Release of CBD Rail Link Business Case reveals major differences between Auckland and the government

 Back in August I was criticised by some of my friends in the Green Party for refusing to show up at a rally organised by Keith Locke to demonstrate support for the CBD Rail Link.

My reason was simply that as the rail link was still under study by a team of experts commissioned by KiwiRail and ARTA/ARC, it wouldn’t be good form to be up on a soapbox declaiming via megaphone that it should go ahead.  It will be recalled that when I was chairman of the ARC in 2009 I accepted the Minister of Transport Steven Joyce argument that a business case would need to be made to justify the project going ahead.

Now the long-awaited study has finally been released and its recommendations are better than any rail supporter could have hoped for.  The study reveals that using standard Treasury criteria (8% discount rate etc), the CBD rail link has a benefit cost ratio (BCR) of 3.5 (including wider economic benefits), or using more conservative criteria, the NZTA Economic Evaluation Manual, it has a BCR of 1.1.  Essentially the business case provides compelling evidence that not only is the rail link economically viable but that it is absolutely essential for the ongoing development of Auckland.

So given my own approach (respecting the process and waiting until the business case was out) I have to confess being more than surprised at the response of the Minister of Transport.  Rather than merely receiving the business case and announcing that it would be given serious study, Steven Joyce immediately set about trying to discredit it.

 

 

History repeats? This Herald cartoon published 2 Nov 1954 lampoons the scuttling by the National government of a previous plan to build an underground rail link through Auckland. The bound and gagged figure depicts Auckland Mayor J.H. Luxford. (from 'Decently and in Order' by Dr Graham Bush).

A lot of public transport advocates have found Steven Joyce something of an enigma. While many have always suspected he was just another ‘roads first’ National Party politician, others have not been so sure – seeing him as a modern, sophisticated technocrat – open minded to the possibilities of rail.   I confess I have been in the latter school of thought.   In my assessment the Minister is a very smart fellow, more intelligent than most run-of-the-mill politicians. It’s his natural ability that has made him such a senior Minister and such an important member of the government – ‘the Minister for Everything’. Moreover Steven Joyce has always been keen to give the impression that he is first of all interested in objectivity and rigour – in other words ‘what works’ when making decisions around transport.  “Hard-nosed decisions” is one of Joyce’s favourite expressions. 

Reinforcing that impression was a series of decisions Joyce made in 2009, around electrification. First of all in March 2009 he cancelled the regional fuel tax initiative, thereby forcing the abandonment of the EMU tender process, then 9 months later after studying the evidence for himself he approved (again) the electrification of Auckland rail and the acquisition of a new fleet of electric rolling stock.  Moreover Steven Joyce has always made a lot of effort to get to Auckland rail station opening ceremonies – of which there has been many over the last couple of years and to speak positively about a balanced approach to transport (in other words not roads versus rail but roads and rail).

In regard to the CBD Link the Minister had previously been careful not to dismiss it out of hand and has even made some mildly supportive comments.  Given that apparently reasonable approach from the Minister I have tried to reciprocate by refraining from partisan comments (or turning up at rallies) until the business case was completed.

But now the case has been completed – and how revealing it has proven to be. Revealing not just in the sense of the benefits of the CBD rail link but also indirectly revealing of the government’s agenda for Auckland.  The CBD Rail Link Business Case, and Minister Joyce’s reaction to it, has also finally revealed in pretty stark relief exactly where Steven Joyce is coming from.

This has not been an especially good period for the Minister of Transport.  Clearly anyone with knowledge of the Auckland Super City reorganisation would know just how intimately involved the Minister of Transport was in all aspects of this.  Not just on the establishment of the Mega CCO, Auckland Transport, but it became very obvious that the Minister of Transport had his fingers all over the process – including areas which would have seemed to be quite outside his portfolio. 

