It was good to read in yesterday’s NZ Herald that the Labour Party has committed to cancelling the Puhoi-Wellsford “holiday highway” if they’re elected at the end of the year. While the polls indicate that the chances of Labour actually being elected are reasonably remote, if we assume that they retain this policy into the future, the long timeframes for actually planning, consenting and eventually constructing Puhoi-Wellsford should mean that the project never goes ahead in its current form, as eventually Labour will become the government again. For those opposing the highway, it would seem now that the key is trying to delay it until there’s a change of government.

Already $11.4 million has been spent on the project, while NZTA have committed to many more tens of millions being spent furthering the design, purchasing property (a spend that I suppose can always be recouped) and getting all the documentation prepared for the consenting process. So it seems inevitable that more money will disappear into a project that now seems unlikely to ever be completed – a bit of a waste when there are so many competing demands for transport funding at the moment.

It’s inevitable that Labour’s commitment to cancelling the project will annoy some. The NZ Council for Infrastructure Development is already scaremongering that Labour’s policy will destroy Northland’s economy (I never knew saving 10 minutes would have such an impact). I suspect Labour won’t get much gain from the decision until they do the obvious: which is to say that the billion or so saved from the holiday highway (assuming that they still do operation lifesaver or something similar) will be redirected into paying the government’s share of the CBD Rail Tunnel project. That might still leave sufficient funding available to upgrade the North Auckland Railway Line or even complete the rail branch to Marsden Point. $1.7 billion can go a pretty long way when redirected to a series of more sensible projects.

Given that the holiday highway has now become a major political football, it’s probably worthwhile putting together a lot of the background information I’ve looked at with regards to this project and clarifying exactly why it’s such a stupid project. Ultimately there are six key reasons why I think Puhoi-Wellsford is a waste of money. Broadly, they are:

  1. It is not cost-effective and has a low (though still inflated in my opinion) cost-benefit ratio.
  2. It will have significant adverse environmental effects.
  3. It works against Auckland’s planning strategies and will encourage urban sprawl.
  4. Its justification is based on unrealistic traffic growth expectations.
  5. It uses up a lot of money that could be far better put to use on other projects.
  6. It takes far too long to implement and will mean people continue to die on the existing road over the next decade or two.

Obviously there are many connections between these broad points, and I’m not going to work through each one of them individually – but as you can see there are a number of serious issues with this project that mean it’s a stupid idea.

Starting first with the cost-effectiveness of Puhoi-Wellsford, this has been informed by a business case put together for the project in late 2009, which informed the January 2010 “Project Summary Statement”. That statement noted the project had the following cost benefit ratio (depending on whether wider economic benefits were in or out, and what discount ratio you used):It’s worth remembering that projects are assessed on an 8% discount ratio, with the lower discount levels only used for comparative purposes. In terms of the “Wider Economic Benefits”, its interesting to note that the Project Summary Statement makes a fairly big deal of them, but barely a year earlier the same company that put together the 2009 business case had this to say about what it termed “Regional Economic Impacts”: Labour MP David Shearer did a bit more digging, through a series of written questions, about the exact nature of the wider economic benefits – and in particular whether they complied with NZTA’s standard manual for how WEBs are calculated. He got this response from the Minister of Transport:

David Shearer to the Minister of Transport (23 Mar 2011): Were the wider economic benefits used in the cost-benefit analysis of the Puhoi-Wellsford road of national significance calculated in a manner consistent with the New Zealand Transport Agency’s economic evaluation manual?

Hon Steven Joyce (Minister of Transport) replied: The NZTA’s Economic Evaluation Manual contains procedures for assessing agglomeration benefits, which are one type of wider economic benefit, and agglomeration benefits have not yet been assessed or included within the Puhoi to Wellsford business case BCR. Therefore, the NZ Transport Agency did not assess wider economic benefits for the Puhoi to Wellsford BCR as per the Economic Evaluation Manual.

