A major part of the CBD Rail Tunnel’s justification comes in the form of its wider economic benefits – and specifically, wider economic benefits which relate to employment. Put simply, employees in the CBD tend to be more productive and contribute more to GDP than workers anywhere else in the city (or indeed, in the country) – so therefore there’s a gain from finding ways to enable a concentration of employment. This is shown in the graph below:
The above figures are from this extensive study into Auckland’s labour productivity, by Dave Mare of Motu Economic and Public Policy Research.
So what difference to CBD employment levels would the CBD Rail Tunnel make? I can understand that making rail travel faster, and providing better access to parts of the CBD beyond the Britomart area, would make those areas more attractive to developers – just as has happened around Britomart over the past seven years. The business case did a reasonable amount of modelling on this matter, and came up with some fairly significant differences in the “without the project” and “with the project” scenarios – in terms of how many jobs there would be in the CBD:
The two scenarios are explained below:
- ARC RLTS Scenario – Not substantially reflective of the land use changes that would be induced by the CBD Rail Link.
- ACC Medium Scenario – Reflects the CBD land use changes that would be induced by Rail Link assumed to open in 2021.
Effectively, the rail tunnel project enables and encourages around another 22,000 jobs to be located in the CBD over the next 30 years than would be possible without the project. Some of those jobs might not have otherwise existed (as they may be for companies who would not bother with a NZ office if Auckland’s CBD wasn’t attractive enough) and some will be relocated from elsewhere in the country or the region – but once again will benefit from that ‘productivity premium’ that the CBD provides. These are the benefits that provide much of the economic justification for the CBD Rail Tunnel.
But this is all theoretical. Apart from the effect of Britomart on development around that part of Auckland’s CBD, I could be skeptical like Cameron Brewer and suggest that Auckland’s employment has generally been decentralising over the past few decades. Why wouldn’t that process continue? Surely a mere rail project couldn’t be a catalyst for encouraging greater employment concentrations? I’d want to see some international examples.
Fortunately – that’s exactly what the CBD Tunnel business case provides. It compares three sets of cities: San Francisco with Los Angeles, Portland (Oregon) with Memphis (Tennessee) and San Diego (California) with St Petersburg (Florida). In each situation, over the time studied , one of the two cities (San Francisco, Portland and San Diego) constructed a significantly more extensive rail (either in the form of heavy rail or light-rail) system than the other. The key variable that was then measured was the proportion of new office for the region that ended up being located in the CBD. The results are very interesting:
In all three cases, the city which invested in a transit system ended up with a much greater proportion of its new office space being located in the CBD. The implications of the case studies for Auckland are explained further (from page 55 of the business case):
Accepting the fact that the comparisons are less than perfect and the three city pairs represent a limited sample size, the analysis showed that the CBDs that enjoyed new rail rapid transit systems captured on average 21.6% of its regional office market over a 20 year period following the start of construction as compared to 5.3% for the CBDs that did not enjoy the development of such systems. On average this represents a four-fold increase in CBD office market share.
These case studies demonstrate that the construction of rail rapid transit systems oriented to serve the CBD lead to accelerated CBD office construction. A larger office concentration in the CBD creates many benefits for the region, including higher average salaries, a larger economy, a greater range of retail and restaurant offerings in the CBD and likely more cultural and entertainment opportunities. The key reason employers prefer a central location with good peak hour access is proximity to the largest possible labour force. Being able to select from the widest possible range of employees allows an employer to maximise productivity for wages paid.
Rather than being an entirely new system, the Auckland CBD Rail Link completes an existing system that currently does not fully service the CBD. Because the Auckland case differs from the North American cities that built new systems, the impact of the CBD Rail Link on the Auckland CBD office market share will not be as great. However, the case studies suggest that if the CBD Rail Link project is built, the Auckland CBD can expect accelerated office space construction over the 20 years following start of construction. Based upon the multiples generated between those cities that developed a rail system and those that did not, a doubling of office construction over this 20 year period would be a reasonable expectation, compared to the no build scenario.
