Somewhat unsurprisingly, many commentators have been quick to write off Len Brown’s transport vision for Auckland as impossibly expensive, ‘pie in the sky’ aspirations. Some of the criticism has come from predictable sources, like David Farrar’s Kiwiblog:
Len may think he has a mandate for the rail – and he does if the ratepayers of Auckland who voted for him are willing to pay for it. But he does not have a mandate to demand the taxpayers of Wellington, Napier, Nelson and Christchurch pay for it.
Other criticism has come from less predictable sources, with Labour MP Stuart Nash getting grumpy about Auckland demanding a bigger slice of the infrastructure spend:
All this posturing, threats and huge budget promises re Auckland from their new councillors etc makes me shake my head in disbelief.
Akld is but one of many cities in this wonderful country and if Aucklanders think they have pre-eminent rights on all of our taxes then they need to pull their heads out from their nether-regions and get real. New Zealand does well when all New Zealanders are thriving.
What both comments indicate is a growing awareness of one of the outcomes of local government amalgamation in Auckland – and that is a far stronger a more unified voice from those ‘north of the Bombays’. This more unified voice means that Auckland should have a better ‘seat at the bargaining table’ with central government – and may well mean that Auckland cannot continue to be given the raw deal from transport investment that happened throughout the 1980s and 1990s in particular.
A Brian Rudman NZ Herald article from last year detailed how poorly Auckland has been treated when it comes to transport spending over the years:
In 1991, when Auckland’s last attempt to get a light rail commuter service fell over for lack of Government support, the Auckland Regional Council revealed that Aucklanders paid $150 million on petrol taxes to Transit New Zealand, but only $84 million came back to the region in transport funding.
ARC member at the time, Gary Taylor, said: “Let’s face it. Auckland is getting ripped off by Transit New Zealand. We should use some of the electoral muscle this region has and go to Wellington and exert it.”
It didn’t work. Between November 1993 and November 1999, under a National Government – with Aucklander Maurice Williamson as Transport Minister – only 25 per cent of Transit’s income was spent north of Pukekohe despite just under 40 per cent of the tax-paying population living here.
The relevance of all this, in terms of answering the question of “how to pay for the big three rail projects?” is that I think Auckland has a very legitimate claim for getting a significantly better deal out of central government when it comes to our share of transport spending. As I noted a week or so ago, over the next 40 years Auckland’s population will grow by a million people, whereas the entire rest of NZ will only grow by a third of that. Here’s the relevant graph for those who don’t remember:
I think the graph above shows that it’s pretty hard to argue against the notion that Auckland probably deserves at least half of the “new transport infrastructure spend” over the next 40 years.
So while I’ve generally advocated that a big chunk of the CBD rail tunnel could be funded by choosing a more cost-effective option for the Puhoi-Wellsford Road, and redirecting the billion dollars saved there into being a big chunk (perhaps even all) of Central Government’s contribution to the rail tunnel, at least one thing Puhoi-Wellsford has going for it is the area’s population is growing significantly.
By contrast, between now and 2030 the population of the Wellington region is expected to grow in population by 74,900 – compared to Auckland’s population growth of 573,700 during the same time period. Over the next 20 years, Auckland will absorb 60% of the country’s population growth, while Wellington will only absorb 8%. Despite this very slow growth, the government wants to spend around $2.4 billion on the Wellington Northern Corridor “Road of National Significance”. Parts of that road, most notably Transmission Gully, have cost-benefit ratios even lower than the Puhoi-Wellsford “holiday highway”. Furthermore, most of the Wellington Northern Corridor project simply duplicates the railway line and is likely to undermine the current investment going into improving the Wellington rail network.
So why is NZTA’s motorway spend elsewhere in New Zealand relevant to finding money for rail projects in Auckland? Well, quite simply, it is because NZTA is spending an enormous amount of money on motorway projects throughout New Zealand over the next 10 years. In fact, NZTA generally spends a huge amount of money on transport – much of it on highly necessary things like maintaining local roads and helping pay public transport subsidies. Looking at the 2009-2012 National Land Transport Programme gives us some idea of the amount of money that is available for spending on transport. This is summarised in a section of NZTA CEO Geoff Dangerfield’s introduction to the 2009-2012 NLTP:
Overall, NZTA will spend around $8.7 billion on transport over the next three years, meaning that over half that amount will be spent on new state highways. A lot of that is going on projects that do make economic sense (like the Victoria Park Tunnel), but a lot will be spent on projects that have been shown to not make economic sense: like Puhoi to Wellsford and Transmission Gully.