Even more intriguingly, an independent assessment of the economic benefits of all the roads of national significance, which was undertaken by SAHA consultants, made a number of adjustments to the cost-benefit ratio of the Puhoi-Wellsford project (along with a number of other RoNS):
Business cases are generally calculated over 30 years, and as the Minister wants the Puhoi-Wellsford project completed by 2020, that means the benefits should be truncated at 2049 rather than 2059. My understanding is that that 2059 date came from NZTA’s initial assumption that 2029 was a more realistic completion date. This was confirmed by the Minister in an answer to another question from David Shearer:

David Shearer to the Minister of Transport (23 Mar 2011): Further to the Minister’s answers to questions 01514 (2011) and 01506 (2011), why did the business case for the Puhoi to Wellsford road measure the opening date of the Warkworth to Wellsford section as being 2029 when NZTA are proposing to complete the section of road by 2022?

Hon Steven Joyce (Minister of Transport) replied: The New Zealand Transport Agency advises me that the opening date of 2022 for the Warkworth to Wellsford section of the route represents an aspirational completion date for the project, reflecting the desire to make a substantial start on all the Puhoi to Wellsford RoNS sections within 10 years. The Business Case opening date of 2029 for the Warkworth to Wellsford section represents the Agency’s estimated timeframe for the project when the Business Case was completed.

I’m not quite sure the extent to which the GPS4 updated funding total made much of a difference, but it certainly seems as though the actual BCR for this project is closer to 0.4 than to what NZTA have been telling the world.

The bizarre thing is that even then I think that the benefits of the project are being grossly overstated. The business case relied on an assumption that in the “do nothing” scenario the average speed of vehicles along the route would be merely 60 kilometres an hour – which seems bizarrely low. As Warkworth is the major source of delay points, one would think that a bypass would solve much of the congestion issue there at a fraction the price. Furthermore, the business case relies upon massive increases in traffic volumes that seem a bit out of whack with what’s been happening in recent years. To finish the point off about cost-effectiveness, perhaps the final word should go to something Martin Gummer (former head of transport funding agency Transfund) said in a December Herald opinion piece:

This is one big difference between the projects. The CBD rail loop is an all or nothing project. A loop that stops halfway is not a loop but a dead-end – or loopy.

The holiday highway, however, has a lower cost alternative – improvements to the existing road, that could defer replacement for a further 20-30 years. Corners could be smoothed, alignments improved, maybe a short bypass built around Warkworth, and three- or four-lane sections with a central wire barrier built in the Dome Valley.

If one is truly interested in cost-effective improvements to State Highway 1 north of Auckland, the answer is pretty obvious: bypass Warkworth, extend some passing lanes, do some safety improvements in Dome Valley and then take a look at things. The fact that the Minister of Transport is unable to see the advantage in such an approach really does suggest that the project is more about monument building than actually about responding to what’s needed.

The next big issue I have with the project is in relation to its environmental effects: both in terms of its actual impact on the environment it will pass through and also how it will encourage urban sprawl in the northern part of the former Rodney District. A detailed analysis of the project’s environmental effects can be found in this post but to summarise we’re probably looking at another three or four of these: Plus a simply massive amount of earthworks, as shaded blue in the diagram below: I’m sure there will be plenty of battles over the project’s environmental effects when it gets to the consenting stage, and judging by what has happened with the Waterview Connection project, NZTA shouldn’t simply assume that they will be able to get consent easily: my feeling is that the board of inquiry for the Waterview Connection (subject to the release of their final decision of course) have set the bar pretty high in terms of avoiding/mitigating adverse effects if projects pass through the “fast-tracking” process.

Another aspect of the project’s environmental effects is less easy to pin down, but potentially more significant over time: and that is the way the project will encourage urban sprawl north of Auckland. This works against Auckland’s growth strategies that have been seeking to maximise the growth of Auckland through intensification and limit urban sprawl – yet another potential example in Auckland’s sorry history of having transport and land-use development strategies that are completely at odds with each other.

If we now turn to safety concerns, this is where the holiday highway proposal really annoys me, because it is literally leading to lives being lost. There is no doubt that much of the Puhoi-Wellsford road is very dangerous at the moment. Between 2000 and 2009 there were 41 fatalities along State Highway 1 between Puhoi and Wellsford, along with 31 serious injuries (between 2004 and 2008) and 118 minor injuries between 2004 and 2008. 25 of the fatalities were between Warkworth and Wellsford, through the notorious Dome Valley, while 16 were between Puhoi and Warkworth. Most of the deaths were from head-on collisions, suggesting that they could be prevented by simply putting a concrete median barrier down the middle of the road.

