Auckland transport funding

July 16th, 2013 at 10:00 am by David Farrar

The Herald reports:

Aucklanders have two options to address the city’s transport funding gap: road tolls, or higher rates and fuel taxes.

That’s the conclusion of a high-level report, released this afternoon, which gives Auckland Council and the Government a clear timetable for when new revenue sources will be needed to raise an extra $400 million for each of 30 years – $12 billion in total.

The money will be for projects such as the City Rail Link and new roads, including another Waitemata Harbour crossing.

But Transport Minister Gerry Brownlee immediately ruled out two options.

“We say no to regional fuel tax and no to tolls on existing roads,” he told 3 News.

The report, by the Consensus Building Group (CBG), a 17-member think-tank appointed by Mayor Len Brown, concluded that unless Aucklanders were prepared to accept significantly higher rates increases and heavier congestion, introducing some form of congestion charge by 2021 would be required.

I think a congestion charge is the best form of funding, as it is basically user pays. The challenge is whether it can be done in an efficient way.

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Auckland transport projects

June 28th, 2013 at 1:18 pm by David Farrar

The PM has announced three major long-term transport projects for Auckland, at a cost of around $10 billion. They are:

  • The City rail link, with construction to start in 2020, or earlier if central city employment grows by 25% or in the year rail patronage is forecast to hit 20 million trips (if before 2020)
  • A second harbour crossing, with a tunnel  planned for around 2025, with route protection to start this year
  • Speeding up the  combined Auckland Manukau Eastern Transport Initiative (AMETI) and East-West Link project

They are also looking to bring forward three smaller projects -  to complete a motorway-to-motorway link between the Upper Harbour Highway and the Northern Motorway at Constellation Drive, widen the Southern Motorway between Manukau and Papakura, and upgrade State Highway 20A link to the airport to motorway standard.

It’s good to have certainty over the harbour crossing. These things need huge lead times, and you don’t want to be debating whether to have one, where it will be, and is it a bridge or tunnel just a few years before you badly need it.

It will be interesting to see the funding details over time. Will they all be funded from the National Land Transport Fund or will taxpayers make a contributions (NLTF is funded by petrol tax and road charges – not general taxation) or will PPPs play a role?

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Tolls are best

April 27th, 2013 at 2:00 pm by David Farrar

The Herald reports:

Aucklanders face paying to drive on city roads unless they are prepared to swallow hefty rates or fuel tax rises.

On Monday, an advisory group assembled by Mayor Len Brown is set to announce its recommended solutions to plug a $12 billion funding gap and fix the city’s ever-growing traffic jams.

The mayor says he will back whatever the “consensus-building” group recommends, even if that means tolling motorways or charging motorists to use arterial roads by 2021.

The principle is that users should pay for the costs of their transport. Hence tolls and/or congestion charges are my preferred approach.

Petrol tax is a form of user pays. It is imperfect, but much simpler to impose and collect. As technology gets better I’d like to see more congestion charges and toll roads and a lower level of petrol tax.

Rates are my least preferred method of funding transport projects. Motorists and public transport users should fund transport projects – not homeowners.

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Petrol Tax

December 20th, 2012 at 3:19 pm by David Farrar

Petrol tax should not be used to fund the Government’s general spending. Most people would agree on that. For several decades petrol tax was a great revenue earner for the Government. It was impossible to avoid, had low compliance costs and only four companies had to pay it.

National in the late 90s changed this. Previously almost half the petrol tax went into the consolidated fund. It then made a decision to dedicate it to the land transport fund. What this means is that petrol tax is an imperfect form of user pays.

Again I think most would agree those who use the roads should pay for them. Why should someone who works from home pay the same towards road maintenance as someone who spends four hours a day driving on them?

In a perfect world we would have GPS chips that monitor every road we drive on, how congested it is, is it peak time etc and we’d get charged directly for our road use. However that technology is a wee way off, and there are huge privacy issues around that. So we have petrol tax as an imperfect but pretty good rough system of user pays.

This then leads to two issues around petrol tax. The first is whether it is set at the right level to fund the various land transport projects, or are they making a profit from it?

