An interesting question and answer session in parliament today between Russel Norman and Finance Minister Bill English. A transcript of the questions and answers can be read here.
The first thing that I noted was how hesitant Mr English was in answering these questions. Typically he answers his parliamentary questions pretty confidently – although it seems as though perhaps his knowledge of transport matters isn’t particularly great. That might explain why he often tries to get Steven Joyce to answer transport-related questions – the Greens did well to hide the transport focus of the session behind a pretty general main question or I suspect he would have flicked it on to Joyce to answer.
The other thing that I find a bit strange – and frustrating as well I might add – is how English wrote off rail projects as seemingly always having poor business cases. This may well be true for the money the government has pumped into KiwiRail over the past few years to keep it afloat (although the long-run cost of letting the rail network disappear outside the main centres and a few busy lines could well be much much higher), but it really isn’t true for urban rail projects in recent times. Rail electrification in Auckland was calculated as having a BCR of 1.5 to 1.7 – not spectacular but certainly worthwhile and certainly a lot higher the the BCR of the Puhoi-Wellsford “holiday highway”. On a smaller scale, the reopening of the Onehunga Branch Line railway was calculated as having a BCR of 3.1 – many times higher than the Puhoi-Wellsford road or the Transmission Gully motorway: both multi-billion dollar projects.
It’s also slightly disturbing that he admitted the government seems to have done little, if any, work on evaluating the effects of an oil price spike on transport investment. Just last week an excellent research paper by the Parliamentary Library was released – called “The next oil shock?” It is well worth the read, and is summarised below:
It would seem like this is a pretty important matter for the government to at least be thinking about what the impacts of a supply crunch might have on the transport sector. You know, if agencies like the IEA and the US Military reckon that a supply crunch might only be a couple of years away – it might be worth having a think about what the impacts might be on your transport spending priorities, right?
Getting back to what Bill English says in the video above, I also take issue where he says that no matter how high petrol prices get, more people are likely to drive than catch the train. Well of course, and that’s completely irrelevant. What really matters is the change in use, because that will impact on the capacity of the current systems: if the number of people driving starts declining (or even stays the same) then you probably don’t need too many more roads. Similarly, if the number of people using public transport skyrockets (even if it is far less than the number of people driving) then chances are your current system will need its capacity expanded.
This isn’t just guess-work – it clearly happened back in mid 2008 when petrol prices jumped to above $2 a litre. We saw public transport patronage skyrocket, while use of roads dropped dramatically. Is it that impossible to think that the same thing might happen again?
Seems a bit of an odd time to be spending $11 billion on more motorways over the next decade.
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He looked well out of his league and many of his answers showed that he actually has no clue and is just making guesses. Also he couldn’t pass transport questions to SJ as it doesn’t look like he was in the house at the time.
It shows the Ntional Party mindset about rail quite well… Gas could be $5 a litre and rail investment still not worth it according to English…
All this sillyness about buses needed roads too really gets too me. Only a handful of services in Auckland use the motorway network.
And of all the RONS I doubt any will have frequent bus services running along them.
Vic park tunnel may help buses by reducing harbour bridge congestion, but this is only a very incidental effect.
Shouldn’t NZ be building / updating rail to it’s ports and centre’s to future proof as much as it can against oil spikes? And should passenger rail be better funded rather than $11 billion being spent on roads? Seems crazy to me.
Yes, and yes. But we’re stuck with a Minister of Roads who’s not had anyone slap him about and explain that the Minister of Transport is meant to support balanced transport use. Trucker Joyce probably wouldn’t listen, in any case, but it’s a conversation that needs to be had.
I feel kinda sorry for the farmers who voted in B’linglish, because if his attitude toward spending money on rail in Auckland is “Meh, y’all will still drive when it’ll cost more in petrol for a year than you paid for the car” it’s definitely not going to be giving any consideration to how the large rural population in NZ will continue to participate in the nation’s affairs.
Not just our economy, but our entire way of life rests almost entirely upon the undisturbed access to an endless supply of a single and currently-undervalued commodity. That doesn’t strike me as being very smart. Having absolutely no contingency plan in the event that the one single commodity suddenly (or even gradually) becomes a little less undistrubed, endless or undervalued is even less ‘not very smart’.