Furthermore it was quite obvious that the government was expecting that their man John Banks and his government-friendly ‘affordable progress’ policies was going to win.  As it turned out Banks crashed and burned and it was Len Brown with a visionary manifesto very much based around rail projects who won a resounding mandate from Aucklanders.

With Plan A now around the government’s ankles, the government has gone to ‘Plan B’.  ‘Plan B’ is to delay any new rail projects for as long as possible by refusing to fund them. Plan B was in evidence during the Auckland Council swearing-in ceremony when the new Mayor, councillors and a crowded Town Hall audience of leading citizens was subjected to an embarrassingly obvious lecture from the Prime Minister about how important it was for the new Auckland Council to spend 18 months completing a ‘spatial plan’ before embarking on any major infrastructural projects like CBD Rail and rail to the airport.  Let me correct that – I should say ‘rail infrastructural projects’ – obviously the government would be unlikely to be calling for a freeze on road projects. 

‘Plan B’ was also in evidence in Minister Joyce’s letter to the newly elected Mayor of Auckland Len Brown revealed in the NZ Herald a couple of week’s ago.  Joyce had wasted no time in getting see the newly elected Mayor – and met with him on 14 October.  That was more than two weeks before he was sworn into office. The point of the meeting was to try to warn the Mayor off his visionary rail programme for Auckland.

The crux of Joyce’s message to the Mayor in a follow up letter of 28 October was that in terms of Auckland rail services, the Minister had discovered “an annual operating funding shortfall of $30m per year”.  (Never mind that the funding shortfall is almost entirely the result of policy decisions directly or indirectly made by the Minister)

In case the Mayor didn’t get the message the letter concludes with:

Finally, it is my understanding that Auckland Transport and KiwiRail will formally present the initial Auckland CBD rail tunnel business case to us before the end of the year.  However it is imperative that we resolve the current metro rail funding shortfalls before we consider broader capital programmes to expand the network.”

Now with the release of the CBD Rail Link Business Case, ‘Plan B’ has racheted up a gear with the Minister trying to pour scorn on the business case. 

It would seem that why the Minister has become so emotional about the CBD rail link (which clearly he doesn’t especially care for one way or the other), is that the rail link has become inextricably entangled with something the Minister really does care for – the Puhoi to Wellsford road project – aka ‘the Holiday Highway’.

Clearly the CBD rail link, which at around $2 billion is about the same cost as the Holiday Highway, has become in Joyce’s mind the unwelcome – even dreaded Doppelgänger of his much favoured Puhoi to Wellsford roading project.

Last week a devastating critique of the Holiday Highway appeared in the Sunday Star-Times by business journalist Rod Oram. 

http://www.stuff.co.nz/sunday-star-times/business/4366408/Going-down-the-wrong-road

Oram’s article is so important I will quote from it at some length.

“The motorway will significantly distort development patterns, thereby blighting the region. It will help push urban development out to 85km north of Auckland’s CBD over coming decades.

This will exacerbate Auckland’s weakness as a sprawling city, with dire economic consequences. Worldwide evidence shows lower density means higher infrastructure costs, favouring private over public transport and a weaker network effect. People living and working closely together generate greater wealth than those spread out.

In fact, the government knew last year the motorway was uneconomic, according to the cost/benefit analysis done for it. Likewise, the Waikato Expressway and Wellington to Levin motorway were uneconomic under conventional analysis.

That was very embarrassing for the government. After all, the three projects account for almost half of its $11b, 10-year Roads of National Significance programme. And the analysis showed speeding up the projects, which the government promises, would reduce the benefits.

These were political problems it created for itself. It announced the seven roads in March 2009, nine months before it received the economic analysis. It didn’t like the analysis, so spent another seven months getting the answers it wanted, according to documents coming to light.

Transport Minister Steven Joyce is proud of the government’s work ethic. “No work had been done on this project prior to it being confirmed as a road of national significance last year so this is great progress,” he said last week when announcing the route for the first stage from Puhoi.

