This is a Guest Post by “Mr Anderson”
An article in Stuff today questions the Roads of National Significance programme and its economic benefits:
The Government’s $12 billion roads of national significance programme is upgrading routes used by as little as four per cent of the country’s traffic.
The Green Party wants the programme scaled back and says its research shows the routes carry only 400,000 of our 11 million daily vehicle trips.
Green transport spokeswoman Julie Anne Genter said the benefits did not justify the spending.
“The spending is disproportionate to the number of trips. We are spending money on projects you are unlikely to drive on. It’s an enormous amount for a few roads that have almost no traffic growth.”
Supporters say the improved network will increase traffic flow and lead to a lift in business productivity, but Genter said the benefits would be negligible.
I think the fact that traffic on the roads is not growing is more important than the percentage of the country’s traffic carried by the roads. How, I do think that most of the RoNS’s traffic is likely to be carried on two of the projects with the best BCRs: the Victoria Park Tunnel and the Waterview Connection. Take those out and the rest put together might be lucky to get to 1% of the country’s traffic.
NZTA’s response to this critique is typically vague – that the package will contribute to economic growth even though most studies of the projects suggest that many don’t deliver much on this promise:
Transport Association chief executive Geoff Dangerfield said highways played a significant role in trade, competitiveness and economic growth.
About $50b worth of goods entered the country each year, and 92 per cent of all freight, by weight, was moved by road.
The seven programme routes were linked to economic prosperity.
“These roads are linked to our five largest economic activity centres, Auckland, Hamilton, Tauranga, Wellington and Christchurch. Moving people and freight more safely and efficiently represents a critical investment. The programme improves access to our ports and markets, and puts infrastructure in place that will encourage growth.”
Dangerfield said the project would give gains “significantly beyond the costs”, and they would accrue beyond the 30-year time period the agency used to assess the benefits.
I think NZTA would be extremely glad to be able to do away with some of the RoNS projects so they’re able to fund other projects that make much more sense.
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NZTA staff.
http://www.nzta.govt.nz/about/who-and-what/who-we-are/our-people.html
Cannot see anyone on there who would have much of an interest in what people on this site have to say. I’d love to be proven wrong but……
Not much of any urban experience on that list, except Zollner* I guess, all people with provincial experience and, it would appear, interests. Hey ho, just like the government then. Poor Auckland, it is the outlier in New Zealand, sticking out like a sore thumb, big and not understood.
*It is his wife who has advanced the ‘truckometer’ theory of the NZ economy…. road freight looms too big for NZTA, again as it does for their masters. Here:
http://anz.co.nz/commercial-institutional/economic-markets-research/truckometer/
Though the list is well colonised with treasury fanatics, recycled state sector bureaucrats and private sector bean counters. Makes you want to cry when you what narrow criteria we use to select our technocrats from in this country.
I know that the NZTA follow this site very closely
Is NZTA says “92% of the $50b of imports by weight is moved by roads” why is investment for imports so important when i am thinking 45% of the $41b Exports is moved by rail,
Well it must be important because NZTA are spending billions and billions of our taxes to subsidise the trucking industry to increase its share…. and in order to duplicate uncongested freight routes all over the countryside…. which will mean that carrying those plastic trinkets from the ports to the Warehouse will be a more profitable business, or at least in an attempt to offset likely threats to profitability like fuel price increases.
NZTA are right when they mention it will gain beyond the cost, it’s important that we keep our freight moving as this is what keeps our economy going. Where NZTA faults is where the money is best spent, yes you are going to get economical benefit from investing in Roads of National Significance, but this comes nowhere near the economical benefits investing in, lets say, commuter rail. As this is going to reduce road congestion much more.
Remember that it’s because of this continued investment that our vehicle ridership is averaging around 1.2people per car last time I looked. What ticks me off about the current system is that when building Motorways they take into account the very subjective wider economic benefits, but the when it comes to rail they claim you cannot quantify them so they are inaccurate. I agree on including Wider Economic Benefits, but this needs to be done across all forms of transport.
The key thing to remember is the definition of “cost”. In reality, cost means the same thing as “opportunity cost”. So if we spend say $12 billion on the RoNS we should really be thinking about how we could have otherwise used that $12 billion for the goals the RoNS are trying to generate, if we weren’t spending that on seven big motorways.
