A few weeks ago I wrote a post about how the NZTA had shortlisted three groups of companies to build the Puhoi to Warkworth motorway.
One of our biggest complaints about the project is that despite repeated attempts over many years – including Official Information Act requests and via the CBT in the board of inquiry process – we’d never seen the business case for the project. Well the afternoon of that post the agency finally published it (4.6 MB) – although a heavily redacted version of it. As you can see by the revision history below this document has been around for a long time and has been frequently updated. The total document is over 160 pages in length.
At a high level the business case confirms that the primary driver for this project is the simple fact that the government designated it a Road of National Significance (RoNS). The distinct impression I’m left with is that it’s a project about a decade too early and as such one that has massive consequences for a lot of other more beneficial projects. This is also backed up by the timeline of events showing that prior to being named a RoNS there was very little work – only a high level strategic study – that had been done on the project. One comment I think is particularly pertinent is below. Compare and contrast that statement with how the government have
The RoNS projects represent a ‘lead infrastructure’ approach. This means the Government is investing in infrastructure now to encourage future economic growth rather than wait until the strain on the network becomes a handbrake on progress.
Compare and contrast that statement with how the government have treated the City Rail Link for which they are requiring the rail network to be bursting at the seams before they’ll even consider funding.
From there it almost seems like the authors are trying to find reasons to justify the project – something that becomes clear when looking at the economic analysis. One of the big reasons for needing the motorway is the fact that in the Auckland Plan the council identified a lot of potential for greenfield growth. What’s not mentioned is one of the reasons the council put growth in Warkworth was because the NZTA/Government said they were going to build the motorway. A classic example of the motorway industrial complex at work
Another key reason is the often cited need to improve the Northland economy – even though the road stops well short of Northland. The improvement in the economy is supposedly about the fact that a motorway would allow a lot more freight to move in and out of the region. Yet the business case seems to give conflicting information about just how much more freight will be moved. In the executive summary it says:
Freight volumes between the regions are forecast to increase by 70% by 2042 – referencing the Ministry of Transport’s 2014 National Freight Demand Study which I talked about here.
Yet in the body of the report it says
Freight volumes are forecast to double by 2031, with the vast majority of this increase being carried by road vehicles – referencing the 2008 version of the National Freight Demand Study
The problem with both of these figures is from what I can see the 2014 freight study doesn’t support either of these claims. The tables below show the 2012 volumes vs what is forecast for 2042. Also of note is that of volumes leaving Northland, 7% go by rail and 60% by coastal shipping. Excluding the freight that stays within Northland, I’ve calculated the change in volumes at just 43% out to 2042, well short of the claims in the business case. There are also high and low forecasts with the increase range being from 38% to 48%.
As for why some of the potential increase in freight couldn’t go on rail, the main reason they give is that the rail network doesn’t have much available capacity. It seems to be the NZ way that a road with ‘capacity constraints’ get huge sums of money thrown at it while a parallel rail route with capacity constraints is left to rot and threatened with closure. The NZTA justify this position by effectively saying that even if the rail route was upgraded that it is unlikely to have much impact on road demand.
It seems the most valid of the justifications is that the road has a poor safety record and it suggests the road is the 16th worst in NZ. My issue with this is that by waiting for a full motorway solution to be built we will continue to have crashes in the future. Had the NZTA not been under a political directive that the road must be a motorway then it’s possible safety improvements like we’ve suggested in the past could have already happened by now.
One of the most interesting sections is how they say the preferred route performs against the project objectives. This is on page 43 (actually page 51) of the report. Some of the impacts are
- Compared to not building it, traffic volumes increase from 25,000 to 29,000 vehicles per day in 2026 and from 30,000 to 42,000 vehicles per day in 2051.
- Even in 2051 the road will achieve Level of Service A meaning the road will basically feel pretty empty almost all of the time.
- They claim it will produce $9.1 million in crash reduction benefits in its opening year. Unfortunately no mention is made of what happens to the existing road which will still have all its existing safety issues.
- In 2026 travel time will improve by 17 minutes in the PM peak. This is shown below and amazingly they say that with the new motorway it will take just 10 minutes to get from Grand Drive in Orewa to north of Warkworth. That’s a distance of about 24km so suggests vehicles travelling on average in excess of 140km/h.
