Shortly Prime Minister John Key will be delivering his State of the Nation address at a luncheon being held by the Auckland Chamber of Commerce. It’s been widely expected that he’ll announce the government agreeing to start the main works on the City Rail Link in 2018 – in line with when the council/AT wanted to start them – instead of 2020 like they had announced when they supported the project in 2013. I’ll actually be at the event and trying my best to cover it live on social media so follow us twitter for the latest updates.

Aotea Station Design Platform Oct - 15

But it won’t be the only announcement with Key saying:

“As New Zealand’s largest city, our biggest commercial centre and the main gateway for international tourists, we all need Auckland to succeed.”

He said the Government was already putting billions of dollars into Auckland as it grew and he would highlight some of the priorities for the year ahead.

“It’s a speech that looks very heavily at infrastructure projects, not just in Auckland, but it does look at those issues and gives the Government perspective on next steps.”


“We are spending billions and billions of dollars as a Government on infrastructure. So the announcements we make tomorrow will ultimately mean the Government increases even further its expenditure on infrastructure. We are doing that because that infrastructure underpins the efficiency and competitiveness of our economy. We are not doing this because we need to stimulate the economy per se.”

Mr Key said housing in Auckland was a focus for the Government, but it was not the main issue of his speech. “We are saying we need to build more houses faster. It is our expectation the demand in Auckland is going to continue, that the growth in the Auckland population is going to continue and we just need to build a lot more houses between now and the next five to 10 years.”

It’s also been rumoured that he’ll make comments on the East-West Link, Additional Waitemata Harbour Crossing and Penlink. Further while he says housing won’t be a main issue of his speech I suspect that other aspects of infrastructure provision such as funding for water infrastructure that would enable more housing to be developed more quickly might be.

I imagine we’ll see media reports of the announcement coming in fairly quickly after the speech so the main purpose of this post is for somewhere to discuss what’s announced – I’ll have a more detailed analysis tomorrow.

Of course with the CRL getting so much attention it begs the question how many times will the media or some media commentator refer to it as a loop, suggest it’s just about trains going around in circles or that it’s just about Len Brown wanting a toy trainset.

Anyway it should be an interesting few hours. Keep an eye on our twitter account for the latest updates.

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  1. Is there no livestream or such? Not a big key fan but would like to see what he has to say about Auckland’s infrastructure and hopefully an earlier commitment to the CRL.

  2. So Yes the CRL has the go-ahead. Govt funding from 2020 but that means that construction can actually get going in 2018 and be paid from 2020 with completion around 2021/22 hopefully sooner.

  3. Yay – but not that bigger news really. All they have done is agreed the funding for 2020. And they did it not because they thought the CRL was needed, but just to provide assurance to land owners.
    I don’t think this leopard has changed its spots…

  4. Congratulations to all those who made this happen. Advocates, AT staff, councillors and Mayor, and even good people in government.

  5. The CRL will be completed in 2023, as per the Herald article. From my initial reading of that Stuff link (thanks for the links, guys), it’s still not quite clear if the govt will only fund from 2020, or from earlier, perhaps even from now. Today’s speech was just a speech, there will be policy detail to go with it, and if we’re lucky it might be available in the next day or two. The impression I got was that govt funding seems likely to kick in at least a bit earlier than 2020.

    So, the govt is still not definite to pay a full half of the CRL project. Which is a bit rubbish, but I’m hopeful that the funding share will improve and end up at close to 50% even if not quite there.

    The East-West link being brought forward is a bit daft, but at least there’s no concrete timeline quite yet. Reading between the lines, my guess is that since it’s planned to be funded out of the NLTF, it’s going to be a full motorway. That’s a waste of money and a bad project, but could have been worse – at least nothing on AWHC. The industrial businesses around Onehunga and Penrose must be stoked, all the lobbying has paid off and they’ve just secured themselves a truly massive subsidy.

    Nothing concrete on public transport besides the CRL, it seems – the govt is still a long way behind the times on that.

  6. Excellent news for the CRL

    Let’s hear it for John Key and the National Party, a party that understands multi modal transport.

    1. Funniest thing you have ever said on this blog….well done.

      One thing they are consistent on is subsidies for big business and where possible, total disregard for the environment at the same time. Roll up, roll up, the EW Link.

    2. Let’s hear it for the nats: taking their first tentative steps out of the 20th century. Albeit kicking and screaming all the way.