If we recall what Len Brown’s rail vision for Auckland actually entails: a start on the CBD Rail Tunnel within three years, substantial completion of the Airport Line within 10 years and (the one where I think he’s a being a bit optimistic) construction starting on the North Shore Line within 15 years, its’ a pretty big timeframe we’re talking about. At best, he’s probably asking that all three projects be completed by around 2030: in twenty years’ time when Auckland’s population will have grown by approximately another 575,000. Over that time NZTA will have spent (at current trends) around $60 billion on transport throughout the country. Even if the three rail projects cost a total of $8 billion, that’s a pretty small share of NZTA’s total spending throughout that time period – particularly as it’s likely local government would contribute a fairly significant chunk of money to the projects too.
So in my opinion, there’s plenty of money available to pay for the three big rail projects – because we’re not planning on having them all completed tomorrow. The key is ensuring that Auckland gets its fair share of NZTA’s funding pool – and ensuring that ‘fair share’ takes into account Auckland’s utter domination of population growth statistics – and also enabling NZTA funds to be spent on rail. Stupidly, that cannot happen at the moment. So while Len Brown’s transport vision is certainly visionary, I think it’s very unfair to say that it’s unachievable and unaffordable. The money’s there (or will be there), we’re just spending it on the wrong stuff and in the wrong parts of the country.
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What we need is someone who can sell these projects to the country, if people from outside the city (and some inside) actually realised the benefit it would bring to them they would be supportive of it and calling for it to be built also. When I say benefit to them, I obviously don’t mean physically (unless they come to the city) but economically i.e. by building the CBD tunnel it will allow X much more development which will attract and create more businesses and therefore jobs. This in turn will lead to more taxes being paid and the government being able to afford more services that will also benefit areas outside of the city. In summary we really need to educate the country of the benefits of investing in Auckland.
Rudman doesn’t know what he is talking about. For most of the 1990s most transport spending went on road maintenance because of austerity. Remember these were the days when between 60-75% of fuel tax went into the Crown Account, and the BCR threshold for capital projects dropped to 5 from over 10, so the new spending was by and large for projects that were serious accident blackspots. Ones that Aucklanders would die on too on highways in Waikato, Bay of Plenty and Northland, on their holidays. This was the age when the only new highway projects in urban Auckland were the Mangere and Papatoetoe Bypasses (now SH20), and eventually the Albany-Orewa Northern Motorway (which was primarily built because of the fatality rate on the old SH1). Oh and you can add the ongoing programme to install median barriers on motorways in Auckland and Wellington, a legacy of el cheapo construction in the 60s and 70s.
The big focus at the time was on accident blackspots, and significant stretches of busy highway got intersection upgrades, realignments and the rest to stop people killing themselves and others. By the late 1990s most of that work had been done because the emphasis on improving safety moved from infrastructure to behaviour.
Brian Rudman might think transport spending is about capacity, but for a long time in NZ it was about saving lives, and this has been quite successful. As transport spending has been rationed on the basis of net national benefit, saving lives has always been ranked higher than a few thousand commuters saving time.
You cannot argue Auckland “deserves” a portion of spending based purely on population growth, because that doesn’t measure the state of the infrastructure and the issues being resolved. It also doesn’t follow that growth means you build capacity, when you may actually use what you have more cleverly (“Predict and provide” should be dead as a philosophy).
I have long disagreed with Transmission Gully, but all of the projects north of that are well deserved (Kapiti Expressway has an excellent BCR for example). None of this has anything to do with upgrading rail in Wellington, which was approved years ago and is proceeding (e.g. electrification to Waikanae and double tracking from Mackays to Paraparaumu).
However, there is a bigger issue you haven’t tackled, which is the PAYGO nature of NZ transport funding. Why should current generations of motorists pay the full capital costs of projects that will be enjoyed by future generations? In an age with steady levels of spending over many years it isn’t a problem, but it is grossly unfair to pay for future capital with current revenues. It also underprices transport spending because the cost of capital is excluded. It doesn’t happen in other sectors of the economy.
The appropriate approach is for whatever entity is responsible for infrastructure to borrow and pay it off using future revenues. For rail it would be fares, and whatever the monetised benefits are of rail from motorists – of course if that doesn’t stack up then the project shouldn’t proceed. The same should apply to motorways – the Puhoi-Wellsford project should be funded from borrowing, and paid off through future revenues from road users, and I suspect that wont stack up either. In both cases interest would be paid, because the cost of capital ought to be reflected in those projects.
