There are not many people these days that would say the Northern Busway has been a bad investment with most people wanting to see it extended, both at the CBD end and also to Albany and eventually Silverdale in the North. The busway has become so popular that now about 30% of people crossing the bridge towards the city in the morning peak are doing so on a bus which is pretty impressive and for one thing has already helped to delay the need for an extremely expensive additional crossing. One question that I have been keen to get an answer to though is just how successful it has been and the NZTA as part of my OIA have kindly provided me with the the original business case for the project (1.1 MB) which makes for some interesting reading.
The business case was completed in 2004 and investigated three options, the busway, the busway but also with T3 vehicles and the busway with T3 vehicles initially but then changing to T2 from 2015 once other projects like VPT had been completed. It was estimated to cost $214.6 million although they note that the North Shore City council planned to spend some more money to improve the stations which would help build patronage. Here is a summary of the costs and benefits of each option:
The cost of the busway ended up being about $294m of which $210m was for the busway itself and $84m was for the stations. As you can see though, comparing the costs to the benefits the option for the busway actually came out with the lowest score with a benefit cost ratio (BCR) of only 1.2 which was much lower than I had expected. So the next question I had was what figures went into the business case to arrive at these benefits, one factor that would make quite a difference is the discount rate used. Our former admin has done a number of posts that explain discount rates and the impact they have on investments we make. The standard NZTA rate currently used is 8% however for the busway a figure of 10% was used (I assume that was the standard rate back then). Reviewing the business case using current NZTA methodology would most likely result in higher BCR numbers across all three scenarios.
The biggest impacts though come from the number of people using the busway as well as the benefits that accrue to other road users who aren’t using the busway. The results of the modelling for two years are included in the paper and these are 2011 and 2021 and this is where we can see how many people were expected to use the busway.
So they suggested that in 2011 we would have about 1630 people using the busway to head to town in the AM peak and in 2021 that would rise to 2174. Of course these are likely to have been fairly conservative numbers but how do they compare to what we actually had. We don’t have direct numbers for the busway but we do have numbers for the harbour bridge which would also include buses from Onewa Rd, Auckland Transports annual report for 2011 tells us that over 8600 people crossed the harbour bridge by public transport, while the report we saw last week shows that at the height of the peak about 5000 people cross the harbour by bus. Of course a decent chunk of these numbers will come from Onewa Rd but the majority have likely travelled along the busway meaning that we are already far exceeding the numbers forecast above.
What this means is that the busway has already delivered significantly greater than expected and will continue to do so. If we were to re-evaluate the the project with what we have learned so far the BCR would likely be considerably higher. Interestingly the NZTA might be doing just that right now, in responding to my request they advised me that they are just finalising a post implementation review of the Busway which should be out very soon, possibly by the end of the month. They have said they will send me a copy so I am looking forward to seeing what comes out.
I think there are also lessons we can learn from this when thinking about other PT projects, the main one is that it seems that our models consistently under estimate the demand for high quality PT services like the busway. I think it would be a good idea for politicians to keep that in mind when thinking about the CRL today as that is another project where I feel the patronage projections underestimate what will really happen.