One of the most frustrating things about the process the CRL has gone through is not that the government is forcing it to go though extremely rigid analysis, but that it doesn’t require other projects to do the same. Bill English was questioned on this today by Julie Anne Genter but never seemed to be able to directly answer the question. I will say one thing though, he at least wasn’t dismissive of the project.
Also in the news about politics and the RoNS. National’s Northland MP, Mike Sabin has come out yesterday extolling the virtues of Puhoi to Wellsford. Yet at the same time he has confirmed some of the voodoo economics that seems to surround this, and many of the RoNS projects. He claims:
“The Greens would scrap this project in favour of Auckland’s rail loop, because they see it has better cost benefits than the Puhoi to Wellsford project, yet NZTA estimates this RoNS will benefit Northland’s economy in order of $35-$45 million a year, giving a cost benefit ratio of 2 to 1.”
Well let’s just look at that a bit closer. $35-$45 million a year seems fairly significant but in the context of this road is nothing. Being generous let’s say that the benefits start coming in as soon as the project starts and we use the normal 30 year assessment period, ‘et’s also ignore any of the benefits being discounted. That would give us benefits in the range of $1.05 billion to $1.35 billion over a 30 year period. Yet the road is expected to cost around $1.6 billion and that was before the recent announcement that the shorter and easier Puhoi to Warkworth section will cost around $1 billion. I don’t know how on earth you can get a BCR of 2 to 1 when the benefits achieved are less than the construction costs but that is why they are called voodoo economics.
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Cripes! If Puhoi to Warkworth is $1b then the Warkworth to Wellsford will be a minimum of another $1b.
According to the well hidden business case it’s only going to be $324-598m
Strangely this document doesn’t seem to be on NZTA’s website. It’s here though:
http://www.localmatters.co.nz/site/localmatters/files/Puhoi%20to%20Wellsford%20Business%20Case.pdf
Thanks Conan. What a remarkable document.
It sure is, there are no lack of highlights but my favourite is that tourism in the far north dropped in 2007/2008 due to congestion on state highway 1. There was a sentence admitting that maybe the GFC has a slight impact too.
Note that the value of the Warkworth bypass- something we all agree is necessary is counted twice. Its benefit is included in the BCR of both halves of the evaluations. Another way that breaking these massive projects up is clever… they dice up the cost, but include the most beneficial part as counted against each separate cost. Sneaky sneaky. Unless of course it’s a rail project in which case they throw the kitchen sink and minister’s breakfasts into the cost column and ignore the benefits.
Note also the following. So much effort goes on to find cheaper ways of building the CRL with sub optimal half pie routes and downgraded junctions yet how many people are spending their nights urging the adoption of the cheaper route here?:
Also unlike the CRL; uninflated figures.
It made for depressing watching the response from the Treasury benches, but yes as you noted Matt, Bill English did not dismiss it out of hand. Interestingly the NBR has been running numerous stories on the CRL and Auckland congestion in general in the past week or so. One reporter producing the lion’s share of copy and generally taking the party line but there is glimmer of light at the end of the tunnel.
From here:
http://www.nzta.govt.nz/about/media/releases/1921/news.html
“Estimated costs for the Puhoi-Wellsford project are $760m for Puhoi-Warkworth and in the order of $1b for the Warkworth-Wellsford section
The Puhoi-Warkworth section has a BCR of 1.5 and the overall Puhoi-Wellsford project has a BCR of 1.0”
And it seems the more expensive it has got, the better the BCR over time. I’m puzzled.
So is there a new business case given the vast differences in costs from the original? There seems to be no shortage of breezy information on NZTA’s site, but not much in the way of factual reporting (if you could call the business case that).
So that it’s clear:
BCR in 2012 was 1.0 and the price $1.76B
BCR in 2013 is 2.0 and the price $2.0B +
Does the BCR climb to 3:1 if we spend $3b? 🙂
The Freight story – From Page 13 it list what the local councils know about projects and there priorities.
http://www.hamilton.co.nz/our-city/city-projects/Documents/Upper%20North%20Island%20Freight%20Story%20-%20Shared%20Evidence%20Base%20Document%20-%20FINAL%20April%202013.PDF
I really enjoy these posts about what happens inside parliament, something I don’t know a lot about, but which are so totally fascinating.
It is amazing some of the things which are said which just seem ignorant.
Why does the P2W have a higher BCR than the CRL?
I thought from posts here it was the other way round?
This blog is becoming more & more about making cheap shots. I’m disappointed jarbury left because at least he was fair..
Can you quantify the ‘cheap shots’ that you allege in this post?
I agree with you there, its very one sided here. I actually found what Bill English had to say was rather interesting.
What I don’t get is why Julie-Anne keeps flogging the same dead horse over and over again. We all know that the P2W project gets around the same BC as the CRL at about 1/3 the cost, but what does that have to do with anything?
I would rather she did something if use than turning up and crying each week. Why not look at making sure that what the government is spending money on gets done right rather than whistling in the wind over things that are years away and unlikely to change.
Hey, who deleted my post?
No-one has deleted your post. I get emails when comments are made and haven’t had one from you about this post. Perhaps it was the browser playing up.
Oh well no big loss. I was just having a go at aunt Julie and her lack of results.
The ‘cheap shot’ allegation again. It doesn’t read like a cheap shot to me. If you can counter argue the post with facts and evidence, go ahead bro……
Sigh. Can someone please list here again the BCR for the CRL and for each RON.
I love how people refer to the P2W as bieng good for the FAR North. It is about a 2 hour dirve from Wellsford to the FAR North.
Obi commented on speeds of travel between cities in NZ in a previous post. Driving Lincoln to Manchester UK takes longer for a shorter direct and driving distance than Auckland-Whangarei.
Spending large sum of money for roads to small places does not make sense. In fact you could give $3,000 to every Northlander every year for the cost of the RONS. See http://www.auckland.ac.nz/uoa/home/news/template/news_item.jsp?cid=516593
I have a piece of turf in the far north. It´s my holiday pad. Do I want the Government to spend $2 billion so I can “perhaps” save 10 minutes getting up to Kerikeri? NO!
I would rather have something that reduces the number of vehicles heading into the CBD so I can get to work a bit easier! BUILD THE CITY RAIL LINK!
Subsidy for importers. they get gold plated road, Exports are left with SH18 for timber from Helensville area to Northport, and Dairy exports get min standard rail.
I can sense Julie’s frustration. Bill English hides behind BCR evaluations, so the next tactic needs to be questioning these BCR’s and the assumptions behind them, particularly pointing out assumptions that are not world best practice. One place to start would be evaluations done in Australia, where consultants are not under pressure to provide answers that are politically palatable to a pro-roads government.
Here are some from Melbourne on valuing agglomeration benefits, and forecasting demand (particularly the increasing real costs of driving).
http://corp.ptv.vic.gov.au/assets/PTV/PTV%20docs/Melbourne-Metro/MM1-Agglomeration-and-Human-Capital-Impacts.pdf
http://corp.ptv.vic.gov.au/managing-victoria-s-public-transport-network/network-development-plan-metropolitan-rail/