  7. As a Cantabrian I have to say I am disappointed with John Key’s speech. John put his best ‘I am a financial expert’ voice on, which he uses to mask his policies are a confusing mis-mash.

    Just spending a few minutes thinking about what he said reveals that John and the Nats are not policy experts.

    From my point of view their biggest lie is National supports growth. If that was the case Canterbury as New Zealand’s second fastest growing region would be getting the pro-rata equivalent to Auckland’s mega -infrastructure projects, so that Christchurch doesn’t make the same mistake as 1970-2000 Auckland of underinvesting in infrastructure.

    Instead National prefers to bypass cost benefit procedures and randomly fling infrastructure projects (pork) around the regions -probably to maximise vote buying. In many ways John Key is just Muldoon with a modern corporate makeover.

    As JimboJones says, the National Leopard has not changed its spots -it doesn’t honestly acknowledge the mistakes of the past and systematically try to fix them.

    Moving quicker on CRL is good but at best it is only a half hearted acknowledgement of the infrastructure challenges of Auckland and New Zealand.

    1. Ahhhh $17bn for the Canterbury rebuild? There is provision in there for new infrastructure also so you could say that Canterbury is already getting some funding for infrastructure improvements, yes in a different form but funding still.

      1. $17 Billion hides a lot -most of it is not new funding. For example a lot of it is EQC funding, which is an insurance scheme that Cantabrians have paid into and deserve to get paid out on. Another big chunk of spending is rebuilding damaged government assets -buildings and such, that should have been insured.
        Also to be accounted is that Cantabrians had good private insurance -the ‘stimulus’ of this insurance spend generated taxes and increased employment which was very helpful to the nations books as NZ struggled to get out of the GFC.
        Overall the government has only spent a few billion on Canterbury due to earthquakes. I challenge anyone to demonstrate that the government has been over-generous.
        But the point is that Christchurch/Canterbury hasn’t collapsed. The region contains the second biggest city in NZ. It remains the second fastest region. Yet compared to Wellington it has 30km of motorway versus 100km+ (post Transmission Gully) and no passenger rail compared to over 150km for the Wellington region.
        Despite these facts, John Key’s speech on new infrastructure to support growth in New Zealand he is completely silent about Canterbury. That is why I am dissappointed.

    2. No.

      No project, anywhere, should have attached to it a requirement that a financial sum of the same magnitude be spent in another reason. Each project should be assessed and funded based solely on its own merits, to do otherwise would be wasteful, with all regions operating under the same rules. Under such a system Christchurch is not disadvantaged in any way, it can and should seek funding for its own projects that have a positive benefit to cost ratio.

      1. The government spends the majority of its transport budget through the RONs schemes so it can bypass proper CBA and regional comparisons. It is tricks such as this that means Canterbury has a growing infrastructure deficit. New Zealand is currently paying catch-up in Auckland for decades of infrastructure deficit spending -why make the same mistake elsewhere?

        1. This project is not being delivered under the RONS banner. I do not agree with the RONs projects, or the manner in which they have been forced through based on ideology rather than merit but to burden a project that has a sound case with issues so wholly unconnected with it is unwise, and essentially is an opportunistic political manoeuvre to take advantage of a controversial situation to promote your own agenda regardless of the harm it may do elsewhere. I do not know in detail the infrastructure issues facing Christchurch, or what projects (if any), are presently shovel ready, indeed I’m not sure whether you are promoting something in particular or just the general idea that Christchurch should be given more funding. I would be far more receptive if you spelled out specific examples of the infrastructure projects Christchurch needs instead I have the impression that you are agitating for cash without an advanced plan for how it should be spent.

  8. Lots of motorways and roadways within his speech. Only PT announced are CRL, busway extension to Albany and AMETI (but I am unsure if they have committed money for that).

      1. He simply mentioned that AMETI existed, he didn’t offer a single dollar towards it or mention bringing forward its woefully long time scales.

  9. 50/50 funding, but we’ll still keep a veto on the council’s funding options

    and the Herald says the government is “kick starting” the (enabling work is already underway) CRL, sheesh

  10. Don’t see why we are paying for the rail tunnel out of general funds, when it could be paid for out of rates increases directly targeting the benefiting property owners. Why should the general fund be used to subsidise these rich pricks?