The concept of opportunity cost is particularly appropriate when it comes to looking at Puhoi-Wellsford. While the government is probably right in saying that there will be some benefit for Northland’s economic from the project, we should really be looking at whether spending $1.7 billion to save 5 minutes is really the best spend of that money, or whether we could get better economic outcomes for Northland by doing something different. It’s quite likely we could do a smaller version of Puhoi-Wellsford, a really big economic development package for Northland and still have around a billion to spare – which could be spend on something like the CRL project.
….or even the rail line to Port Marsden. I’m pretty sure there would be some economic benefits in that.
Quick check – $120m apparently. Seems like a pretty cheap transport investment.
The Marsden rail branch project BCR was around 0.4 (and that was generous) when I last saw a report on it a few years ago. The fact that NorthPort which crows about how important the project will be in bringing it more business, hasn’t paid for it, says it all really.
NZTA should ask New Zealand’s number one exporter
1. Why it designs it transport fleet for roads with tight radiuses (they use local road network).
2. What percent of travel time does this No.1 exporter use their transport fleet on RoNS roads (only near Te Rapa).
3. How much fright by weight or volume goes to port by road (zero they use rail).
And yes Bryce, rail to a deep sea like Port Marsden, just might lower the cost of exporting for dairy product even more.
http://tvnz.co.nz/q-and-a-news
A news discussion on Q and A this morning on Kiwirail. The interview with Jim Quinn was fairly predictable, while the panel discussion between presenter Greg Boyed (?), Helen Kelly, Dr Bryce Edwards and Matthew Hooton threw up a few clangers.
Firstly, Matthew Hooten’s comment that the New Zealand rail network was built for a population of 50 million, and then when Dunedin station was built the comment that the estimate had been revised down to 15 million, while another comment was along the lines that the Napier to Gisborne line was built to serve cities of 1 million at each end of the line – what nonsense! Either a diversionary tactic designed to muddy the waters, or a mark of someone who was seriously out of their depth in this panel discussion.
Secondly, the presenter made the comment that “rail is a pretty archaic form of transport”.
Helen Kelly and Dr Bryce Edwards did their best to counter with arguments on the WEBs provided by having good rail linkages and building rail wagons in New Zealand, and stating that rail could be a modern and fast mode of transport.
Unfortunately, nobody made the link between the completely different economic rules being used to justify the RoNS programme (ie extensive use of WEBs in the calculations) in contrast to rail. Jim Quinn himself clearly stated that he has no mandate to consider WEBs in running Kiwirail. His response was that any directive for Kiwirail to consider WEBs must come from an outside agency.
Clearly, there is a massive gap still to be bridged for MSM in New Zealand to take a more forward looking attitude toward rail, and I suspect PT in general.
And, I remain hopeful that someone, someday will be in a position to succinctly and publically comment on the very different rules being applied to the RoNS programme compared to the Kiwirail Turnaround Plan.
As is the case everywhere the vast bulk of the benefits for NZ having a functioning rail network are economic not financial. In other words the positive outcomes from rail mostly do not turn up on any operators balance sheet. These include systems resilience, environmental benefits, resource independence [especially when using locally, mostly renewably, generated electricity], reduction of road death and injury, urban form quality…. By insisting that rail be only evaluated by a narrow balance sheet money in/money out criteria is to either declare your ignorance or to mask a planned the dismantlement of the system.
It is hard to see Jim Quinn, whether or not he admits it to himself, as having any other role than to preside over the continued destruction of the rail network bequeathed to us by our forebares. It will be reduced to being a logistics company serving a few routes basically chosen by the despatches at Fonterra.
This is an extremely short sighted view that fails to understand what we have in the rail Right of Way and how valuable it potentially is.
Because the next set of RoNS basically run along existing rail routes it is clear that they are designed to replace this network. An enormous spending programme to ensure that our export industry lifeblood is entirely dependent on this one mode and its 97% imported fossil fuel.
This is a wilful or ignorant destruction of an already existing resource built up over time. But also because of the expensive and rushed RoNS programme also robs investment in maintaining local roads and the gov is allowing ever heavier and more destructive trucks onto our roads the rail network is not the only asset that we inherited from our hard working forebares that we are sacrificing to this misguided and ill-timed monster.
There are jobs that rail should do and the costs of moving this work to our roads are numerous. One example is death and injury caused by the increase in truck traffic, but also direct financial ones. Here’s one: The bone headed failure to invest to encourage a higher proportion of the goods at AK’s port by rail means that multiple billions will be spent to ease the passage of far too many diesel fume belching semi-trailers through the city on our expensive and strained motorways.