Also in the wider section they’ve included the following table on the risks to the project from a 2010 study. They noted that it’s highly likely that the project’s costs would outweigh its benefits and that traffic volumes would be lower than needed to justify a motorway.
So what about the economic assessment, they were right that the costs would outweigh the benefits. Assessed over a 40 year period and a 6% discount rate it achieves a BCR of just 0.92 or just scraping over 1 if wider economic benefits were included. Hardly a massive economic saviour. Unfortunately almost all details about the assessment have been blacked out.
There’s no mention of what impact tolling would have on the BCR however they do say this.
An initial toll revenue forecasting exercise has been carried out based on the forecast traffic volumes and light and heavy vehicle mix, and using the conservative price assumption that the same pricing is applied from NGTR. [Blacked out section]. The conservative price assumption was used to produce a lower-end forecast.
This analysis suggested a conservative tolling revenue forecast in the first year of operations (2022), net of collection costs and diversion (but excluding the costs of the tolling gantry equipment), of around $10M, growing to $17M in 2030 and $28M in the last year of the P-Wk PPP concession. The total nominal tolling revenue over the PPP period was forecast at $440m. The potential tolling revenue profile based on this analysis is presented in the figure below:
They suggest this may just cover the operation and maintenance costs of the road.
Lastly the project is going to be built as a PPP. There’s quite a bit of information as to why they think it should be a PPP which you can read though if you’re interested. What caught my eye was Appendix G which covers off where risk sits between the NZTA and the contractor. Below is just the first part of the table.
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Matt why don’t you think its great that a road is being built that won’t already be at full capacity? Its a wonderful thing to have something that isn’t congested. You should be rejoicing instead of being critical. For once a transport route is being implemented BEFORE the need is desperate. How you can deny the building of a decent road north is beyond me.
A) all the work before it was announced as a RoNS said bypassing Warkworth and a few other would address almost all the issues. Instead it was hand picked as a RoNS for political reasons, much like the govt tried to do with the Northland bridges shambles. In this case the real reason seems to be more about enabling Greenfield sprawl adding Warkworth and getting to beaches around Omaha faster
B) due to tricky geology it’s extremely expensive to build. The estimate we’ve seen is about $750m but could be higher.
C) the money and other resources dedicated to it have crowded out a lot of other more worthwhile projects.
D) traffic volumes north of Warkworth are low and haven’t been increasing
E) if it was really about Northlands economy then it would be better to spend money improving roads in Northland e.g probably could have built passing lanes, curve realignments and other safety upgrades all the way to Whangarei
how about because there’s many other road projects that are more deserving than this?
The current road isn’t at capacity, rejoice! Rejoice! Rejoice in not spending three quarters of a billion dollars in the wrong thing.
The current road isn’t at capacity and will still be killing its users while our children are still paying off this vast white elephant. Double LOS A for Omaha! What an absurd economic imperative.
“Road killing its users”?? Don’t blame the road. Blame a transport system that relies far too heavily on fallible humans getting everything right all the time. Happily most people manage to drive that road without killing themselves; And conversely, many people manage to kill themselves (and others) on roads that are supposedly “safe”. It’s the transport mode itself that is hugely unsafe, despite $billions that have gone into it over the years trying to make it safe. An inconvenient truth that the Govt doesn’t want to hear.
The road, with the level of use, and the hilly sections, plays a part in human behaviour whilst driving. There have been some very good plans in the past, including from Transit/NZTA, to resolve these issues in a very affordable manner.
Dave, bad road design can certainly kill.
Not trying to argue that roads should not be made safer. More the semantics of what is doing the killing.
The road (“good” or “bad”) is what it is. Those who use it must take this into account and drive accordingly. True, drivers may get away with being more careless or reckless if the road is improved, but to me the problem is much less about “the road”, and much more about drivers failing to make allowances for what type of road it is (and probably has been for many decades). Very likely it will have been “improved” (at high cost) from an even worse road decades earlier, but speeds creep up and driver-caution diminishes. Hardly the road’s fault..
If a bit of railway is deemed unsafe at normal speeds, a speed restriction will be imposed at a sufficient level to mitigate the danger, even if this means creeping along at low speed for many kilometres. Drivers found to be flouting this will at the very least be stood down and investigated. In this way a “dangerous” bit of railway is made immediately safe, long before $millions are spent upgrading it.