    1. The people living near Papatoetoe, Waitakere and Puhinui train stations are rich pricks?

      Wow, I guess I still don’t understand Auckland geography that well. I always thought they were lower income areas. Yet they are right next to train stations.

      1. As has been mentioned before in this blog the area around Aotea is also one of Auckland’s poorest area’s. I do not believe that the CRL will improve the returns for owners of Zest and similar apartments.

        1. It will definitely make it a lot easier to catch the train from there. For now you’d need a somewhat cumbersome detour via Britomart, by the time you’re on a train you’re already underway for 20 minutes.

      2. I wouldn’t describe Waitakere as lower income. The local school is decile 8, the same as Epsom Normal and Remuera Intermediate. This doesn’t change the argument for directly benefiting, since regardless of wealth their train station is now disused. It looks like you still have a little to learn about Auckland.

      3. Nope, they are mostly taxpayers who are paying a shovel full of rent (up 26% under Len Brown). So you want to shove their taxes up along with their rent?

  11. I’m wondering where the CRL funding will come from, the National Land Transport Fund or somewhere else? And will the Council pay its share in 2018-2020 with the the government paying from 2020, but both paying $1.25bn total each? Or something else? Also the new “project of National Significance” category for the East-West link is interesting. Hopefully we can add the city rail link into this category

    1. PM saying east/west will now cost between $1.25 and $1.85 billion, ergo more than their share of the CRL!, and is being fast tracked and brought forward. This is a poorly analysed and rushed project of dubious value and escalating costs.

    2. They actually mean “project of National Party significance” and it demonstrates how gutless they actually are – they know it doesn’t stack up so they’ll do anything to promote it

  12. National really want that fourth term. Watching the news tonight the east/west gets announced fait accompli but there still seems to be a question mark over funding for the crl. As Michael Barnett commented there needs to be a debate over funding and how it is allocated. Personally I think we’ve had a major breakthrough in that the media and politicians have finally started to call it a link instead of a loop. They’ve got a bit more educated about it.

    1. A couple STILL got that wrong – but we’re actually beyond where that matters. The big thing is the symbolic go-ahead and committment, even if details still have to be sorted.

      Oh, and double-triple-sigh on the East West Link. There goes enough money to complete Auckland’s total cycle network in one go, and then some. For a duplication of an existing road.

        1. +1

          Via Otahuhu we could have special Airport Express trains from the CBD travelling on the Eastern and/or Southern line non-stop, or limited to 1 or 2 stops, and then on to Mangere and the Airport – maybe a travel time of about 20-25 minutes. [Also, this way, we have a fast, simple, completely mode/grade-separated HR route.]

    1. Wow, so much development. It’s amazing how far Auckland has come. When I first started going to uni in 2000 it seemed like Auckland was only really Queen Street, High Street, and the Viaduct. The amount of development in that time has been staggering but it’s only going to accelerate with the CRL.

      1. Yep, it was starggeringly high rate of development until 2008.

        Now it is just staggering slowly along as land costs have sucked the profitability out of the sector.

    1. He is just making the point that I’ve been making, admittedly in a slightly odd way, that densification will have some substantial additional costs. In this case trying to create more classrooms for a school when there is probably no additional land available to do so, which could potentially make it more expensive than a greenfields site. And the question is where is the funding for that coming from? This can probably apply to other things like water etc… Where the available services have to be increased as things get more dense (not suggesting that I have a problem with that in the areas around the city rail loop at all, but there are going to be additional costs)

      1. Not necessarily. It’s likely that a lot of the new housing will be apartments and town houses. In NZ these have traditionally been favoured by households without children.

        1. James, That is a fair point. As a parent I couldn’t imagine trying to live with kids (especially young kids) in an apartment. But with some of these really sought-after schools what may end up happening potentially is that people will purchase an apartment near the good school and live there for the school year and live the rest of the year in a house either somewhere else in Auckland or somewhere else in the country.

        2. A family is renting an apartment of mine solely because of their preferred schools, while letting out their own property to offset the cost. I’m not saying this is common, but is one real-life example.

        3. By apartment I presume you mean in a multilevel block rather than a terraced apartment in a quality development.

        4. Yes. I personally still wouldn’t want to live in a terraced development, not quite enough space for me to grow the trees and plants that attract native birds and butterflies, but it’s better than an apartment. Would depend on the size of the backyard as to how many families would want to live in places like that but I’m conscious that on new developments like Long Bay there is virtually no backyard size anyway, even though you are paying ridiculous money for the land. But if you want to be really dense apartments fit more people in a small space. There are some pretty horrible looking examples here of that here on the north shore. But again, some people will be happy with living in that situation for various times in their life. But they are not for everybody.

