Last week the reserve bank dropped the official cash rate to its lowest ever level in a bid to spur growth and keep inflation within its target band of 1-3%. What is unusual is the RBNZ Governor also took the step of calling for the government to increase spending on infrastructure in Auckland.

“A lot of the focus tends to be on monetary policy to work out price output splits for an economy to try to get some demand growth and output growth and also maintain low inflation,” Wheeler said.

“One of the issues is what role can fiscal policy play,” he said.

“One could mount a case for saying there’s the potential to have more infrastructure spending around Auckland.”

Wheeler said the economy was generating output worth NZ$230 billion a year.

“So some capex expenditure by the government could well be helpful to try and reduce excessive capacity in the economy and, from our point of view, reduce the output gap and build inflation pressures, so that would be something that would be helpful.”

He also talked about it on Radio NZ’s Morning Report on Friday

Or listen here

So basically we need infrastructure and policy changes to unlock capacity and make it easier to increase the supply of housing in Auckland. It’s an interesting move from the RBNZ as I can’t recall seeing them making such a suggestion ever before. Infrastructure is quite a broad area and includes things like schools, hospitals, emergency services facilities etc. but of course one of the most crucial areas highlighted is Transport.

Even if the government agreed and decided to increase spending on transport infrastructure actually doing anything is likely much more difficult. Many of the projects that may want to accelerate suffer from the same problem, they’re nowhere close to being ready for construction. Many of them are just ideas on paper and haven’t been consented actually been designed. Take the Additional Waitemata Harbour Crossing as an example even if the government decided to fund it as soon as possible it would still be years away before any sod is turned as the project hasn’t even been designated yet. By the time they got to the point of getting the diggers out we’re likely to be in a different stage in the economic cycle.

Combined with the fact the government is already accelerating a number of motorway projects this means any focus would likely need to be on projects that can be designed and consented quickly or projects which are almost shovel ready. To me this means any spend up on transport infrastructure is likely to be focused on quick things like cycleways – which implementation teams are already going to struggle to use all the funding currently available – or other small local road projects.

That leaves large projects and currently there aren’t too many of those in Auckland’s plans that are close to being shovel ready – but there do happen to be a few interesting ones. The first is of course the City Rail Link which already has consent, the first stage is underway and design work is ongoing for the main works which still needs construction funding approved.

Aotea Station Design Platform Oct - 15

Another big exception I can think of is likely to be Auckland Transport’s light rail plans. This is because for the most part the light rail proposal uses the existing road corridor and is just a reallocation of road space so I suspect that the consenting – if any is needed – would be much faster and easier.

Bringing forward both of those projects would make for welcome announcements.

Share this


  1. Interesting times in terms of both monetary and transport policy.

    Given population and rail patronage growth in auckland it’s hard to escape the conclusion that we should be pushing “go” button on crl project right about now. Recent climate change agreement lends extra support to low carbon transport options such as rail, especially given wratcheting up mechanism that may come into play.

    If i was central government id approve crl construction but require time of use road pricing scheme to be implemented when it opens in 5 years time. Then akl can start to make smarter use of transport infrastructure we have and generate funds for more investment when required.

    1. I think that is exactly the solution Stu. Run a toll cordon around the CBD and charge for each entry and exit and tip the cash raised straight into CRL and the Northern Busway. But set the price high enough to really impact on traffic flows. You should stand but dont stand for the Greens as nobody pays any attention to them!

      1. Cordons create barrier effects and lead to unintended consequences so clearly the answer is to use GPS to manage time of day variable pricing throughout the city. After all we want to get those kids back on their bikes and walking to school in the burbs too, it’s not just about the city centre (and nor is the CRL).

        1. I lean towards gps based systems myself. But im open to alternatives … but key thing is linking changes in infrastructure to changes in pricing. We dont just need more stuff, we need to use the stuff we have more efficiently.