For the minister or Dangerfield to blithely assert that they are ‘sure’ that this programme will benefit ‘significantly beyond costs’ stretches credibility given the scale of this gamble in an uncertain world.
In short the costs of maintaining and improving a viable rail network that is already there is considerably lower than this this vast programme and is one that offers multiple benefits, while harder to quantify than by just looking at a simple balance sheet, are not beyond the capabilities of reasonably intelligent people. So we must assume that this policy then is an intentional one to commit the country to having only one functioning land transport mode.
Except of course, you’re advocating spending literally billions of taxpayers’ money for these elusive economic benefits which don’t really bear close scrutiny when you get beyond the parts of the network that can sustain themselves (NIMT, MSL, SIMT, ECMT and WCL).
Systems resilience? For what? Outside Auckland and Wellington, where substantial local government contributions keep the rail systems intact, rail is virtually irrelevant for moving people and is as vulnerable as roads and nowhere near as flexible as roads. There are more than a few substantial centres with no rail services and there is scant evidence they suffer as a result (Queenstown, Nelson, Taupo and Rotorua).
Environmental benefits are real, but negligible and are they worth a couple of billion dollars? You’d get far more by subsidising the truck fleet (or better yet have RUC differentiated to encourage it) to shift to Euro V rated vehicles. In fact the biggest step environmentally on land transport was the shifting of the sulphur content in diesel from 2500ppm to 50ppm in the past decade, slashing particulates from diesel engines by over 90%. Rail has an environmental advantage in certain conditions, but the STCC study case studies showed that it was not consistent.
Resource independence is predicated not on electrification (no one is arguing close the main trunk, nor electrify the rest of the network) but on the fuel efficiency of rail vs road. The “four times more fuel efficient” claim of rail is dated as it originates from a Railways Department test done in 1981, back when trucks were prohibited from hauling most freight more than 150kms. Since then truck engines have vastly improved at a rate faster than that for diesel locomotives. The gap has closed somewhat, but whilst the fuel efficiency is real it is clear that gets more than eaten up by other costs of rail freight including the enormous capital cost of the bespoke equipment and infrastructure, and double handling costs. It’s unclear why saving the import of one input in production is so important that it should be offset by the high costs of others.
The news is that rail long ago stopped being a general freight operation for most of NZ, it simply can’t come close to competing with road freight. As a result, it does what it is good at – shifting bulk commodities reasonable distances and moving containerised freight.
It is NOT clear that the RoNS are designed to replace the rail network. In fact if you want to see the road network that replaced the rail network, then go back many decades to watch the state highway network evolve. That network decimated intercity passenger rail because people found they could take their cars faster than any train, and when land transport was properly deregulated in 1982 it was clear freight could go the same way.
I’m not a fan of the RoNS concept at all (although I believe there are some valuable projects within them), as I much preferred the strict BCR approach to the politicised transport funding Labour and the Greens gleefully set up and which National has, understandably, run with for its own preferences. However, to equate propping up branch lines that carry one or two short freight trains a day as having the impacts of major highway projects is preposterous.
Of course if the highways had been run as a business, as the Nats were seeking to do until 1999 (and as they are in Austria, South Africa, Croatia and much of France and Japan), then the story might have been quite different, as the state highway network would have had to make a profit, reinvest the profit in the network where it was wisest to do so, and never ever have had an increase in funding from FED or RUC, but have to introduce tolls to fund expansions (or woo road users off of motoring tax in favour of user fees). However, I’d easily bet that most people contributing to this blog were as against that as they are against massive state organised road building.
The problem with a strict BCR approach is that you tend to end up with the cheapest and nastiest outcome, particularly as the only benefit which seems to be counted to any great extent is shifting cars a few seconds quicker.
Case Study – Fonterra Crawford Street Dairy Freight Hub
Fonterra’s decision to develop a new freight hub in Hamilton is a good example of how a business’s emission profile can be reduced by using rail. The development of the new freight hub and subsequent modal shift to rail has resulted in annual savings of around 20% of fuel use and 2,000 tonnes of carbon dioxide emissions per year for Fonterra. It has also had a significant effect on the amount of truck kms being travelled in the Waikato area improving safety and reducing congestion.
