A couple of days ago I discussed one of the Ministry of Transport’s discussion papers that has been prepared to inform the development of the next Government Policy Statement (GPS) for transport. The GPS is an important document because it is effectively the government’s input to how NZTA should spend the $3 billion or so that sits in the National Land Transport Fund each year.
Amusingly, I have heard that the previous government introduced the concept of a GPS for transport funding because it was concerned that NZTA were focusing too much on roading project and too little on funding transport alternatives. The GPS that was released in August 2008 was actually quite forward-thinking – recognising rising oil prices, the need to reduce carbon emissions and the need to support public transport to a greater extent. Somewhat unfortunately, the increased political power the GPS provided was captured and used to reverse all these positive steps when the new government re-released it in May 2009.
But anyway, setting aside the rather ironic history of the GPS, as I noted the other day the MoT are developing the next GPS and I have a number of interesting documents they have prepared as a background to inform their work. The particular document this post will analyse relates to State Highway investment – and focuses on both the changing trends in State Highway investment resulting from the 2009 GPS as well as looking forward to what might be in the 2012 GPS. You can read the whole document here.
One graph fairly early on in the document highlights the significant increase in spending on state highways over the past decade. I’ve added the red line to show more clearly the split between new construction spending and maintenance/renewal spending. The biggest increase is clearly in spending on new state highways:
What is somewhat strange is comparing the graph above with the one below – which actually comes from NZTA and shows trends in state highway traffic volumes over the past 20 years. It would seem that spending on state highways has dramatically accelerated at the very time use of state highways has stagnated. It seems a bit weird to ‘ramp up’ spending on something that doesn’t have increasing demand. No mention of that in MoT’s document though.
The overlaid straight lines show where volumes ‘should’ be if the rate of increase in the late 1990s and early 2000s had continued over the past 4-5 years. Clearly, despite unprecedented spending levels on state highways, the demand just isn’t there and people are simply driving less.
Getting back to the MoT paper, it outlines the strengths and weaknesses of the changes to funding allocations highlighted in the 2009 GPS. It is interesting to note that most of the strengths seem to be very much qualitatively assessed, or simply assumed – particularly in terms of the economic impact of the projects. What I find particularly interesting though, are the issues and potential problems that have been caused by the massive focus on building new state highways – and particularly on advancing the various “Roads of National Significance” (RoNS):
Unsurprisingly, the huge focus on building the RoNS is starting to crowd out other projects that also need funding. Most scarily is the potential impact of reallocating money set aside for road safety improvements to spending more on RoNS, as with the safety improvements 246 lives can be saved, but without them only 149 lives can be saved. In short, it would seem that MoT is asking the Minister whether he wants to kill around 100 people over the next decade. It will be interesting to see his response.
More positively, MoT think that the very last area that should have its funding reallocated to the RoNS is funding allocated to other parts of NZTA’s spend: which would include the very important public transport infrastructure and services subsidies – as well as NZTA’s contribution to local road improvements and the like. However, it seems very likely that the RoNS are going to start to crowd out other smaller state highway projects – with the other projects probably likely to have much higher cost-benefit ratios.
This last point, the impact of the RoNS projects on the cost-effectiveness of our spending on transport, is an interesting matter and gets analysed further in the MoT paper:
Now I’m the first person to say that cost-benefit ratios shouldn’t be the be-all and end-all for analysing what transport projects should and should not proceed. The over-reliance on time-savings benefits plus the natural “short-termism” of the analysis process has many significant weaknesses. However, from looking at the graph above it is absolutely clear that there has been a significant reduction, over the past couple of years in particular, in the cost-effectiveness of approved state highway projects.
The MoT paper blames the RoNS for this trend:
The paper does then go on to justify the RoNS investment on the grounds that the standard BCR technique is weighted against large urban projects. As I noted above, the criticism of the BCR process is valid (though it’s amazing how MoT forgets all this when talking about the CBD tunnel project), but the low level of benefit compared to the high cost of the RoNS projects surely still tells us something about the efficiency and effectiveness of this spend.
There’s an interesting comparison of local road spend versus state highway spend – and how they tend to vary according to the three ways NZTA assesses projects: strategic fit, effectiveness and efficiency (efficiency is the BCR measure, strategic fit seems to mean little more than “does the Minister like it?”)
Going by the graphs above, if you were interesting in ensuring good efficiency from your transport spend, then chances are you’d be spending more money on local road improvements and less on building new state highways.