          1. I agree with road pricing, but I struggle to see the logic in linking it with infrastructure spending. This was already proposed by the Mayor as part of their Auckland Transport Plan, or whatever it was called. The issue then was, road pricing was seen as a means to fund the infrastructure. Indeed the Mayor promoted it as such. I think this is a mistake, politically as people will perceive road pricing as a “tax” being used to pay for something they may or may not want. It is far better, I think, to sell road pricing on its own merits as a means to alleviating congestion, to improving the efficiency of road use (inlcuding PT), and to reducing the overall cost of transport by lessening the need to spend money on infrastructure. The last point I think is critical and will not be able to be made by linking road pricing with infrastructrue spending (because the point is the exact opposite of this approach).

          2. The point is to not just link with any old infra, but to link it with the necessary alternatives to driving so people can more reasonably choose to not pay to drive by choosing to not drive. But, indeed, it may be best to first introduce it on a revenue neutral basis first, then alter it to generate a means to funding borrowing for new infra later, if that has political support. Stu’s suggestion to time it with major RTN systems like the CRL is also worth considering.

          3. Road pricing always dies as soon as the road lobby dash in faster than a robber’s dog to claim the spoils. The purpose is not to raise cash but to price out car trips. But the problem is you then have to spend the money somewhere and if it goes to the consolidated accounts then people hate it as a tax and campaign to remove it like the harbour bridge tolls. If the money can be ring fenced to improve alternatives for the people paying or priced out then you have a chance of getting public acceptance. I guess that is why I favour a cordon as it is easy to allocate the money to other ways of crossing the cordon. Yes there are problems but cordon technology exists and doesn’t require continuous tracking.

        2. I’d like to see the Mt Eden & Dominion Road parking 24hour busways both ways. The parking regime changed to maintain a 15% vacancy ratio.
          Also consideration should be given to a new harbour crossing along the lines of Portlands “Tilikum” bridge. We could consider using the NY idea of issueing bonds to fund the bridge to be repaid by future tax revenue from the increased values of the properties in the vicinity of the extensions (as NY did for the 7 line).

          1. Yes a Light Rail and walking and cycling bridge from the end of Wynyard to Onewa would be great; but it would have some rather steep grades to get high enough for the boats to still be able to access the marina and upper harbour. So a twin [Light] Rail tunnels as the next harbour crossing after SkyPath are probably the best shot.

            The road crossing simple can’t happen; the vast amount of traffic inducement it would cause is not only a disaster for the City and the Shore, but also is completely incompatible with our international commitments to lower carbon emissions. And the great news is that rail tunnels are smaller cheaper to build and much higher capacity than road tunnels, and mean the Shore gets rail Rapid Transit sooner: Win/win/win.

  2. I wonder if AMETI would also be a project which could be sped up. It is a project that the conceptual designed is done plus some public consultation. It is surely a part of Auckland that needs improvements in public transport. I would have thought that double tracking the rail to onehunga and buying new electric trains for improving services to pukekohe etc would not be to hard either ( but I think that buying assets overseas is the type of spending the reserve bank is thinking of).

  3. Airport to rail also shouldn’t take too long to get underway if they wanted to. They already have the land designated etc.
    Another one would be extending the NBW to Albany.
    The other important one is the 3rd main on the Southern Line for freight. This could coincidence with electrification to Pukekohe and additional EMUs.

    1. I thought the NBW extension was already funded as part of project that will start the design phase soon.
      I think there are a number of projects which have completed initial design phase and costing which could be rolled out very soon for detail design and costing, then building.

      I think if the government wanted to spend $5 or $10 billion dollars quickly there are not shortage of projects in Auckland that could not start building within 2 to 3 years.

  4. The very first piece of infrastructure to sort would have to be the ridiculous 2 lanes on the southern motorway at Mt wellington. This bottleneck is a test of anyone’s patience. Design madness in the extreme. the sooner that short piece of motorway is made three lanes the same as the approach and exit each direction the better. Currently (no matter what form of transport you bat for) its a joke.

    1. You show your ignorance with that comment Ricardo. That is a deliberate bottleneck to avoid absolute chaos on other parts of the network if more capacity was provided there.

      1. That’s not the first time I’ve heard that ‘explanation’ for why the motorway adjacent Sylvia Park narrows to two lanes before returning to three (in each direction). For the life of me I cannot understand it – it makes no sense. How does it stop congestion on other parts of the motorway? And if it does (and if that’s supposed to be a good thing) then why aren’t we also narrowing other parts of the motorway to two lanes in order to create choke points?
        Does anyone have a better explanation of why this is necessary?

