On Saturday there were some interesting discussions on TVNZ’s Q+A programme with Jake Tame about infrastructure with Minister Chris Bishop and Infrastructure Commission Te Waihanga chief executive Geoff Cooper.
In his discussion with Chris Bishop, Tame covers a range of topics from his various portfolios, many of which probably of interest, such as the impact of the government’s policies on the construction industry, on city deals and the government pushing councils towards asset sales, housing and in particular his response to the op-ed from Christine Fletcher late last week.
The part that interested me the most was when he focused the discussion on transport plans and in particular the government’s obsession with the Northern Expressway.
Tame: There is a significant revenue problem, right. So advice from infracom in January showed you have $62 billion in transport spending planned over the next decade without a funding source confirmed, quote, “in the land transport sector there is currently a misalignment between investment plans or expectations and available revenues to fund them. This is particularly the case in central government road investment”.
And there is perhaps no greater example of pressure to fund roading projects than the Northern Expressway, which according to your own advice is going to take 1 in 10 of every dollars of capital funding that the government has for infrastructure, and that’s infrastructure for school, for hospitals, for the defence, over the next 25 years – 1 in 10 dollars is going to go on that road. What is going to be the benefit to GDP?
Bishop: Well the Northern Expressway is a critical project for the country and it will do for Northland what the Waikato Expressway’s done for Waikato and Hamilton, which is unlock growth in that part of the world.
Tame: Although there are obviously fewer people in Northland than there are in the Waikato, cause it also
Bishop: Well there are fewer people now, but there was also bugger all people living on the North Shore before we built the second, before we built the Harbour Bridge in the late 1950’s, so that’s the thing about great roading and transport connections, is it spurs housing and commercial growth, people go where the transport connections are. And that’s the great thing holding back the Northland economy at the moment, is it’s, you know, so many days per year it’s literally impossible to get from Northland south to Auckland. And so that connectivity between Northland and Auckland we think is really important. It’s not all going to be built straight away, it’s not going to be, you know all happen in the next five years
Tame: No you’re going to phase it
Bishop: It’s a long-term plan to unlock the growth in Northland.
Will it really unlock all that much. While Northland does have the lowest GDP per capita of any region in NZ, over the last 20 years it has grown slightly more than the Waikato’s has.
Tame: So what’s going to be the benefit to GDP?
Bishop: Well there will be any number of economic models, I think NZIER’s got a report which shows the projected GDP numbers for Northland but to be honest, you put your finger in the air and it’s going to be X number of jobs, it depends on what model …
Tame: So how can we make an informed decision about what is in the best economic interests in the country. You’re going to commit to spending 1 in 10 of every infrastructure dollars in capital spending this government has, going for the next 25 years for a project where you’re putting your finger in the air.
Bishop: Well everybody accepts, I think [waffle about Labour], that the single best way to unlock the economic potential of the north, which let’s not forget is our most deprived area or region economically, and socially, with all of the social inequity that comes from social deprivation, the single best thing do to is to make it more connected to our wealthiest region, which is Auckland, so joining the two economic markets together is of critical importance. There’ll be a whole range of estimates out there but I don’t think anyone disagrees with the basic proposition, that if you have a four-lane road that makes it far easier to drive and take trucking, trucks and tradies
This here really highlights the problem this government have, where every problem can seemingly only be solved by a four-lane road. Sure, it’s nicer to drive on one compared to a typical state highway but that doesn’t mean it’s worth the investment. If Labour were to propose spending so much on something with no business case, National would, rightly, be screaming about it.
As we’ve covered before, the business case for the Warkworth to Wellsford section – which in 2020 was estimated to cost $1.7-2.1 billion and now is expected to cost more than $4 billion – noted that one of the triggers for deciding when a four-lane road would be needed was when:
- Forecast traffic volumes are predicted to exceed 25,000 AADT [average annual daily traffic]
That volume is around what is currently seen on the Waikato Expressway and more than twice what is seen through large parts of this corridor with only around 10,000 vehicles per day crossing the Brynderwyns. Spending billions so a small number of vehicles can travel just a little bit faster is not a good return on investment.
