Instability Threat to Holiday Highway

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The Herald today reports that

Unstable ground around Dome Valley north of Auckland threatens to rip the wheels off the Government’s “road of national significance” from Puhoi to Wellsford.

Transport Agency northern highways manager Tommy Parker has admitted concerns about the feasibility of completing the road as a four-lane expressway past Warkworth.

“There are alternatives outside the Dome, but you are still going the other side of the valley and we have a lot of ground movement,” he told the Herald.

“Every time you put a spade in the ground up there you’ve got to put in retaining structures, or tunnels or something.

“The level of ground movement is more than we had anticipated, which makes huge problems and huge costs.”

It looks like NZTA might finally be considering other options:

Asked how it could be completed within a $670 million estimate, when the shorter Puhoi-Warkworth leg would cost $980 million, Mr Parker said it depended to what standard it was built. That included whether it was built with four lanes or two.

Of a suggestion that the agency should settle for providing safety upgrades to the existing State Highway 1 through Dome Valley, he said: “That is an option that is being considered along with the others.”

Transport Minister Steven Joyce has this to say:

“I don’t have a strong view as to whether the road between Warkworth and Wellsford is built on the current route or a new alignment,” he said.

“But it is crucial for it to be built to roads of national significance standard – a four-lane divided expressway – and that remains the Government’s expectation.”

So it looks as if even Steven Joyce isn’t pushing for a new toll road all the way to Wellsford any more. Our “Operation Lifesaver” gets a mention as well:

The safety upgrade idea was raised last year by the Campaign for Better Transport, which suggested choosing between two sets of improvements to the Puhoi to Wellsford route costing $160 million and $320 million. Both included a $50 million bypass of Warkworth and safety upgrades including extensive median barriers for Dome Valley and other black spots on a route where 44 people have died since 2000.

The more expensive would include a realignment of the difficult Schedewys Hill north of Puhoi.

Campaign convener Cameron Pitches noted a cash-flow problem which the Transport Agency says has forced it to delay $15 million of improvements to Warkworth’s Hill St intersection with SHI, a traffic bottleneck, by at least 12 months.

“For us the obvious solution is instead of spending $1 billion on a new toll road to Warkworth, let’s just look at working with what we’ve got and making that safer,” he said.

Well yes, exactly!  In response Mr Joyce still clings to the fallacy of economic benefits for Northland:

It remained crucial for the economic development of Northland and the safety of one of the country’s busiest rural highways “that we have a clear strategic plan to upgrade it to a standard that befits the level of cars and freight that it carries”.

With the National Land Transport Fund about to go into deficit by $250m, you would think that the Minister would be looking at projects that offer the best value. A billion dollar toll road between Puhoi and Warkworth is not one of them.

Highway Upgrade Cheaper, Safer

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Bob Scott has done a brilliant article summarising the folly of the Holiday Highway:

A headline like “80 New Zealanders Sentenced to Death” would bring an outraged reaction if resulting from the actions of a Third World despot.

But the reality is, that’s not the case. Rather it’s what could happen if Transport Minister Steven Joyce gets his way with the ridiculous and hugely expensive scheme to classify the Puhoi to Wellsford motorway extension as a “Road of National Significance”. And to press on with its construction with a completion date of 2032…

He goes on to push for alternatives:

Among the schemes was one that was put forward by the Campaign for Better Transport. Known as “Operation Lifesaver”, it suggested urgent safety upgrades to the existing State Highway 1 at the known accident blackspots and bypasses for Warkworth and Wellsford to ease the congestion at these points.

The benefits of this scheme are many, including an estimated cost of between $160 million and $320 million. A fraction of what the Government is proposing to spend.

The chief benefit, however, is the work to improve the road could be started right now.

If the safety improvements were completed within the next three years, then saving lives would begin in 2014.

That alone could save at least 80 lives between now and 2032 that would otherwise be needlessly lost.

How can anyone possibly justify jeopardising so many lives on a piece of political ideology?

Incidentally, the only feedback we received on our proposal from central Government was that our figures were out of date.

Northern Toll Road an Economic Disaster

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The really interesting thing about the editorial in the NZ Herald about toll dodgers is that it tells us that ” the tolls paid off more than $11.3m of a 35-year $159m loan it took to complete the $356m project ” in the last two years. The article claims that this is “more or less on target”.

I cranked up Excel to find out what the return on capital is. It works out that if you pay off a 35 year loan at $5.65m per year, then the effective interest rate is just 1.5%! That’s less than the cost of inflation. What a disaster!

Furthermore, it is difficult to see how the toll road to Warkworth can be justified. Assuming that half the cost ($450m) is financed through the toll, then the annual income needs to be $16.2m at a 1.5% interest rate. That’s about three times the revenue than from the Northern Gateway, suggesting a toll of $6 and $12 each way for cars and trucks respectively. (OK there will be economies of scale here as the costs of tolling will be reduced, but roughly…)

Hopefully we get this sort of interest rate for public transport projects as well!

