It’s taken a while to fully digest the light rail announcement from a couple of weeks ago. As I said at the time, and in quite a few interviews since, I have mixed emotions about it all. On the one hand it’s amazing to see the government willing to invest so much in Auckland’s rapid transit network – but on the other hand I worry the ‘tunnelled light-rail’ option has taken the worst parts of the two modes they looked at: the high cost of metro and the lower capacity of light-rail.
Perhaps most of all, I worry that the massive cost of the project will either mean it just doesn’t happen, or it will soak up so much money itself that nothing will be left to progress other important rapid transit projects in Auckland like the neglected Northwest Corridor, let alone progressing rapid transit in Wellington and Christchurch.
But, for now, I think we need to look ahead. As well as explaining the recommendation for tunnelled light rail, the recently released cabinet paper (which is well worth a full read) provides an outline of how the project will be taken forward. Four big areas stood out for me:
- The scope of the next phase of work, including the upcoming detailed business case
- How urban development opportunities will be integrated
- Work to develop an enduring framework for rapid transit in New Zealand
- How the project might be funded
Scoping the next phase of work
The Cabinet Paper outlines 14 areas where direction is provided to the next phase of work:
- Scope and progress a business case, undertaking necessary analysis to build on the IBC and ensure a robust evidence base for future decision making, including final investment decisions
- Examine and optimise the preferred proposal to consider whether there are cost savings that can be made, acknowledging that international comparisons cost considerably less. This should consider the extent of land acquisition and corridor widening required in the context of moving towards a low emissions transport system with reduced vehicle kilometres travelled
- Refine the solution to ensure it is integrated with wider planning for growth and transport investment across the region, including the AWHC, the Auckland Rapid Transit Plan and Kāinga Ora Large Scale Projects
- Develop procurement and land acquisition strategies, considering the potential for early strategic land acquisition
- Develop a consenting strategy, begin route protection and the preparation of associated applications for consenting. This must involve working with the Ministry of Housing and Urban Development to consider the application of the Urban Development Act 2020
- Undertake further community, Māori and stakeholder engagement, especially through masterplanning activities, ensuring that local interests are presented in plans and to build an understanding of the implications of this project for urban form along the Corridor
- Determine the approaches to minimising disruption to businesses and business compensation
- Further investigate opportunities to reduce embodied emissions across the integrated transport and urban development programme
- Agree the governance arrangements for the project in the delivery phase, including the roles, responsibilities and accountabilities of agencies
- Agree the preferred delivery entity, the powers and form of it, ownership and operations of the transport asset
- Determine the preferred funding and finance arrangements for the delivery of the project
- Develop an approach to minimise disruption to businesses and target assistance available for businesses affected by the project
- Develop options to stage the route, and project as a whole (both transport and urban interventions)
- Develop an approach to the design, delivery and operation of the project in a way that has zero tolerance for harm, and supports workers to thrive. The approach should minimise health and safety issues with a target of zero fatalities during the construction of the project, reflecting approaches taken in other jurisdictions such as the 2012 London Olympics
There’s a lot in here, with perhaps the most interesting bits being specific direction around looking to reduce cost (which is outrageously high by international standards) and reduce embodied carbon (which is important, given the tunnelled light rail is projected to increase emissions over the next 30 years rather than reduce them).
It will be interesting to see how flexible this scope is – for example could efforts to reduce cost include shifting the corridor more to running under Dominion Road rather than the much longer route via Sandringham Road? Or could we even see a shorter tunnel, given that it’s only really the city centre section where the Northwest joins in that faces capacity constraints (and even then not for many decades)?
It will also be interesting to see how the detailed governance arrangements for the project look going forward. Will this continue to be a very much “Wellington/central government” led project, or will control tip back towards Auckland? What will the role of Auckland Council and Auckland Transport be? With a local government election coming up later in the year, and a new Mayor now confirmed, it’s possible that a future Mayor and Council may not be quite so passive in simply accepting government decisions on this project, and may want a proper seat at the decision-making table.