While this chart is now a few years old, the traffic volumes are still about the same.
Given the Waikato has more than 1.5 times the population of Northland, and that the expressway also serves trips to other regions like the Bay of Plenty, Northland’s population and economy would have to grow way above anything currently predicted to generate the kinds of traffic volumes needed to justify four-laning the road.
But that doesn’t mean I think there should be no investment. Absolutely we should improve the road, but at this stage it doesn’t need to be to a four-lane standard. I’d also bet there would be a much greater outcome for Northland if we took some of the money saved and put it into improving other roads in the region.
The interview continues
Tame: Yes but what at what cost? This is the question, if it’s 1 in every 10 dollars of infrastructure dollars, 1 in 10 of infrastructure dollars for hospitals, for defence, for schools, going on for the next 25 years, at the very least you would expect the government that’s going to spend that much money, and as you know, the infrastructure commission has warned that costs for this project could double from their current estimates, if you’re going to spend that much money surely you have to make an informed decision about whether or not it makes sense.
Bishop: It’s an expensive project and the broader point you’re making, that there are funding pressures on transport is a very fair one, and a very valid one, and that’s why we’re looking at whole range of other, different funding sources for that, including tolls, and including value capture in order to make sure the benefits of transport investment, that the people who benefit from that, that we capture some of that value and that helps pay for some of the road in the first place.
As I’ve also highlighted before, given the low volumes of traffic and how much this road is expected to cost, tolls are unlikely to even cover the cost of maintaining the road, let alone scratch the surface of helping to pay the capital costs. To make an impact they’d need to be so obscenely high that they would put most people off using it and that would also discourage people and businesses from setting up or expanding in Northland. Trying to rely much on value capture is likely to have the same impact.
Tame’s interview with Geoff Cooper covered a range of issues including how New Zealand is often not good at maintaining and renewing the existing infrastructure we already have. He also talked a bit about the need for robust business cases for infrastructure spending which led to this exchange about the Northland Expressway.
Tame: Is it possible for something like the Northern Expressway, which is obviously very complex piece of roading and piece of infrastructure, is it possible to get a robust business case so you can make an assessment for that kind of spend.
Cooper: I mean I think Waka Kotahi has a fine assessment process set out there, by which they have a very rigorous way of assessing costs and benefits. I don’t understand why we couldn’t use that in this case.
It’s pretty easy to see why Waka Kotahi don’t want to use their existing processes to assess a project like this – it would look terrible. Instead, I’m sure they’re spending a heap of time (and money) to invent a bespoke process that delivers the pre-determined outcome of a four-lane road.
There’s plenty of other interesting stuff in those interviews, what did I miss?
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This project is becoming a bit of a millstone around the government’s neck. They can’t easily dip into general taxation as they are running a tight budget and I suspect they are stuggling to find other sources of funding.
All we’ve heard so far is there are a number of consortia interested in building the project but I suspect that interest is in the amount of money they might get out of the government in the next 30 years.
I’d be interested to know what evidence exists that the Waikato Expressway has brought visible economic growth to Hamilton. Its peak use seems to be for Aucklanders going on holiday. Not to Hamilton, I suspect.
I drove through to Taupo just this week.
Does seem to be a lot of recent development between Hamilton and Cambridge alongside the state highway.
It is true that Hamilton is growing rapidly, and some of that growth is sprawl to the southeast. But even more of that growth is to the southwest, an area not served by a 110km/h four-lane highway.
Don’t worry. At some point they’ll build an expressway beltway around the Tron.
I think the majority of traffic travelling on that road will be between Auckland and Hamilton. The volume drops off quiet dramatically on the Hamilton bypass section.
I don’t know whether it has had a significant economic boost, but it would be a much lower bar to cross with twice the traffic volumes and a significantly lower cost.
