This carries on from my first post about the briefing from the Ministry of Transport to the incoming ministers.
The report makes only brief mention of what will likely be the biggest issue for transport going forward, funding. We have already seen the NZTA have to do a deal with the Auckland Council to help cover some of their funding shortfall but the next graph shows that we will only be able to cover the planned expenditure with a ‘high growth’ scenario.
Figure 18 shows projected NLTF revenue and investment projections to 2030.
Under ‘median’ and ‘high growth’ revenue scenarios, the revenue raised will be able to fund projected investments. Our modelling predicts that high oil prices and lower GDP growth could reduce revenue to the point that it is insufficient to meet current projected expenditure. However, higher oil prices would also reduce the demand for road travel and expenditure on roading, and increase the demand for public transport
NOTES:
1. High oil price scenario is based on the Ministry of Economic Development’s oil price reference scenario (US$ 115 per barrel in 2009$ by 2030) with appropriate fleet replacement adjustment.
2. Low GDP growth scenario assumes annual GDP growth is 1 percent lower than current GDP growth path.
3. High GDP growth scenario assumes annual GDP growth is 1 percent higher than current GDP growth path.
4. The large increase in NLTF revenue observed since 2008 is due to 100 percent hypothecation of NLTF (effective from September 2008).
5. Expenditure projections from 2011–12 to 2021–22 are sourced from Government Policy Statement (2009 and 2011 versions). Thereafter, a $100 million increment per year has been assumed.
A ‘high oil price’ scenario would erode FED revenue with the gap between revenue and currently forecasted expenditure increasing rapidly after 2020 — under this scenario, revenue would be $4.9 billion less than forecast expenditure over the periods from 2021 to 2030. This scenario is in the nature of a risk rather than a certainty
I don’t know about others but to me it seems like they are playing a game of chicken with oil prices, this might help to explain the sudden rush we are seeing with low value projects and many of the RoNS. I think this will be an area of increasing concern and one that we will need to keep an eye on closely.
One area that is made pretty clear is that there is going to need to be a lot of continued focus on Auckland (and it’s surrounding areas) in the future due to the amount of population growth that is expected. Auckland is expected to take about 60% of the national population growth while the Waikato and BOP regions will also get bigger. This is best shown in the form of graphs and these two from the document help to highlight the change we will see over the next 20 years.
This kind of population growth will put a lot of pressure on Auckland’s transport system, as we are already seeing many of the easy/low cost projects have already been completed which means that to dramatically expand capacity things start getting very expensive regardless of the mode i.e. in the billions of dollars. The MOT picks up on this a little bit: (note – when they say to urban transport it appears they are just referring to all forms of transport in urban areas)
61. Because the majority of New Zealand’s growth will be in urban areas over the next 20 years (primarily in Auckland) urban transport networks will play an increasing role. This means they will need to become more effective through better use of infrastructure, urban planning, and demand management tools.
There is also a bit of paranoia starting to creep into the report, in this case a paranoia about rail, the high level comment in the section titled Investment in Roads says:
Roads are critical to the efficiency of urban centres, with private motor vehicles and buses providing transport modes for most people. This importance will continue.
Rail’s role is supplementary. It provides commuter rail travel in Wellington and Auckland and reduces road congestion.
Rail provides about 15 percent of freight movements. This share is expected to remain about the same through to 2031.
In Auckland, commuter rail travel will account for about 4 percent of peak commuter trips in 2041 compared to less than 2 percent now
So for a comment about investment in roads we get absolutely nothing about the governments investments in the RoNS yet we get 3/4 of the comments about rail. This paranoia is something that gets repeated in other parts of the report, especially the last comment about the percentage of trips.
Carrying on with the report we get to the usual traffic growth predictions that suggest unending growth in traffic volumes despite both local and international evidence showing that is not the case, even the graphs they present show this yet they seem to expect the valve will keep being opened further, this also related directly to the amount of money that will flow into the NLTF. One thing I noticed is they also show a high growth path but never show a low one which could quite possibly happen with the way the world economy is struggling along at present.
