Note: Consultation on the GPS closes at noon on Tuesday 2 April See our previous post on feedback guides and check out the Transport4All guide here.

The Government’s Draft Policy Statement (GPS) on Land Transport contains many ideological burbs and inconsistencies. One of those is around the rail network.

For example, the draft talks about how rail freight investment has seen a significant increase in recent years but rail freight usage has dropped. While this might be technically accurate, it fails to acknowledge that:

  • much of the investment is once-in-a-generation spending, such as to replace equipment and infrastructure that is often many generations past its use-by date.
  • there is typically a lag between investment and a change in usage.
  • rail has many other wider economic benefits, estimated at $1.7-2.1 billion annually from things such as keeping trucks off the roads resulting in less congestion, emissions and better safety outcomes (some of this comes from the metro networks in Auckland and Wellington).
  • despite the investment, there isn’t exactly a level playing field, given the larger, heavier trucks introduced from 2010 onwards that don’t pay enough road user charges to cover the damage they do to our roads, which is a key cause of our pot hole problem.

Going forward, the GPS suggests:

This Government’s focus will be to invest in maintaining the network between the busiest and most productive parts of the existing rail network – between Auckland, Hamilton, and Tauranga. While rail freight network investments will remain within the GPS, rail infrastructure will no longer be cross-subsidised from revenue generated from road users. It is unfair to ask people using the roads to fund rail infrastructure. Rail investments will continue to be supported and funded through the Rail Network Investment Programme, as agreed by Cabinet. Track User Charges paid by rail users will be used to support these investments.

The GPS proposes to cap rail investment to the amount of revenue generated from Track User Charges, which are fees paid to use the rail network – currently paid by the two metro networks and from freight users. The TUC from freight is currently around $20 million, but as this paper from 2021 highlights, just to cover the cost of wear and tear on the freight network was estimated at $53 million annually, while the cost to bring it up to, and maintain it at, a modern standard would require $420 million annually.

All of this means that much of the state of the network is likely to decline in coming years, and it won’t be surprising if in a few years KiwiRail are forced to close lines down – meaning more heavy trucks, on the roads, more potholes, and all of the other negative impacts that come with that.

A level playing field?

The GPS also pushes the government’s new Roads of National Significance, which they say will all be “four-laned, grade-separated highways“.

The Roads of National Significance include:

Whangarei to Auckland, with the following stages prioritised:

  • Alternative to Brynderwyns
  • Whangarei to Port Marsden
  • Warkworth to Wellsford.

Tauranga to Auckland, with the following stages prioritised:

  • Cambridge to Piarere
  • Tauriko West State Highway 29.

Auckland roads:

  • Mill Road
  • the East West Link.

Roads to unlock housing growth:

  • Hamilton Southern Links
  • Petone to Grenada Link Road and the Cross Valley Link
  • North West Alternative State Highway (SH 16).

Other major routes:

  • Takitimu Northern Link Stage 2
  • Hawkes Bay Expressway
  • Second Mt Victoria Tunnel and Basin Reserve upgrade
  • the Hope Bypass
  • The Belfast to Pegasus Motorway and Woodend Bypass.

We already know that for many of these projects, the costs used by National in its policy are wildly wrong, in some cases out by billions. Furthermore, at least some of these projects, such as the East-West Link and Mill Rd, haven’t been designed as fully grade-separated roads – meaning their costs will likely increase even more.

Furthermore, most of these projects simply won’t have the traffic volumes to justify such investment.

So, the question is: what would it take to have the RoNS pay their way, like rail is required to do? How many vehicles paying fuel taxes or road user charges would be needed to justify the investment? Alternatively, given the government has also said they’re open to tolls as an option to help pay for these projects, what kind of toll might be required?

Estimating assumptions

To come up with these figures, I’ve made a few assumptions.