Why is road so resistive to this kind of approach? Why do we tolerate so much more danger on roads than pretty-much anywhere else? Why are roads able to extort huge sums of public money for “safety improvements”, while rail usually just has to make do with speed restrictions where safety is an issue?
Answer: Because we have developed a complete societal blind-spot to the real costs of using and sustaining road transport.
Does the tolling scenario include a revised time saved calculation to allow for the time it takes to pay the toll. Paying by (now removed) ticket machine for the existing toll road takes an extra 5-10 plus minutes. Paying on line takes 5 minutes. I think that paying the toll uses up all the tine saved from using the toll road compared to the road via Waiwera.
Unfortunately NZTA have a blind ideological adherence to electronic tolling and won’t consider adding a physical toll collection lane each way on the toll road. Of course electronic tolling disadvantages poor and eldery.
On the holiday highway is Joyce still claiming that it will be a benefit?
Has a business case been published for the Transmission Gully motorway?
Myself and everyone I know has set up an online account that has auto-topup so it doesn’t take any of my time.
Setting up an account with auto top up is just a way of lending $ to NZTA interest free.
Might be worth it for daily commuters, but for those of us in Northland or tourists et it doesn’t make sense.
You still have the option to pay online post journey?
Just don’t try to pay mid journey (as a passenger in the car obviously). I did this once and the system miss-allocated the trip as a “future” trip, and I ended up getting invoiced for one trip, while my account was one trip in the black.
Rarely travel toll roads, so my parents (who live in a different city to me) put it on their account for me.
Government plan is to have a lot more toll roads (up to three already), so they can spread the admin costs over more transactions.
I think they expect most regular travellers to set up an account. I would expect over time these will be the bulk of trips on the road.
One thing I’ve heard (and which I thought would be a good idea before hearing it) is that the NZTA want to link up paying tolls to HOP cards. That would mean you could register your car against your hop card and the system would then just go back and charge that when you passed through. Nice and simple
oh no! they might make half a cent each year off me!!! How will I ever cope??!!! seriously pull your head out…
It’s for freight. This is the most tendencious claim of all:
Good to see someone is taking road safety seriously in this country. Fewer trucks on and safer roads for everyone will save many more lives and reduce the numbers of traumatised families than building vast unneeded duplicate glamour routes for seamless access to Orakei-at play.
All the cost estimates have been blacked out. Clearly it is going to cost more than the $760m usually quoted. Why don’t the NZTA have the guts to tell us? And why didn’t they submit this document as evidence to the BOI?
What is the justification for redaction? The Ombudsman guidelines say –
reasons for refusing official information. These include when release would likely prejudice the:
-security and defence of New Zealand or its international relations
-entrusting of information to the Government of New Zealand on a basis of confidence
-maintenance of the law.
They also include where release would likely:
-endanger the safety of any person
-seriously damage the New Zealand economy.
Which of those justify this? Damaging the economy?
I did a quick calculation on the benefits of another RoNS, the just started Huntly bypass. Saving 5 mins on each trip for 18,000 vpd at a cost of $458m works out at $84 for each hour saved over a 10 year payback – as of March this year, the average hourly wage was $27.48, so they must expect the wealthy to use Waikato Expressway.
How do they get away with redacting that? It should be public information.
Hm, should we OIA for all the redacted sections, or a list of reasons for blacking out each section, with a reminder of the Ombudsman’s guidelines quoted as part of the request?
Re:Huntly, I’d say that the economic benefits largely arise from the ability to unruin Huntly by removing the state highway.
Nothing will ever ‘unruin’ Huntly.
Getting SH1 andall of it’s severance out and shutting down the coal generators would certainly help/
As long as they’ve still got the Deka sign, everything’s ok in Huntly.
They need to give the reason for the redaction and should put the relevant section of the act by each blacked out section. There is the right of appeal which by the amount of black ink would be well worth a look at.
Why only use a 10 year payback period? That road is going to be there for the best part of a century. Even using 30 years brings your $84 back to $28. Over that time wages should rise so the road does become positive in that regard.
On a related topic, has there been any sign of those ten missing bridges that National were going to build?
Weren’t they an election bribe? Surely Northland don’t receive the inducement if they elect the other guy.