There doesn’t appear to be much. I was looking at regional GDP per capita figures when writing this and while it started from a lower base, over the last 20 years Northland’s GDP per capita has improved at a slightly greater rate than the Waikato’s.
I wonder how the line from Auckland to Whangarei is going? Just a few freight trains a day.
Has there been any talk about a passenger service on the line as I think it would be quite popular.
Its disappointing that PM Luxon has ruled out passenger rail to Tauranga and supports better roads.
The CRL is opening in a year but as yet there is no plan to extend the network in our growing city.
The problem here is clearly that the current government has a cargo-cult mentality when it comes to roads. And as in any cult – there’s very little to none ability to shift the mindset.
All we can hope for is that the process of getting anything off the ground takes longer than this government has.
I think you’d be lucky to average 80kmh to Whangārei. Make it a 4 lane 110 kmh road, and with cruise control you can average close to 120kmh (police don’t seem to ticket at that speed). That is a 50% increase in speed that you wouldn’t get with a 2 lane road, so it is significant.
On the flip side, no one is promoting spending billions on a road to say Gisborne, and that is also an area with poverty and poor transport links.
I guess all their baches are up at tutukaka and not in gizzy
Yeah, if we factor in illegal things, BCR would be even better. Think of all the drugs that could be transported down to Auckland! That would mean a massive influx of money to the north.
But joke aside, obviously a four-lane road would be easier and faster to drive and potentially be safer, too. However, with local speed limit raises in densely populated areas, safety does not seem to be a concern. And even then, the BCR is just too bad. Saving time on this trip for a relatively small number of cars is just not worth billions of dollars when schools, hospitals, rail and even existing roads are struggling as they do.
According to Google Maps it currently takes just over 2 hours at an average speed of 67.6kmh. So a 50% improvement can be achieved by averaging about 100kmh, which should be possibly on a mostly 110kmh road without breaking the speed limit. Of course you would be pretty much the only person who isn’t.
I hate to burst your bubble but the current average speed between Auckland and Hamilton is 76 kmh, even with motorway/expressway the whole way.
But is that av speed including the crawl of the southern motorway. Once onto the actual expressway its cruise control locked at 114(110 actual speed) the whole way.
If you’re going to invest in safety, a four kane highway is not what you’d do.
You’d look at the entire Northland area, and restore the ability to walk and cycle within and between towns, and you’d find bus services so they increase from once or twice a week, to something workable. A frequent that actually means non-drivers don’t have to rely on friends and neighbours to drive them places, regardless of the skill of the driver or state is the car.
The impact of a four lane highway will be to increase traffic on all these unsafe lanes, reducing people’s ability to get around safely. It’ll also increase the drivers’ expectations of speed.
The saving would be a bit less than that as the motorway is already about a quarter of the way there, but you’re right it would be a significant saving for a private car.
The saving isn’t nearly as big for a truck though as they are still limited to 90kmh even on the faster roads and trucks are where the economic benefits tend to come from.
I think the biggest single thing we could do for Northland would be get the treaty settlement done with Ngaphui. Probably followed by the development of a container terminal and rail connection at Marsden Point.
Third would be upgradeing the current road to 2 + 1 with the Brynderwyns being bypassed along with other improvements in places like the Mangamukas to reduce the chance of these roads being closed.
I agree with your suggestions Jezza I would add a determined effort to reduce power prices would help not just Northland but the whole country. Would we need to buyout the gentailers or could it be done by regulation.
If the Marsden rail link is built and the container terminal built we will also need a container yard established at Otiria. My suggestion for the Road would be to just string its construction as we can afford it.
This is the single sensible answer. It needs to be tied in with an economic development plan that generates enough GDP and necessary transport to make it worthwhile. And for resilience – make the railway effective.
Even with a substantial travel time saving, is it enough to enable an extra productive round trip every day by, for example, a truck or a tradie?
Does getting to the beach 15 minutes quicker mean more ice creams are bought?
Fuel economy gets worse, not better above about 80 km/h so I guess people will be buying more of that.