The government got its unwelcome news about its uneconomic road projects in the work it commissioned from SAHA, an Australian-based consultancy. SAHA’s December 2009 report, billed as its final one, showed the conventional cost/benefit ratio of the Puhoi to Wellsford project was 0.4, meaning for every $1 invested the return was 40c; the Waikato Expressway’s was 0.5 and the Wellington Northern Corridor 0.9”

 That’s right, Oram revealed that according to SAHA the CBR for the Wellsford to Puhoi is only 0.4!!!

Not surprisingly the Minister was infuriated and demanded the right of reply. http://www.stuff.co.nz/sunday-star-times/business/4395254/Getting-around-in-the-real-world

Those like me waiting with some anticipation for how the Minister would explain away the derisory 0.4 BCR for the Puhoi to Wellsford were to be disappointed. Joyce didn’t even try to respond to that most devastating revelation.  Instead of employing sophisticated counter-arguments, what Joyce gave readers was a stream of consciousness, obviously written by the Minister himself, revealing some fairly banal conservative views – including a snide comment about the ARC and the Metropolitan Urban Limits policy. (He also misrepresented the ARC policy on road access to Puhoi).  In fact Mr Joyce revealed his views on transport and urban development to be standard ‘roads first’ and pro urban-sprawl – in other words fairly basic small-town red neck stuff. 

In many ways this is history repeating itself – there have been two previous attempts to expand Auckland’s rail network with an inner city undergound link   Such a scheme was first proposed by Minister of Railways (later Prime Minister) Gordon Coates as early as 1923.  In the late 1940s the Ministry of Works formulated a scheme which was accepted by all parties for nearly 10 years before being killed off by the National Government of the time – with the active compliance of the then Auckland City Council.  Again in the late 1960s the ARA and the NZ Railways worked up another plan, again with an underground loop known as ‘Robbies Rapid Rail’. This in turn was killed off in 1975 by the newly elected National government of Robert Muldoon.

Not only is there an echo of events but also of personalities – with Steven Joyce the present-day ‘Minister for Everything’ playing the role of the 1950s era National ‘Minister of Everything’ Stan Goosman.

Clearly this debate has got a fair way to run – but it would seem clear to me that sooner or later if the National government wants to be re-elected next year it will have to concede that unlike the Puhoi to Wellsford Highway with its BCR of 0.4 – the CBD Rail Link does stack up.  The National Government would dearly love to kill it off – but if they are not careful what comes roaring out of Auckland’s underground rail link could end up running down the National government.

For further excellent commentary and analyses please go to these sites to read articles by Josh Arbury, Cam Pitches and Martin Gummer

http://transportblog.co.nz/2010/12/07/cbd-tunnel-vs-puhoi-wellsford-an-in-depth-analysis/

http://www.bettertransport.org.nz/2010/11/rod-oram-exposes-economic-fallacy-of-puford-toll-road/

http://transportblog.co.nz/2010/12/06/martin-gummers-opinion-piece/

This entry was posted in Uncategorized. Bookmark the permalink.

19 Responses to Release of CBD Rail Link Business Case reveals major differences between Auckland and the government

  1. Gary Stewart says:

    well said Mike

    having now read Joyce’s rant, which as you say doesn’t address the facts, and effectively treats Rod Oram as a screaming leftie [news to me], Joyce sounds like someone who would fit comfortably in the ACT party

    personal choice is paramount, where we want to live and drive is the most important thing. Fine, fine, fine, but when will these ‘personal choice’ advocates stop supporting corporate welfare support (ie pay for their choices themselves) and stop banging on about the need to scrap social welfare (people and kids should have the personal freedom to starve presumeably). Let’s bring back debtors prison to encourage them.

    When will car companies and petrol companies start paying for roads out of their profits?