I asked for a copy cashflows for the National Land Transport Fund for the the last three years.  The net revenue from petrol tax, road user charges and vehicle registration fees was $2.51b, $2.63b and $2.69b in the last three years. The expenditure or distributions were $2.93b, $3.03b and $2.67b. This means that spending was greater than income by $420m, $400m and $20m surplus last year. So over the last three years $800m deficit.

That makes it clear to me that the Government is not using petrol tax to fund non-transport projects. If transport expenditure is needed, of course motorists should pay for it. I actually have a view that the petrol tax level should not be set by Government at a set level, but automatically increase or decrease to fund all transport projects that have a positive business case.

Now the second issue is what transport projects are funded from the land transport fund. The Greenies want nothing spent on roads, and it all spent on rail. There;’s never been a road they have supported. Some think there should be no subsidy for public transport – that passenger fares should pay for public transport, not road users.

I think the current mix of both road and public transport is pretty good. The NLTP plan has $12.3b invested in land transport of which $1.7b is for public transport. Some people would have you think there is little funding of public transport.

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Time savings from Roads of National Significance

October 1st, 2012 at 7:00 am by David Farrar

Labour and the Greens regularly slate the seven Roads of National Significance that National has identified and funded as priorities.

Now my view is that generally all transport decisions should be based on a there being a positive benefit to cost ratio, and in fact petrol tax levels should adjust to fund all transport projects that have a significant benefit to cost ratio.

The Greens recently asked some PQs to the Minister of Transport of some of the RONS. Not surprisingly they have not highlighted the answers. They are:

  • Waikato Expressway will save 35 minutes off peak time travel between the Bombay Hills and some four kilometres south of Cambridge township – that is around a 33% improvement in time.
  • The Wellington Northern Corridor will save 45 minutes northwards in the afternoon peak and 35 minutes southwards in the morning peak, between North Levin and Wellington Airport. That is a 45% reduction in travel time northwards!
  • The Puhoi to Wellsford RONS will save 26 minutes southbound and 15 minutes northbound during peak times, between Johnson Hill Tunnels and south of Te Hana. That is around a 70% reduction in travel time southbound and a 45% reduction northbound.

Worth remembering that when people rail against them.

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Guest Post: Fiscal prudence and transport priorities

April 23rd, 2012 at 1:53 pm by David Farrar

This is a guest post by Green MP Julie-Anne Genter, initiated after some questions in Parliament last session on this issue:

Let me just start with what this post is NOT saying:

  1. I am not saying that people should not, or will not, continue to use cars for many trips.
  2. I am not saying that all existing roads should be turned into dirt tracks for carts and horses.
  3. I am not saying we should ban anything, or eliminate all car parking.
  4. I am not saying that you should give up your car, if it doesn’t suit you.

 When we get past the straw man arguments, there is something you and I (and all New Zealanders) can be very concerned about: The Government is planning to spend $14 billion over this next decade — which is more than this year’s deficit and 75% of all new transport infrastructure spending — on a few new state highways with very poor business cases.

Most of that is on 6 projects it calls the ‘Roads of National Significance’. (The 7th, Victoria Park Tunnel, the project with the highest benefit cost ratio, has already been completed.)

It is truly extraordinary that the Government considers the RoNS to be a key plank in their economic strategy, because there is actually no evidence to suggest the additional motorways will have a positive impact on the economy.

A compilation of the benefit-cost ratios carried out by the Parliamentary Library show that, in total, they are projected to return just $1.40 for every $1 invested (if you excluded Vic Park, it would be less). Several of the individual projects will cost more than their benefits, most notably Puhoi to Wellsford and Transmission Gully, which cost nearly a billion dollars more than the benefits they would create.

Moreover, the Government’s numbers are too optimistic. The traditional traffic engineering approach tends to overstate the benefits and understate the costs (PDF) of motorway projects. One of the basic assumptions in the modelling is that traffic volumes will always rise — irrespective of fuel prices and the economy. The RoNS business cases are no exception: Puhoi to Wellsford assumed 4% annual traffic growth from 2006-2026, though NZTA data now shows that didn’t eventuate from 2006-2011. Traffic and freight volumes on state highways aren’t growing because of the impacts of high oil prices and low economic growth—in fact, they’re back to 2004 levels.