The last area I will touch on are the comments related to Auckland. As mentioned earlier the shear amount of growth that is expected to happen in the region will add considerable pressure to transport networks that has the potential to soak up large amounts of central government transport funding. They suggest that there is a $10 to $15 billion funding gap and once again we see the rail paranoia come back as in relation to the transport projects outlined in the Auckland plan we get:
The draft Plan emphasises a shift to public transport to accommodate future trip growth and reduce congestion. It proposes over $5 billion of new rail capital spending to support this goal. The proposed spending on rail is part of an ambitious capital plan which proposes some $22 billion of new capital spending on major Auckland transport projects, predominantly roading related projects, over the next 30 years. The draft Plan canvases new funding mechanisms, with an emphasis on a road pricing scheme, to fund this programme.
So $5b or slightly over 20% of the planned funding is in rail yet that is considered ambitious while around $17b, planned mostly for roads isn’t. You would think that culling a few excessive roading projects would be recommended however slightly later directly responding to the draft plan we get:
The draft Plan does not address forecast congestion on the State highway network
Much of the forecast congestion occurs on the State highway network. The draft Plan has a heavy focus on public transport, which will reduce pressure on the State highways. However, the draft Plan does not
propose significant new highway capacity (with the exception of the proposed additional Waitemata Harbour Crossing and a possible new connection between the southern and southwestern motorways).
Those two projects alone will cost around $7b which is more than the suggested rail improvements and yet they say there isn’t enough focus on the state highway network. The MOT have also claimed that many of the projects in the draft plan “may provide limited value for money” which is odd considering that many of them haven’t even been assessed in great detail yet. Out of step with most of the report which tends to avoid making specific suggestions they have given an idea of some measures that could be taken to make better use of existing roads.
(a) improvements to traffic light timing and control
(b) variable lane markings and signals
(c) high occupancy vehicle lanes to increase the passenger capacity of bus lanes
This basically equates to “lets give cars more space”, especially the last one which is just a fancier way of saying that we should allow cars in bus lanes (also worth noting that this is the only time in the main part of the document that the word ‘bus’ is used). In the end the MOT’s recommendation on Auckland seems to be to do nothing as they say that there will be a little bit of breathing space after the current group of projects finishes before the next major round of projects needs to be decided upon. My feeling though is that in two years time when the EMU’s start rolling we will start to see some really major jumps in rail and other PT use (from feeder buses etc.) and that the window the MOT thinks it has will actually be quite small.
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So is there an economic imperative to implement an effective decentralisation plan? It’d be cheaper and easier to make the regional cities grow. The land costs 10 minute bike ride from the Square in the centre of Palmy, are a bit cheaper than land costs 10 minutes bike ride from Aotea Square.
How exactly do we make the regional cities grow though, how would this be cheap and easy? Auckland and the other major cities are growing because that is where people want to live (for the best access to employment, services and urban lifestyle) and that is where most businesses want to locate (for the best access to the widest job and consumer markets). Agglomeration benefits and demand for them work ‘naturally’.
What measures would cheaply and easily overcome the huge natural demand for growth to agglomerate in the major centres, and redistribute that to places where there is no demand for growth? I can’t think of any much short of a soviet style planned economy. Australia tried that scheme in the Whitlam era with a huge package of regional infrastructure, investment in industry and tax breaks for companies to relocate to regional centres. The outcome was pretty negligible, Sydney, Melbourne and SEQ continued to grow masssively while the likes of Albury-Woodonga continued to be small regional centres.
I don’t have an answer, but I don’t want to live in a country with a single thriving super-city and a lot of depressed looking nowhere towns. At the moment regional NZ is a bit of a mixed bag. I was in Havelock North a few weeks ago and it is surrounded by cool modern wineries while the locals are building themselves some funky houses. But for every Havelock North there are a dozen ugly towns like Dargaville, Levin, or Huntly. I think part of the problem is that a lot of these very small places were located within easy traveling distance for farmers on horses, and were bypassed when those farmers bought their first car and found that a nearby town was easy to get to and had better services. So now these small local centers have no purpose, never will, and just sit there decaying with a state highway running through the center and an unemployment problem.