  2. Patrick Reynolds says:

    The extraordinary thing about Joyce’s rant is that he has betrayed himself as being against choice: he has chosen and we’re all going to drive and all freight will be on the roads. His programme is a systematic attack on choice for how we travel and how freight is moved using taxpayers money to subsidise his winners. Furthermore he is weakening the strength and resilience of the nation’s infrastructure wealth and all of based on the whim of the Minister. He gets angry, ad hominem, and mendacious when confronted with the facts. Extraordinary.

  3. Barry Palmer says:

    Hi Mike,

    I am awaiting a reply from Rob O’Neill from Sunday Star-times as to the availability of space for an opinion article. If it eventuates it will go out under Cam as CBT Convenor and he and I will contribute.

    Did you see Jenniifer and my letters under Steven Joyce’s apology for an article? I missed them until Cam pointed them out to me. If I missed them I guess hundreds of others did.

    Will keep you posted.

    Regards
    Barry

  4. Matt says:

    Mike, have you yet tried asking anyone at the Herald why they’re meekly parroting Joyce’s lies about the BCRs of Puford (gives the WEBs-inclusive figure every time he mentions it) vs the CBD Loop (suddenly he’s far from convinced about WEBs)? Or why they never explain that for Puford and the CBD Loop to have an equal BCR they can only be compared in a manner that’s unfair to the Loop?

    Joyce needs to be called on this one in the mainstream press, and loudly. Even taxpayers who resent every last cent that gets spent north of the Bombays will be wondering why they’re having to wear 60 cents in the dollar on Joyce’s pet road projecting while, at the same time, being deprived of at least 13 cents in the dollar in economic returns for the Loop. If money has to be spent on Auckland, they’ll surely want it to be spent wisely.

    • Mike Lee says:

      Thanks Matt,
      not sure about the Herald being meek – the guy is a Cabinet Minister so what he says has to be reported fairly. Suggest you email Mathew Dearnaley and discuss with him
      Cheers,
      Mike

      • Matt says:

        Being fair doesn’t have to extend to reporting his every word without challenge. Reprinting press releases is not journalism it’s just lazy, and if they’re going to interview him they should be asking questions not just taking notes.
        My objection is not to them reporting what he says, but to their reporting it without any suggestion that he’s not being completely honest in what he says. That’s what I mean by meek. Anyone who’s looked at the respective summaries knows that Joyce is playing fast and loose with the numbers, but all we see in the Herald is near-verbatim quotes from him and no hint in the same piece that a comparison of the projects on the basis he’s using for Puford will light the CBD Loop up like a Christmas tree. It requires columnists like Rudman to get that fact into the Herald’s pages.

  5. Simon Cox says:

    Mike

    What has been so disappointing has been the Herald`s coverage lately surrounding the CBD tunnel. For Matthew Dearnaley to report the BCR as equal for both the Puford Holiday highway and the CBD tunnel was just rubbish.

    And then for the editor to come out with an editorial that was just factually wrong was beyond belief. He only had to look at the effect of what building Britomart has done for rail in Auckland to see that his comments about build it and they will come were wholly untrue. It`s extremely unfortunate that apparently the editor of the herald is the same guy who was editor at the Waikato Times until recently where he was equally dismissive and unsupportive of the Waikato commuter rail idea and clearly supported the local national MPs views. If it isn`t already hard enough, now it looks like we have the main local media who is going to make life difficult by supporting Steven Joyce`s line every time.

  6. Jennifer Northover says:

    I actually find all of this quite disturbing. Given all the evidence, independent reports etc, it’s a straight out abuse of power and appalling misuse of taxpayers’ money. Recent “scandals” of credit card (mis)use, (over)use of MP entitlement to travel discounts, wananga appointments of whanau, to give some examples, pale into insignifcance given the enormity of this abuse.
    Why isn’t there more made of this by opposition parties or am I missing something?
    I’ll join a march on this – I treasure the greenbelts we have in Auckland, for recreation and lifestyle and fiercely oppose further sprawl.
    NZ is slipping further and further down the ranks and it is the responsibility of our governors to deploy resources in a responsible manner. In any corporation this type of behaviour would see the board of directors sacked en masse.