We all know petrol prices are at record levels — up 50% in the past five years — and are likely to go much higher this decade. This is a very strong case for deferring the RoNS in favour of more cost-effective projects that also reduce the oil-dependence of the transport sector.

Road users, ratepayers, and the economy will benefit from projects that will move the most people and goods for the lowest cost in the coming decades. And we need to be realistic about the increasing cost of fuel to cars and trucks.

There are better alternatives: Making it easier and safer for kids to cycle and walk to school is one of the cheapest ways to reduce peak hour congestion. By adding capacity to train and bus routes that are already experiencing huge (10-15%) annual patronage growth in Auckland, we can ease congestion on the roads, reduce household petrol bills, and improve the cost effectiveness of public transport. Freight priority (think truck lanes) can be cheaply implemented on key routes at extremely low cost.

Even if you drive everywhere, you benefit when we make it easier for others to leave the car at home, because it’s a cheaper way to reduce congestion (plus it’ll be easier for you to find parking…).

Resources are limited, so we must make choices. Expanding the existing state highway programme is expensive for little gain – but it also means that every other transport category will be squeezed for the next decade: including road policing, local road maintenance, walking, cycling and public transport. So it will be harder for people to get where they need to go. That’s going to mean more congestion, or more lost money in high petrol bills.

If we choose to invest in modern, smart transport solutions, we can spend less on petrol, reduce our international debt, and have a transport system that is better for our economy and better for our people. But, first, we need the Government to honestly re-evaluate its transport priorities.

I think scrutiny of an annual $1.4b spend is a good thing, and JAG makes some reasonable points around the fact some of the RONS do not have a positive benefit to cost ratio. There can be reasons to look at factors beyond the benefit to cost ratio, but Government should generally be careful not to cherry pick “winners”.

I’ve actually advocated that rather than vary the level of benefit to cost ratio which determines a transport project gets funded, we should instead set a constant ratio (maybe 1.5:1) and adjust the level of petrol tax automatically to fund projects which qualify.

On the issue of future traffic volumes, the link provided by JAG is worth reading, showing the recent change in both NZ and global traffic volumes. However I would be cautious about jumping to conclusions over future volumes as I think the three factors are petrol prices, economic growth and population growth. Petrol prices may continue to increase but population growth will remain, and eventually economic growth will be higher (but perhaps not as high as when fuelled by debt).

Thanks to Julie Anne for the post. With $14 billion being spent over a decade, it’s an important debate.

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A balanced approach

November 16th, 2011 at 10:00 am by David Farrar

Stuff reports:

On a bus in Wellington yesterday, the Green Party announced it would scrap Transmission Gully, the Kapiti Expressway and the Basin Reserve flyover roading programmes and reprioritise the $2.4billion spending.

I don’t know why the Greens just don’t come out and ban cars, rather than mess around with half measures. Their strategy is for roads to become so dangerous and congested through lack of spending, that people will abandon their cars, which will of course save the planet.

Road Transport Forum spokesman Ken Shirley disputed the Greens’ figures and said that over the next three years National had proposed spending $10b on roads and $7b on rail, despite roads taking 75 per cent of freight while 15 per cent of freight was moved on rail. The Greens were politicising the national highway process because of their love of other transport modes, he said.

This is what I call a balanced approach. You needs both roads and rail.

Porirua Mayor Nick Leggett called the Greens’ policy “madness” and said Transmission Gully and the Kapiti Expressway were essential to help develop the economic capabilities of the region.

A sensible chap that Leggett.

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The truth behind the slogan

November 14th, 2011 at 9:00 am by David Farrar

Labour and the Greens refer to the the proposed Puhoi to Wellsford SH1 upgrade as the Holiday Highway. They would have people think it is a little used road, that only gets a bit crowded on Friday nights. In fact it is far more than that.

The road between Puhoi and Wellsford is part of SH1. As a two lane road, motorists will know that traffic flows at the speed of the slowest vehicle on it. We must be one of the only countries in the world that doesn’t have at least two lanes each way on our major highway.