So, faced with all this information which shows that the dramatic increase in state highway spending over the past few years has little logic to it – with traffic volumes falling and the economic efficiency of the spend plummeting – what is the response of the Minister? Does he consider that, in hard times, we should ensure the best value for money possible from our transport spend and push back a few of these exceedingly expensive RoNS projects? No – it seems like he wants more of them:
Cambridge to Taupo is around 130 kilometres. I wonder how many tens of billions a RoNS along that route would cost? Furthermore, State Highway 1 south of Tokoroa only carries around 6500 vehicles a day – compared to around 8500 a day on the one-lane Kopu Bridge in 2009.
We might have just found a project that makes Puhoi-Wellsford’s cost-benefit ratio look fantastic.
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So from this we can either conclude that Joyce is so powerful within his party and government that his pet [insane, murderous] projects are immune to the whole ‘nice to haves’ versus ‘necessities’ philosophy, or, that that was all bullshit from English anyway and just PR for slashing programmes that they hate anyway. Oooops, I mean, ‘have a low Strategic Fit’.
Patrick, I’m not quite sure of when this document dates from but it might well be from some time last year. Who knows if Joyce still wants to advance these projects given other spending priorities like Christchurch rebuilding.
D’ya think? I was assuming that Puford at least would be delayed because of CHCH, and here he is drawing more lines on the map.
And when I say delayed I am confident that given a couple of years of delay these crazy projects will be seen to be what they are, wrong headed, and be abandoned. I’ve said this before but I think Joyce half knows this and it explains his unhinged urgency.
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Does the Minister really intend to spend billions to kill 100 people?
I get the impression he is pushing long term for at least a continuous 4 lane expressway/motorway from Whangarei all the way to Wellington. We can probably assume the CBD Tunnel would become a lower priority than these as well as it has a ‘low strategic fit’. This also confirms something I have said before, if they really want to help Northland spending $2b on local roads would probably give a far better investment and employ a lot of local workers.
Also Hamilton to Tauranga would likely include the $2b tunnel under the Kaimai’s that the RTF was pushing for last year
pertly good tunnel there already…. oh that’s right, it’s the evil mode: rail.
WOOPS ‘perfectly’
I had a laugh from your closing statement about Puhoi-Wellsford, then realised but it’s true…
The particularly scary thing about the funding crunch of the RONS is that the government is considering borrowing so they don’t lose “momentum” on these uneconomic projects. Given the trends in decreasing traffic, with the steady rise in oil prices, this is negligent and is going to burden future generations with Mr Joyce and the National Party’s pet roading projects.
The MOT sum up the economic impact of the RONS as: “In 2009/10 66 percent of the investment in new and improved State highways went into projects with low benefit-cost rations. This largely reflects the addition of the RoNS programme.” The justification they’re using to continue with this is very weak. ‘Strategy’, and the derivative ‘Effectiveness’, are both scored partially in terms of how well they “plan for and deliver the roads of national significance”. I can’t think of a more inane criteria to use to compare the RONS against other projects with.
Also worth noting is that between 2003 and 2010 the condition of the state highway network has deteriorated with the amount of rutting on the road network increasing by 240%. Is this because of the recent focus on investing in new highways rather than maintenance, or because of heavier trucks?
Exactly Feijoa: The justification theyâre using to continue with this is very weak. âStrategyâ, and the derivative âEffectivenessâ, are both scored partially in terms of how well they âplan for and deliver the roads of national significanceâ.
This is completely circular reasoning. They are significant because they have high significance. This is simply a version of: ‘because I said so’ dressed up in ministry speak.
Question to Mr Joyce: “Is it true that the RONS programme cannot be justified given its poor economic basis?”
Mr Joyce: “It depends upon what the meaning of the word ‘is’ is.”
strange not too see part of the Auckland – Tauranga SH2 route on this list, especially from SH1 to SH25 or SH27.
There is 13,000 AADT at Mangatawhiri, and it is a high crash route. Furthermore a 20 year four-laning plan has been developed for this route, and the deviations that have been done in the past decade have been done with four laning in mind. A staged 20 year approach like this is the right one to take, so it is weird to see the only sane project to be left of the list.
The 20km east of Cambridge has a high traffic volume (14,000) and may need upgrading in the next 10 or so years, but the rest of the corridors are a joke.
They are now talking about extending the Waikato Expressway to Tauranga and that would become the main route from Auckland to Tauranga which would take much of that traffic away.
