Likewise, it is clear that the cost and traffic volumes for Transmission Gully are such that it could not recover more than a small minority of capital costs from a toll. That may be good in reducing the burden from other motoring taxes, but does raise questions as to whether those benefiting from the road are paying adequately for the travel time savings they will gain (as the project appears to have a few safety benefits, and is probably also a transfer of wealth to property owners living adjacent to the current route).

The E&Y report on the economic contribution of toll roads in Sydney does take the whole idea of wider economic benefits, which are controversial, as few study the lack of such benefits in many cases.

http://www.infrastructureaustralia.gov.au/publications/files/Eco_contribn_of_sydney's_Toll-Roads_EY2008.pdf

However, there can be little doubt that the major toll roads in Sydney and Melbourne have transformed access and transport costs for those cities, particularly for freight and particularly for business and commuter trips that are not focused on central business districts. “Smart Growth” advocates may not support this, as they tend to support intensive central city business activity with clusters around public transport nodes, but both Sydney and Melbourne have very well developed suburban rail networks that whilst critical to commuting to their excellent downtown areas (and being alternatives on the radial corridors), do little for freight or for the most distant areas of new development.

so the argument that this is users pays is simply nonsense.

Let the private sector buy the land, build the road and toll it at full cost recovery, and watch nobody turn up. That’s the dirty honest truth, that politicians have been pushing for something that wouldn’t be viable in the real world.

The desire by the government to make this a profitable operation for private enterprise is purely corporatist, and involves a subsidy from other road users to the future owners.

After all the entire state highway network now is self-sustaining and generates enough money for a wide range of targeted improvements, but let’s not pretend that Transmission Gully isn’t just a political boondoggle.

You missed my point. I love that road, too, but the locals avoid it like the plague. Tolls can be counterproductive, as in this case. Taxpayers all over NZ paid for the bulk of the road, it’s there, it should be open and free. End of story.

Why not just contract the yanks or Chinese to build it in six weeks? Why is road building a protected subsidised industry in New Zealand?

KS

Have you checked out the toll toad in Tauranga? About the only company I get when travelling that road is trucks!
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Well others just don’t like your company then!

The toll road is a God send to those that bother to think about their time. I use it constantly. No ques, no slow coaches, east driving, no traffic james, easy access from the Mount to Greerton and vice versa ( 10 minutes totoara St to Greerton),or Greerton to Matua. Piss poor for returning from Bethlehem to Greerton,11th Ave southwards to Greerton so one must endure the deliberately clutterred Cameron Rd with the Hospital and schools clogging the way.
Lack of egress from the highway to 11th and 15th ave and highway to greerton direct. (save me even more time.)

Generally 7 out of 10.
Still must not complain as without the road Tga traffic would be a nightmare. Even though its cost the ratepayers its still good. They raised the tolls from $1.00 to $1.50 which is a pain. $2.00 would have been better. Trucks get it cheap because they will go through the resdiential other wise.
The other problem is that the road was built with the northern road attached so the out of TCC population pay zilch for the use of the road. If those from Bethlehem north had to pay the road would have paid for itself by now. But stupoid arse johnny come lately Aucklanders managed to prevent that. Hope they are happpy with their rates.

I agree investors woudl demand a risk premium here but the anlysis still needs to be done. (If we get a Greens government I can see a higher risk premium on everything.)

I predict a $4 toll on TG. Maybe ipredict can open a market. I’ll happily pay my toll each day. If I live that long.

So please stop confusing private losses with public benefits.

I’m not. I’ve already pointed out that the public benefits are just 60% of the costs.

One thing I really don’t like is the way tolls have increased substantially in the last five years, since the introduction of electronic tags. When I first arrived in Brisbane in 2007 it was $1.90 (then $2.10 and $2.40) to cross the Gateway bridge. It’s now (from memory) $4.90, plus a fee if you don’t have an account, or a fee for topping up your account without direct debit (ie giving them direct access to your bank account).

Personally I’d rather see the gully road funded by debt and a toll than a PPP, however a PPP is better than no gully route at all. I’d also like to see a start made on the Kapiti Expressway, but I’ll believe that when I see it too.

You are again confusing private lossesd and national economic benefits. That the investors lost heaps of money does not mean that the roads were not needed. They investors just over valued the asset. Just like Facebook IPO. Same thing.

NSW Toll roads have made a huge positve economic benefit to Australia – see the attached independent EY report. Given Sydney’s population growth the counter factual is insane. Have you spent time in Sydney and driven there? Done business there? If you have, and you knew what the roads were like in 1990 you woukld not be saying “these roads haven’t been needed” That is just complete bullshit. The place would be like Saigon.

So please stop confusing private losses with public benefits. And go spend some time driving in Sydney and then come back and tell us the roads “aren’t needed”.

http://www.infrastructureaustralia.gov.au/publications/files/Eco_contribn_of_sydney's_Toll-Roads_EY2008.pdf

The fact that these PPP projects have failed also means that Australians have incurred a massive opportunity cost. The billions that have been spent on projects that it turns out haven’t been needed could have been spent on other investments that would have produced a better return. With some of these PPPs, digging a hole and filling it back in again would have yielded a better return.

As to your “we need some better roads”, well we need lots of things, and we have to prioritise them according to evidence based criteria and available budget.

I’m not a PPP advocate. Some make money some fail. It is a secondary issue. But we need some better roads. Otherwise my Australian visitors will keep saying “mate WTF is it with the roads here?” FFS, get out of New Zealand and go anywhere in the OECD (or just about anywhere at all). Go and do some driving, and then come back here and tell me with a straight face our roads are OK. Becasue they ae so not.

I can’t for the life of me see how the involvement of the likes of Macquarie Bank and hoardes of contract lawyers will add value to the project which, again I say, already has a pitifully low BCR. The Government will have to pay a guaranteed profit premium to the successful bidder. After these Australian disasters there will be even more of a premium.

But don’t take it from me, take it from former Fletcher Construction CEO Mark Binns back in 2008 :

If the aim was to bring projects to fruition quickly, making them PPPs would be a retrograde step, as so much time is involved in setting up the legal framework between participants in the project, he said. He also questioned whether private sector funding would be viable in the current credit environment without Government guarantees, which nullified the transfer of risk to the private sector…

Sometimes benefits of transferring the risk of PPP projects to the private sector were illusory, it said, citing the British Government’s bailout of Metronet, the private operator of the London Underground.

Binns suggested that if the transfer of risk was not complete, the true benefits of PPPs came down to an analysis of the funding costs, and there was a strong argument that the Government would be better off just raising debt, potentially through infrastructure bonds, to do the project using other traditional methods of contracting.

The builder also cited major “upfront paperwork and contractual costs” on PPPs, saying the time and cost involved in this phase was significant and tended to counter any savings in the design and delivery phase.

Nothing much has changed since then, apart from more failures across the ditch.

Details on the most recent PPP failure (just days ago) is here.

The fact is Gumints and local bodies have criminally missappropraited BILLIONS of dollars for other spending.

If they were private organisations the Directors and Managers would be doing time.

This lot are do better. They are still fraudulently misappropriating funds but at least not to the extent of the previous administrations.

Exmaple and proof # 3497 that all pollies and liars and crooks.