  • I’ve assumed that around 15% of vehicles using a RONS road are heavy vehicles. This is higher that most of these roads see currently.
  • For light vehicles, I’ve used the light vehicle RUC rate of $76 per 1000km
  • For heavy vehicles, I’ve used the highest RUC rate for a powered vehicle of $435 per 1000km. Given many heavy vehicles will be lower than this, that should help make these numbers more conservative.
  • Combined, this works out at vehicles paying an average of 13c per km.
  • I’ve also assumed that these projects would be given a long timeframe to pay for themselves – over 50 years – and that they would be subject to an interest rate of 3%, which is lower than government 10-year bonds normally.
  • On top of building the road, operations and maintenance will also be needed. To estimate this, I’ve looked at Waka Kotahi data on road maintenance spending by region and compared that to the lane kilometres of state highway that exist (length of the road multiplied by number of lanes). This gives quite a range, from $132k per lane km per annum in Auckland, to just $20k on the West Coast. I’m likely being quite conservative here, but I’ve assumed $30k per lane km per year or $120k per km of four-laned road.

The Results

I’ve only done the calculatoins for a handful of the RoNS projects where it is relatively easy to get a comparison.

Whangarei to Port Marsden

This project is 22km in length and the Waka Kotahi estimates released by Labour last year suggested the project will now cost $1.41 – $1.67 billion. For this exercise, I’ll use the lower cost. Based on that, just to pay the capital costs of the project, the annual cost works out to just under $55 million per annum, and maintenance costs bring the total up to around $57.4 million per year.

Average daily usage of this section of SH1 is around 18,000 vehicles north of Oakleigh and 15,000 vehicles from there to the Port Marsden intersection. So at current usage levels, road taxes over this section would cover only around 30% of the of the cost. A toll to make up the rest would need to be around $6.40 per trip.

Alternatively, to achieve full cost recovery, the average daily traffic would need to be in the range of 55,000 per day – equivalent to SH18 in Auckland.

Alternative to Brynderwyns

Waka Kotahi are currently busy cutting hillsides out of the existing Brynderwyns route to make it more resilient. Previous work has suggested a couple of possible routes, with the shorter orange route being around 13km. However, it’s unclear whether the government would also require them to tie it into Port Marsden in the north and Wellsford in the south, which combined would add around 28km and therefore a lot more cost.

The Brynderwyn’s bypass options

The last time this route was given even a high-level costing was 2017, a long time ago. Given the terrain, using the lower-end estimate of $130 million per km of the Warkworth to Wellsford section seems appropriate as a guide. This would put the Brynderwyns bypass at $1.69 billion, which would give it a combined annual cost of $67 million.

A lot of traffic drops off at south of Port Marsden, so average daily traffic over the Brynderywns is only around 10,000 per day – meaning road taxes would only cover 9% of the cost. A toll to make up the rest would need to be around $16.70 per trip.

Alternatively, to achieve full cost recovery, the average daily traffic would need to be in the range of 109,000 vehicles per day: equivalent to SH1 south at Upper Harbour/Constellation.

Warkworth to Wellsford

This project is probably one of the most advanced of the RoNS, with a lot of business case work already completed and the designation work complete. The project is 26 km long.

The latest cost estimate for this project is $3.5 – $4 billion, with the higher end cost having almost doubled from just a few years ago. Again, I’ve used the lower of the cost range for my calculation, which gives this route an annual cost of $139 million.

Currently around 11,000 vehicles a day travel this route, meaning road taxes would cover about 10% of those costs. A toll to make up the rest would need to be around $31.30 per trip.

Alternatively, to achieve full cost recovery, the average daily traffic would need to be in the range of 113,000 vehicles per day: equivalent to SH20 south just of the Manukau Harbour Crossing.

Even with wider economic benefits included, the 2019 business case only suggested this road had a BCR of 0.7.

Cambridge to Piarere

This project is about 16km long and the cost estimates revealed last year were $1.5 – $2 billion, more than double the estimates from a few years ago.

