Over the past week I have written a number of posts about the upcoming 2012 Government Policy Statement for transport and its effect on the “funding bands” that guide the amount of money NZTA can spend on particular things. My general feeling about the GPS draft document is that it’s utterly stupid and illogical, but also that it’s not particularly more stupid and illogical than the current 2009 GPS – which I suppose isn’t really saying much.
The main thing to know about both the current and future policy statements is that they suck money away from pretty much everything aside from new state highways, so that the government’s selected “Roads of National Significance” can be given funding priority. While that is certainly the case, so far it would seem that the various transport bureaucrats have done a reasonably good job at ensuring these funding changes haven’t resulted in major negative effects on the operation of Auckland’s public transport system – for example. We have still managed to improve both the infrastructure and the operations of the PT network to an extent where it has supported an increase in total patronage of over 8% in the last year. Furthermore, as I reported a couple of days back, the improvements are ongoing – at least for the next few months. So at least from an outside perspective, we haven’t really seen any hugely obvious adverse outcomes from the ‘funding squeeze’.
However, looking at some of the papers presented at last week’s board meeting of Auckland Transport, behind the scenes it would seem as though the GPS is having a huge impact on the amount of funding available for Auckland Transport from NZTA. This issue is most clearly highlighted in this board paper, supported by this appendix. The infrastructure section of the April Business Report also contains information on the changes to available funding from NZTA that were not anticipated. While the papers mainly talks about the impact of Auckland Council’s annual plan funding decisions on what Auckland Transport will be able to do next year, the changes in available funds from NZTA have potentially vastly more impact on what will – and won’t – be able to happen in the future: both in terms of infrastructure and operations improvements.
These paragraphs from the business report outline quite clearly what I’m talking about:
So the money NZTA has available for non state highway infrastructure projects in Auckland in the 2011/2012 financial year has declined from $279 million to $147 million – ouch that’s an utterly massive decline! It’s also interesting to note that one of the main reasons for the decline in available funds is the ‘timing of cashflow against revenue streams’. This suggests that they might be getting in a bit less money for fuel taxes than expected, yet have mounting bills to pay (for state highway projects?) and therefore have very limited funds available for local projects in Auckland.
The report prepared about the Annual Plan also says a bit about the lack of NZTA subsidy funds being available – although this time a far smaller figure (presumably relating to operating costs rather than capital expenditure):
The detailed financial information attached to the Annual Plan report gives us some further information on what’s being discussed above:
You can see the $16 million shortfall in NZTA operating subsidy in the Draft Annual Plan compared to what was expected in the Long Term Plan. Looking further down the tables, the difference in available subsidy for capital projects from NZTA can be seen too:
Now if it weren’t for the enormous number of utterly stupid projects proposed to be funded by the Draft Annual Plan (Penlink, huge carparks in Takapuna and Manukau City etc. etc.) I would probably be more worried about this than I am. I’m somewhat hopeful, to an extent, that NZTA’s funding pressures will mean many of the stupid transport projects that the old councils advanced – and have just been carried over as Auckland Transport’s funding priorities – will not proceed.
However, as a longer term trend this is something to worry about and I think is a real indication of the massive funding pressure that will come on efforts to improve public transport and local roads over the next decade – if the 2012 Draft GPS becomes a reality. As I have noted many times before, 75% of the country’s population growth over the next 40 years is in Auckland – we simply can’t afford to continue to get a raw deal when it comes to transport funding.
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This is quite a common technique employed all around the world, Instead of addressing the real problems causing funding pressures and cutting the low value spending the central government cuts funding to the local governments so that they either have do the hard work finding more funding or have to deal with the public backlash.
Calls for a regional fuel tax can’t be far away.
Perhaps this is also creating some publically acceptable justification for introducing tolls.
This suggests the MOT has underestimated the effects of higher oil prices on inflows into the NLTP. Stated differently, they have overestimated how much people will continue to drive when faced with higher petrol prices. But Josh I hope you’re right – it seems the opportune time for AT to fire a warning shot across NZTA’s bows that if something is to be cut its the RONs and Penlinks of the world (assuming they have that authority?).
On the other hand, I also think this again highlights the need for AT to consider charging more for PT in the peak periods, as a means to reduce the need for subsidies and subsequent dependence on NZTA that they engender. If AT earn more revenue from passengers travelling at peak times, then they won’t be so dependent on NZTA to stump up for funding when they want/need to run more peak period services.
Peak period services on Brisbane’s SE busway approach 100% fare recovery, which means they are not a drain on public funds. It also means that you could increase peak frequencies without requiring much subsidy. So if we can get that peak period fare recovery up, we can reduce the dependence on fickle subsidies and rates!