Holiday Highway Submissions Close Tomorrow

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Submissions on the Holiday Highway close tomorrow on January 28th.  Fill in your submission here, or send an email to

To get you started, you might like to consider the following bullet points, which form the basis of the CBT’s submission:

  • The proposed Puhoi to Wellsford Toll Road has a very poor BCR, somewhere between 0.4 and 1.1 according to various studies since 2009. These BCR figures have been arrived at without knowing what price will be set for the toll in relation to trucks and cars.
  • The BCR figures ignore the risk of rising petrol and diesel costs. If prices continue to rise this must have an impact on the viability of roading projects in general and in particular this project, since the BCR is already borderline.
  • With an estimated completion date between 2019 and 2022, the existing road will continue to be used without safety improvements, risking further loss of life. Significant safety improvements are possible in a much shorter timeframe if the project does not proceed.
  • Estimated travel time savings are unrealistic, as pointed out by Bevan Woodward in a recent article: “A slow trip from the Puhoi to Warkworth currently takes about 13 minutes. That’s an average speed of 78 km/h to travel the existing 17 km. The business case claims that the Puhoi to Warkworth motorway will provide a travel time saving eight minutes. However, to achieve this one would have to travel the 18 km of proposed new motorway at an average speed of 120 km/h. If the new 18km motorway was driven at the legal speed limit of 100km/h, this would take 11 minutes. However, as the motorway access takes one to the north of Warkworth, another one to three minutes must be added to drive through the Hill Street intersection into Warkworth, meaning that there are no time savings. The NZTA’s business case claims significant time savings which are unrealistic and without these time savings, the project delivers a very negative return on investment.”
  • Even if the estimated time savings do eventuate, they would have very little impact on the economic wellbeing of Northland.
  • Alternative options have not been adequately considered or costed, in particular the alternative “Operation Lifesaver” proposal put forward by the Campaign for Better Transport.

Puhoi To Wellsford – What is the best option?

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Local publication Mahurangi Matters has run a story on finding the best solution for upgrading SH1. The CBT contributed a piece on our “Operation Livesaver” proposal:

The Campaign for Better Transport (CBT) last year proposed an alternative to the costly Puhoi to Wellsford toll road currently being proposed by the Government. The Puhoi to Warkworth section alone is estimated to cost $1.65bn and the NZTA has yet to announce how much the toll will be for trucks and cars. Based on work already done by the NZTA, alternative upgrade options were costed at up to $320m. The key features include a Warkworth bypass, median barriers throughout Dome Valley and Schedewys Hill, and three-laning sections of road between Puhoi and Warkworth.

The alternative options were put forward largely to accelerate much needed safety improvements as upgrading the capacity of the route is not justified for the handful of days a year when holiday traffic creates congestion. Between 2000 and 2009, 41 people died on SH1 between Puhoi and Wellsford, most in head on collisions. Given that sections of the toll road won’t be completed until 2019 and 2022, the risk is the current poor safety record will continue.

The CBT is also concerned that for those who won’t be able to afford the toll road, the existing parallel highway will remain as dangerous as it currently is, with no planned safety upgrades.

The alternative proposal was endorsed by the former ARC in August of last year and put forward to the Minister of Transport and the NZ Transport Agency for consideration. Responding to the proposal, Transport Minister Steven Joyce said that “while upgrading the road would appear to be the cheaper option, this is not actually the case. The initial investigations … show that upgrading the existing road to a four-lane motorway standard would actually be the same or more expensive than constructing a new, purpose-built road.”

The Minister is missing the point. We don’t think there is a need to upgrade the road from Puhoi to Wellsford to a motorway standard, for the sake of a few predictable periods of congestion, especially when the alternative SH16 route is under utilised.

The Minister also claimed that the proposed toll road will have “additional benefits as it caters for the movement of both passengers and freight. Forecast freight volumes between Auckland and Northland will double over the next 10 years.” CBT believes the existing railway line to Northland, currently under threat of closure, should be left open for the purpose of carrying the expected freight growth, especially logs and other bulk goods.

Northland Chamber of Commerce chief executive Tony Collins claims that the Holiday Highway is “strategically important”, while “the sooner the better” says National Road Carriers. You would think that these two organisations would be able to argue coherently about costs and benefits, but they don’t.

NZTA will hold a final information day at the Warkworth Town Hall on Saturday, January 22, between 10am and 2pm, and it will display the same information as the earlier events to provide a final opportunity for people to review the indicative route before consultation closes on January 28.

Joyce: Central Govt to Review CBD Business Case

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A Beehive media release has announced:

Transport Minister Steven Joyce has asked officials from the Ministry of Transport, the Treasury and the NZ Transport Agency to work with Auckland Transport, Auckland Council and other agencies to review the business case for a CBD rail link ahead of any further discussions between central government and Auckland Council next year.

The business case, released last month, provides a capital cost of $2.3 billion for the rail link in 2010 dollars.