It’s time to apply the same financial disciplines to land transport infrastructure projects as is done elsewhere in the economy (and the transport sector). Ports and airports do it, time for rail and road to do so as well (Kiwirail and its predecessors have done it for the ferries for decades).
Wow, I can’t say I disagree with anything in that post (except perhaps a little about population growth, I think it is an important consideration). That must be a first – LOL.
I particularly agree on what you say about PAYGO. It doesn’t make sense that we’re sitting here in 2010 having to considering scrimping and saving the money for rail projects (in particular) that will largely be enjoyed by many more people than we have now, and by people who are likely to be significantly wealthier than we are now.
Well thought analysis, I hope you forward that to Len brown.
you should submit this as an op-ed to the Herald.
Regarding the Victoria Park motorway, I still think it is a bit sad that we will end up with a four lane motorway running through what should be the equivalent of our Central Park.
No doubt it is a shame to see a motorway though the park, but Victoria Park was and never would be anything like Central Park. Making such comparisons only weakens your argument.
I agree, the Domain is a far better candidate for Auckland’s Central Park.
albert park can also take the spot. I find myers to be one of the nicest since you’re down and out of the cbd, but because of that it’s also quite “shady”
Something really should be done with myers
Being “Auckland’s Central Park” isn’t just a function of being closest to the CBD. It’s also about size, features, and use. From what I know of NY’s Central Park, it’s bigger than some Auckland suburbs. It’s got a zoo and various other attractions. It’s used for concerts and other social events. The only park in Auckland that is even vaguely comparable is the Domain.
I think it’s a bit sad we’ll end up with an 11 lane motorway running through St Mary’s Bay and of those 11 lanes only 1 will be dedicated to buses which are carrying a full third of all the passenger traffic, and the rest to cars.
or the 10 lanes of bridge now running across manakau harbour, what an eyesore
[quote]”…over the next 40 years Auckland’s population will grow by a million people, whereas the entire rest of NZ will only grow by a third of that…”[/quote]
I’m not sure that is accurate. Stats NZ says, “Sixty percent of New Zealand’s population growth between 2006 and 2031 will be in the Auckland region.” See [1] and [2]. I doubt there’ll be a big enough shift between 2031 and 2040 that we’ll see it go from 60% of the growth to the 75% implied by your statement above.
That aside, is it so smart to put all our growth in one area? I’m wondering if we would benefit more if we found a way to better distribute those 1.333.. million people. For one thing we’d be more resilient to natural disasters. But wouldn’t it also better utilise our infrastructure in other areas? And wouldn’t it bring better economies of scale to those other centres for things like transport and health facilities (e.g. if CHC grew to 750 thousand people you might better justify building NZ’s next major childrens hospital there, improving quality of life for everyone in the South Island by doing so, and so on with other things)?
Legitimately asking. Forget for now the philosphical debates about whether trying manage and plan population growth is some infringement on people’s rights, etc.
[1] http://www.stats.govt.nz/browse_for_stats/population/estimates_and_projections/NationalPopulationProjections_HOTP09base-61.aspx
[2] http://www.stats.govt.nz/browse_for_stats/population/estimates_and_projections/SubnationalPopulationProjections_HOTP2031.aspx
Remember 40 years time is 2050 not 2040. Those are legitimate questions, though I think that focusing growth in Auckland can mean agglomeration economic benefits that you wouldn’t get elsewhere.
Maths fail on my part 🙂
I think the 75% is in the upper North Island so might not just be Auckland.
I think the main reason why Auckland is getting such a large share of the population growth is that it is where a huge proportion of the jobs are (there is only a limited amount of farmers we can have) but is also where people actually want to live. It is where most of the migrant communities are and additional migrants want to stay close to people they know, add to that the fact that while the weather isn’t perfect it is generally far better than places like Wellington or Christchurch. There are heaps of reasons why people want to live in the city and would be hard to encourage them not to.
I think Auckland has been at an awkward population size for some time, small enough that politicians have had an excuse for not investing more in rail infrastructure but to big for a car only city. I think we are starting to get to that tipping point where it will be impossible not to build the rail infrastructure we need unless we want the city to grind to halt on the motorways.