I think the whole “people will still continue to use private vehicles thing” really depends on how MUCH the price of oil rises. If it goes up by 50% then maybe, yes, most people will continue to drive. If it triples, maybe not.
I am very concerned that the govt is about to enable the development of a lot of housing right on the fringes of Auckland which many people will buy cos they’re desperate for a house. Then in 2013 these people will suddenly find themselves crippled by the cost of getting to work. What will happen to them then? Will there just be a spate of mortgagee sales as there was in the USA when oil prices rose?
Lucy, the mortgagee sales in the US weren’t tied to the oil prices, the timing was just coincidental to the wider onset of the GFC.
We should be particularly concerned about what’ll happen with greenfields development in SE Auckland, where there is no viable public transport option to get pretty much anywhere. This is one of the prime development locations, but nothing’s being done to build for rail or busway to transport people even to the Southern Line corridor never mind linking all the way into the CBD.
Causation is difficult to establish. While the sub prime mortgage issue was largely blamed for the GFC the fact remains that the GFC occurred when oil prices were high.
Have a look at this graph:
Note that every time petroleum expenditure in the US has exceeded about 5.5% of GDP a major recession has occurred.
Here’s the link, i tried to embed it but it didn’t work.
http://farm3.static.flickr.com/2686/4128705191_2040bec4e2_o.png
That could easily be analysed as showing that demand for oil in the US is so inelastic that even when the economy shrinks (recession) the demand for oil stays constant.
That graph, in fact, shows that the current recession hit before expenditure on oil went above 5.5% of GDP, which suggests that it’s about demand for oil rather than cost of oil triggering a recession.
No those people will just howl about how unfair it is that the government collects so much tax on petrol and demand (along with the RTF) that the fuel taxes are reduced
The most obvious thing there – he just simply didn’t know what he was talking about AT all.
He’s still the double dipper of Dipton.
one very basic simple flaw, right at the start…they still collectively believe that road building relieves congestion. we must be the only country in the world that has not realised that does not work.
as soon as you realise that, every other decision becomes easy. but as long as you believe you can solve congestion, everything else becomes impossible.
“we must be the only country in the world that has not realised that does not work”
Obama is spending a fortune on new roads. It’s part of his hope and change platform.
I’ll keep my money, guns and freedom, you keep the change..?
And as we’ve seen with the SH20 connection onto SH1 at Manukau and the resulting kaos….. roads really are much better at relieving congestion – yeah right.
Does Auckland need provincial small town MPs like Dipton Dickstick and Taranaki Joyce running city transport planning – no.
Len Brown opened the Manukau extension and spoke of it favourably at the ceremony.
It’s a good thing that a suburban mayor like Slap Head Brown isn’t running city transport planning. Oops!
You’re familiar with what the extension’s replacing in terms of paths through the ‘burbs, right? Of course Brown spoke of it favourably, as would any person with half a brain and an open mind: clearly not you. It’s only B’linglish and Trucker Joyce who’re talking about it having been meant to ease congestion. It’s there to take thousands of cars off the roads through Wiri, Manukau and Papatoetoe, by providing a direct connection between the Southern and South-Western motorways.
“It’s there to take thousands of cars off the roads through Wiri, Manukau and Papatoetoe” equals “ease congestion” in the ‘burbs.
And it’s done that successfully. The congestion is now at the inter-motorway link.
it didnt ease congestion, it just shifted it
“it didnt ease congestion, it just shifted it”
So this is either a successful or unsuccessful outcome.
If successful, then it can’t be used as a stick to beat “Dipton Dickstick” English and “Trucker” Joyce. Although it shouldn’t be used to beat them anyway since the project would have been approved and funded by the last Labour government.
If unsuccessful, then Len Brown obviously didn’t anticipate the outcome or warn us about it. In fact he wanted to associate himself with it at the opening. In which case he shouldn’t be trusted in charge of Auckland’s transport.
stop clutching for straws.
It’s successful because it made Joyce’s mates some money, and they can now say there’s a new missing link that needs to be fixed, which will create another missing link and so on… profitttttt
It’s unsuccessful because it didn’t do anything to reduce congestion. Induced demand + bottlenecks + increasing amounts of cars = more congestion
The road has the potential to be a success – if the width of Wiri Station Road is severely narrowed and that road is turned into a reasonably nice normal street, rather than a freaking massive vehicle sewer.