Traffic on this section has certainly risen since the completion of the Waikato Expressway around Cambridge and is now around 20,000 per day, so road taxes would cover around 25% of the costs. A toll to cover the full cost of the road would therefore need to be around $6.20 per trip.

Alternatively, to achieve full cost recovery, average daily traffic would need to be in the range of 79,000 vehicles per day.

Even with wider economic benefits, the 2021 business case suggested this route had a benefit cost ratio of just 0.58 to 0.63.

The Belfast to Pegasus Motorway and Woodend Bypass

This project is around 8.5km and National has estimated the cost at $270 million. However, given other projects in the area, $350 million is more realistic and it could be even more.

With all the growth in this part of Canterbury over the last decade, this section now sees around 20,000 vehicles per day – meaning this section is probably one of the best performing on a cost recovery basis, coming in at around 57% of costs covered by road taxes. This means a toll would likely only need to be around a dollar to fully pay its way.

Alternatively, traffic volumes would need to increase to 35,000 per day – but that is almost at the level of the section between Kaiapoi and Christchurch.

As you can see from the examples above, none of these RoNS projects pays for themselves based on just the fuel and road user taxes generated from the vehicles that would use them, and they still wouldn’t do so even with a significant increase in usage. This means they are heavily cross-subsidised from people using other roads; exactly the same as the rail network is being treated.

This is also why historically we don’t build transport routes based on their financial impacts, but rather on their economic impacts – the improved connections and other benefits they enable. And on those measures, these newly proposed RoNS that have been assessed, don’t stack up either.

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    1. But Miffy, tax cuts will allow them to smoke more, so there will be more money to build roads!

      Win-Win-Win (if you are a tobacco company, an asphalt supplier, or a trucking company).

    2. Or how many school-lunches they need to cut back on.

      Even cancelling the iRex ferries will save only chump-change compared to the RONS 2.0 wish-list. And it will likely lead to the biggest pothole of all in our national state highway system.

      1. If they give the kids a cigarette each instead of lunch they might be able to meet their budget goals. Chris Bishop could talk it over with his previous bosses at Philip Morris or maybe Luxon could talk to his sister in law who works for a tobacco company.

        1. Would make a big dent in obesity levels too. That’s some effective calorie restrictions, right there. /s

  1. The $435 dollar limit seems a bit low. I think you probably need to scroll down to the H costs. But even then they seem to top out at around $930/1000km

  2. I’m not going to waste my valuable time submitting because I know that the coalition simply will not listen.

  3. I think rail freight volumes have dropped due to a range of factors. Solid Energy going out of business and closing mines, Pike River ending in disaster, the rail ferry Arahura not being replaced, Kaikoura earthquake, various lines being closed/mothballed, old worn out rolling stock, insufficient rolling stock, both locos and wagons etc etc. The investment takes years to show results because you can’t get new locos or rail ferries next week. Can someone explain that to minister? And tell him to stop using the word “blanket”.

    1. Rail freight volumes have dropped because KiwiRail has increased their pricing to a level far above that of trucking. A wagon load of freight costs about four times more than a truck load of freight. Rail customers are only given a rate competitive with trucking if they consign a full train load, and there are very few such customers in existence. KiwiRail has less than 100 customers in total these days. In other words, KiwiRail no longer competes with trucking companies for freight. That’s why KiwiRail doesn’t promote a freight service anymore. Try finding them in the yellow pages. You don’t see this overseas, and you wouldn’t see it here with private companies. Railway companies understand that trucks are their competitor, and they price their rates comparable with trucks.

      KiwiRail puts its rates up frequently, and each time they lose another customer, they further increase rates for their remaining customers to make up the difference, which in turn causes more customers to leave. When Labour came to power in 2017, KiwiRail had six major customers on the North Auckland Line. Today they have one. Don’t let the Northland rail upgrades fool you into thinking they are doing well up there – they are not. If Fonterra walks, the line will close.

      Rail freight volumes will continue to lower until the network is no longer viable, unless private rail companies are given access to the network, creating a more innovative, efficient and competitive industry. Sadly, not a single political party wants that. They all want full control of rail so they can run it according to their political ideology. That’s what is ultimately killing rail in NZ.