But with the holiday highway proposal, chances are we’re not going to see any further improvements to the road for the next decade or so: meaning another 40 or so people are likely to die as a result of Steven Joyce choosing to proceed with the holiday highway instead of immediately making safety improvements to the existing road. When I helped put together the Campaign for Better Transport’s “Operation Lifesaver” proposal this was top in our mind: how can we improve safety along the road quickly and cheaply. There’s quite a lot you can do for a fraction the price of the holiday highway.

And finally, perhaps the main reason (along with safety) I oppose the Puhoi-Wellsford project is the opportunity cost of it: what can’t we fund because we’re sinking $1.7 billion into this pretty dodgy project? The obvious one is the government’s contribution to the CBD Rail Tunnel: of let’s say around a billion dollars – which would make up half the cost of that project. Other projects could include a series of road upgrades throughout Northland, improvements to the North Auckland Railway Line, potentially constructing the Marsden Point rail spur and so forth. As I said above, you can do a lot with $1.7 billion. In this blog post I tried my best to stack up the CBD Rail Tunnel against Puhoi to Wellsford, being as generous to the holiday highway’s business case as I possible could – but even then I came up with the following comparison: The graph below shows how Puhoi-Wellsford stacks up against the other roads of national significance (and the CBD Tunnel, which I put in): Perhaps what’s most interesting is the comparison between the benefits of the Victoria Park Tunnel and the Puhoi-Wellsford road: with the VPT’s benefits looking around four times that of the holiday highway – even though it’s one quarter the price. In fact, Puhoi-Wellsford’s benefits look minuscule compared to all the other RoNS: even though it’s one of the more expensive ones!

Overall, by any measure I am convinced that Puhoi-Wellsford is a stupid project. It’s a waste of money, it will ruin the area’s environment, it will cost lives because it takes too long and it will prevent far more worthy projects from proceeding. Which is why I am very glad to hear that Labour opposes it.

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13 comments

  1. It is not credible that such an expensive project THAT DOES NOT GIVE US ANYTHING NEW could have any sort of productivity gain in anyway in proportion to its cost. If there was no land route north of Auckland then the claimed outcomes could be believed. There are already two roads and one rail line through here and they are not over utilised. WE do not need an forth option, but smaller and cheaper improvements to the existing routes, and the rail line. 2+ billion would go a long way to improving all three that will take effect much sooner and give far greater return on capital much quicker.

    With the completion of the WRR road travel from South and Western Auckland is likely to prefer SH16 more, so a few more passing lanes on this road would achieve a great deal at much much less expense.

    Puhoi to Wellsford is not only not necessary, it isn’t even nice to have.

    1. Patrick I agree. Over Anniversary weekend when State Highway 1 was closed (gosh, do we need it at all??) the western route was the only one open and it seemed to handle the traffic just fine apart from a jam just before Wellsford. A simple bypass of Wellsford and some more passing lanes would turn this into a very functional northwestern route.

      It’s unfortunate that Labour missed the opportunity to make it clear that while they are canceling the project they support something like operation life saver. Otherwise it will appear that that status quo is what they support (I’m assuming they will actually do something to fix the issues with the road north of the tunnels).

      And typical that the Herald manages to dig out the day after boxing day photo of traffic jams at the tunnel to illustrate the cancellation proposal. I guess that is part of the problem- a large percentage of the population will never catch the train so wonder why they should pay for it, while they will use that road (and the infrequent users will more than likely be users at holiday times) and can see the benefit of the road for that one trip. Apart from a minor toll they don’t directly pay for it either.

  2. “agglomeration benefits have not yet been assessed or included within the Puhoi to Wellsford business case BCR.”

    Gee I wonder why?

    1. hmm … could they be negative perhaps? I.e. Pu-ford causes a transfer of employment away from existing urban areas, thereby lowering urban density and undermining potential agglomeration economies? How very sad.