If the street isn’t narrowed, then it will inevitably fill up with cars again and we’ll be back to square one. In other words, the project will be a failure.
The key is to lock in the benefits of the project, by making the local roads more local. We’re making the same mistakes with the Waterview Connection: not taking advantage of the vehicles it will take off the local roads by putting in bus lanes, narrowing the streets, widening footpaths, building cycle lanes and so forth.
At the open days when NZTA was asked what the plan was for Gt North Rd in terms of taking the opportunity to ‘lock in the benefits’ as you put it, they merely replied that it had nothing to do with them so they weren’t doing anything to it. We therefore need to push the Auckland Council to make these changes around Waterview and presumably around Wiri Station Rd….otherwise both projects will be huge expensive white elephants.
“It’s successful because it made Joyce’s mates some money, and they can now say there’s a new missing link that needs to be fixed, which will create another missing link and so on… profitttttt”
Steven Joyce entered parliament in 2008. Construction started on the extension in 2006. It was planned, approved, and funded by the last Labour government. Are you saying that Helen Clark and transport minister Annette King were somehow the pawns of Steve Joyce and his “mates”? If so, why didn’t Len Brown denounce these evil people when he opened the extension? Is it because Brown promised only to ever tell a limited version of the truth?
My family, along with most others in the UK, didn’t do much traveling before the Industrial Revolution. Generations lived in the same Northern England village and they’d be lucky to move 5km to work in a neighbouring village sometime during their life. They wouldn’t have owned horses or carts and their recreation would have been limited to a few hours walking. Obviously holidays were out of the question.
That all changed with the Industrial Revolution. Some of my ancestors jumped on ships and came out to NZ. Others moved in to the developing English industrial cities. They still walked around those cities, but railways were being developed that could take them on holidays to the coast. People living in Manchester would go to Blackpool. People living in London would go to Southend or Brighton. People living in the Yorkshire industrial cities would go to Scarborough.
Thankfully those days are over. We have the freedom to shop where we like, to work where we like and where we can earn higher incomes, to visit friends, to go to the gym or play sport, to pop away for a weekend to the Coromandel, Northland, or Ruapehu, and to tour around the country during our holidays. While rail is good for some of this, such as daily commutes in to a CBD, people’s travel patterns require flexibility and that flexibility is based on cars and roads. That is why even in cities with good rail systems, such as Wellington or London, the majority of trips are still made in cars.
Bill English obviously doesn’t expect people to regress to the travel patterns and lifestyle limitations of Victorian times. I agree with him. To believe otherwise is to think that thousands of years of human development will need to be reversed. The world has never run out of any natural resource and the prices of the resources that used to be key to the world economy are generally cheap as dirt even thousands of years later. Think bronze and iron. If by some miracle the price of oil spikes to be unaffordable, we’ll all start powering our cars with something else. We won’t suddenly start living the lives of our great great grandparents.
I’m going to start powering my car with fairy dust
No need. There are good alternatives bouncing around the lab. There just isn’t any need to bring them in to production while oil is cheap and plentiful.
Such as? Biofuels require too much space and energy to grow (plus lead to people starving). Hydrogen is too difficult to transport. The only real alternative is electric cars, but those have some pretty rare metals in them and are likely to remain expensive for quite some time yet.
Oil is a fantastically well concentrated form of energy. The reason people shifted from wood to coal, and then from coal to oil, was that each one was more efficient and effective than the last. There’s not really anything obvious to move from oil to – at least not in the quantities, ease of transportation and storage, and relative cheapness that we’ve enjoyed oil for the past 50 odd years.
Not of course that we’re ever actually going to run out of oil. We will just have to get used to spending a lot more on it – which means we may start to wonder whether burning huge amounts of it to shift a huge pile of metal around (plus ourselves of course) is really the most efficient way of using a pretty expensive resource.
“Such as?”
