Whoever leaked the draft City Centre Future Access study (CCFAS) is, as Mr Anderson said in a comment the other day, a complete and utter idiot (assuming that it’s someone from Auckland Transport rather than Central Government). After working so hard over the past year to get beyond the differences in opinion between the two parties which plagued last year’s review of the CRL’s original business case, it’s really dumb to spoil this goodwill by jumping the gun. But I guess what’s done is done. Let’s just hope it doesn’t have a long-lasting impact on the project.
From Brian Rudman’s two articles on Friday we know some really interesting details have emerged from this important study into future access to and from Auckland’s city centre (which isn’t what the CRL is solely about of course, a fact that seems to escape many from time to time).
- We know that without CRL, even by 2021 (a mere nine years away) the CBD is projected to be one heck of a congested place, with most bus networks at capacity and general traffic speeds having slowed down tremendously from their current levels. Remember that the CRL isn’t due to open until around 2021/2022 and also that the bus network will be revised significantly by 2016 to improve the efficiency of the PT network tremendously. In short, it seems that we simply can’t delay CRL’s opening date beyond 2022 without utter chaos resulting.
- We know that other options to “solve” this problem, including surface buses and an underground bus tunnel, perform significantly worse than the CRL in terms of a benefit-cost analysis. I suspect that this is because they rely upon significant existing roadspace being taken away from general traffic and given to the exclusive use of buses – whereas CRL uses a completely different transport network. This highlights an amusing irony: that the CRL is likely to clearly be the best option for car users. I wonder if the AA will start changing its tune from supporting “buses instead of trains” now?
- We know that there’s something strange going on in terms of accurately capturing the benefits of the CRL project, if it’s clearly the best option for improving access to the city centre, the implications of “do nothing” are horrific, but it still doesn’t have a cost benefit ratio of greater than 1. There is something of a logical fallacy there: the best solution to a problem that needs to be fixed almost by definition must be worth doing.
On this last point, Rudman’s opinion piece highlights the connection between this clear logical fallacy and the often vexed issue of discount rates, which lower the benefits of a project by a certain percentage each year to take into account net present value and the opportunity cost of spending money now. New Zealand uses an 8% discount rate and assesses projects over 30 years – which is pretty high compared to most international countries and means that in year 30 after a project’s completion we’re only saying the benefits are worth 11% of the benefits in “year one”, while we don’t bother counting the benefits in year 31. For some projects, like an intersection upgrade or widening a road, the benefits get “eaten up” pretty quickly and a shorter assessment period and a high discount rate make sense. But for projects with very long-lasting benefits – the CRL being perhaps the most prime example of that – the high discount rate and relatively short assessment period are illogical.
This is perhaps best illustrated in a graph comparing the benefits of CRL under New Zealand’s system and the UK system:
Of course lowering the discount rate and lengthening the period we count the benefits will improve all projects and doesn’t magically mean we can now afford a whole pile of stuff we couldn’t afford before. But it highlights that BCRs are perhaps not the objective tool for measuring whether or not we should do something they’re often made out to be (and of course this rings true for motorway projects as well), but rather an excellent tool for comparing apples with apples – like has been done in CCFAS. Likewise using a BCR to compare the Puhoi-Wellsford project with possible alternatives such as bypassing Warkworth or the more extensive Operation Lifesaver would tell us a lot about which option makes the most sense
Judging by what we do know, and assuming that there’s no massive change between the draft report and it being finalised, it will certainly be interesting to see what Central Government’s eventual response is. They may rely on the BCR number (which could still go up in the final version) to say there’s no proof the project is worth doing, but now that the consequences of a “do nothing” seem to have been explored in more detail – and are pretty horrific – that approach seems unlikely. What’s perhaps the most interesting conundrum for the government is that it sounds like CRL is clearly the best option for those people government really cares about: the car drivers. Will the government help out the poor car drivers by helping fund a project which means hundreds of extra buses on downtown streets are no longer necessary and avoids the need for whole major roads to be completely closed off to general traffic and given up to buses only?
I guess we will see.