I think the real benefits are in reduction in DSIs, and those can be realised for a lot less than the cost of a full four lane motorway with huge shoulders and ruinously expensive earthworks.
The Productivity Commission’s draft recommendations include right-sizing new investment, perhaps the government should consider listening to the advice it’s paying for?
Correction: Infrastructure Commission
I think the better idea would be to give everyone in Northland their own helicopter. Think how fast they can then travel. The economic growth that would unlock!
Plus all the people who would move to Northland to get their “free” helicopter too. So there would be also a population boom.
You make a good point: providing helicopters seems absurd, but a road paid for out of general taxation is also absurd. I really can’t think of one good reason to subsidise roads – if it was completely user pays then the users may not think the cost increase is worth it.
Paying interest of 4.45% on $2.1 billion is $89 million a year, $244k a day, $24.40 per user.
Let’s follow that through to it’s illogical conclusion. With $4B in capital available. Take off $1B for a bunch of heliports around Northland and every beach front section in Auckland which leaves $3B. Let’s use $500k as our helicopter buy price as we’d follow the car market and flood ourselves with used imports. $3B divided by $500k = 600 helicopters. At say four round trips per day that the equivalent of 2,400 car trips. That’s about a quarter the current car trips. Let’s do it! Sound like so much fun and we wouldn’t have to upgrade the road due traffic reduction. It shows the absurdity of the spend they are planning when an idiot idea like free helicopters aligns with it.
Um, $3B/500k is 6000, not 600. Enough for all the trips quite handily.
Ofcourse, finding 6000 helicopters at $500k a pop seems a stretch, but why not pay full price at, say $2m(?) and you’ll still have 1500 of them to play with!
Very good.
Actually, that is a good point. If I am to spend billions for a road without looking at BCR. I can imagine building at least a single carridgeway SH1 quality of road to gisborne from tauranga would bring a lot more benefits.
Maybe we need a Winston Petersish character but from Gisborne to campaign for their region?
Opportunity cost of that road is crazy.
Massive investment in health care across NZ.
Massive investment in education across NZ.
If it ‘has’ to be spent on transport, what would that money do for a national roll out of improvements to the rail network and investment in passenger services to the north, waikato and bay of plenty.
Or even if it has to be spent on roads and improvement in resillience on inter-regional connections throughout the country.
Yep agree, if it HAS to be spent on roading.
Have a roading plan for the entire country. 2+1 layouts all over the country where needed, safer inter-regional highways, median and side barriers etc.
Tack on a recreational cycle / walking track onto the side too.
Surely that’d be a political win for (perhaps) less $$ than the RONS?
Yes.
The Waikato region has 2.5 times the population of Northland (rather than the 1.5 times as stated)
The Waikato expressway is also one leg of NZ’s Golden Triangle and given the importance of this region to NZ’s economy, $4b spent on another leg of that triangle would be a far better investment for NZ. A second Kaimai tunnel spec’d for high speed passenger rail as well as freight would be what I’d be spending infra dollars on.
From Wikipedia:
The Golden Triangle is an geographical term that refers to the area between Auckland, Tauranga, and Hamilton, in the North Island of New Zealand. It is most commonly used to refer to the area’s importance to the nation in regard to economy and population growth.[1] As of 2021, Auckland had a population of 1,716,000, Tauranga of 155,200, and Hamilton of 178,500. In total, the Golden Triangle has a population of roughly 2,500,000, nearly half of New Zealand’s total population. In 2019, the New Zealand Government predicted that the area’s population would grow by 35% in the next 25 years.[2] In 2022, more than half of the nation’s residential and non-residential building consents were issued within the Golden Triangle.[3] 56% of all of New Zealand’s freight movements occur within the triangle, generating half of New Zealand’s GDP.[4] As such, the Golden Triangle is a strategic region of New Zealand in regard to its trade and economic policy.
“A second Kaimai tunnel spec’d for high speed passenger rail as well as freight would be what I’d be spending infra dollars on.”
This.