The potential for this project to shape and support a more sustainable pattern of urban growth in Auckland has been highlighted by government on multiple occasions as a key reason for investing so much in this part of the city. There is also this infamously bad diagram appearing to show that higher capacity forms of rapid transit would magically allow apartments to be built, which were otherwise for some reason impossible with surface light-rail alone.
Setting that aside, this is a really good corridor for growth – especially with rapid transit in place that allows people to easily access major employment areas at either end of the route. Significantly more growth in this corridor than previously envisaged should mean that far less sprawl will be needed over the next 30 years, and the horrifically expensive and car-focused Supporting Growth programme can be massively curtailed.
The Cabinet paper outlines a few of the next steps that will be taken to realise the growth potential of the corridor:
- Refreshing the strategic case to outline the urban development factors as well as transport, to help establish realistic and feasible benefits
- Revisiting land use scenarios, including methodologies, modelling and feasibility assessment of scenarios
- Identifying the interventions required to facilitate market development benefits, particularly increased housing capacity. These interventions would be focused on infrastructure and land use initiatives and include zoning changes (including impact of new medium density residential standards/intensification rules), land acquisition and aggregation, as well as masterplanning and the ‘packaging’ of development opportunities
- Analysis of the viability of the development sites that make up the enabled housing capacity, providing an indication of the phasing of development sites
- Analysis of likely effectiveness and feasibility of urban interventions, including analysis of the effectiveness of different packages of interventions at different locations along the Corridor
- Engaging with the market to enable, promote and incentivise urban development to achieve desired density and scale
- Developing our understanding of the costings for the urban interventions, including enabling infrastructure and other amenities required to support development (for example water infrastructure, urban parks, schools, other utilities). Investigation and analysis of options of these interventions is generally the responsibility of partners, namely Auckland Council and Kāinga Ora. Engagement and commitment from these partners will be required to support this work
- Confirming the requirements, constraints and dependencies of Auckland Council and Kāinga Ora’s adjacent schemes and land holdings is critical, of note are the Kāinga Ora Large Scale housing projects in Mt Roskill and Māngere
- Analysis of social, well-being, economic costs and benefits of different interventions (or packages of interventions)
- Working with partners to develop a recommended implementation plan focused on infrastructure and land use initiatives and other urban interventions to facilitate market development.
There’s a lot of bureaucratic waffle in here, but it seems like there will be pressure on Kainga Ora to really step up their game in undertaking massive redevelopment in the area, and on Auckland Council to make sure the Unitary Plan enables the scale of growth to fully maximise the benefits of this gigantic investment.
Recently published draft Area Plans for key places along the route, like Mt Roskill and Māngere, suggest the Council doesn’t have a clue about the scale of change that will be required in these places. So it will be a very interesting discussion between the government and the council on this.
A rapid transit framework
Perhaps one of the most exciting parts of the Cabinet Paper is discussion about the need to develop a framework that guides the planning, delivery and funding of rapid transit across the country. At last there is clear recognition that the current approach is woefully inadequate and actively works against efforts to develop these networks.
From a national perspective, it is not sustainable for investments such as ALR to continue to be developed on a project-by-project basis. To effectively plan and deliver rapid transit in a way that supports long-term growth in cities and delivers against our emissions reduction targets, we need to work towards a clearer, nationwide approach to the planning, funding and delivery of rapid transit. This will be particularly important to frame the development and delivery of future projects in Auckland, Wellington and Christchurch. Preferred options for rapid transit projects in Wellington and Christchurch are likely come before Cabinet in 2022.
The framework we are developing through work on the Strategic Planning Act will be a significant step forward in the integration of planning for transport and land use. This will provide a platform for a shared understanding for how regions such as Auckland will grow. It will help provide a more consistent approach to identifying and protecting transit corridors and creating certainty for the Government, its partners and the market regarding the timing and prioritisation of investments.
In response to this new planning regime, and our climate commitments, a nationally consistent strategy for the planning, funding, ownership, operation and delivery of rapid transit in New Zealand is needed. The Minister of Transport intends to set out a high level direction on these issues in an amendment to the GPS on Transport in early 2022. As part of the policy work programme needed to take ALR forward, the Ministry of Transport will lead ongoing work, working the Treasury, Waka Kotahi and others.
