Preliminary findings of the business case for the CBD Rail Tunnel should be released within the next month. Of course we all have our fingers crossed that the number-crunching confirms most people’s strong belief that the project is cost-effective and well worth the rather significant $1.5 billion pricetag. I think another critical thing to keep an eye on is how the business case for the CBD Rail Tunnel stacks up against the extremely poor business case for the Puhoi-Wellsford road. After all, both are transport projects that are likely to cost around $1.5 billion – so it would make sense to measure them up against one another to see which offers the best “return” on that investment of $1.5 billion.

It is interesting to note in recent weeks the Transport Minister has been a bit more positive in his soundings on the CBD Rail Tunnel – noting that out of all rail projects it was certainly likely to be the next off the block and may well be cost-effective (unlike others such as a North Shore Line – I agree with him on that point). Perhaps he has been informed a bit earlier than the rest of us that the project does stack up well?

Putting wishful thinking aside for the moment, what happens between the time the business case is released and the end of this year is critical in keeping the ball rolling on advancing the project. We must remember that there are a lot more steps in the process towards actually making the project happen – including the extremely important step of actually securing and protecting the route. Ensuring that all the work currently going into the project doesn’t end up as a giant door-stop, but instead advances onto the next phase of route protection is exceedingly important – as not only does it ensure the tunnel can’t be stuffed up by other projects, but it also continues to build momentum for the project.

Wellington’s bureaucrats are well aware of the process too, as a paper prepared by Treasury on the project shows. In response to a request by Steven Joyce to tell him more about “where it’s up to and where it’s going” (he didn’t already know?) the paper provides a very useful insight into the kind of advice that Joyce is getting on this project. Of particular note was how the paper (which was written in March this year) points towards “six months time” being a crunch point for determining the future of the project. It’s disappointing, but hardly surprising, that the paper is somewhat negative on the required timing of the project (I wonder what Treasury would say about Puhoi-Wellsford?) However, that’s not really the key point here. The key point is that there’s a huge decision to be made in the next few months – whether to lodge the notice of requirement to protect the tunnel’s route. That’s the second big hurdle for the project to get over (the first being getting the current study underway). As the paper notes, once there’s a commitment to lodging the notice of requirement to protect the route then serious money starts needing to be spent on the project – making a commitment that it’s only a matter of when, not if, the project gets constructed.

Of course the absolutely massive unresolved issue is “who will pay for the project?” One and a half billion dollars is a lot of money (assuming that’s roughly what it’s likely to cost) and unlike state highways, rail projects don’t have a dedicated funding source. It’s on this matter that I think the Treasury paper provides particularly interesting advice: This highlights what I think the biggest barrier to constructing the CBD Rail Tunnel is – and that is the fact that NZTA money cannot be spent on the project. Whatever the rationale behind Cabinet Minute (09) 8/11-14 was, the decision made to effectively ban NZTA funds from being spent on this project is devastating for the likelihood of it happening any time soon. This is for one basic reason: NZTA have money, nobody else really does. It’s very interesting indeed to see that Treasury is basically recommending that this decision be reversed, so that NZTA can use its money to pay for at least part of the project.

And it makes good sense too for NZTA to help fund the project, because road-users (who fund NZTA) will be amongst the biggest beneficiaries of the CBD Rail Tunnel – as it will enable the rail system to take huge numbers of people off the roads at peak times in particular. And, as the table below shows, each extra rail trip generates a huge amount of benefit for road-users: For all those championing the CBD rail tunnel, what we really need to focus on is changing Cabinet Minute (09) 8/11-14 and allowing rail capital projects to once again tap into the NZTA funding pool. That will enable the money freed up by a more cost-effective Puhoi-Wellsford project to be used on this project.

Ultimately, I think that’s the only likely way the project will happen any time soon. We build the $160 million “Operation Lifesaver” upgrade to Puhoi-Wellsford and therefore save around $1.4 billion compared to the cost of a full motorway upgrade, and we put that money into the CBD tunnel – supplementing it with a decent contribution from the Auckland Council. The outcome is that we save around 50 lives on state highway 1 between Puhoi and Wellsford and we direct our money more cost-effectively. I wonder whether that will happen though.

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  1. The paper was prepared for the Minister of Finance, not Steven Joyce. As it not his field of expertises Mr English can be fully justified to request general information on any major project (and this is a good sign).

    Its quite interesting how it is noted that once the project is started it will build almost unstoppable momentum.

  2. The time frame is a bit disappointing, especially seeing as from what I understand we’re at Britomart’s limit currently, we will be given a bit of slack next year with the bidirectional running in the Britomart tunnek, but basically that’s a good 10-15 years out from when they say it’s needed…..

    Bill English has been even more anti this tunnel than Joyce (if that’s possible) so not sure how this will play out…

  3. If this was from March then it was certainly before the detailed work being done now on the business case. At this stage the team doing the study probably know what the results are and are just putting the finishing touches on things and getting it signed off internally. I do suspect that Steven Joyce has had a heads up on what the outcome already which is why he seems to be warming on the project but RTC is correct, Bill English has been more anti rail than Steven.

    It is also positive to see treasury wanting NZTA funding to be available. It might be a case where it will be allowed for this project only but that the current restriction will remain in place to stop other projects from being thought about. I do think it is fair that Auckland pays for part of the project and it could be good to say that the government pays for the tunnel and Auckland pays for the stations. I would think that the government would want to cut any extra expense out that is possible and one way to do that would be to scale back the stations to the bare minimum needed to be functional, while this would work I would prefer we put some decent design into them to make them attractive so people really want to use them, like the good jobs done at Newmarket and New Lynn.

  4. How do they figure the CBD Loop will not “realistically” be needed for 20 years? Most of what i have read has said Britomart will be at capacity when patronage reaches about 16 million, which will not be twenty years away.

    Looks to me like the perfect opportunty for Joyce to sidestep this project without saying he dosn’t want to build it.

    1. That’s an excellent question Cam. The RLTS says it is needed by 2021 at the latest and I am inclined to agree.

      Britomart is very close to being at capacity for the number of trains it can handle at peak times. While we can make the trains longer, that boost won’t last us forever.

  5. And of course longer trains only helps boost capacity, not frequency.

    Am I right in thinking that we won’t quite be able to meet ARTAs goal of ten minute frequencies on the main lines post electrification?
    I.e. three main lines x six trains an hour = 18 trains an hour. Add in two an hour for Onehunga and that is 20 trains an hour at Britomart… which is at capacity, even before we allow some ‘fat’ in the timetable or have slots for the Overlander or things like a Waikato connection.

    I really wish that once the Western Ring Route is finished they would shift the same sort of funding over to public transport (even a third would be plenty tho!) and make some real progress.

    It’s not like we don’t have the money, we just spend it all on other priorities.

  6. I am just really tired of the national government, they just seem to think it is ok wasting 90% of our money building those stupid motorway projects! I think a general election is in the air don’t you agree?

  7. this is treasury – it’s their job to stop Ministers investing in infrastructure projects (except large roads and PPPs which they are mysteriously fond of). Similarly, it’s pretty much bill English’s job as Minister of Finance to just go around saying “No, NOOO, we can’t afford it – put that cheque book away” etc

  8. “this is treasury – it’s their job to stop Ministers investing in infrastructure projects (except large roads and PPPs which they are mysteriously fond of). Similarly, it’s pretty much bill English’s job as Minister of Finance to just go around saying “No, NOOO, we can’t afford it – put that cheque book away” etc”

    Which is a very valid function in ANY government. I just hate the way they pick who DOES get the money at the end.

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