  7. Tim says:

    Hi Mike

    You were against knocking over a couple of delapidated sheds on the waterfront. Now you and Len (bless ya both) are talking about carving under/over ground tracks through half of Auckland.

    You’ve both lived in Auckland long enough to know you are dreaming.

    Best.

    • Mike Lee says:

      Wrong about the sheds buddy. The agreement I reached with the Historic Places trust was to dismantle and remove Shed 11 and keep and restore Shed 10. Shed 11 has now gone – Shed 10 is about to be restored. Exactly what was agreed. The proposed tunnel is only 3.5km which does not equate to “half of Auckland.” You need to get your facts right before you accuse other people of dreaming.

  8. Jennifer Northover says:

    I understand that editorials of this political leaning are written by John Roughan, but that he doesn’t do all the editorials. I suppose they believe they need to be seen to be equally challenging/supporting across all views, but that doesn’t excuse factual errors.

  9. floss says:

    What both Joyce and Oram fail to mention is that we will have fewer vehicles on our roads, not ever-increasing numbers.

    Dozens of recent reports including one cited by Lian Dann in the NZ Herald on Saturday all point to an oil supply crunch in the 1012- 2015 timeframe

    see http://oilshockhorrorprobe.blogspot.com/2010/12/staring-down-barrel-of-oil-shortages.html
    for some interest analysis

  10. Jeff Thomson says:

    Hi Mike
    Have been wishing to send you an email for some time (and will do so now), expressing my gratitude for the fantastic and tireless work you do in pushing the development of an effective public transport system for Auckland. I came back to Auckland a few years ago after some time in London. It’s difficult to compare with a city of nine million people but I couldn’t believe how poor our system is. What is it with our governments? Do they not travel to, and experience the PTs in regional cities?,Sydney, Melbourne? or further afield? Perhaps it’s the NZ lifestyle feeling of ‘live in the suburbs, drive in the car everywhere’. Trains and the rail loop are the way to go in reducing congestion, increasing economic development (eg, the rail loop opening up the ability of shoppers to move around the area, K Road, Newmarket),.. Sometimes you have to build it and they will come. I can’t consider Auckland to be a city until this stuff is worked out. Great to see Q Theatre underway, St James?
    I overheard a guy at the Britomart station the other day trying to work out how he would get somewhere for work using PT.
    I could go on but, thanks for your efforts!
    Kind Regards, Jeff Thomson

  11. Scott M says:

    Hi Mike,

    I am intrigued to know how the dynamics have worked between the ARC and the private bus companies. As someone who tried to start a bus route between Pt Chevalier and Newmarket, and therefore has first hand experience of Aucklander’s love of their cars, I know that these companies rely on the subsidies they receive.

    Surely then, the ARC was in the power position and should have been dictating the terms to them, not the other way around.

    However, anything I read, whether it be the bus dispute at NZ Bus or integrated ticketing, these companies are selfishly pursuing their interests and not those of the ARC.

    Why didn’t the ARC just tell them to “lump it or leave it” with respect to integrated ticketing. Faced with loosing their subsidies I am sure they would have caved in.

    I am interested in your thoughts, being someone who was in the “thick of things”.

    Cheers

    Scott

    • Mike Lee says:

      Hi Scott,
      since December 2004 relationships with the bus companies was managed not by the ARC but by ARTA which is now a part of Auckland Transport. When NZ Bus locked out its workers (and therefor Auckland bus commuters) we made our displeasure known to NZ Bus very forcibly but we prefer to work constructively with the bus companies. The question of integrated ticketing is quite complicated and involves the government and the NZTA as well as the private companies. I agree that Infratil (which owns NZ Bus) aggressive lobbying for its own Snapper card has complicated and delayed the introduction of an integrated ticket here in Auckland. Cheers, Mike

Leave a Reply

Your email address will not be published. Required fields are marked *

*

*


You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>