I think government has some influence. There is no reason for some agencies to be located on parliament’s door step and distributing them around the country would anchor a few regional economies. It would also help avoid issues with a natural disaster in Wellington taking out most government functions in one hit. But that is still tinkering at the margins of regional vibrancy.
Hey Obi. Levin has its charms.
It suffers from winter woodsmoke (like just about everywhere in NZ), laissez-faire burning-off (and a regional council that doesn’t give a damn), the mixed fortunes of Highway 1 (traffic plus customers), and is still hurt from whatever industries it once had closing down. It does have a couple nice beaches, the lakes (Lake Horowhenua does need a clean up), and there is mountain-biking and hiking in the hills. The local market-gardens mean fresh food is abundant and cheap.
It could do with a new bike safe crossing of the Manawatu or two, and a few signs at the ends of paper roads telling us where we could walk, and a local bus service probably needs another go.
But it is exactly the kind of town that needs devolved government functions and more industry. $400,000 buys you almost nothing in Wellington or Auckland. But in Levin $400,000 buys you a nice house on acres, 10 minutes bike ride from 3 supermarkets, numerous roadside fruit and veg shops, a department store, a cinema, etc. etc.
It’s a real town and it’s a better place to live than nearby ultra-suburban and boring-as-bat-shit Paraparaumu.
6 trains a day between Palmerston North and Wellington would do Levin the world of good, and it does seem that the Wellington-Levin road corridor is going to be improved despite what common-sense may say about each bit of it, which does mean that transport connections are going to be improved, so it does make sense to name the Welly-Palmy corridor an area for more development, and could take growth pressure off a bursting at the seams Auckland. Add international flights back to Palmy and Levin is an hour or less from 2 international airports.
Moving government services into small towns just won’t work, for starters we already now that most people don’t move house as much as frequently as they move jobs so most people who currently work for government agencies probably aren’t prepared to move far away from where they are likely to have their families settled, especially if they already have support networks nearby like family and friends. The next issue is that even if you were able to double the size of some of these small towns it still won’t make them that much more viable from an employment perspective. Say you have a senior manager or specialist profession who decides to leave for another job, how many people in the a small town would have the skills to move into that kind of a role, this means that to attract someone with decent talent you would likely have to bump up the pay rate quite a bit so you have just increased that ministries costs. Most places outside of the main cities wouldn’t have the office space needed meaning expensive construction projects to build them and leaving large empty buildings in Wellington.
There would be quite a few other negatives to things like this and in the end it is no different to communist social engineering and would likely be strongly resisted by many people.
The last time I drove through Levin I think I spotted a cool looking new city council building on the eastern side of SH1. At least I think it was Levin. But it was the only building I saw that was worth a second glance.
There must be 700 people working at Police HQ on Molesworth St… it is a 14 or 15 story building so I’m guessing about 50 per floor. If Police HQ were in Levin then that’d be around 2000 police and dependents and that would create the demand for teachers, car mechanics, waiters, and maybe 1000 other non-police jobs. It would mean that Levin was less exposed to commodity prices since government work tends to be steadier. It would mean that a single earthquake isn’t going to take out the Beehive, Defence HQ, Police HQ, Red Cross HQ, Ministry of Health, and the Fire Service HQ which are all within a couple of hundred meters of the same fault line. And it might anchor enough businesses that Levin becomes a place to stop for longer than it takes to fill up your tank and grab a BigMac.
Oh, and Matt L… I’m not advocating that this be done suddenly. Or to tiny places. You should have little problem hiring staff in, say, Hastings or Dunedin. As for Wellington real estate prices, they increased a lot under the last Labour government with all the public service hiring. Landlords made a killing, but I suspect it has forced out non-government business and that can’t be a good thing.