Stone Age people didn’t see the Bronze Age coming along. The horse and cart industry wouldn’t have been able to describe the internal combustion engine five years before it was invented. I read that current semiconductor technology is approaching immutable physical limits… I have no idea what will replace this technology to allow innovation to continue, but I’m confident that something will. (And to be honest I have absolutely no idea how current semiconductors work, even tho I’ve worked with them for years)
Technological innovation has been a constant of the western world since the Stone Age, with the exception of the Dark Ages in Europe which were caused by the breakdown of the Roman Empire. Every generation of technology has been better and cheaper than the ones preceding it. Innovation has only accelerated over time. You don’t need to be able to predict what future innovations will be to be sure that they’ll eventuate.
Yes something will definitely take oil’s place – eventually. The point is that we may be looking at a supply crunch in the next couple of years while any long term oil replacement/supplement is looking like it’s many many years away.
It’s the transition points that become difficult. I’m not saying that peak oil will be the end of the world and slam us back to the dark ages. I’m just saying that oil is likely to be pretty damn expensive in the fairly short-term future. And that’s something we should take into greater consideration.
I have no doubt of the ingenuity of humans but blindly believing in an unidentified technofix is negligent at best…
The bronze age replaced the stone age because they discovered bronze before they reached the peak production capacity of stones, coal use eventuated before they reached the peak production capacity of wood, oil use replaced coal use before the peak production capacity of coal…
We are likely to reach peak oil production within 20 years, given it takes 15 years (at minimum) to replace the 750,000,000 vehicles in the world, we need to find a cheaper more abundant form of energy than oil that can replace 97% of motorised transport vehicles and have it installed in all new production vehicle within 5 years… I don’t think that is very likely…
And yet today Londoners can pop over to France or the Netherlands for a holiday by railway in a third the time they could in a car. Modern trains have about as much in common with a Victorian steam engine as cars do with a Victorian horse buggy. Taking a train on holiday is no different from taking a plane. Are you saying that planes don’t offer flexibility to tavel patterns?
It is simply ridiculous to suggest that ‘flexible’ travel must be based on cars and roads. Why is that? I earn a high income, visit friends, go to the gym and play sport, and I don’t have a car. I have the freedom to shop and work where I like (I work in the outer suburbs). I probably wouldn’t be able to manage all I do if I drove everywhere, I don’t have the time to waste in traffic or looking for a park.
I hear the same thing here about ‘you can’t go away for the weekend without a car’ but it’s just wrong. This year I’ve spend a weekend in the country, and one at the seaside without driving there, not to mention two overseas trips.
And yet almost everyone else owns a car. Either there is something about you that isn’t shared by the majority of households… perhaps you’re much more disciplined in your planning, or most other people wouldn’t regard two weekends away by late October as being a sufficient quota of fun. Or you’re implying that everyone who owns a car is a bit stupid.
Each to his own obi, I also earn a high income and never need to use a car to get everything done and pretty much no one I work with owns a car let alone uses one to get around the city or commute. It’s just not true that a society needs to be car saturated to function.
I don’t think people who rely on cars are stupid, just that they are 1. people with very few alternative options for good transport in Auckland [ie all of us], and 2. people not very prepared for the near future of expensive petrol.
Hence the urgency; we really ought to be getting ready for expensive oil, especially as there is a great side benefit; a much more pleasant and liveable city. And more sustainable, and I mean that in the fullest sense, we cannot sustain this way of organising society. In order to get anywhere like prosperity we have to change the things we can so we can keep some of the things we can’t.
Remember the energy contained in 1 litre of petrol is very hard to obtain or deliver in almost any other form and from any other source. What I would like to ask our dear Minister of Finance is’ What are we going to be happy to be not importing so that we can pay twice as much as we do now for the oil we aren’t doing anything to give up?’ Especially as we even don’t pay our way now, and schlepping the stuff we do make is going to get more expensive and harder to sell as oil goes up.
No one thinks that oil is going to get cheaper, amazing really as contrarians can almost always be found. Peak deniers don’t really exist, they push the timing out, or fantasise that something magical will appear to twist the laws of thermodynamics, but don’t deny that oil is going up.