        5. We live comfortably in our terraced apartment, ina medium density development. There are mature trees already here and the newer trees, planted as part of the development, are fantastic. I’m sitting here listening to all manner of birds. There is a 1/2 acre park (including a playground) and our 8 year old son loves it. We moved here from a 4 brm Cali Bungalow on a 1,300 sq/m section and I’ll likely never return to a stand-alone house.

      2. Well Stefan, even if the rolls of those schools increase that is unlikely to be anywhere near as expensive as creating all the infrastructure for entire communities out on the freshly ruined countryside: The three waters, roads, PT services, fire, schools, police, libraries, social services etc. As opposed to increasing use of existing infra which of course makes their fixed overheads more productive. Sweating existing community assets is way preferable to spreading and duplicating them all over the place.

      3. Sounds like there is already a funding problem from Central Government given his AGS example. So why wait until now to go public with it and blame it on the CRL?

        And as for “its a train waiting for passengers…”. The guy is a muppet.

    2. I’ve never seen a politician actually complain about something that will assist with development in his electorate. I guess it’s development that will help people who aren’t core Act voters. I think he’s seeing a future where thousands of these people move into his electorate. I guess the good thing is that as a fringe party no one gives a crap what Act thinks anyway.

    3. If there are more students in the area, then the government should do what it does elsewhere – build another school.

      Now that would truly horrify his constituents, who would suddenly find themselves in the zone for ‘Newmarket High’ or ‘Grafton College’.

      1. But the cost of purchasing land in an already developed space is incredibly expensive. Unless there is already allocated crown land, you would have to remove huge numbers of existing houses to create a school, unless you take over existing reserve land which means even less green space and resulting worse environmental impacts.

      2. The MoE are notoriously bad at managing land for schools, check out this little piece of brilliance from them

        Generally, they don’t not buy land for schools in existing areas, the strategy is to go up with multi-storey classrooms or take over existing green space (playing fields) for classrooms.
        In both cases green space per student goes down dramatically, there is no minimum green space per head specified for schools in NZ. Many on this blog will simply say get used to it, that’s the way the world over.

        Under the Revised Unitary Plan in fact the MoE have asked that the special school zoning be removed and most schools have been re-zoned residential suburban or urban, to allow them to sell schools that are “surplus” to requirements.

      1. Um, the CCFAS estimated negative net nenefits for the CRL. But i guess you could be right, that just puts it in the same box as transmission gully.

        1. It also compared the alternatives to the CRL and they all came out inferior to it . But then you knew that.

        2. Every option they looked at had negative net benefits. I looked at replacing my toilet with the following options: pure gold long drop, a silver toilet/bidet combo, and a litter tray lined with shredded $100 notes. They all seemed a bit daft but it makes sense to go with the least bad option right?

        3. I can’t possibly comment on a ridiculous analogy to try and prove a point you are struggling with otherwise.

          But they looked at something like 40 options. It came up best.

        4. KLK if it has negative net benefits then doing nothing at all is a better option. Was hoping I difpdnt have to spell out the obvious but there you go.

        5. Exactly Matt, at least that was the fig leaf used to defend the negative net benefits. (There are some basic issues of logic in the idea of a comparative BCR but I won’t go there right now). So my question remains -why has the government reneged on its promise for a business case (as it wasn’t the CCFAS).

        6. There won’t be another formal business case (like in 2011 which the govt rejected after doing some dodgy analysis on it), there will be a business plan to work out the best timing of things. One of the key reasons is they now accept it just has to happen. Without it it hinders some of the massive commercial investment planned in the CBD which isn’t counted in the business case anyway. Along Albert St alone there’s about $2 billion of investment going in with much of it directly tied to the CRL.

        7. From the CCFAS:
          “To enable the relative economic performance of the options to be compared, a Comparative Benefit Cost Ratio (CBCR) has been produced. This is not be compared to a standard or traditional funding BCR as its sole purpose is for comparison between the options and it is the relativity of the CBCRs which is important”

          Missing a comma, but I think the point is clear.