The UK have been moving agencies out of London gradually for a while. I was living in Derby when the prisons headquarters moved in to town. I think it might have been a division of the Home Office. Anyone who has applied for or renewed a UK drivers license knows that they’re based in Swansea. They’re still heavily concentrated in London though… There are more combat troops inside the M25 than there are in Wales, because obviously central London is a better place to train infantry than a sparsely populated mountainous area 😉
Oh please. It would hardly be “communist social engineering” to open a government office in Levin (or New Plymouth or Dunedin or Invercargill)
I do know there are a few suspicious people in Levin who go to service clubs and the bowling clubs. I hope someone is monitoring those kulaks closely for seditious activities. They might be planning to kidnap Treasury and bring them to the adventure playground for the day. (Actually going by their latest output Treasury does need to get out more, so maybe that’s not such a bad thing.)
It would probably be financially cheaper but not necessarily economically cheaper due to the agglomeration benefits of having more people and businesses in the one place i.e. say an international company was to set up an office in NZ, they would far more likely choose Auckland than Palmy due to the size of the labour market, even if you doubled the population in Palmy.
You also ignore the reasons why Auckland is growing so fast, it has the lowest median age of any region in the country which means there tends to be a higher percentage of births, it is the city that most people who emigrate to NZ arrive at and there is more likely to be their friends, family or their community here. On top of this the city has some pretty outstanding natural beauty (not that other areas don’t) as well as a decent climate. There are probably a few other reasons as well but when all of those elements are thrown together it is not surprising that Auckland is growing so fast. Trying to force people to move out of Auckland would require some pretty extreme measures and likely cost more than gains.
You mean to say the spatial plan proposes to spend $5b on rail versus $17b on roads? I thought it was meant to be a giant shift towards public transport? WTF is going on Len Brown?
In case you hadn’t noticed, this is the National Party’s Ministry of Transport; Brownlee and Joyce’s beast. Len Brown and the sensible members of our community will have to fight them – until we get them out of parliament.
I’ve been saying for a while how profoundly ideological this government is. It’s now transparently obvious to all that this is the case.
“In Auckland, commuter rail travel will account for about 4 percent of peak commuter trips in 2041 compared to less than 2 percent now”
So we spend 20% of the capital investment on rail and also subsidise operational rail expenditure by about 50% and in 30 years time rail will still be an afterthought? I’d assumed that we were aiming for something around 30% or more of all commuter trips.
Does anyone know what the corresponding percentage is for Wellington? Surely not as low as 4%.
Based on that it is suggesting that we should spend even more on a mode that is forecast to see its share decrease. To be honest, I don’t believe the figure would be as slow as 4% given some of the other dodgy work that the MOT has produced i.e. assuming unlimited roading capacity in their CRL review, not taking into account that multiple EMU’s will form each train etc.
Talking of ‘peak commuter trips’ is perhaps a bit misleading, they really mean ‘every work trip in the region at peak time’. In the near future the real value of rail comes from allowing high value long distance commutes to occur off the road network. A good example is actually the Northern Busway, the few thousand peak trips per hour is almost negligible on a regional scale, but it does carry 40% of peak trips in the harbour bridge corridor. The rail corridors have an equivalent effect on the western and southern corridors.
“Talking of ‘peak commuter trips’ is perhaps a bit misleading, they really mean ‘every work trip in the region at peak time’. ”
I vaguely recall reading years ago that 70% of all trips in Greater London are made by private vehicle. Which amazed me given the Tube system, train system, and bus system that go just about everywhere. Trouble is I can’t find a reference for this figure anywhere on the web. If true, it emphasises that most London trips are around the ‘burbs rather than in to zone 1.
That is a pretty common sort of number in many cities worldwide because they count all journeys i.e. someone just popping down the road to get a loaf of bread. The trouble here is we get get people who say that because the number of trips made by car is high that we should only invest in roads and should shut the rail network down. Imagine what would happen if someone seriously suggested that happen in London.
We also get the same sort of thing with freight movements. This report goes to great length to say how the rail network only moves about 15% of freight around the country so is effectively only of minor importance however in one small point they say that 45% of products destined to be exports are moved by rail. Again this difference is they are counting everything possible as road freight e.g. a truck the delivers furniture.