As an aside, it may also suggest the need to abandon he expansion of low patronage bus services in the far-flung suburbs. But I recognise that’s probably unpopular …
I would guess that during peak time recovery is fairly high, if not 100% but that is the off peak services that drag those costs up. The problem is if you only had a peak time service then it wouldn’t be as useful for people so less would use it so the best option is to try get those off peak services better patronised. One option might also be charging students full price on certain services, the train I catch gets to Britomart at 8:14, well before school starts yet there are huge number of students of all ages. This normally leaves a lot of people who are paying a full fare to have to stand or sometimes miss the train. There are later trains that would still get them to school on time but that wouldn’t be as crowded and shifting them to those might be a good solution.
I wouldn’t be so certain about the farebox recovery levels at peak times. While that particular trip might well cover its operating costs with the fares raised, the fact that you need to own as many buses, trains, ferries as so forth as you do for peak times makes it an expensive time to serve in terms of capital costs.
I think you’re viewing fare recovery too narrowly. The trick to remember is that the costs of vehicles (and for that matter the costs of capacity improvements) are associated with peak periods, because they have zero marginal value outside of peak periods (when we have surplus vehicles and surplus capacity).
In this case, the demand for new service is caused by growth in the peak, when the operators do not have spare buses lying around. So if AT wants more peak services, then Ritchies/NZ Bus etc have to procure new buses at $200k each. That’s where the peak period costs come in – costs which should be passed onto peak users.
Many (robust) economic analyses of public transport systems (that assign these costs correctly) find that peak services tend to be more highly subsidised than off peak services.
I just said what Josh said, but not as succinctly 😉
Ok… a little confused, but I guess I will say this.
During peak hour the public transport system saturates with patronage. So a bus service, or even a train at that, is likely to have good cost recovery during peak hour. And this is probably true for all express services whether on a busway or not.
The problem with peak services is – as you pointed out- expansion during peak hour is expensive. However, Brisbane does have peak hour fares during this time. It’s cheaper off-peak, although pricing is a weak tool to influence patronage.
Growing off-peak patronage is the money spinner I think. You already have surplus capacity so no need to buy a new bus or whatnot and you can get good patronage all day. Maybe feeding buses to trains will also help in that department as well.
BrisUrban – why do you say that pricing is a weak tool with which to influence patronage? Do you have some evidence of that?
One thing to consider though is that it makes more sense for NZTA to be subsidising peak time PT than off-peak PT, because it’s during the peak that PT creates the most road user benefits. While we would want peak/off-peak pricing to encourage peak time travellers to shift to off-peak, we wouldn’t want it to encourage peak time travellers to go back to their cars, as that would add congestion at the worst time of the day.
It might be interesting to get some definitive answers out of NZTA about how their petrol tax take is tracking compared to expectations over the last year or two. And also for them to ponder whether they need to redo some of the traffic modelling for various projects to take better consideration of lower traffic volumes than anticipated.
While that sounds perfectly reasonable, it’s about as likely as hell freezing over. Revisiting traffic growth assumptions is pretty much heresy in transport engineering circles. Mainly because it reinforces the inconvenient truth that we have produced particularly expensive asphalt-coloured elephants.
Revisiting traffic growth assumptions would sink the BCRs on the RONs to the point where you may as well just round it to zero. I suspect the more attractive strategy from NZTA’s perspective is to pretend publicly that everything is ok and persist with RONs, while behind the scenes forcing regional authorities to cut PT budgets.
Ahhh what a wonderful transport minister NZ has.
What kind of traffic growth/fuel price assumptions do models like ART2 and ART3 have? Are they the models NZTA uses (they’re referenced in the Waterview Connection background information and are the only traffic models I have ever heard of)?
More importantly, could one make an OIA request to find out what all the assumptions were, and then start to pick them off one by one in a public forum like this blog?
There’s no obvious good reason why the assumptions going into traffic models shouldn’t be public. They’re not commercially sensitive, to my mind, because they’re not to do with the costs of provision of goods or services. I’d be pretty worried if they’re considered to be secret under the “free and frank” rule, too, though I’m having difficulty expressing just why. Mostly I guess it’s just that I don’t think that the calculation of utilisation of public roads should be any kind of secret, and similarly the forward projections of fuel prices are publicised by the likes of the IEA.
You’re right Matt – and I suspect you would be given the traffic growth assumptions if you OIA’ed them.
Many basic models simply look at the last 10 years and draw a line of best fit over time, from which they derive a linear growth rate that is applied to future years. But often tricks are used to fudge the numbers, e.g. ignoring more recent data (because it shows volumes flat-lining) while dragging in data from years ago, when volumes were growing rapidly.
