This week we saw the government do a massive U-Turn on its support for the City Rail Link and then a few days later agree to a bucket full of roading projects. While we can debate the merits of these projects, crucially the three main projects – The CRL, AMETI and the East-West Link and an Additional Waitemata Harbour Crossing – are the three at the top of the priority list in the Auckland Plan. This is significant as it suggests that the government agrees with one of the aspects of the plan that it had previous expressed the most doubt about. Whether that has been done purely for political reasons or not doesn’t really matter in the grand scheme of things.
The announcement certainly caught a few people out. Councillors like Cameron Brewer and Dick Quax had previously used the lack of government support as a reason to oppose the CRL and so are now having to find new ways of opposing the project with the next battleground appearing to be about the funding. The timing of this announcement is even more intriguing given that local body elections are only a few months away. While nothing can ever be guaranteed in politics it is a massive boost to Len Brown and one which would almost certainly see him re-elected. So spare a thought for candidate John Palino who has not only seen his chances of winning the Auckland mayoralty plummet but who also suffered from a case of spectacularly bad timing.
Earlier in the week we saw noises from both Cameron Brewer and from George Wood complaining about the issue of funding. John Palino perhaps sensing an opportunity to also attack Len Brown put out the following press release on Tuesday afternoon. I have bolded the most important parts.
I’ll put the local back into local government
“Mayor Brown’s decision not to give Aucklanders the final say on what equates to a permanent 30 per cent increase in rates contradicts the very principle of local government and will further harm Auckland’s critical relationship with Wellington,” says Mayoral candidate John Palino.
“Auckland has massive transport challenges and none greater than finding the investment the city needs. The Consensus Building Group’s investigation into funding Auckland’s transport is a good start to the discussion, but the Mayor proposes that it’s also the end.
“That’s not local democracy, especially when the Consensus Building Group never had central government support and was not allowed to question the key projects driving the need for new taxation.
“The Mayor established the group to consider options for covering a projected $10-15 billion transport funding deficit over the next 30 years. That deficit is made up of the Mayor’s key projects – the $2.8 billion city rail link; the $5 billion additional harbour crossing; and the $2-3 billion AMETI and East-West link project.
“These three projects do not deliver good transport outcomes for Auckland and this shows up in the analysis which shows the transport benefits of these projects to be greatly outweighed by the costs. The return on the AMETI and East-West Link project is still unclear, but the CRL returns 40 cents for each dollar invested and the harbour crossing returns 30 cents.
“In establishing the Consensus group, the Mayor has tried to deflect ongoing and unresolved evidence that his transport programme is flawed, doesn’t return the benefits which would otherwise offset their cost, won’t improve congestion and will require a further $400 million per annum in taxes each and every year forever.
“As Mayor, I won’t be selecting projects as part of my campaign, but I’ll be holding those agencies to account for developing solutions that meet Auckland’s needs – something the Mayor’s programme doesn’t do.
“If we can get a transport programme which delivers the quality of life Aucklanders demand, then I’ll look at funding options alongside and not independent of central government. We have to work together if we’re going to get positive outcomes.
“And most of all, I’ll give you the final say on whether you think such a significant proposal will help deliver the city you want to live in,” says Mr Palino.
Of course the very next morning Gerry Brownlee had started hinting to reporters that the government was about to support the City Rail Link and by the early afternoon John Key had confirmed it. Auckland was to get the CRL and like all politicians wanting to be noticed put out a press release (but only on his facebook page that I can find)
Media Statement from John Palino on Government’s Funding of CRL
John Palino Welcomes Government’s Decision to Fund CRL: But Let’s Make Sure We Get It Right First Time
I welcome the decision from Central Government in regards to supporting the City Rail Link with it due to start in 2020.
I also welcome the decision that Central Government will fund 50% of the project cost for this crucial piece of transport here in the heart of Auckland.
While some might complain at the long start date, it is important that both Auckland Council and Central Government have all their T’s crossed and all their I’s dotted on what will be one of Auckland’s largest civic projects.
If this is not done before the first sod is turned on the CRL, we risk budget and construction blow outs so commonly seen with these kind of projects around the world.
We need to get this right first time as it is the only time to get it right.
Of course if there is provision to bring the start forward then I will lobby Central Government, providing it is prudent to do so.
It is time to get Our Auckland Moving Forward – sensibly
So in the space of just over 24 hours he went from suggesting that the CRL would have bad transport outcomes (based on an out of date and dodgy review of the original business case) to welcoming funding for it. U Turns in politics happen from time to time but the speed of this one is more like someone just pulled up the handbrake in a bid to prevent running into a concrete wall. Of course two days later the government also agreed to the other two projects John said delivered bad transport outcomes. John definitely had the rug pulled out from under him by the government.
I’m keen to start keeping a track of statements made by either politicians or others who suggest that the CRL is not worth it so that we can hold them to account in the future. I remember that before Britomart a lot of people claimed that the project would be a massive failure yet the absolute opposite has happened and it would be good to highlight this now. I would like to be able to do this with the CRL.
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Agreed, but can we start with Len Browns lie that the CRL would be funded using PPP and infrastructure bonds (which was a key part of the CRL mandate)
From memory he said that they were options to be considered, not that they would definitely be used.