      I don’t think rail has a future in NZ. The network will be gone within 20 years, probably starting with Picton-Christchurch.

      1. I have no inside information but I fear that a lot of what you have written has more than a grain of truth in it. I am looking forward to the reopening of the NAL to see how many customers and how much freight will be carried. I will be disappointed if there isn’t a concerted effort to gain new customers. It can’t just be dairy and cement. I am hoping Kiwirail is not going to lie down and start begging that the only way to keep the line open is to build the branch to Marsden Point. A conserved effort must be made to show that they are willing to compete also they need to show that they are willing to innovate. I have suggested Road bridging between to port and the Whangerai yards previously. Now I am suggesting the yard should be setup as a custom bonded area with containers being unloaded from the ship then trucked directly to the Whangerai yard. They could even use electric trucks to do the job.

  4. Thanks Matt, a great piece of work. I realise that your figures are indicative, but it certainly makes the point that political dogma always wins out. As one of the question in the GPS asks ” Do you agree with the focus on value for money outlined in the draft GPS 2024?” and based on your article and the costing assumptions, how do we define “vale for money” because I certainly can’t see it with this obsession with roads!

  5. Excellent job, Matt. The problem with talking truth to power is that they already know the truth and they wish to continue to ignore it. They can continue to ignore it as long as enough ‘of the people’ are happy to also be carried along in this state of ‘ignorant bliss’. So to get the ‘powered’ to change their mind we need to show them that their charade is widely known to be such and a great number of people are unhappy enough with it that they may vote against them next time.
    So please, Christopher and others, who think it’s not worth submitting on the GPS, I implore you to do so, that our collective voices may be too loud to ignore.

    1. The coalition of chaos will never listen to arguments against their policies until the mob are trying to break down the doors to the debating chamber. In the meantime they will just talk louder and louder so that the plebian voices are inaudible.

  6. It does feel a bit depressing putting together submissions on the draft GPS. But, in my bubble at least, I do get the feeling that there is plenty of resistance building. The just published Greater Wellington Regional Council transport emissions plan clashes totally with the GPS. But I think there are other good reasons to keep building the case against the GPS. We need the opposition parties to see clearly an alternative vision and start building it into their policies. Our combined submissions will help provide the evidence base and the arguments. Then, when there is eventually a change of government, we can quickly put in place the policies that will make the changes many of us wish for. In the meantime, we can feel happy that more and more Parisians are enjoying riding their bikes on their expanding cycleways!

    1. Thanks Paulc I wasn’t planning on wasting my time over submitting (figuring that ministers Brown, Bishop and Willis have their minds made up already), but you are right that numbers matter. I’ll do it.

    2. The investments planned in the GPS are vital for the future of this country. With the annual interest on the debt accumulated by the Red Queen’s idiots approaching $10 billion, this country will not earn its way out of bankruptcy with spending on cycleways and a defunct narrow gauge, pioneer rail network.
      The RoN’s are in the nation’s economic interest and benefit far more than just the immediate users.
      If you think the answer lies in cycleways for everything, you might also propose how freight and inputs for commerce are delivered without a few hundred thousand cycle couriers and rickshaws.
      Let’s hope that now the adults are back in charge of the country they get many terms in government to re-make this country a place for hard working individuals to have opportunities, rather than a communist utopia.

      1. you reveal, Chrisb, that you understand naught of the economics of transport infrastructure. None of the RoNPS are in the economic interest of the nation, because they will not be charged to the user but subsidised hugely by non-users everywhere, and will have negative BCRs – as this entire article describes.
        Your ridiculous and juvenile comments about ‘the adults being back in charge’, and ‘the Red Queen’, reveal that you’re just a NatBot with no appetite for evidence, just in love with Simple Simon’s dogma.