The approach should clarify the definitions and role of rapid transit in wider transport and planning frameworks, including the wider range of interventions that will be needed to reduce emissions in our cities. This will form the basis of advice to ministers on the roles and responsibilities for the delivery and operation of rapid transit within the transport system.
Sufficient progress will need to be made on the development of the national approach to rapid transit to inform policy decisions on funding and delivery entity choices for ALR. The Minister of Transport will return to Cabinet with details of this national approach as part of advice to Cabinet on the delivery entity for ALR.
The catastrophic mess of planning the City Centre to Māngere light rail project over the past seven years is exactly why a framework like this is required. Hopefully it provides clarity about “who does what” when it comes to rapid transit – in particular whether a new national “rapid transit agency” needs to be established, or whether Waka Kotahi can finally throw off its 1960s motorway focus to become a proper multi-modal transport agency and consistently lead the delivery of these projects like it does for state highways.
With the government selecting an option that costs nearly $15 billion, more than three times the cost of City Rail Link, funding will be a major focus going forwards. The Cabinet Paper talks about a variety of funding sources for the project, including some that are likely to be extremely controversial such as value capture.
It is clear that a significant proportion of the capital costs associated with the project will be paid for by the Crown. To support this, it is important that a broad range of funding sources, including value capture, is utilised as part of a fair and equitable funding solution. The Establishment Unit’s work indicates that $2-3 billion could be recovered through value capture mechanisms.
The development of the final funding package will require an ambitious approach that reflects the scale, breadth and nature of benefits that investment will bring, based on the ‘beneficiary pays’ principle.
The Establishment Unit considered the merits of a range of funding sources.
- Infrastructure Funding and Finance (IFF) levy.
- General rates (to recognise regional benefits to regional landowners).
- Business rate supplement across Auckland (with local and regional price differentials).
- Development contributions, which will recoup growth-related elements of Auckland Council’s contribution from developers.
- Strategic land acquisition and intervention has the ability to generate funding for the project, and will need to be considered in more detail in the next phase business case.
Whilst this has provided an indication of the potential funding tools that could be used, further analysis is needed to better understand the affordability and viability of different mechanisms, and the contributions these could make. We are proposing that this takes place during the detailed planning phase, led by the Ministry of Transport and the Treasury with input from the ALR Unit.
The Establishment Unit has considered IFF as a proxy for value capture, although we note that this mechanism is generally intended to recover costs rather than capture value. This future work should explicitly explore how value capture could be pursued as a core component of any funding solution, recognising that the developers and landowners who benefit from investment should make a contribution to its costs.
Whilst the use of both targeted rates and/or the IFF levy could be an appropriate part of any funding package, we are recommending that future work develops the policy approach and a pathway to implement a specific value capture tool that could be used for this project and possibly others. Given the impact on landowners along the Corridor, any announcements the Government makes about the project should indicate the possible funding sources to be used.
The National Land Transport Fund (NLTF) alone will not have the capacity to fund the capital costs of this project, or all of the operating costs. The NLTF funding model is well-suited to meet maintenance costs and gradual network improvements but too inflexible to meet the capital cost profile and the many objectives we want from projects such as ALR.
In some respects it is good to look at a wide variety of funding sources for a project like this. However, I do worry that the approach to funding and financing this particular project might fall into many of the same problems highlighted by the previous section about the need for ongoing certainty about funding rapid transit. Complicated funding agreements developed on a project-by-project basis is a recipe for delay and uncertainty – not only for this project, but for rapid transit in general.
Overall, if we set aside the issue of whether tunnelled light rail is the best option or not, the Cabinet paper highlights some pretty useful pieces of work going forward that will hopefully not only be valuable for this project, but should help make rapid transit easier to progress across New Zealand. Development of a rapid transit framework has probably come many years too late, but is absolutely essential going forward. Similarly, gnarly conversations with Auckland Council about how much much more growth can be enabled in the corridor has to happen sooner rather than later.