They certainly were planned as an election bribe, but I recall that in order to say they were actually “Not a Bribe”, they had to say the bridges would go ahead anyway…
Didn’t say when they were coming.
So yes the bridges are coming “by Christmas”, but which year?
From memory there’s one project (the two bridges at Matakohe I think) planned for the next three years. They’re may be one other on the list but the rest of the bridges are sometime in the distant future i.e. could be a decade away
What would the cancellation of this outrageous Puhoi- Warkworth project cost NZTA/taxpayers in likely damages to the contracting consortium?
The problem with the goods coming out of Northland by rail at present is that it really isn’t economical to cart it by road, and quite a bit of it can’t go by ship either. I’m talking about logs and wood chip for Kawerau, and shipping containers of dairy products from Kauri which is probably going to Tauranga. To cart the stuff to Kwerau would mean a truck and trailer unit per wagon load, and the truck would have to be double shifted simply because the drivers would not be able to do a return journey before running out of hours. The cost of each of those truck and trailer units would be in the vicinity of $1/2 a million each, plus the cost of two experienced drivers, at about $25 an hour each. The dairy containers could probably go to the port by road, but for the shipping companies to be interested in calling at Marsden Point they would have to have a lot more available, and, guess what, the best an cheapest way to get them there would probably be by rail, which is why Fonterra is committed to rail in the first place.
Small thing, but I love it that they say benefits could be increased if there was “effective communication of benefits.” Increased benefits to the PR company maybe, but how does talking about it help anything? What a weird mindset. Obviously grasping at straws.
Not to mention that they see the risk of costs exceeding benefits as high. Huh?
Yes loved that risk table. Basically reads as if benefits aren’t there we need to make stuff up. Similar with the traffic volumes
Haha brilliant. Hope you don’t mind, I’ve quoted that in my OIA request to them.
I’m really interested to see the response about the travel times. It seems that a transcription error has occured…..
Oh poop I forgot to query that. Do you want to file a separate FYI/OIA request on their calculations used to come up with those numbers (distance, speed, speed limit…)
I would need some help/advice on the process I think….
Private message me on facebook?
This is what NZTA said at the BOI about the travel time:
“However, CBT’s example assumes the travel times in my Report were taken over the full 18.5 km length of the Project. As noted in my Report (and shown in Figure 15 of that), the travel time routes are taken from Puhoi to immediately north of the Project’s northern tie-in, not from the physical extent of the Project at the Johnstone’s Hill Tunnels. I chose the southern extent of the route immediately south of Puhoi Road because the Project and the existing SH1 are very close to each other at this point and it provided a useful location to make a comparison. The distance between Puhoi and the northern tie-in is approximately 16.6 km and the average travel speed over this length of the Project is forecast to be 99 km/h in the interpeak. This travel speed is for vehicles in uncongested conditions. In the PM peak period the speed is 98 km/h over the same route.”
My main issue with this road is it’s winding nature! It is a motorway so build it as straight as possible not some half baked design that has a big ass dogleg half way along it (Moirs Hill Road). This dogleg adds over a kilometre to the length of the route meaning that time-savings and fuel savings etc are reduced. People that say it is just a holiday highway obviously hardly ever use the road! Sure the existing road can be lightly used a lot of the time but all it takes is one slow vehicle and it becomes a very long slow drive (and there are many accidents). Yes I suppose there could be some cheaper passing lanes added etc but it is still a 3rd world style route considering it is supposed to be State Highway 1! Spending the money on the existing road now only to then build the motorway in a decade or so would just be a waste of money better to just do it once and do it right.
If a toll road covers the cost of interest alone then that is still sufficient (if you think about it other roads are built that are entirely funded by taxes etc).
I do however think that the Northland line should be reopened and used (along with Auckland port closing to large container ships with the work being split between Northland and Tauranga – could still be coastal shipping using it and perhaps certain other shipping).
The toll revenue wouldn’t cover the cost of interest let alone any of the capital costs
and what road has it’s capital costs paid for other than from government (central or local) or toll?…. Exactly none! At least a toll road is helping to pay towards it’s costs something which other roads don’t except in the form of time savings for vehicles, in fuel savings, congestion savings, and less accidents.