  7. The only answer to this is for Kiwirail to get things together and carry more freight. After all they have an upgraded locomotive fleet with more locomotives on the way. New wagons are going into service. In a few months an upgraded weather proof North Auckland line will be reopened hopefully all the way to Otiria which will hopefully have a new road rail transfer facility. The Ruakura freight hub is open. The third main is nearly finished. All these improvements are a legacy from the last Govt. So let’s not get too despondent and think of this the Govt policies are only going lead to more congestion in Auckland and around roading work associated with the Ron’s. Kiwirail if it gets it act together will be in a good position to provide reliable predictable container delivery between its various terminals and ports in the upper north island. All they need is to open a new terminal at Kawerau and perhaps Te Kuiti. But I have being suggesting that for some time.

  8. I think we’ll have a few lines shutting down after weather events. I don’t think KR will let the main lines close outside of that, just defer maintenance, but the NAL I think is ripe for being cut, along with the Manawatu gorge etc. if a weather event does enough damage.

    Re RoNS, Chch motorway will make it to the SH7 interchange over the years as it sprawls out after each extension, but I don’t see it going much further after the traffic splits. Southwards I definitely do see it expanding much further, along with a motorway connection swinging around the other side of the airport to join the Rolleston one.

  9. It be great if the government focused more on ‘Heavy Rail Passenger projects’ too, doesn’t have to be for this term but would like for next term. Auckland in-particular does need a new ‘Heavy Rail corridor’ and in-construction phase second corridor within the next 10 years so it displaces the existing bus corridors to transfer them to new local routes. We definitely need at least two more ‘Heavy Rail corridors’ in likes of Dominion RD, North Shore line, Sandringham RD within the next 10 years.

    It be good if the government did more ‘toll roads’ than ‘fully paid roads’ since a lot of our existing roads don’t get enough users driving on the roads while our public transport system in Auckland, particularly in Central Auckland is bottlenecked from roads to PT and in real-need for more ‘fully paid’ Heavy Rail lines. More bus lanes aren’t going to reduce congestion in Central parts of Auckland since theres heritage & special character sites, has huge meaning if pulled down so roads can be widened for bus lanes to be created. More ‘Heavy Rail’ lines are needed here in Auckland to reduce congestion on our roads!

    Rotorua for long-time now could do with a new motorway Bypass, passing the main ‘town centre’. That another place in NZ due for some-kind of new road since its becoming bottlenecked with often big trucks passing through Amohau ST which is inside the ‘Town Centre’ which can be unappealing to tourists. A new motorway Bypass would be a win-win for tourists & locals who live in Rotorua since it’s a really busy main road next to the mall. A new motorway Bypass in Rotorua, should go overlooking Amara Park Racecourse, using existing Malfroy RD, passing through Ngongotaha Valley, ending at Ngongotaha Motorsport Park and create a intersection

    The government shouldn’t do any ‘Public private partnership (PPP’s)’ like what they got in Sydney where NSW Transport & Transurban own multiple toll roads. But, Transurban has the overall ‘marketshare’, they even own toll roads in Melbourne & Brisbane. In Melbourne they also got Citylink as operator of toll roads. Encourages private owners to monopolise ‘toll roads’ by gaining overall control, no cease to end fare-free usage of roads, meaning will see continuous hiking in ‘road toll fares’. Lastly, refusal to hand over to central government meaning life will get inconvenient for ordinary commuters using ‘tolled roads’. We need NZTA to continue to be in full-ownership of all planned toll roads, not companies or regional government entity.

    1. +1

      Respectively, the last toll which got removed in Australia was M4 in NSW, between Granville-Silverwater in 2010 and only to be reinstated back. The Sydney Harbor Bridge is tolled, second ever road toll in Australia, ‘debt already paid off, yet commuters still forced paying toll. Not a single tolled road has been handed back to central government this century (year 2000-present day) in Australia. Same thing will happen here if we copy Australia. Continuous paid-off debt make everyday life a misery for working families, businesses & businesses with trucks operating.

      Michael West Media:

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