The Waikato expressway should cut travel time between Auckland and Tirau by close to half an hour, which will make the Auckland-Tauranga via Tirau route (SH29) competitive with the current SH2 route. Especially if straightened and widened to 4 lanes, and even more so if a tunnel section is included.
Also the SH29 route is very busy as is, with about the same amount of traffic as the SH2 route. Remember it not only gets the Tauranga-Hamilton traffic, but also traffic from Tauranga-Wellington and the lower North island.
Even if Joyce does get these projects added to the RONS and included in the government plans there is still no guarenttee they will be built.
The progress on the RONS, while not slow, is not quite breakneak. Currently only 3 RONS are under construction, namely the Vic Park Tunnel, Te Puke Bypass (also known as the Tauranga Eastern Motorway), and the Christchurch Southern motorway. The Waterview connection and Ngaruawahia bypass section of the Waikato expressway will start construction latter this year. The rest of the RONS are still in planning stages.
The Puhoi-Wellsford road win’t have its first stage begin construction until 2014, and if Labour wins the election that year may not ever be completed. The more uneconomic Warkworth-Wellsford stage won’t begin until 2017 (i.e. end of Nationals 3rd term) and even that date is not certain. So in order to build the Puhoi-Wellsford motorway one hss to rely on labour continuing to build the motorway even though construction has only just begun (possible, but far from guarenteed, especially if as likely they are in coalition with the Greens), or national winning not only this years election but those in 2014 and 2017 too (and National remains comitted to all these roads all this time). If you ask me theres a very strong chance the Puhoi-Wellsford will never be built (particularly the second stage).
Some other RONS are in a even worse stage. No date has even been disscussed for starting construction on the duplication of Wellingtons Terrace Tunnel, presuming its start date is sometime after 2017. Some of the Christchurch projects also don’t have any start date indicated.
Any new RONS wil probably be at the back of the queue. This means that being generous they may have just started come the 2020 election. Would Labour continue to support them once under construction? Or should we bet on National being re-elected in 2011, 2014, 2017 and an unprecedented since 1969 4th term come 2020. Even so will Steven Joyce still be in politics, yet alone transport minister at this satge? A post 2020 National government could be quite different to the one we have today. The only upside for Joyce is the government should (asumong no new major recessions etc) be well back into surplus by then, so govt finances will no longer be under the squeeze they are today.
In short the road to getting the new RONS built is very long and windy. The light at the end of Steven Joyces Tunnels is dim.
Errr Nicholas I wouldn’t be counting on that surplus… see the IMF report below. And I would strongly urge you to view it mainly as trying very hard to not scare the horses: especially with regard to OPEC’s claims of reserve capacity, which is almost certainly a political resource not an actual one. As well as the fact that their modeling never once mentions the possibility of political events [so called oil ‘shocks’ although we should be used to them by now]. Remember the unrest in Egypt happened in the very year that that country switched from being a net exporter of oil to a net importer. Oil is money and oil is food. There will be more shocks and the world is on a knife edge with its most vital ingredient.
Your analysis is good though, many RoNS won’t happen, but sadly by then we will have wasted time and money and it will be very hard to build the things that would help, like the CBDRL. I agree they won’t build Puford as planned, if only they were doing the valuable bits first, the bypass and upgrades to SH1….. It really is crazed megalomania isn’t it? This is the last burst of 20th century transport building I’m sure. The question is how long will it last? What oil price will these guys notice? Or when will the public force them to notice or unseat them?
So, it’s not just that he’s an ideologue, he’s actually nuts. Real, no fooling, totally mad as a meat axe.
We laugh at the USA for spending all their tax on silly wars in the Middle East and not on health and education. But we don’t realize that our own govt is spending all our money on silly motorways in the middle of nowhere… Honestly, this is just completely bonkers, undies on your head crazy.
Money man Joyce must really be on the receiving end from vested interests for these insane projects to go ahead.
I am concerned though that the North Auckland lines will be closed next year (don´t be fooled by the term `mothballed´) but then the Holiday Highway is never built, thus actually only removing the rail network for the north….just what the trucking lobby really wants.
How can Whangarei District Council CEO Mark Simpson be promoting the Northland rail network closure next year, when the white elephant Holiday Highway wont even be built before 2025? Does Simpson have political aspirations with the National Party, or is he a shareholder in Northland trucking? I smell a rat with Simpson.