I’ve made three return trips today: one about 800m to the corner cafe on foot, one about 3km to the supermarket in the car, and one 17km into town on the busway. To say that only 1/3 of my trips were by public transport it perfectly true, but it’s pretty meaningless.
This report is laughably and dangerously nuts; average oil price 2011 $USD 111 /barrel (Brent) so is it really credible that in 2030 it will be $115? In otherwords no real change, really? And this is under a ‘high growth’ senario. And only the most cornocopian fantasists or oil investment promotors (like Yergin) ever try to pretend that this could be the case.
But anyway I don’t know what price or even availabity of oil will be like in 18 years either but for any predictions to be even slightly credible they should run a range of possible variations to their assumptions. This is another one of this ministry’s backwards reports: They clearly start with the answer, how can we justify what we want (motorways) and define away any problems. How can they do this? Easy, they’ll never be held to account for these numbers, but they will be quoted as fact by the minister and other interested parties to justify the actually unsupportable plans with our money and futures.
Same goes for all their projections, vehicle kms travelled etc…. They will be wrong because all their assumptions are too narrow. They all in fact rely on nothing changing. Don’t we, though, ‘live in a dynamic world’ -Rt Hon John Key.
I am quite concerned with this section in the first briefing:
Not having consistently good output is definitely a concern. They like other government departments are also on a cost cutting drive which is primarily about reducing staff numbers.
Frankly on the basis of this work they all should be sacked immediately for taking the piss.
This report shows the thinking in MoT without the filter of Stephen Joyce. They seem more concerned about peak oil, shortfalls in the Land Transport Fund, and the low benefit:cost ratios of recent projects than Joyce seemed willing to admit. This advice is more the collective opinion of a number of senior people who probably started their careers as road engineers than advice based on sound research. An Australian study of peak oil for the road industry (click link here: http://www.aspo-australia.org.au/) showed what ws termed the “2017 drop-off” in oil production. Yet most road agencies and car manufacturers around the world would like MoT be forecasting an increase in fuel use. Who will be priced out ? It will be the poor and middle class of New Zealand and the USA before the wealthy of China. This will have a large impact on Land Transport Fund revenues. A 2030 price of $115/barrel in 2009 dollars is laughably low.
The report should be essential reading for Len Brown and those advising him. It shows what myths need to be challenged in putting the case for the CRL and other PT investments. If MoT and many Aucklanders think in terms of motorway lanes, PT capacity should be expressed as the number of “virtual lanes” travelling on PT at peak hour. For example, the Auckland Harbour Bridge has perhaps 4 virtual motorway lanes travelling by bus at peak hour, which at current growth rates would be 6 lanes in 10 years. A completed CRL would have a capacity of 12 virtual motorway lanes, whereas the current useage of rail would be about 4 virtual lanes. The tracks leading to Wellington station would be perhaps 6 virtual lanes. A graphic artist should be able to convey this on a stylised map by overlaying images of lanes on images of buses or trains. This would emphasise PT investment as a cost-effective way of deferring road investment.
Very good Malcolm. And graphics wizards out there that wanna have a crack….!
Obi said:
Yes you’re approximately right there Obi. Same with greater New York too, and probably most cities in the world (perhaps not Tokyo). However, if you look at peak time trips into central London you’re probably looking at a 90% modeshare for public transport at least.
What this highlights is the irrelevancy of the total trip modeshare split. Because only 30% of trips in London are by public transport, does that mean they only spend 30% of the budget on public transport? Of course not, because many of the road trips are short trips “to the dairy” and don’t use up much transport capacity. For long trips to the city centre at peak times – the trips that put the most pressure on the road network, the importance of PT comes through.
Same lesson (admittedly on a smaller scale) can be made in Auckland. Who cares that only 2% of trips are on the rail network? What about the percentage of peak time trips to the CBD that are over 15km in distance? The trips that really hammer the transport network? I suspect your rail/busway modeshare for those trips would be enormously higher.
Good point Mr Anderson, I think that’s why each trip added to the rapid transit network generates such high transport benefits, because they are long trips at peak times that take people off congested parts of the road network.