The freight hub was built alongside KiwiRail’s container transfer facility in Crawford Street as Fonterra sought to take advantage of the cost and sustainability benefits of using rail. Prior to the freight hub being built product from Fonterra’s seven producing plants was sent directly to the port of Auckland or Tauranga. This went via a mix of road and rail with many of the plants having no rail connection. With the opening of Crawford Street product the majority of movement to the ports is by rail.
The fuel efficiency impacts of the freight hub have been documented in a report by Environment Waikato with funding from EECA. To read the full report visit – http://www.eeca.govt.nz/node/13368
A good read from credible sources (Fonterra, Waikato Regional Council, EECA, Kiwirail) and here are some snippets for you:
p.9 – rail moved 52% of Fonterra product in 2005
p.11 – the new Crawford Street hub resulted in an increase from 52% to 75% of Waikato tonne kilometres being carted by rail resulting in (p.2) a 20% savings in fuel and CO2 emissions
p.13 – 5 to 10% fuel savings in new China locos compared to older US types and they meet Euro IIIA emissions requirements. Note that the emerging and future diesel locomotive technology for constricted loading gauge operations such as New Zealand may well be with gen-set technology. With this type of technology, 3 or 4 standard truck motors are set up inside a locomotive body and they can cut-in and cut-out as required which will be a huge game changer. In addition to obvious advantages in optimising power requirements, use of truck motors will put to bed forever claims that truck motor technology is somehow increasing in efficiency at a greater rate than rail. In addition, the fundamental reliability of rail will improve with gensets being able to offer a back-up get-home ability not previously available.
p.14 – 2.5 times more fuel efficient by rail
To counter another hoary old chestnut – alleged double handling by rail compared to road. Road goods are also double handled. In almost every case, road line-haul trucks are not the same trucks used to do the local distribution. It simply isn’t feasible for B-trains to traipse along most general roads in our cities and towns. The goods are loaded out of the line-haul B-trains, and then either warehoused, or directly transferred to smaller trucks – ie they get double handled. Even for container haulage, you’ll often find that medium size Hino trucks or similar are used around our cities rather than the big rigs.
Coming back to the RoNS. When one considers the Waikato Expressway, the various investments in the motorway networks of Auckland and Tauranga, and then consider the rumoured Waikato-Bay of Plenty road tunnel in a second tranche of RoNS projects, they clearly duplicate an already effective and efficient rail network. From the hype I have heard, it all boils down to 2 big reasons NZTA and MoT are using as justification for the roading:
(a) to encourage car journeys, and urban sprawl. The government has yet to give a convincing argument to say this is cheaper than intensification especially considering the extremely poor BCRs for these roads
(b) for so called truck productivity improvements. Given the existing and already efficient rail network through this region, why the necessity for these trucking highways?
The only conclusion that can be made is that these heavily subsidised highways are being deliberately built to tilt the playing field.
And – if the government is really serious about decentralisation and export led growth in the regions, how about subsidised air fares between Auckland and Northland, or between Auckland and Gisborne? Doing this would allow export focussed businesses to cost effectively relocate in the provinces, knowing that convenient and low cost flights are available to the main centres and to connections out of the country. This is taken for granted by the jet served main centres, and is often given as a reason for businesses to locate in Auckland. In case of both Northland and Gisborne, it will take many years before the cost of artificially lowering air fares to these two regions comes anywhere near the money being tipped down the drain to build the RoNS.
And finally, how about serious attention toward dropping the value of the NZ dollar down to a rate that will allow a manufacturing base that exists for reasons other than to support the domestic residential construction industry.
Apart from the RoNS in Hamilton, Auckland and Christchurch it is hard to see how they can be said to “give gains “significantly beyond the costs”,”. The critical roads for economic value are those carrying tourists and agricultural produce. The RoNS are reducing investment in them. Experts in the Ministry of Transport have been debating whther or not NZ can afford to invest in two competing intercity transport networks since at least 1930 (when the ministry was created). Common sense says the original idea of highways connecting rural centres to railheads was the smart money investment, so of course this country had to go and do the exact opposite. Even the old National Roads Board had enough sense to know that when you’ve got 10,000km of highways and 40,000km of rural roads you don’t blow all your budget on gold plating a few km. In fact thats what the original Main Highways Board did in the 1920’s and 1930’s, building portland cement highways for a few tens of miles outwards from the big cities while the rural hinterlands made do with gravel roads that were frequently impassable everytime it rained. Had that way of doing things continued after WWII we would have a divided highway from Auckland to Whangarei and gravel roads from Whangarei to Dargaville and no tourism industry.