Mr Joyce says the business case was a first step but it leaves a number of questions unanswered.

“It would be irresponsible for the government to even consider being involved with a project of this size without being confident about having the full facts.”

Mr Joyce says he wants a number of questions answered as part of the review, including:

  • Does the business case include the full capital and operating costs needed to realise the project?
  • How many additional passengers will the rail tunnel attract over the $1.6 billion electrified network we are currently building?
  • What impact will the rail tunnel have on car travel and congestion?
  • When will the tunnel be needed?
  • How does the tunnel project relate to the growth and productivity of the CBD and Auckland more widely?

Mr Joyce has today spoken with Auckland Mayor Len Brown who has agreed that a formal assessment of the business case by central government agencies is a necessary step.

“The findings of this review will help us determine if, how and when to progress with the CBD rail link project and will give both central and local government the certainty needed,” says Mr Joyce.

I had thought most of these questions had been answered. I wonder if Auckland Council will have the guts to ask for a review of the business case for the Holiday Highway:

  • How much is the toll, and what impact will this have on traffic volumes?
  • What safety improvements will be made to the existing State Highway 1
  • How does the CBT’s Operation Lifesaver alternative compare?
  • etc

Factual Errors

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Steven Joyce responded to my article in the Sunday Star Times last week, as well as Rod Oram’s:

Rod Oram’s second opinion piece on Auckland transport issues contains a further significant factual error, which results in him again overstating his case.

It is simply incorrect to say that the proposed CBD rail loop and the Puhoi to Wellsford Road of National Significance have different benefit cost ratios (BCRs). If you use the same calculation – that is the standard transport BC including wider economic benefits – then the BCR for both projects as the same 1.1.

The associated opinion piece by Cameron Pitches also contains factual errors.  It is incorrect to say that the government has not committed any new money to rail capital projects in Auckland. In fact, we have provided $581 million in new funding and loans to support Auckland metro rail, as well as reinvesting $50m to complete Project Dart and a new $500m appropriation for the Auckland Electrification Project.

The previous government planned to fund these projects through an additional 9.5 cent regional fuel tax.

Of course, Minister Joyce is making a few factual errors of his own here.

Starting with the regional fuel tax, this was never going to be 9.5c per litre.  The ARC press release here summarised how the fuel tax was to be applied:

As a result of consultation, it is proposed that the fuel tax commences on 1 July 2009, and is phased in over three years at 1 cent per litre on petrol and diesel from 1 July 2009, rising to 3 cents per litre on 1 July 2010, and 5 cents per litre from 1 July 2011.

So initially the tax was going to be 1 cent per litre, rising to 3 and then 5c. The additional 4.5c was to be at central Government’s discretion.

In the end, government repealed the regional fuel tax and replaced it with a nationwide increase in excise tax last October of 3c per litre.

As to the Minister’s contention that the BCRs are equal for the Holiday Highway and the CBD rail taunnel, Josh Arbury has an in-depth analysis here, which concludes:

In short, while the CBD tunnel is definitely the more expensive project, its benefits – no matter which way you measure them, are enormously greater than the benefits of the Puhoi-Wellsford road. Under none of the scenarios for including wider economic benefits does the holiday highway make economic sense, just as under all the scenarios we see the CBD Rail Tunnel making economic sense.

There are other matters that make me think Puhoi-Wellsford’s cost benefit ratio is enormously inflated (like the unrealistic time savings and the fact that the effects of tolling haven’t been considered), but even with the most generous interpretation of that project’s economic benefits, it simply can’t compare to the CBD Rail Tunnel on all measures.

Martin Gummer: Auckland at Crossroads

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Martin Gummer was chief executive of Transfund NZ from 1997 to 2002, and chief executive of ARTNL (the Auckland Regional Transport Network Ltd) from 2002 – 2004.

Transport officials, past or present, almost never speak out on transport issues, so it is particularly courageous of Martin to do so in an opinion piece in today’s Herald.

In particular the following quotes should be making people stand up and take note:

The holiday highway, however, has a lower cost alternative – improvements to the existing road, that could defer replacement for a further 20-30 years. Corners could be smoothed, alignments improved, maybe a short bypass built around Warkworth, and three- or four-lane sections with a central wire barrier built in the Dome Valley…

So what huge benefits justify spending four to six times greater than that for a major overhaul of the existing road? A time-saving of 10-15 minutes over the status quo? Hardly.

The minister and the Government are getting into tricky territory here. This has more than a whiff of the politicisation of transport funding that characterises the Australian system.

The CBD rail loop should encourage urban renewal, commercial activity and property development along its alignment, and more intensified urban development around or near other rail stations – helping to harness Auckland’s growth within its existing urban area.

It should also make rail travel a more viable, accessible option for more Aucklanders.

The holiday highway will further improve property values, increase property development in Warkworth, Wellsford and surrounding communities, and encourage more commuting from there to Auckland. Where do the Government’s priorities lie?

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