“No one thinks that oil is going to get cheaper, amazing really as contrarians can almost always be found”
Count me as a super-contrarian then. The petrol price will bounce around over the next few years as it has done since 1973. In inflation adjusted terms oil is only two thirds the price it was in 1979 and only half the price it was in 2008. But I’m happy to predict that in 100 years time there will be negligible demand for oil and it’ll be almost worthless. There is a good chance that will be true in 50 years time, but that depends on when it becomes viable to introduce alternatives to petrol and therefore on the petrol price itself and I suspect we still have several decades of relatively cheap oil ahead of us.
Remember that the Club of Rome predicted that the world had only 31 years supply of oil in the 1970s, assuming no increase in demand. And in 1919 the US Geological Survey predicted that world peak oil would occur in 1928. Apocalyptic oil production predictions aren’t anything new… they’ve just never been accurate.
The Saudis predict that the world has about 100 years of oil left. That sounds reasonable since the Saudis actually have a reason to talk UP a shortage. Should Bill English be producing reports concerning events in 2110? I don’t think so… would we use a report from 1910 to guide Auckland transport policy now?
The difference is I don’t live in Auckland. I drove all the time when I lived there, for sure, but here few of my friends need cars. I was implying that your idea that cars are essential for living a good life is stupid. I don’t think car drivers are stupid, I realise that most in Auckland have little option. That doesn’t make it a good idea however, nor the only way to do things.
As for the weekends away not being sufficient, Its not because my lack of car ownership means I’m stuck in the city as you seem to be suggesting. I tend to take longer holidays overseas a couple of times a year and spend my weekends in Melbourne. There woul be nothing stopping me from goIng away every weekend if I felt like it.
Anybody who thinks that the oil price and the current recession are not related in a causative way needs to read this: http://anz.theoildrum.com/node/6974
Basically prosperity exists in the gap between the cost of extraction and what we can afford pay for the one source of almost all of western civilisation’s energy [now including Chindia]. Our over exposure to debt was found out by the 2008 spike in oil prices. Oil is everything.
For this govt. [and the last, but it is even more urgent now] to have the policies so clearly outlined by English above is so violently imprudent and dangerous for the whole country to be laughable. Is it just ignorance and stupidity, or are they hostage to special interest groups? If it’s the former then god help us [this is still a very popular gov- almost certain to be returned]. If it’s the later it’s criminal.
Stupidity is promoted everywhere, anyone read that [Christchurch based] idiot in the Herald this morning? He is funny, just not in the way he thinks he is.
uh, Patrick, the GFC began in 2007, and the first dominos in the US housing crising started to topple in 2006. Our (you mean NZ’s I assume?) over-exposure to debt wasn’t news in 2008, or 2006, or even 2001. We live a debt-funded lifestyle of buying far in excess of our current earning capacity. Oil prices are irrelevant, except where we stop travelling because the cost of oil pushes the cost of petrol sufficiently high as to make it uneconomic for people to use cars except when necessary.
The complex debt instruments that brought the whole thing down were nothing to do with oil, they were all to do with yet more debt on houses that were bought, largely, on the basis of the impossible concept of perpetual capital gain. This isn’t even a case of having to buy “the official storyline” (TOSL) because one cannot determine the truth through empirical evidence, in this case the TOSL can be validated by looking back at news reports from before the term “GFC” was even coined, and then following them forward.
Has anyone pointed English to the 2008 road toll, the lowest in many years, and explained that NZTA are attributing it to petrol having gone over a mere $2/litre and leading to people driving less? If society slowed to such an extent at $2.18 for petrol, what will it do when petrol is $2.50, or $3, or even more, per litre?
We have evidence of what happens when petrol prices increase, but English is trying to announce that people will continue to drive to the extent they do now. We have proof that they won’t.
It just ignorant to think that people drive because the are in love with it or because driving is somehow a natural state of affairs. People simply drive when it is the best option for them, when it is the easiest, fastest and/or cheapest way to get around. If petrol is $5 a litre then people won’t drive anywhere near as much because it will no longer be the best option. Does he really think people won’t even flinch when it costs $300 to fill the tank?
Nick, when you’re double-dipping on housing allowances on top of getting paid around a quarter-mil a year, plus getting your transport costs covered by the tax-payer, you tend to forget that Joe and Josephine Bloggs are quite sensitive to the price of petrol in terms of discretionary travel. English hasn’t ever had a real job, except for when he was working on a farm. He went from Treasury wonk to pollie tubbie.