When I was working for Transit NZ, we used to deal a lot with local politicians who complained that the benefit-cost analysis approach was “unfair”, “biassed against small communities” and didn’t “acknowledge local priorities”. We were savvy enough to know that this was code for, “the process isn’t giving us what we want”. After a while we didn’t take it personally. Now, the problem is a Minister who is overruling on the RoNS because the conventional analysis doesn’t prioritise what he wants. A big review of UK transport policy a few years ago made it quite clear that smaller projects had consistently larger B/CRs than the larger ones, but once politicians’ egos get involved that sort of reasoning goes out the window!
Where I am now, I have seen too many schemes put up for funding because they looked good, or because they were OK’d as part of coalition deals. It is a pity that one part of the New Zealand process that works – isolating the politicians from the way the money is spent – has broken down as badly as it has.
Interesting looking at the push by Joyce to upgrade lots of roads for heavy trucks. Luckily due to poor erasing methods I can make a good guess on page 11 that this work would cost a minimum of $200 million for heavy freight routes, although it mentions the cost could be three times higher if weaker (Harbour Bridge I guess) areas are included.
I noticed the same thing, Luke, and put it somewhere between $200 and $299 million.
Interesting point is that this is more than the requires Northland rail upgrade, right?
Northland rail only needs about $5 million a year to stay open, maybe less. But yes the $300 million would cover the rail line to Marsden Point and expanding the tunnels to take large containers. Even the $120 million for Marsden Point would take most logging trucks off Northland roads, and the tunnel works could be done later depending on what happens with ports.
http://www.stuff.co.nz/business/money/4928139/Fuel-tax-on-hold – this is hardly going to make the funding situation any better! Maybe the ‘lumpy’ nature of the RONS means that don’t actually need the money this year. No other RONS projects seem anywhere near ready for construction. I guess Waterview may start next year, but being suge a huge project it will take a while for the serious money to be needed.
The Cambridge to Taupo section is an absolute no no, if he even thinks about spending money on this, I think the whole government has lost the plot, the road doesn’t hardly carry that much traffic, far less traffic than the Puhoi to Wellsford section. The route has already been improved, lanes have been widened to acommodate passing lanes. It just becomes apparent that the National Party want to support the trucking industry, so they manipulate local councils who are powerless to stop them.
But rest assured I think this is unlikely to happen, as this route won’t generate enough economic growth given the distance from the main population centres and the very little traffic that uses the route as well. But to even consider it as a draft report is mad. They keep refusing to spend much needed public transport projects and indicate clearly that there is no more money left to spend on public transport and that we must allow Christchurch to rebuild. What a load of hogwash, if this was the case how come Steve you are comming up with RONS from out of nowhere that haven’t even been mentioned to the public yet and is seeking to place these ahead of any much needed tranport improvements.
You must be insane, PT Patronage is skyrocketing rapidly, especially on rail, if nothing is done about constructing the CDB rail loop now, Britomart will be in severe deadlock in years to come and its all your thought you useless bald headed Minister, spends 90% of his time head placed in the sand!!!!!!
Are these roads going to be PPPs? Are they going to be tolled? If Joyce’s economic benefit of these projects actually existed surely there must be hundreds of private builders willing to build and operate them for him. After all aren’t National the party of free enterprise?
I agree to the words of Topcat. you have completed your project successfully now its time to going for tolled.
If Don Brash returns he’s certainly looking to cut government spending, identifying the $300m/week that we’re borrowing to be unsustainable.
These roads would have to be on the chopping block.
That is true – we just have to convince the ACT Party that not all roads are created equal. They have a peculiar perspective that roads deliver freedom and liberty, while public transport is equivalent to communist social planning. Anyone that gets stuck in traffic every day with quality public transport alternative can tell you that cars do not equal freedom.
Don’t be so sure it will be roading that will be cut, this is quite a scary read from him in 2004.
http://www.donbrash.com/roading-now/
Also more recently as part of the 2025 taskforce where while calling for more robust business cases pretty much can be summed up by roads are the best option.
http://www.aucklandtrains.co.nz/2010/11/05/brash-questions-big-road-projects/
P.s. Note the typo in the last sentence; it should read “with *no* quality public transport alternative.”
This is probably dated now, but I compare the roads of national significande in NZ with the Roman empire. One of the first things the Romans did in the countries they conquered was to build a roading network. Now, do you think the government is in league with our delightful free Trade partners the Chinese government in the building of these RONS? The way it is being done is with almost total disregard to the environment and the people in the towns living close by. They are going to mean ease of access for all the exports to China from our once beautiful country.
Sure in the short term they are bringing alot of work for lots of people and companies but when that dries up what are we left with?