The main problem with this road is again that it is not direct enough to make much of a saving over the existing route. If they could ease that dogleg not only would they have to purchase less land, they would also cut 1km off the route and save nearly an additional minute of travel time (not to mention that corners are expensive to construct – which is why construction companies love them!, and that they require more maintenance than straight roads due to the sideways loads placed on them).
Before we continue, to what secondary or tertiary education level did you get to with (a) geography and (b) economics?
What about the toll? Currently it costs $2.20 for a car ($4.40 for vehicles over 3.5 tonnes) to travel 7.5km on the Northern Gateway. The new toll road is going to be about 24km, will the toll go up pro-rata?
I don’t believe the toll will go up much (or even at all) because there is such a minimal travel time saving generated by this extension to the motorway. In fact given that the motorway runs a few kilometres north of Warkworth, the travel time savings could be negative for people heading to the Warkworth area.
Hence if there was a toll on the motorway north of Puhoi, I believe many people (especially bound for the Warkworth area) will get off at Puhoi and use the old road (currently SH1), which takes on average 13 minutes (from the tunnel to Warkworth).
There’s not going to be a separate toll gate for the next stage?
If there are 2 sections then expect each to be the same as now (or inflation adjusted). If driving over both sections then I think there would be a discount (they have discussed this previously with plans for Penlink) so it would probably be something like $3 rather than $4.40.
So, not even close to repaying it then. The current tolled section only cost under $400M so add $1B (which is what I expect the cost to be) + PPP expense and this is one money sucking road. That doesn’t go to Northland. Not even close.
Simiar to transmission gully, travel time savings are reliant upon a much higher average speed than the existing route and in the magnitude of a couple of minutes at peak time possibly. A toll large enough to pay for the road will disincentivise people using it.
One wonders whether the risk table is perhaps one of the only ways NZTA has of communicating the folly of this to their masters? I looks pretty shithouse.
Meanwhile, one of the worst/scariest/dangerous roads in the country continues to be neglected. One also wonders how intentional that may be….
Which road is that?
They’re neglecting a very large number of dangerous (and slow, if taken at sensible speed) roads and corners and intersections as a result of the RONS. People are being killed as a result of NZTA/Minister misdirection of funds.
“It seems the most valid of the justifications is that the road has a poor safety record and it suggests the road is the 16th worst in NZ”
Yes, the road has a bad safety record, but is far from the worst in NZ, There are lower hanging fruit to spend the money proposed to be spent on this road on. (although in reality at $1B plus you could probably afford to do major safety improving modifications to all 16, and save far more lives than this project would)
SH1 from Puhoi to Warkworth George. You know, the road this motorway bypasses.
I suspect you know this though.
Matt, this is a very good exposé of the business non-case for this project. Hard to believe that anyone confronted with these arguments could continue supporting it!.
If this scheme is to proceed, it can only be because there are:-
a) some major additional benefits that NZTA have failed to communicate, or which you have failed to uncover. [Highly unlikely]
b) a lot of ignorant or brainwashed people out there who believe all the hype/misinformation, and cannot see that this project does not stack up [More likely]
c) a lot of misguided people who can see that this project does not stack up, but think it’s OK to throw a $billion at it anyway [Most likely]
Where is this government’s so-called fiscal responsibility?
*** This comment has been deleted because it was, well, stupid. When commenting in the future, please avoid so-called “narky nah nah pooh pooh” type comments. ***
The amount that Skypath will cost in total is not even in the same order of magnitude as what the Puhoi to Warkworth project will cost.
Actually, it is out by almost TWO orders of magnitudes.
Its like the older kid arguing he should be gifted a brand new BMW free, because the younger kid MAY get a bicycle, which he will have to pay back the loan for.
Guys like Local Resident complain that skypath will dump thousands of people past their house each day (in cars ?!?!), so business case shouldnt be an issue as a user-pays initiative.
Or is it this week when you switch the argument to there not being enough people, such that AC will have to pay out an amount equal to a rounding error on P2W?
Its hard to keep up….
Does skypath even need a “case”, the harbour bridge is a critical pedestrian link, it’s straight forward, it shaves hours off of active mode journeys (e.g. via hobsonville/greenhithe).
A road through a north auckland that shaves a few minutes of your journey to northland or back is laughable and shouldn’t of even seen the light of day, its just almost as mindless as an extra motorist crossing across to the shore.
