How the CFN fixes Council’s budget problems

Before last week’s distractions, there was an NZ Herald article which discussed key issues with Len Brown over the coming three years. Perhaps the most interesting part of that article was the focus that Len put on looking again at the Council’s budget.

You said your first focus was next year’s budget and taking on board some messages from the campaign. What were they?

The community embraces the need to genuinely address … under- investment in infrastructure and particularly transport, but they want to balance that against the issues of affordability and within a budget that is sustainable. One of the key concerns was to keep a real close eye on debt levels and how much we borrow to achieve that. I have got that message.

You have forecast to borrow $2.8 billion in your first three budgets and a further $2 billion in the next three years. Is that wise?

It’s important for everyone to take stock. We have just received the community’s view in terms of the outcomes. The budget is an important part of it. I will be assessing that first budget and need to present that to council on November 17 … I will certainly be reflecting on that. Secondly, we are down against projections on [capital spending] on this year’s budget, let alone the 10-year budget which is a crystal ball-gazing exercise, quite frankly, and we will be assessing our debt levels and budgetary management every month of every year.

Somewhat strangely, he then goes off to discuss how we apparently need the completely idiotic $5 billion Additional Harbour Crossing project, but let’s leave that issue aside for just a minute or two.

During the first term as Mayor there was obviously a lot of pressure to ensure that rates didn’t increase very much – particularly as combining the rates system was always going to mean serious winners and losers (funny how we only ever hear about the losers). Yet there continued to be some big spending items: fixing up the electric trains deal after the government got rid of the regional fuel tax, getting started on AMETI and many other non-transport projects. It seems like the “out” in the equation for the first three years was for the Council to increase its debt levels – taking advantage I suppose of the greater financial muscle the new combined Council now has.

If there is an increased desire to limit the growth of Council’s debt during the next three years, some pretty tough calls will need to be made around what projects happen and what projects don’t (since it’s capital expenditure rather than operating expenditure that is funded from debt). While that applies to all types of Council spending, as we know transport is by far the largest area of Council capital expenditure.

This is where the Congestion Free Network comes in. We first created this network because we were horrified by how expensive the transport plan outlined in the Integrated Transport Programme is and by how badly it missed achieving the goals and targets set by the Auckland Plan. Remember that for $68 billion in the current plan you get:

More Congestion:

A heap more transport greenhouse gas emissions (rather than the sought decline):

Basically no increase in the proportion of people catching public transport into the City Centre:

Nowhere near the PT, walking and cycling modeshare target set in the Auckland Plan:

I could go on but this is getting boring. The basic story the Integrated Transport Programme tells is that if you spend a lot of money on stupid projects, you don’t actually achieve what you want to achieve.

As we explained recently, the real beauty of the Congestion Free Network is that because you’ve provided a complete rapid transit network that is free of congestion, you can stop wasting money on unnecessary roading projects which aim for (but of course never deliver thanks to induced demand) reductions in congestion. This means you can build the Congestion Free Network and still save at least $10 billion from what’s in our current 30 year transport plans.

$10 billion of course sounds like a LOT of money. And it is. Surely ripping $10 billion out of a transport budget – even over 20 years – is going to hurt due to what can no longer be done? Well only if your transport budget isn’t full of excessive projects to begin with. The table below outlines our initial thoughts about how you can reduce the spend on new roading projects over the next 20 years from $21.6 billion to $7.0 billion:

To show the savings a bit clearer it’s quite useful to look at them in pie chart form:

As you can see the biggest chunk of the savings just comes from not doing a project that’s not only a waste of money but will actually make things worse. Then we shave money off big slush funds highlighted for motorways to sprawl that won’t be required (unless someone truly is planning to build the Karaka-Weymouth bridge) or widening arterial roads which don’t need to be widened (they probably just need a bus lane). Puhoi-Wellsford gets chopped back to Operation Lifesaver, AMETI’s cost gets fixed so it doesn’t double-count the East-West Link, we scrub out the unnecessary six laning of the Northern Motorway between Albany and Orewa (why would you six lane when you’ve just built a busway?) and many other projects which are generally not completely stupid ideas but where the solution proposed is vastly bigger than the problem that exists (e.g. East West Link). I suspect the only people who really want everything on that list built are the NZCID and their members who stand to benefit hugely from it all.

The scary thing about ripping nearly $15 billion out of the roading budget was just how easy it was. We barely felt mean at all with many of the cutbacks. We’re still proposing Penlink to happen some time before 2030, we still propose to spend money on widening the southern motorway south of Manukau, we’re still spending $1.3 billion on AMETI, we’re still completing the Western Ring Route, we’re still grade separating the Kirkbride Road/SH20A intersection, we’re still spending $800 million on upgrading arterial roads, $700 million on new arterial roads in greenfield areas, $350 million for rail grade separations – the list goes on.

Auckland Transport is supposed to be preparing a second version of the Integrated Transport Programme in the upcoming months – including consideration of the Congestion Free Network as one of the scenarios looked at in this process. We await with great interest to see whether the Mayor’s enhanced focus on the budget extends to chopping out some of the extraordinary waste of money proposed in the first version of the ITP.

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