I did an urban economics course recently – they made the point that increasing road access from Northland to Auckland would also make it easier for businesses that serviced Northland to relocate to Auckland. On balance it might make things worse for Northland.
Very good analysis Matt, but just this: Northland pop is 200,000; Waikato 500,000. That’s 2.5 times greater in Waikato, not 1.5 times
The problem isn’t the expressway itself as it really will unlock growth in Northland, provide resilience, and severely reduce DSI.
The problem is the cost and how it’s to be funded.
Almost anywhere else in the world this project would cost half what us proposed (and it would likely be built to a higher standard too – concrete rather than flexible pavement etc).
Get it down to $2B and I say go for it 100%.
Funding; the government clearly wants to use PPP. If it’s anything like our existing experience in NZ with similar projects (Transmission Gully motorway) then it’s a terrible option that will cost us all 2-3x more long term.
Any PPP needs to be done contractually with guarantees in place regarding maintenance and no government subsidies of operating costs. If it’s anything like loses money then that needs to be on the concessionaire not the government.
End of the that is unlikely so government just needs to pay for it rather than hanging a heavy future liability on taxpayers. Government debt is the cheapest out there. Better to pay 3% pa rather than double digits for 20 years.
TL:DR – get building costs down and government needs to pay not PPP.
I’m not sure even $2 billion is worth it for a bypass of Wellsford.
Also how are you planning on getting the costs down? The geology north of Auckland is what it is, it’s not going to change.
that is now expected to be 4 billion and the whole project will be around 20 billion
“it really will unlock growth in Northland”
Compared with what other potential investments in the region?
Minister Bishop was born after the construction of the Harbour Bridge, as was I. He has no lived experience of not having a Harbour Bridge, so to describe it as he does is insulting to the people that constructed the most incredible piece of infrastructure that we have in this motu.
Wasting more money on the former Holiday Highways is a continuation from the previous Nazional government and also disrespectful to the reality of climate change.
Full regional rail would be a far loftier goal for our motu, and any minister of transport with true vision would be pushing for this, with full electrification. This would unlock Northland, as the Te Huia has unlocked the Hamilton Auckland interloper route.
Automobiles ruled the post world wars years during the second half of last century, but they are surely something we can retire from our conscience?
Dream on…
bah humbug
Had they left the toll on the bridge we would have had another 30 years ago
Would the growth that occurred in Northland have occurred somewhere else instead? Maybe you’d get more bang for buck having that growth in the waikato and just improving the expressway there.
Historically, the old National Roads Board had a policy of ensuring that maintenance of the existing road asset took precedence over adding to that asset. $1bn of road maintenance would really help, in a lot of places!
From an era when it was considered bad taste, in theory, to load costs onto the next generations for the driving excess of today. In practice they still loaded many costs on to their descendants, but today the road building is continuing *despite* all evidence that it constitutes climate destruction and a huge reduction in opportunities for the next generations.
Does anyone know where Labour policy is heading? Do they have a plan to fix Nact’s mess of cripplingly excessive highway spending? What exactly will they do on this project if they get on next election?
Labour still has car worm brain, and could be particularly bad on this project given the economic deprivation of Northland, so we need someone to get through to them about the long term superior benefits of rail to Northland, and of fixing local roads, before this nonsense project.
The full alignment could be completed but initial construction scaled back to delay expensive capex.
a) Some sections could be 1×1 with passing lanes & shoulder & median barriers
b) Some sections could be alternating 2x1with shoulder & median barriers
c) Only 4 lane where necessary
c) Any interchanges could initially be at grade roundabouts
Agree with many that this project is way too expensive for it’s benefits.
Would be better, long term especially, to amp up rail infrastructure for Northland including very modern efficient digital savvy container/transfer to truck terminals where needed. Get freight onto rail as much as possible and get some good regional and even local rail going.
Fix safety issues on the roads where necessary but don’t make it the easy default way to travel. Need stick and carrot.
I see the figure of 2 billion being used a lot .That wont even build to Tehana which is looking more like 4 billion .That makes the total job closer to 20 billion