When the Auckland Transport Alignment Project (ATAP) was completed in September last year, a lot of the initial focus was on how to best fill the $4 billion funding gap the project identified over the next decade. This “gap” arose from being the difference between the $23.7 billion programme of investments across the whole transport network (new projects, PT service costs, asset maintenance, renewals etc.) that ATAP identified in its “indicative package” and the $19.8 billion that ATAP estimated was likely to be available for transport in current plans.

The $23.7 billion was broken down in a bit more detail in the ATAP Supporting Information document:

This shows around $13 billion in new projects, $3.4 billion in PT operations (net of fares) and $7.3 billion for asset management, which seems to mainly be local road renewals. The $13 billion in new projects is made up of $4.7 billion of committed projects (like City Rail Link) and then the major additional investments shown in the left-hand column of the table below:

We asked NZTA for a more complete list of the investments in the ATAP indicative package, enabling us to look completely at the list of projects. Below shows those with a first decade cost of more than $100m:

In addition to these projects there are a further $2.4 billion of smaller, under $100 million, investments.

The other side of the funding gap equation comes down to what ATAP assumed would be available from current funding plans – like the Council’s Long-term Plan. This is explained in more detail in the ATAP Revenue & Expenditure Report, with the key excerpt below:

Turned into numbers, the revenue & expenditure report creates a rather awkward graph as shown below.

So essentially it’s assumed there will be around $11.3 billion available from the National Land Transport Fund (NLTF), $6.8 billion from the Council and $1.7 billion in rail funding from the Government (because for some stupid reason rail can’t be funded from the NLTF).

The ATAP Revenue & Expenditure report went one step further by trying to estimate what share of the $4 billion gap would lie with the Council or NZTA. For some reason ATAP assumed that required rail funding from the government would definitely be available when required, potentially a good thing although not exactly mirroring recent practice, which means none of the gap lies with the Government’s funding of rail. Estimating the share of the gap that falls to either NZTA or Council seemed quite difficult though, and would depend on a whole number of assumptions that themselves seem highly illogical a lot of the time:

  • Whether projects are fully funded by NZTA (i.e. state highways or busways next to state highways) or have shared funding by the Council and NZTA (local roads, PT subsidies, busways not next to state highways, light-rail next to state highways etc.)
  • Whether NZTA’s funding assistance rate (FAR) is the “normal” 51% or a lower rate. It seems like in recent years for a lot of investment types for some reason NZTA have funded these at a lower FAR.

Depending on different assumptions for the second bullet point, either “most of” or “all of” the funding gap seems to sit with the Council

Since ATAP was completed there has been a lot of bluster, but not much clear progress on addressing the gap. This is despite ATAP’s recommendation saying that “the Government and Auckland Council work together to consider options and agree on an approach to address the funding gap by mid-2017, to inform statutory funding documents.” Steven Joyce has seemingly spent the last few months taking funding options off the table – be it a regional fuel tax or using smarter transport pricing as a revenue tool as well as a demand management one.

It seems like there are some obvious steps that could be taken to reduce the funding gap:

  • Reconsider some of the major projects. For example cutting East West Link back to the more sensible “Option B” looks like it could save up to a billion dollars. There’s a quarter of your funding gap gone immediately. Mill Road is another $290 million project that could be replaced by a much cheaper upgrade of the existing road. You can chip away at that gap pretty quickly.
  • Develop a more logical split between NZTA and Council funding. It makes no sense that state highways are 100% NZTA funded while major nationally significant PT projects require 50% council funding. Also some of the more significant arterial road upgrades carry much more traffic per day than just about any state highway outside Auckland. A series of these changes wouldn’t reduce the size of the gap, but would “even it up” between Council and NZTA.
  • NZTA need to look at whether they’re screwing Auckland out of necessary funding. Quite frankly it seems bizarre that assumed NZTA funding for Auckland will stay flat over the next decade when the population is projected to grow substantially. This would mean Auckland gets a smaller and smaller proportion of the country’s transport funding even though we are a larger and larger part of the country’s population.
  • The Council needs to get over the viewing the Transport Levy as “interim” and instead realise that until new forms of transport funding become available (i.e. until the unlikely event that Steven Joyce changes his mind or if he was no longer finance minister) pulling off the levy and essentially reducing rates at a time Auckland’s transport needs are so great, is pretty dumb. This is something the AA have advocated for keeping too.

We will look further into this over the coming weeks and months. In particular, we have started to run the numbers over how implementing the Congestion Free Network impacts upon the funding gap. So far it seems good news and you could implement the whole CFN and remaining important parts of the ATAP indicative package over the next 20 years and save over $2 billion when compared to ATAP.

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11 comments

  1. There is surely a cost at doing thing at ATAP’s (i.e. a snail’s) pace rather than a shorter timeframe, like the 20 year CFN program. If the roads are to be gridlocked either way, then it might as well be because we’re rushing vital infra.

  2. Retaining the transport levy is a no brainer. Per capita its a miniscule expense and one that we wouldn’t notice if it remained.
    I attended a business lobby group on Council’s Budget. Apart from a minority of nimby’s the majority were in favour of more ambitious funding on infrastructure and were prepared to pay more to fund it.
    The slow pace is a lack of political will not a funding issue

    1. Wow, in those models it looked like Newton Road was going to have a roundabout on it over the NW motorway (and the carriageways from the Southern motorway to the Harbour Bridge were going to take rather circuitous deflections at both Grafton gully and Newton gully, as though the main flow was either going to the East side of the CBD via Grafton gully or carrying on West along the NW motorway, but not North over the Harbour Bridge).

  3. I agree with you about cutting back or economising more on the E W highway or the Mill Rd project.
    I found it very interesting the the new 39 story Precinct building by Britomart is $600 million but the new 59 story building in Customs St is $300 million.
    I guess we will not get to know how those tendering for the CRL are chosen.
    Possibly the lowest cost offer might be the best no frills way. A basic structure is required.
    A high cost 5 star job with all the optional extras may have delays and cost overruns.
    A few $hundred million saved will get the next project started sooner in these years of urgency to complete many projects.

    1. Please do explain what counts as an “optional extra” in building the CRL. Auckland has a history of building sub-standard solutions like our rail-free 4-lane harbour bridge.

      1. When the the bridge was built I guess there was much research done about future demands of the bridge and 4 lanes was decided.
        At the moment it seems that most agree that 2 tunnels are required for the CRL.
        In the future it seems there are no suggestions of adding to it except possibly a line from Britomart to the NS via tunnel.There has been no decisions about this and so will add to the costs in the future. I hope for example they would choose the basic diameter rather a larger diameter hole. Possibly tiling is not required.
        I again give an example of unnecessary work quoting the new Otahuhu station. At the front of the station a large area of concrete measuring about 20 m by 30 m and sloping down to the main building was layed. (The concrete industry is the 2nd most polluting.) It is rarely used. Trees could have been planted instead. It would have been much cheaper and more user friendly had they built a say 5 m by 3 m path sloping upwards to the building and then people would need to walk up just 1 flight of stairs rather than 2. People get frustrated or don’t return when things are made difficult.

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