          Earlier today:
          “Providing these issues are resolved, and I’m confident they can be, we’ll aim to finalise the business plan later this year,” Mr Key said.
          A business plan would outline the business case in a commercial operation, so it is unfair to say he has reneged at this stage.

          He didn’t make any comment on the East West Link business case or plan, only saying that as a connection to the airport it was of national significance, so you would be right to question that logic.

        8. And the BCR was done prior to the CCFAS. The latter, as I understand it, came about because Joyce didn’t like the BCR and asked for comparison of alternatives, flawed modeling and all.

        9. From what I remember the CCFAS was solely isolating congestion reduction benefits and the BCR was done prior to that. For the record it should be noted the continued delay in response to council reports from Ministers and MOT. Also during the time Steven Joyce rubbished the business case Len Brown presented an independent review done by several large firms… Also after the MOT report TransportBlog rightly noted the inconsistency in discount rates and short periods of life used as compared to highways.

        10. Yes CBCRs a lovely invention. Given all the CBCRs showed comparative benefits significantly exceeded costs we have to assume that the unmeasured benefits for the chosen option is are very large (if we are to believe the chosen option actually has positive net benefits). So we have this huge chunk of unmeasured benefits that are necessary for the viability of the option. So it would be fair to assume that all options have large unmeasured benefits. Now if we did full evaluations for each option we would be right to choose the option with the highest actual bcr. So we have to make the assumption that the actual uncalculated bars wiuld rank in the same order as the CBCRs. In order for that to definitely be the case the unmeasured benefits for each option have to be a fixed proportion of the measured benefits. Why would that be the case? It’s just a blatant unjustified assumption.

        11. Jeremy can you point me to the independent review. I can only remember a revision done by the same firms that wrote the first puff piece / report.

    1. It will probably have to increase to pay for the Council’s share. Either that or everybody who drives on the motorway gets tolled. It would make more sense to me to charge people going into the central city, they are the people that will benefit from the rail loop.

        1. How can the council share already been covered when nobody has actually agreed on what is going to be yet (Although Key has suggested 50-50, it’s not set in stone)? Let’s assume that it is, why is there any discussion whatsoever about tolls? That would therefore be completely unnecessary. Both the existing mayor and Phil Goff have been saying how they want tolls yesterday. If it is already covered, they don’t need them.

        2. Because forward financial planning is how real organisations work. It’s covered, see above.

          Road Pricing is a political issue for the future, and is much more about optimising the efficient use of assets than revenue gathering, politicians take every opportunity to give voice to future issues when they get a chance.

          Key was being vague because he, more likely the more backwards members of his cabinet, don’t want this on the gov’s books because of their obsession with a paper surplus. All he has said is that it won’t be from the NLTF, which is overcommitted on the RoNS anyhow… It’ll be 50/50.

          It really is getting hard to catastrophise about this now; even Quax was tweeting about Italian statues yesterday, just pretending not to hear!

        3. I have absolutely no faith whatsoever in the financial planning of Auckland Council. They have managed to blow out the IT project budget, and it could well even overrun that blowout. Under the current management debt has doubled. Will be interesting to see if they can do the Loop within the $2.5 billion currently estimated. If they run it as badly as they run the IT project there is no chance.

        4. That IT project has been run under the current administration, who have let it blow out, it may be better if someone was managing council who did know something about IT, but I have no idea at this stage if Ms Crone would be better. Not particularly impressed with what she has said so far.

          As I’ve pointed out the current administration has managed to double debt, not hit targets for rates increases, let IT project get out of control, dramatically increase staff levels et cetera, not exactly a great financial record.

        5. You’re moaning about the operational parts of Auckland Council. As such there is (by law) little direct political direction of operational decisions allowed by the Mayor and Councillors – for good reasons.

          The CRL is being built by Auckland Transport – a completely different organisation to AC, yes it will be funded via the transport levy, levied by Council in rates.

          But Auckland Transport don’t have an IT blowout problem, they reused an IT system from one of the 8 councils that merged to form the Supercity at a fraction of the price of a new system.
          They’ve got on with building and running the transport functions of Auckland, including the new trains. Yes they still have some problems, with long dwell times at the train stations for the EMU, and with last years plans with chopping down the Pohutukawas near MOTAT. But they made the right call in the end on that.

          As a result – I expect CRL build out will be managed well and delivered on time, under budget, barring any delays, or worse – political interference – from both central and local governments of the day.

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