    2. Are you talking about where it narrows at the Sylvia Park offramp?
      Seems to me the problem is not the two lanes, it’s c**ts running up the inside lane and then cutting back to the outside, thus jumping the queue. The solution is to get rid of that inside lane at the offramp so people can’t queue jump

        1. and again I say: if that’s really the case, then why don’t we throttle other parts of the motorway?
          I don’t accept this, it’s as ridiculous as saying we need to drink 6 glasses of water a day (and not 5, or 7) – it’s folklore.

    3. If that bottleneck is taken out then the whole traffic will be shifted north creating much pressure and more congestion from Mt. Wellington all the way to the city.

    4. There’s a case to fix that bottleneck but really, it’s just pushing one queue of cars up to another queue of cars further up the road. Let’s get more electric trains and some trams going instead!

  5. Accelerating the Auckland Rapid Transit Network now is a matter of supreme urgency. The government has just signed up the nation to do its fair share in keeping global temperature rise to 1.5C. The lowest hanging fruit in that ambition is to meet the powerful and clearly evident latent demand for quality modern Public Transit in our biggest city: The RTN, growing at over 20% pa.

    Such infrastructure not only combats local and global pollution by lowering the city’s carbon intensity and imported liquid fuels directly, but it also enables and incentivises a more compact and therefore permanently carbon efficient city. It also reduces delay for those users who choose or must use the extensive private vehicle networks; maintains the efficiency of the roads.

    Ideally in conjunction with road pricing, the projects on the future Rapid Transit Network offer immediate opportunities for Keynesian stimulus of the kind the Reserve Bank Governor is calling for and are long term assets that are fit for purpose given the clear global demands of this century.

    Here is a perfect opportunity for the government to pursue all these goals together; support and grow the modern services economy in our one city of scale, stimulate the economy with infrastructure of lasting value, and meet our international obligations and help protect our own agricultural sector from excessive Climate Change. CRL is ‘shovel ready’, as are the rest of the PT parts of AMETI, LRT is not far off, NW Busway. Rail to the Airport should be underway directly after the CRL. Electrify rail to Pukekohe and beyond. Third Main on the AKL trail spine. Do it.

    1. To be fair you could probably get a much quicker environmental result by subsidising electric cars. For $2 billion the government could subsidise 200,000 electric cars by $10,000 each.
      Not that I think that is the best approach, just saying that the CRL might not be the lowest hanging environmental fruit.

      1. Electric cars still have a long way to go – most of the US has subsidies in that kind of range, and they’ve sold less than 400,000 of them so far ( That’s a country 70 times larger than NZ. Electric cars will be great for NZ in the long term, but it’ll be many years before they really start to make a difference to our emissions, even if we do decide to subsidise them.

      2. Electric cars are a great improvement over ICE vehicles, obviously, and particularly in NZ given our 80% renewable generation. However they do nothing to improve urban form whereas Transit does. Because it isn’t just the engine in the machine that matters, it is also the kind of land use that the transportation type enforces that’s critical.

        Swapping one ICE driver for one EV driver is all well and good, but is nowhere near as good as swapping that driver for a Transit rider or a walker or cyclist. The later help create proximity and the former dispersal. And proximity is the powerful magic of the city. Both for efficiency and prosperity and for radically improving carbon outcomes.

      3. As long as you ignore all the environmental impacts of actually building the car and the effect of the resources that go into it. Car tyres are not made out of fairy dust but out of oil derived products.

        If we started converting existing cars to electric that might have some net effect.

        I used to be a great fan of electric vehicles but now I see them as just another excuse not to make any real change to the way we travel.

    2. But regretfully I suspect that the “National Government” will only move when they consider it is politically advantageous for them i.e.retention of the treasury benches. And regretfully the National Party tend to be followers of public opinion and uninformed “Joe Blow” opinion tends to be way

      Personally I would like to see them show leadership and advance what is clearly best for Auckland – all those projects Patrick has nominated above.
      For those of us who wish to live in a great city we can but chip away with a little pressure here and there and hope!