I guess New Zealand is still a democracy. As the RONS were a very open part of the National Government policy, it is fair to say that the majority of New Zealanders voted for RONS.
I guess it is also fair to say their are very few National voters on this blog.
While I am all for freedom of speech, surely there is a time when you guys accept your vision of transport spending is not shared by the communities you live in.
Rather than (selfishly?) try to halt the progress the majority of Kiwis voted for, why don’t you consider emigrating to countries that are more aligned to your own thinking?
Now please do not think this is a personal attack on anyone – I don’t care if you stay or leave – but treat this as a genuine question. Why do you want to flog a dead horse and oppose democracy?
The majority didn’t vote for this government. National, ACT and United Future got 47.97% of the vote (see http://www.electionresults.govt.nz/electionresults_2014/partystatus.html). Until NZF won Northland that gave them a majority, so the Maori Party added its 1.32%, but that’s still only 48.29%. It’s only the quirks of MMP, which the government refused to reform, which gave them a majority.
Even many of the 48% don’t support the transport policy – see for example http://www.stuff.co.nz/national/politics/10289369/Poll-Public-transport-beats-better-roads.
And since less than 50% of the electorate turned the Government got around 25% of the total of those who could vote.
Wow, “local”, you’re one sick puppy. You’re seriously asking why citizens of this country don’t just up and leave because you disagree with what they are saying? Fascist much? Opposing unnecessary roading and discussing alternative transport options, to try and give our country some better ways forward, is grounds for leaving the country? Don’t even try to help do something, just give up and leave? What a depressing attitude to life.
Phil by your logic – given the majority of the community support Skypath then why are you selfishly trying to halt progress by objecting to Skypath. If you don’t like it you should just sell or house. Why do you flog a dead horse and oppose democracy?
As for the blog, I’m aware of a number is national party voters and even members who read and agree with the blog.
democracy requires that we respect people’s right to vote, and I certainly respect anyone’s decision to vote for anyone.
But the democratic decision that occurs every 3 years when there is an election is not “solidified” in time for evermore thereafter. People’s views evolve all the time as they get exposed to new situations and information – that’s why political opinion polls are conducted at regular (say monthly) intervals.
Indeed I suspect that there will be readers of this blog whose political views have been informed by what they’ve read on this blog. And if we want to present people with information that may be relevant to future democratic decisions then what’s wrong with that? And even if it doesn’t affect anyone’s vote, it’s still better than people have more (independent) information on what the different parties stand for.
People don’t vote based on transport issues.
It’s frustrating – most transport funding and decision making happens at a national level, but most people only vote on transport issues at a local level.
Wouldn’t it be awesome if we could directly vote for each ministerial portfolio?
Two weeks before last years election at the Grafton Gully Cycleway opening (on Saturday Sep 6), John Key said the National Government supported the SkyPath, so clearly this is part of the National Government policy. Rather than (selfishly?) try to halt the progress the majority of Kiwis voted for, why don’t you consider emigrating to countries that are more aligned to your own thinking? Maybe Oxfordshire would be more to your liking?
Just like Len Brown was elected as Mayor of Auckland because the majority want better Public Transport. So why does the Government continually put obstacles in the way, for example not allowing additional tools for funding like motorway tolling? Why do they oppose this democracy?
frankly my dear, I’d say it’s just politics.
Well, there are 3 assessment criteria for a reason. If Economic Efficiency does not apply, the Gov’t can just fall back on Strategic Fit, which requires no real justification other than, ‘it’s something we want to do’. The blatant double standard when compared with PT projects is galling, but not surprising.
Is it a double standard? It just seems to be a rough-shod way of national govt riding over local govt. If we had a PT-friendly govt, they could use the same “strategc fit” stuff in a jiffy to push through 5 busways before the decade is out. Works both ways.
If anything, the problem in NZ seems to be that national govt has way too much power over local and regional transport decisions.
Of course, but in this case the government’s bias is towards building motorways, not busways.
The opposite of what this blog advocates.
I guess if the un-level playing field was tilted the other way – i.e. to favour PT projects over roads – we wouldn’t be complaining.
Some motorway-advocacy blog could then take up the cudgels over “double-standards” if it bothered them enough.