      1. Roads always go in two directions. The more likely outcome is that it wouldn’t have brought more jobs to Northland but would have brought more Northland workers to Auckland.

  3. Also taking into account Mr Selwood’s past candidacy for the Nats (in 2005), it’s not surprising. Bullshit has effectively been called on Prostetnic Vogon Joyce’s pet project.

  4. Josh, encouraging urban sprawl is what a number of locals are hoping from this road (not me). A few months ago I was talking to an NZTA consultant (one of the many that they seem to hire) who told me that the growth percentage in the eastern seaboard suburbs of Omaha, Snells Beach, Matakana et al is significantly greater than the growth percentage of Warkworth. The conversation inferred that the road was really for the benefit of those eastern seaboard suburbs and the large amount of future development that is forseen for that area. When you put that conversation together with the fact that farmers are now being rated off their eastern seaboard land by the Super City – leaving the farmers with few options but to sell to developers then its easy to start wondering who in the Super City is secretly working for the developers. Ms Webster is a very vocal supporter of this road and the high value eastern seaboard land would bring in a lot of money in rates – more if the land was developed than if it were left as farm land. BTW – the Auckland Plan made very little mention of what is intended for northern Rodney so we are left to join the dots (perhaps creating images that are not intended).
    That said, there are a significant number of locals who don’t want the road as they see it as being the catalyst for Orewa/Silverdale type development of the area – thus losing the rural “feel” of the place.

    1. the Auckland Plan made very little mention of what is intended for northern Rodney so we are left to join the dots

      Probably because Brown’s vision is to retain the Metropolitan Urban Limit and thus intensify within the existing built-up area instead of sprawling north. What happens to Rodney et al is down to the final form of the Plan, which is still under consultation.

  5. Its really quite appalling that the political party that is supposedly more “business smart” than the opposition would sink so much money into this, when the alternatives are much cheaper and much more cost effective. It doesnt make business sense to build this motorway. I really don’t understand why they want to build it. Its so clearly a poor investment, why do they continue to promote it? I honestly can’t understand it.

    For a fraction of the cost, they could upgrade the railway line, build a link to Marsden Point and make Kiwirail (a State owned company!) much more profitable. It just doesn’t make sense!

  6. @Jeremy: it’s likely to do with Big Trucking wining and dining them. Or the rumours that Prostetnic Vogon Joyce wants a tilt at Lockwood’s seat when he retires.

    And the funny thing is, Goff’s plan to ditch the Holiday Highway probably qualifies as wedge politics. In this case, if done well, it could just drive the proverbial wedge between the petrolheads and the deficit hawks. Talk about hoisting wedge politicians on their own petard.

    If the left’s supposed weakness is ‘political correctness’, then the right’s weaknesses are probably hypocrisy and the Good Ole Boys Network. They cut all sorts of stuff in the name of credit downgrades, but there’s no such restraint with pet projects like the HH.

  7. In these days of economic uncertainty, flexibility is important. Who knows if Europe will blow up next week massively affecting New Zealand’s income or tomorrow we have another natural disaster affecting New Zealand’s expenses.
    There seems to be some consensus around a need for a bypass of Warkworth. Surely it would be a flexible strategy to start the Puhoi to Wellsford project at Warkworth and progress south along a route that 11.4 million has already been spent on finding. If the construction gets to Perry Road and economic good fortune has not smiled upon New Zealand, we have a Warkworth bypass producing at least some of the economic benefits. If however commodity prices are holding up or indeed we have gone through global monetary reform (slim chance of that)then the bulldozers could push on through to Puhoi before turning around and tackling the seemingly more difficult engineering feat of Warkworth to Wellsford.
    I’m not an engineer so this seemingly logical approach may have practical flaws due to the need to fill valleys with hills along the route, but I would like to see at least some action taken to make some progress.

    1. Really sound idea Greg that has been suggested on this blog before. I think you’ll find it will never happen this way under the current administration as this bypass would likely deliver around 70% of the benefits of the project for around 10% of the cost meaning the southern section alone would never be justifiable cost wise.

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