  6. “To me this means any spend up on transport infrastructure is likely to be focused on quick things like cycleways – which implementation teams are already going to struggle to use all the funding currently available – or other small local road projects.”

    This seems a better way of “try and reduce excessive capacity in the economy and, from our point of view, reduce the output gap and build inflation pressures”?
    Spreading the spend amongst many small (relatively) operators is better than handing another large chunk of public cash to, for example, Fletchers?

  7. Well for starters AT should bring the full and proper K’Rd Station design back – with full entrances at from both Beresford St and Mercury Lanee as originally planned as the first change.

    But I deeply suspect the only “tunnel” project that will get accelerated is the AWHC one – sans any provision for rail – “to save time” with the project – of course. Resulting in yet moar roads.

  8. This seems as good a place as any to query the equity implications of some of our infrastructure investments.

    Let’s be clear: the CBD is the favoured son, and receives the lion’s share.

    Let’s consider the following:
    – Those who live within walking distance of the CBD are likely to be above the median income (see Waitemata Local Board)
    – Those who work in the CBD are also likely to be earning above the median income
    – The lowest socio-economic areas of Auckland are the furthest from the CBD

    What does this mean? It means that the majority of the benefits accruing from this CBD spendup actually go to the rich.

    The hundreds of thousands of poorer people living and working in South and West Auckland suffer; Henderson CBD is a hole, as is Manukau.

    Does this become a “rich get richer” situation? The wealthy Mt Edenites are able to use fast and frequent buses to/from work and their local cafe; those living in Mangere on the other hand are forced into expensive and unreliable private transport.

    Do we need to focus infrastructure on poorer socio-economic areas to create greater equality?

    1. Early,

      You are quite correct, apart from the CRL, investment across the central isthmus should be deferred until post-2044. The Unitary Plan for Auckland prevents population growth on most of the central isthmus apart from the CBD. The central isthmus is a low density suburb of mostly single dwelling houses offering little chance for growth. Spending money on cycle-ways or light rail in these areas is not going to be of benefit

      The government wish to invest in infrastructure to support more dwellings in Auckland and working within the confines of the Unitary Plan that means targeting expenditure to the West, South and Northwest. In the New Lynn – Te Atatu – Henderson area future density of population is allowed to be much higher than in the inner suburbs. To the South and Northwest there is to be greenfield suburban development which can be brought forward with infrastructure support from the government accelerating growth. That is where growth can occur.

      1. The unitary plan still allows for a fair bit of growth across the central isthmus, and this is increasing all of the time (e.g. removal of a lot of single house zone).
        You seem to be arguing that it is better to invest in PT that might be needed later due to growth, rather than investing in PT that is needed now.

          1. The problem is that the Govt is not interested in the infrastructure they seem only to be interested in blaming the Council for not having it there for their SHA’s.
            It is very hard to see how the council is able to develope infrastructure in advance of all these SHA”s being populated and the first item should be the transport cos once people are used to using PT they will be reluctant to go back to the individual metal capsule.

          2. The problem to date has been the government only believed in certain types of growth and certain parts of the economy; essentially the haven’t yet shown much understanding of cities, and their role in the economy, and our one city of any scale in particular. We hope this is changing.

      2. Stand by caller, your comment is based on the Proposed AUP:

        be interesting to see what zoning changes are proposed. Based on the Councillors quoted it could be presumed that the alleged changes referred to are concentrated in those ‘wealthy’ central areas.

        However there will probably still be be a lot of growth that not in the middle too, but good PT networks actually improve longer journeys to a greater degree – see for example the (train) travel time reductions from the CRL (physically located in the centre) accrue largely to those in the far west and south, while also facilitating reduced loads on the existing road based alternatives too.

        Arguably the CRL is facilitating sprawl as much as it facilitates TODs.

        1. Not so. The greatest beneficiaries of the CRL are on the western line, that’s where the radical time savings are to be found, and that only serves Swanson inwards. The greatest improvements are for Avondale, New Lynn, GlenEdwn, Hendo etc. these are not new sprawl areas but rather are current built up areas desperately in need of investment and agglomerating.