Josh, do you happen to have any figures on how kilometres travelled in 2008 compared with 2007 and 2009?
@ Matt. Actually I read an analysis from the USA which showed that mortgagee sales were much higher in areas where the residents were highly dependent on automobiles. Why? Because when the economy went to shit and the price of oil rose people who were living in areas which had more transport options were able to save money by shifting to cheaper modes of transport (e.g., cycling, walking etc). But people who lived in areas were they needed a car to get around couldn’t reduce their transport costs…
@ Obi – when I lived in ARgentina where most people can’t afford to buy cars I was constantly amazed by the number and frequency of buses between towns. For example, if you wanted to go from my city to Buenos Aires there were buses leaving all time – maybe 100 buses a day or more. You could go rock climbing out in the country by bus and get to the most remote placesin Patagonia. The bus system was so good it gave you huge flexibility in where you went. Ironically the in-town bus system in my town was quite shit but that was just a bit of bad luck.
Exactly Lucy, I found exactly the same when I was in Argenita, all over Latin America in fact.
When leaving Buenos Aires to go to Iguacu falls (1200km) we didn’t even prebook, we just caught the subway to the bus terminal and caught the next coach heading out. Damned luxurious thing too, lie flat beds, meal and bevarage service, movies etc.
Incidentally Lucy do you realise we’ve met? You came to look at a room in my old flat in Home St, Arch Hill. We chatted briefly about Argentina and the Greens.
I think people in outer suburbs are usually of lower wealth (that’s why they’re in the cheapest housing areas), are further from jobs and have poorer PT… Peak oil will be hardest on these people I think…
That sounds like a more-complete analysis than just blaming the rate of mortgagee sales on increasing oil prices. These things are never just one factor, it’s always a complex web that weaves itself into a catastrophic mess.
Yes Matt it is all inter linked and complex, and perhaps you didn’t follow that last link before rejecting it so here’s another somewhat simpler one: http://www.theoildrum.com/node/6574
Oil prices started rising in 2004 so this irreplaceable input’s cost rise to the world economy did precede the financial crunch. Remember money isn’t really real; it stands for real things, especially things we all need and want, like food and oil.
I tend to think of the “oil spike” of mid 2008 as the ‘straw that broke the camel’s back’ in terms of the GFC. There were plenty of contributing factors, but in the three months before September 2008 a huge amount of money had been sucked out of the US economy due to extremely high oil prices. There was enough strain already to ensure that this last crisis just couldn’t be handled.
Something had to break, and it did.
hey this interesting, over on AK Trains is a report from the Northern Advocate that seems to show Key somewhat distancing himself from the the Holiday Highway and even mentioning the Northern rail line as worthy of investment: http://www.aucklandtrains.co.nz/2010/10/22/pm-on-puhoi-northern-rail/ whole article here: http://www.northernadvocate.co.nz/local/news/pm-sees-case-for-four-lane-highway/3927346/
Of course he’s for everything, but this is the first time I’ve seen this government say it was up to NZTA, and not that they are just going to do it. Also the first time they’ve conceded that rail is important for the economy. It is the beginning of him giving himself an ‘out’- of course expressed only as a timing thing…. things change though, especially with the cost of certain inputs…. Every year that this white elephant is delayed the greater the chance that that money can be spent more wisely.
So National’s polling wonks have been at work, eh?
Isn’t he saying that it’s up to NZTA when the four-laning gets extended north of Wellsford, rather than between Puhoi and Wellsford?
Crikey, if the business case for Puhoi-Wellsford is poor – I can’t imagine how bad the business case for Wellsford to Whangarei would be.
Er, yes, I think you’re right, however it’s still a shift in language, rail and road mentioned together without rail being dismissed out of hand… If there is to be a softening my pick is it will come from Key, he is after all largely without hard principles and almost pathologically desperate to be liked…. more so even than your average politician.
I don’t mind a pragmatic PM so long as he really looks at the evidence and not just the swarm of ideologues that surround him. We’ve got to ramp up the pressure.
Anyone know what the state of play now is with Hamilton/Auckland services post elections?