Yes I agree Matt, AK is now of a size that requires different organisation and thinking than the rest of NZ. We are a country of provincial towns, and these obviously grow with streets and roads adequately until they turn into cities, and really only AK is there. This also explains the disconnect with the rest of the country and with people with a provincial mindset and values [WGTN has always had a more ‘city’ kind of organisation and thinking, as well as a geography that inhibits auto-dependency]. English, and most of the rest of the NP think with the provincial mindset of the places they represent, not a surprise really. Perhaps what is more surprising that this thinking dominated the previous government too [Cullen was from Dunedin, 100K people], but now it is becoming clear that that a real gap is opening up now between the two parties. I’ve just listened to Goff getting it all right on Radio B this morning about rail in AK, however as was reported here provincial Labour MPs can suffer from the same small town disease. The challenges politically are twofold: to get the city National MPs to change their thinking to reflect the places they are supposed to represent and to calm down the provincial MPs, especially in Labour, that AK getting what it needs doesn’t preclude the countryside getting the different things that it needs too.
Why is the idea of urban transit in AK so able to upset the rest of the country? It threatens their idea of what NZ is.
I have often come up across the feeling, especially in the South Island, that Auckland is not really in New Zealand. And on some level they’re right; it is increasingly a very different kind of place to the rest of the country. And requires different thinking and different organising to function and therefor different spending.
The Rudman quote is a classic of politicians use of lies, damn lies and statistics.
“In 1991, when Auckland’s last attempt to get a light rail commuter service fell over for lack of Government support, the Auckland Regional Council revealed that Aucklanders paid $150 million on petrol taxes to Transit New Zealand, but only $84 million came back to the region in transport funding.”
Transit’s annual reports for that period do show $150m as Auckland’s average contribution for 1990 and 1991 for petrol tax, RUCs and registrations fees. But Auckland’s share of the money that Transit spent on administration, research, policy advice etc adds $20m to the $84m allocated to roads and PT in Auckland. But it is important to note that this loss of almost 1/3rd had only been occurring to Auckland for one decade whereas that same level of loss had been occurring to Canterbury for most of the previous six decades.
“ARC member at the time, Gary Taylor, said: “Let’s face it. Auckland is getting ripped off by Transit New Zealand. We should use some of the electoral muscle this region has and go to Wellington and exert it.”
It didn’t work. Between November 1993 and November 1999, under a National Government – with Aucklander Maurice Williamson as Transport Minister – only 25 per cent of Transit’s income was spent north of Pukekohe despite just under 40 per cent of the tax-paying population living here.”
Only one deceptive use of numbers in that last para. The $150m annual contribution mentioned in Rudman’s previous paragraph is 23% of Transits total revenue. The alleged 40% contribution to other tax streams is irrelevant, and inaccurate. The (NZIER?) study a few years ago showing that Auckland contributes billions more than it receives in government benefits noted that when centralised GST payments were accounted for Auckland contributed 33% of tax revenues in the early 2000s so you can knock a percentage point or two off that figure to account for population growth since the 1993-99 period. Thus the use of electoral muscle actually did work spectacularly well. The use of the phrase “north of Pukekohe” was very careless. It reveals that the “other peoples” roads that Auckland had been subsidising were in fact the all important tourist highways of Northland. Without those highways Auckland’s international airport would not be the critical high value gateway underpinning the Auckland economy (the same effect is evident for Christchurch international airport.
In cities worldwide, the experience is that transportation investment drives enhanced urban development – an inner city rail loop in Auckland would result in substantial gains for all the property owners in the CBD, especially near those locations for new stations.
Instead of the debate focusing on how we the ratepayers (or taxpayers from some other existing funding pool) are going to pay for this rail vision for Auckland, why not explore other innovative ways to capture some of this private gain in property values created by this public rail project?
There’s no reason why transportation investment couldn’t be funded, even in part, by “value capture” of this increase in urban property values – several major cities worldwide have employed this method – in some cases driven by enlightened property owners who saw the benefits of this public investment for their own property development plans.
This is not a “public/private partnership” model, but a sensible way to provide new finance for Auckland rail. Given a public consensus on the merits of an inner city rail loop, Auckland needs to seize the opportunity for innovative ways to raise the capital, not rely solely on the tired old model of raising our rates.
http://www.earthsharing.org.au/2010/08/18/land-value-capture-for-infrastructure/ – summary of concept
http://www.vtpi.org/smith.pdf – annotated summary of case studies
http://www.amconmag.com/blog/keep-america-moving/engine-of-prosperity/ – article
http://www.springerlink.com/content/j27k888853w59531/ – book reference