          1. And the CRL may be an equitable investment, but (for example) the Victoria Street Linear Park is going to benefit the rich more. Rich people are more likely to use it either because (a) they live nearby e.g. Herne Bay or (b) they work in the CBD

          2. The west side of the city centre is one of New Zelaands poorest neighborhoods. If I recall correctly the average household income was less than $20k per annum. There are a lot of low income students, workers and beneficiaries living in affordable housing minutes walk from Victoria St.

        2. Furthermore the CRL will help the Otahuhus and Paptoetoes down south be more viable for uplift too. The fact there are SHAs on the rail line further south is at least better than the totally auto dependent ones elsewhere; at least that makes for less worse sprawl!

      3. Note that it currently takes the same time via PT to get from Otahuhu to Britomart at peak as it does from Mt Eden… Also much quicker to Glen Innes to city than from West Lynn. Fast, frequent trains are reshaping the city, inner suburbs served by buses are being pushed further away. Agree though that North-West and South-East need better PT as priority, these busways should be sorted before LRT.

    2. You are joking right? Most of Auckland’s transport spending has been on motorways to get people to/from the outer suburbs. Even with PT most of the money is being spent on trains that don’t really help ‘The wealthy Mt Edenites’ much. I cant think of any major transport spending in Mt Eden or any central suburb in the last 30 years.
      The reason for favouring the CBD with PT investment is because it makes up the vast majority of common trips. Is it worth spending billions on PT to move 5 people from Flat Bush to Henderson every day?

      1. Transport isn’t the only form of infrastructure.

        And my point is that every dollar spent on the CBD favours Mt Edenites more than Mangereites because the former are closer to those amenities.

    3. Certainly areas that welcome intensification should indeed be rewarded with investment. Those that believe they are finished and full have to understand that they are regecting the same. However it is not quite so simple when it comes to where RTN investment projects are required; to and through the centre IS a fix for New Lynn, Henderson, Manukau, Otahuhu, Mangere etc, giving these places the vastly upgraded access to that and other great centres of employment will make them newly desirable and able to attract investment in both dwellings in local businesses. Particularly the network fix that is the CRL. But also every piece of the missing RTN jigsaw.

      1. Do we really want to live in an upside down city where all of the good transport links are to the outer suburbs? Maybe decent PT to the inner suburbs would attract the types of urbanites that appreciate urban lifestyles and intensification instead of the current dinosaurs. Auckland has been focusing its transport spending on the outer suburbs for decades, this needs to change

        1. That won’t happen JJ, the centre is the key for all parts of the city, that’s what the centre actually means. Fixing connectivity elsewhere must include efficient connection to and through the biggest employment and fastest growing residential area. But also it’s simple geometry; the centre will always remain the closest point to more of the rest of the city than any other part. Especially, ironically, if outward spread continues or accelerates because each edge gets separated further and further through great expansion.

        2. Yes, that would be a great idea. However the council makes building an urban environment non-permissible (by zoning the majority of the isthmus single dwelling) and unprofitable (by way of the constrictive MUL forcing land prices through the roof). The government should not invest in infrastructure to support a thing that is impossible.

          1. Most of Dominion Rd along the LRT route is mixed use commercial and can and will build up in a similar way to how Great North Rd is in Grey Lynn now. I think the way to proceed is to get that route in as it already is likely to stack up, then predicate the parallel routes on up-zoning. So basically answer the resultant clamour for LRT for these routes by saying; sure; once you accept TODs around stations and stops of appropriate height, scale and intensity.

      2. It’s not about who welcomes intensification, it’s providing the poor with additional infrastructure to make up for their loss of income.

        Poor people can’t afford flash backyards and tennis courts, so give them more public infrastructure to make up for it.

    4. We are just wrapping up $5b dollars of investment in a ring road to link all of the outer suburbs and ameti the airport motorway and east west link is another 2b of no benefit to the cbd. The cbd hardly gets the lions share.

      Also the best paying jobs are in the cbd the worst paid people are away from the cbd. Surely allowing them to get cheaply between the two places is a good thing for equity

          1. If they get a high paying job they are no longer poor, and no longer need additional public support.

            Not to mention they probably CAN’T get that job

            Economic status isn’t like race, it isn’t permanent.

