
I just can’t understand the attraction of PPPs. Is it not best to have the goverment own these infrastructural assets and simply contract out the construction and operation as they see fit. Can a government not borrow capital cheaper than a private company?
Sure it might make it happen sooner, but can the state not do it just as soon using the same methods as the private sector, and save the country 30 years of private sector profits and additional access fees?
I think a decision has been made, I sent a letter to Joyce on May 8, about Auckland PT and the response came today and an interesting part reads,
“In March I reiterated the government’s commitments to several public transport projects, including the electrification of the Auckland rail network, track improvements, and new electric trains for the Wellington and Auckland passenger rail netwroks. Total government investment in these projects is expected to be over 1.8 billion.
I believe our major cities need to keep increasing the use of public transport. This is why the government continues to emphasise ongoing investment in this area. However there also needs to be robust business cases for each project, so further rail development possibilities like those you mention in south-west Auckland and south-east Auckland would need to be thoroughly tested financially.”
Obviously didn’t read the ARTA report I referred to… But I think might indicate the plans agreed to by Labour, the councils and ARTA may be so far progressed they’ll be completed, after that……..?
Joyce has said on many occasions that he will fund electrification – the questions are “when” and “how”. Regarding a robust business case for further rail projects – ARTA have calculated $2.4 billion in benefits from the CBD rail tunnel for a $1.5 billion investment.
Stacks up well against a cost-benefit ratio of 0.3-0.5 for Joyce’s Wellington to Levin “road of National (big N) significance”.
That was $2.4 billion in economic benefits from encouragement of development in the CBD from the way I read it, when you add traffic relief and environmental benefits I think it’ll be higher…
2.4 / 1.5 = BCR of 1.6..?
Are you talking about transmission gully..?
Yeah Transmission Gully. BCR of 0.3-0.5. I can’t imagine what the BCR of a Puhoi to Wellsford motorway would be….. 0.01 perhaps?
I saw that on Parliament TV during question time from memory Sue Kedgley gave those figures and Steven Joyce’s response has basically I don’t know but I believe it’ll be good so it well worth the $1 billion odd..! I’ve also seen him talking about after they’re built roads “always exceed their BCR usually resulting in a BCR of 15 to 20″…
Sheesh, if only we could get a Minister that has that kind of blind faith in PT and rail…