It’s this fact that Steven Joyce seemed to struggle to get his head around in his response to the CBD Rail Tunnel business case. This project does not have its real value in the number of cars it removes from the road, but in the fact that it enables (and encourages) Auckland’s CBD to be much bigger – because more people can get into, and out of, the central area easily. If we don’t build the tunnel then all that additional CBD development simply won’t happen – and although we might not end up with the traffic armageddon that parts of the business case anticipate, what would really would miss out on are all those additional CBD workers, their high productivity and wages, and the boost that would bring to the local, regional and national economy.
The employment based wider-economic-benefits seem fairly logical and sound to me.
Processing...
Would be interesting to link this to the waterfront study released last week.
I can’t see how the waterfront could grow as outlined in the report without the CBD loop tunnel.
There is just no way to move the required amount of people to and around the CBD.
There are also many other benefits of having a strong CBD. A major one I see is creating a vibrant city that attracts skilled NZers home, and skilled migrants to live here.
NZers living overseas very much appreciate the mobility enabled by PT in places such as London and Melbourne.
Then there are also tourism benefits of having a vibrant and easily navigable CBD. Talking to many backpackers I find people much prefer Wellington over Auckland because of the vibrant inner CBD, and thus dont stay very long in Auckland.
Anecdotally, it has always struck me visiting major cities around the world that you can almost always assess their civility and success by the quality of their rail system. For example, London in the early 90s had a pretty cruddy rail system (both tube and network railways) largely due a sustained period of low investment and that was reflected in the appearance and feel of the place. It’s quite different now: notwithstanding the gfc, London looks pretty good and I’d suggest that in many ways, this reflects the investment that’s been made in improving the rail infrastructure over the past decade or so. I think the same formula is equally applicable to Auckland.
Yes this the frustrating thing, we’ve all travelled, we all know intuitively from these experiences how transformative a world class rail system is for a city. We all know that New Zealanders are not so different from everyone else on the planet that we won’t use and benefit from such amenity. We all know that this will pump up the vitality, the action, the business in the city. We also all know that where you want to live in the world has a hell of a lot to do with quality of life, basically where’s cool and productive and rewarding on all levels. Not just the level of personal tax. If Auckland is to compete for even its own citizens in a mobile world it’s got to lift it’s game.
And that this is Auckland’s best hope, it could be so good, the natural assets are so blessed, it’s just so let down by the spread out heartless vapidity, the low quality of built environment. The crappy street environment, the dull domination of the car, and the small town values that this domination freights.
Well said Patrick , you summed it up perfectly. Unfortunatley I think there are many amongst our politicians who see a busy and vibrant city as a negative thing.
No Cam, I suspect that many of our politicians have never experienced ‘a busy and vibrant city’ and have absolutely no idea what they’re missing out on. Sadly, I suspect that Mike Lee hit the nail on the head when he described Steven Joyce as a ‘fairly basic small-town red neck’ politician, notwithstanding the fact that he also described him as a ‘very smart fellow, more intelligent than most run-of-the-mill politicians’. From what I can gather from a pretty muddy cv, Joyce hasn’t spent much time out of the country; he’s never actually lived and worked in a city with an effective public transport system, so all he can do, given the limited parameter of his experience is to resort to ideologically-driven derision. Sadly, the Labour party seems incapable of exposing his fallacies: I don’t think I’m alone in thinking that Darren Hughes was absolutely woeful in the House this afternoon as he attempted to interrogate Joyce’s anti-rail fictions.
@Christopher- Good point I notice that even when Joyce has lived in the Auckland region it’s been on the fringes on a lifestyle block. Most of career was spent in Hamilton and before that as we all know New Plymouth and Palmerston North. As you point out it is unclear how much time has been spent out of NZ, certainly it appears he’s never lived in a city overseas.
What’s interesting is that Key very definitely has lived in cities with good public transport. The places he wants to emulate with his financial hub (which I’m very much for, despite what I think of National generally) are places with good, even excellent, public transport – New York, London, Hong Kong, Zurich. But we see no suggestion that he thinks we should be trying to bring Auckland’s living standards up to the same levels as those cities, despite the fact that we’ll be competing for very much the same pool of talent. Talent that will only be swayed so much by the natural environment before they look at how hard it is to get around the city day-to-day and decide that, actually, they’d rather work in one of the other cities that is on their buffet.