  9. Nice render above. I’ve noticed the change of signage recently to AT Metro. Once we get a metro that will be great.

    One concern for the increased infrastructure spend through fiscal policy is the financing. For any cash component we’re still running budget deficits. For debt financing it might be currently cheaper if the government can source its borrowing domestically to take advantage of the cheaper rates but I would expect we can only borrow a portion this way. Much of the borrowing would be from abroad, adding to our already building levels of borrowing.

    An elephant in the room for me is our welfare spend which is over 1/3 of our budget. We’ve got little left over for projects. But that’s political, I shouldn’t be going there.

    1. Getting AKL fit for purpose for this century, and therefore growing strongly, is one way to help address that welfare cost. There is plenty of evidence that this will lift employment and particularly access to employment for families trapped in welfare dependency. However a similar case can be made for lifting education and health outcomes too.

      The great worry is this gov’s old habit of hurling money at last century’s dispersing and dis-agglomerating form: urban motorways. These will not improve AKL’s efficiency, and are appalling for health, and lead to more severed communities: More islands of unwell under educated unemployed stranded ever further from services and opportunity.

  10. ““So some capex expenditure by the government could well be helpful to try and reduce excessive capacity in the economy and, from our point of view, reduce the output gap and build inflation pressures, so that would be something that would be helpful.””

    Sounds like the governor is trying to get someone to do his job for him. If there is excess capacity (and correspondingly low inflation), Mr governor, its your job to ease monetary policy.

    1. That’s not quite right Matthew – it’s always important for fiscal and monetary policy to work together. Part of the role of fiscal policy is to smooth out fluctuations in the economic cycle; it does this already to some extent, but the governor is suggesting that it could do it to a slightly larger extent.

      1. Maybe. Some would argue that monetary offset means that fiscal policy will only have an impact in a situation when the monetary authority is not set appropriately. I.e. Government spending should be fully accounted for in, and therefore offset by, monetary policy. You can argue at the ZLB there is an issue, but that doesn’t apply to NZ. But even if you don’t agree with that, we have a situation where the government has been massively expansionary over the last few years running huge deficits, and the reserve bank has consistently failed to achieve its mandate to get inflation back to the midpoint. And we still have elevated unemployment. If the governor is so worried about “excess capacity” (he doesnt actually appear to be), then he should be easing monetary policy. Its arguable that even his 25bp cut last week and the associated words didn’t ease monetary policy at all if you look at the dollar reaction for example. And the the tightening of last your has to be seen as a complete failure. Basically the governor has failed to achieve his mandated target for six years.

      1. A role to play in what? In making NZ a better place? Sure it does. In smoothing cyclical variations in economic output? Debatable, but even if that is the case – the recession ended several years ago and during and after the recession fiscal policy was expansionary. The government signaled an eventual return to neutral fiscal policy a long long time in advance. We had what, seven years of deficits? Short of the government running a structural deficit (which we all know aint a good idea), I cant see what else the governor should expect from fiscal policy.

  11. Commuter rail in Christchurch would not have much lead time to get a basic service up and running if the country is looking at what infrastructure can be provided that will give a lot of bang for the buck.

    1. Would be good to see some sort of rail system setup using aucklands ex SA trains, running between Rolleston and Rangiora integrated into the metro bus free transfers system. Half a dozen should be sufficient for a half hourly service.

      My guess is $20 million might get the required infrastructure like half a dozen platforms, signalling and crossing loops.

      1. Can’t see it working unless the rails go into the Chch CBD, which seems very unlikely. I don’t think people will be keen on a transfer with 30 minute frequencies.

        1. But in the short term, the centre of gravity for Chch is currently in Riccarton and Addington – places that the railway line goes to. And the bus connections from Riccarton into town are more like 5-10 minute frequencies at peak hour; not hard to coordinate train times with them too.

  12. How about replacing some of the clapped out old busses (Birkenhead, I’m looking at you) with modern electric ones, and the minor infrastructure changes to accomodate them?
    Kicking off the electric infrastructure would seem sensible, and busses are a great place to start.

Leave a Reply