That road actually has more people use it every day, than use the entire train network in Auckland. Around 28,000 people a day use that highway, and 27,000 use Auckland trains (UPDATE: In recent months this has increased to 33,000). Is Labour really claiming 28,000 people a day are off on holiday? Also, let us look at where the road is.

Now I am not sure about you, but I don’t think many people go to Wellsford for their holidays. Those driving north to holiday have generally left SH1 well before Wellsford. So why is the Govt looking to make it two lanes each way, instead of single lane? Three reasons.

  1. Better connectivity between the main producing activities in Northland, particularly dairying, forestry and mining, and the major markets for these activities in areas lying to the south of the region and overseas accessed by the ports at Auckland and Tauranga.
  2. Reducing the costs of commodities transported to Northland from the south for consumption or for input to the manufacturing industries in the area, so making Northland a more attractive place to live and to develop employment activities.
  3. Making tourist destinations in Northland more accessible to the large market and population in the Auckland region.

This is all about economic growth for Northland. Northland is one of the poorest areas of New Zealand, despite having significant resources. One of the reasons for that is the woeful transport links.

The projected economic benefits from the road are:

  • Journey Time Reliability $8m
  • Time travel benefits $352m
  • Vehicle operating costs $35m
  • Accident cost savings $133m
  • Wider economic benefits $159m

That’s $688m in net present value. The business case said:

“Taking these two components tourism and forestry into account, an indicative estimate of the value of increased economic activity that might result from the improvement of SH1 between Puhoi and Wellsford would be of the order of $30-35 million per annum and possibly doubling by 2031.”

Scrapping the highway upgrade to fund the Auckland CBD rail loop will be robbing (poorer) Paul to benefit (richer) Peter. Auckland (including their metro rail funding) already gets 45.7% of the National Land Transport fund and metro rail funding.  If Aucklanders want a CBD rail loop, then they should fund it from Aucklanders through rates and user charges, not from the rest of the country that already subsidises their rail system.

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Labour announces policy for traffic delays

July 30th, 2011 at 9:58 am by David Farrar

Shane Jones says:

Labour’s Transport spokesman Shane Jones says a future Labour government is committed to 100 per cent funding of a two-lane link road on the Kapiti Coast instead of National’s planned four-lane expressway.

Shane Jones made the announcement at a meeting in Waikanae last night.

“Transport Minister Steven Joyce ditched the long-planned link road when he announced a four-lane raised expressway about 18 months ago, roughly along the same route,” Shane Jones said.

“But the link road is what people want. It’s far cheaper, which is important when cash is strapped, will have far less environmental impact on the district than the four-lane expressway, and will do the job that’s needed of reducing congestion.”

No, it won’t. Two lane roads are terrible for congestion, as all traffic slows down to the slowest vehicle.

After decades of dithering, Steven Joyce announced a plan for four lanes from the airport to Levin. This is exactly what the Wellington Region had been calling out for. We’ve alll had the multiple congestion delays on Sunday afternoons etc.

However a road is only as fast as its slowest point. Under Labour you would have four lanes everywhere but Kapiti, which means when it is busy the entire corridor will slow down to the slowest car on the road.

John Pagani notes on election results:

Before the transport agency decided on its particular route, it put out options that seemed to threaten most homes in the region. Colmar Brunton did a survey (pdf) and a route was selected that was the most popular in that survey.

49 per cent supported it.

Opponents of the motorway have argued the poll was flawed because it didn’t offer a ‘no expressway’  option.

Since about 15 per cent of respondents selected ‘no need for expressway’ or some variation such as ‘upgrade existing SH1′, I’m not sure how people arrive at this claim, but it is what they say.

Yesterday, Labour came out with a policy – the one supported by 7 per cent in the poll.

If opposition to the expressway was as strong as opponents say, then you would expect Labour would have picked up support in Otaki.

Interestingly iPredict stocks in Otaki haven’t moved at all.

Labour are just pandering to a vocal but minority pressure group. This isn’t unusual, but in this case they are prepared to screw over all the Wellingtonians who drive to Kapiti or beyond.

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