The Campaign For Better Transport

Let’s just say Auckland had $2.2 billion to spend on transportation. This money is from a crown grant rather than from petrol taxes, so there’s no real bias from the school of thought that petrol tax money should be spent on roads. Therefore, all different types of transport projects could be considered equal – ie. rail versus roads.

Now let’s look at two ways in which that money could be spent:

The first option is on a cheap and nasty Waterview Connection. This open cut, fully surface level option is projected to cost almost exactly $2.2 billion. This is a total of $1.456 billion for construction costs, $290 million for SH16 upgrades and $450 million for financing costs. This option will involve the demolition of around 500 houses, the loss of a huge amount of open space in a part of Auckland that is considered to already be short of open space. Because of its high social and environmental costs, its cost-benefit ratio may be below 1. Furthermore, 73% of the benefits it will supposedly bring are  internationally criticised ‘time-savings benefits’, which don’t actually seem to exist in the longer-term. So, to conclude, for this option we get a 4.5 km motorway driven through a suburb, a huge loss of open space and all justified on fairly dodgy time savings benefits that may not even exist.

The second option, which also costs $2.2 billion, would involve a two track railway line being built from Avondale to Manukau City via Onehunga and the airport. This option would firstly involve completing the Avondale-Southdown railway line – that has been designated since the 1940s. Because of its long-running designation no houses would have to be demolished to make way for the line. Completing the Avondale-Southdown railway line would open up rail access from West Auckland to the airport and south, it would offer freight trains an alternative route through Auckland to the congested Newmarket junction, thereby over time allowing higher frequencies of passenger trains to be operated. This part of the project would cost $729 million and include four train stations – for interchanges with high frequency bus services to the city along Manukau, Dominion and Sandringham Roads.

The rail option would also involve linking the airport to the city by rail – with trains able to travel from Britomart to Onehunga, then over the Mangere Bridge to the airport. Furthermore, it would also link with the existing main trunk railway line near Manukau City. This finally creates a high quality public transport link from the city to the airport, creates an alternative  rail link between Manukau and Britomart, increasing the capacity of the Otahuhu-Wiri section of the Southern Line. It makes running inter-city trains to Britomart a possibility, and they could even go via the airport for extra connectivity.

They both cost $2.2 billion.  They both compete for the same money, a crown grant. I wonder which has the most long-term benefit for Auckland? I wonder which will be built?

With most business opportunities, it is possible to calculate the expected monetary benefits and costs, while considering other factors such as the opportunity cost of capital and project risk.A similar approach for transport infrastructure projects is also attractive. Just work out the benefits in today’s money, divide this by the cost and – presto! – you know exactly how much the economy will benefit from for every dollar spent.

Take the proposed Waterview motorway extension, for example. Treasury and Ministry of Transport officials have worked out that for every dollar spent on the $2.8bn motorway connection between Mt Roskill and Waterview, the economy will receive $1.15 worth of benefits.

In the business case document now being considered by Cabinet, officials point out that “full tunnel” option means that the benefits are only a little in excess of their costs. Some above ground options might save up to $200m from the construction cost, but these have higher social and environmental costs, and also involve the loss of park land and a significant number of houses.

Considering the billions of dollars at stake, one would hope that the economic benefits and costs of the various options are as accurate and as realistic as possible. So are they? Well, no, actually.

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Parliament yesterday had some interesting discussion about progress on deciding which option of the Waterview Connection is likely to be built, if any at all. It seems like Steven Joyce has got it into his head that the poor cost-benefit ratio of the Waterview Connection (only 1.15 and I have my suspicions that’s vastly over-estimated) can be fixed simply by finding a much cheaper option – never mind the environmental or social effects it will have.

Hon STEVEN JOYCE: I share the member’s concern about the cost-benefit ratio of the twin two-lane tunnels proposed by the previous Government. The cost estimates for that project were extraordinarily high, and that is why I have asked officials to consider ways to save costs. We are still working through the final decision on that.

The reason Mr Joyce is still working on this, is simply because there is no significantly cheaper and better value option. For a start, the cost difference between a full tunnel option and other potential options is not nearly as big as people make it out to be. The Ministry of Transport’s review of the Waterview Connection clearly pointed that out (see page 18 of that document).

To paraphrase (all costs in 2015 dollars)

1) Cost of full tunnel option: $2.005 billion for 4 lanes, $2.335 billion for 6 lanes
2) Cost of cut and partial cover options: $1.790 billion for 4 lanes, $1.813 for 6 lanes
3) Cut and extended cover: $1.988 billion for 4 lanes, $2.205 billion for 6 lanes
4) Open cut (no tunnel at all): $1.456 billion for 4 lanes, $1.585 billion for 6 lanes

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The Herald reports:

As the Transport Agency prepares to open a new motorway through Mt Roskill next week, uncertainty remains over how it will eventually reach the Northwestern Motorway at Waterview.

Although a review on using tunnels or a motorway was to have been ready last month, officials are collecting new information at the request of Transport Minister Steven Joyce.

“Officials are doing some more work with it, and we’ll have more to say shortly,” a spokeswoman for the minister told the Herald yesterday.

Serious doubt over whether tunnels would be built – as favoured by the previous Labour-led Government – has engulfed the Waterview link since January, when Mr Joyce reported a cost blowout to between $2.77 billion and $3.16 billion and ordered a review.

He set officials a target of last month for completing the review.

Although they are understood to have met that deadline for preparing a report, the minister has sought more information to add confidence to a decision on the link, which is set to become an issue among candidates for the Mt Albert byelection.

It is worth repeating that the difference between the full tunnel option and the next best partly above ground option is small in the context of the size of the project – $200m.  This has to be the tunnel or nothing.

The Herald reports:

Auckland business leaders are pushing the Government to save more than $1 billion by controversially building the Waterview motorway link across country, rather than through tunnels.

A report sent to Transport Minister Steven Joyce by the Auckland Business Forum is set to unleash furious debate at a time when political parties are preparing to contest a byelection in the local Mt Albert electorate soon to be vacated by former Prime Minister Helen Clark.

The Auckland Business Forum claims a return of $3 for every $1 invested if a non-tunnel option was chosen.  That figure sounds too good to be true.  Meanwhile Duncan MacDonald of the Avondale Community Board says

“If the Government is of a mind to do it cheaper, then it won’t get done,” he told the Herald. “I’ll have every person living in Waterview and Mt Albert out there stopping it.”

I think National have their work cut out if they believe they can win Mt Albert at the same time as bowling 400 houses and alienating every community group in the process.