If someone wants to OIA the traffic growth rates used in the RONs I’m happy to analyse them for you.
Assuming NZTA are using the ART3 model, there is some information online about it. Here is a presentation given by the ARC on it:
The Auckland Transport Models Project – Overview and Use to Date
The petrol price in litres is shown on the example test on page 16 so assume this is an input.
I can’t find the replacement pages for the ARC’s site that described the model, but it is still on the Wayback machine:
Transport model development
There are a lot of large PDFs to analyse…
It would be worth finding out from the NZTA which models they use on different projects before spending too much time reading these, as I assume the ARTA’s models would only be used within the region’s boundaries. And even though the boundaries extend to Wellsford, from the NZTA’s business case for the Puhoi-Wellsford RONS it doesn’t sound like they used anything near as advanced:
“Using future traffic volume predictions, linear growth of 4% per year from 2006 to 2026 is indicated and then growth reduces to approximately 1.5% per year until 2051.”
We’ve had 5 years to prove that assumption wrong now, and given the amount of traffic will feed into all of the project’s benefits it will have a big impact. So, maybe an OIA request is in order to ask for any documents that discuss or have been updated in relation to traffic growth along the route?
Here’s the working presentation link:
http://www.cmsl.co.nz/assets/sm/4747/61/1530C-Davies.pdf
You can download the original (non-scanned) version of the 2009 Puhoi-Wellsford business case here:
http://www.localmatters.co.nz/site/localmatters/files/Puhoi%20to%20Wellsford%20Business%20Case.pdf
Helpful if the NZTA’s website is down (as it appears to be now).
Thanks for that – a few useful first few steps in trying to understand this a bit better. There was some level of modelling done to inform the SKM Business Case, once again indicating a huge 200-300% increase in traffic along the Puhoi-Wellsford route by 2050.
I’ve also uploaded the business case: http://greaterakl.wpengine.com/wp-content/uploads/2011/05/Puhoi-to-Wellsford-Business-Case.pdf
Thanks Josh just had a read. Given that the population is expected to treble from 20,000 to 60,000, the 200-300% increase in traffic volumes seems reasonable based on business as usual assumptions. But the reality is that BAU assumptions just don’t seem credible . Lower levels of economic activity and higher oil prices are likely to curtail growth far below what we are accustomed to.
Plus in these types of socio-economic conditions I just don’t see the rural lifestyle continuing to be so attractive, although I may be wrong. Rural property prices have been hit relatively hard in recent times, suggesting that when the custard hits the fan people to gravitate back to basics – i.e. the cities and towns were there are stronger, more diverse labour markets. I’d be interested in updating those figures with numbers from 2008-2009.
Might make that one of the jobs for the summer.
And would that predicted population growth happen without the road being built? If getting to Auckland is still a dangerous activity (and only five minutes slower than with Puford grande), people will be less inclined to build/move in the northern reaches of the region.
It’s somewhat circular, but the road will definitely encourage more growth than would occur without the road. Really comes down to whether we want the encourage (Joyce’s vision) or discourage (ARC’s vision, seemingly adopted by Auckland Council) more sprawl. I’m not a fan, but there are definitely people about who consider sprawl to be virtuous by its very nature.
Re: cost structure of peak vs off peak buses:
Cost of bus $400k. Discounted at 7 per cent over 20 years gives daily cost of capital about 1/4000 of the total, thus $100.
Marginal distance based running cost (driver/ fuel/ distance based maintenance): say $4/km off peak, $5/km if peak only, being higher to represent the cost of minimum shift length rules (wild guesses – correct figures anyone?).
Bus has a 15km route which takes 45 minutes. The cycle time is 2 hours. The fare is $4.
All day service: bus does 6 return trips over 12 hours. Total daily cost is (15x12x$4) +$100 = $820. Break even is 205 passengers, or about 17 boardings per trip.
Peak service: Bus does one return trip in each peak period (at that distance no more than one revenue run in each peak period is possible. The contrapeak run is empty to depot.). Total daily cost is (15x4x$5) + $100 = $400. Break even is 100 passengers, thus 50 boardings on each peak direction trip.
In other words: an all day service jogging around the suburbs with 10 passengers on board at one time, and 20 boardings per trip on a well balanced route, is probably doing just as well financially as a one trip peak commuter bus with 50 passengers on board.
The break even load factor of an efficient all day service, at customary fare levels, is surprisingly low. The reason buses in car dependent ANZ cities have low farebox cost recovery overall is the large number of *very* empty buses running around at nights and weekends.