Why don’t we leave it to Len’s own words; as he says – he told us for 13 months the way to make it affordable was PPP or Infrastructure bonds.
http://tvnz.co.nz/q-and-a-news/q-interview-len-brown-3829404
LEN BROWN
Absolutely, and I want to tell you how, and I’ve been telling people for the last 13 months. Surprised you haven’t heard this, Guyon. So the last 13 months I’ve been telling the people of Auckland there are two other alternatives. One is infrastructure bonds, and we’ve already got three-quarters of a billion dollars-
GUYON That’s a flash way of borrowing, though, isn’t it.
LEN BROWN
No, it’s an opportunity-Yes, it is, but it’s also an opportunity for our community to invest in our infrastructure. Fourthly, a newer area for New Zealand, and that’s public-private partnerships. I want to look at those. I’ll be discussing those options with our community over the next year. So there are four separate options for doing what we need to do, Guyon, and we’re going to.
So he’s outlined 4 options for consideration by Aucklanders. Your point?
He says he’s outlined 4 options,
One gives him less than half the money he needs, the second gives him less than half what is needed and isn’t his to control.
he hasn’t outlined 4 options at all but a primary funding route with 2 alternatives under his actual control to top it up.
As per what was debated during the election runup
There is also a small anomaly in your two comments: you use the term funding in one instance then affordable in the other. What’s up with that?
The anomaly in your mind being? That he was proposing a form of funding to make it affordable for ratepayers and taxpayers?
Lovely! Now that Key has capitulated on the CRL, this blog is now infested with the C+R (Nat/ACT) astroturfers finding some other way to do Len Brown down. It’s as pathetic as it is transparent.
Sorry Doloras; but I’ve been commenting here for years; much to Matt L’s exasperation at times I think ;p
And this has been a topic of mine since Len started campaigning with it; so sorry – you might hitch your flag to a political party and believe their s**t don’t stink – you can’t hold everyone to your own (apparently) syncophantic tendencies
Can someone clarify for us skips cross the ditch, does the National Party endorse candidates for local government? Over here, the conservative parties don’t except in Brisbane, while Labor sometimes does and the Greens always do.
Are these guys required to hold the party line? Would National HQ send them talking points daily? Or are they more like Tea Partyists?
No the Nats don’t endorse local candidates which is one of the key reasons Maurice Williamson didn’t stand. He wanted to run under the National banner but the party wouldn’t let him. Labour are definitely involved locally with them putting up canditates in some areas.
Based on your description it sounds like NZ is pretty similar to Oz. Palino does not have anything to do with National* other than getting a few photos with the PM. Having said that, Brown is not a Labour candidate, though he is a member. The only official local government candidates from national political parties are the greens as far as I know.
*In his capacity as a candidate anyway. I don’t know if he is a member.
National runs in the Auckland Council elections in drag, under the banner of what used to be called ‘Citizens and Ratepayers’ although they recently changed their designation to ‘Communities and Residents’, presumably because they thought the popular contraction of their identity to ‘City Rats’ might be construed a little negatively. They’ve spent the last, ooh, 170 odd years stuffing Auckland; transforming it from what my gt gt grandfather (who visited the place five times in the 1880s and 90s) as a paradise into a bland, suburban – but immensely profitable – roadsfest. Their most impressive gesture in transport terms was ripping out the trams and rejecting or, at least providing the grounds for rejection by their National masters, on at least three occasions, proposals equivalent in purpose to the CRL. They’re still working on rejecting the CRL, but are being a tad more sly in the way they’re doing it.
Exactly so Chris. And underneath it all is a philosophy that actually rejects ‘Communities’ which makes their name change all the more galling. It seems that the best way to understand Brewer’s classical C+R position, which is to spend nothing on anything, is simply a case of institutionalised selfishness by the people he represents.
It goes something like this: The city is run on property tax, we own most of the property, the best and most valuable property, therefore we are funding the city. And we do not want to spend any money on anyone other than ourselves. Therefore we reject the value of anything especially large capital works that are funded by the City. Motorways they love as they are funded centrally.
Chris Fletcher is more of a classical paternalistic conservative so therefore does support building some things for society as a whole. Partly because this group does believe in the idea of society and all of us being in this together but also as they see these investments as the best way to maintain the appropriate social order.
Lol so your suggestion is to take their money and damn their views anyways? You should probably consider that they probably contribute a lot of rates far out of proportion to their share of representation and consequently get less back for their dollar. Just remember they can always go somewhere else and take those dollars with them…
Remember also that wealthier people tend to be business owners, and the association for that has also been lobbying for the CRL recognising that it’s necessary for the local and national economy. Don’t fuck them off with your stupid comments.
Wow, harsh. If you really think that wealthy white upper middle class Nimbys have less political power than their share of rates you are smoking some good stuff.
Sailor Boy – I’m pointing out that just because someone has a lot of money, doesn’t mean that their views don’t count/aren’t legitimate.
And nah, but I want some of what you’re having if you think that the mentioned class has so much more political power than other groups – if they did, they would be having the government gut at least the DPB, WFF and other benefits to make it harder to stay on it over a long period of time at the very minimum. But of course the government can’t, because so many people support those measures in their current form.
I support choice and sensible decision making – and I believe that decent public transport (in whatever form) is both sensible and offering choices.
I was talking about local politics actually.
The rich white nimbys have hijacked the entire UP process, and stalled PT for years, if that isn’t disproportionate then I don’t know what is.
“based on an out of date and dodgy review of the original business case”
Didn’t the most recent and up to date study (CCFAS) still have the same conclusion though? Ie a BCR < 1?
Still it shows a complete lack of resolve and principle from Palino, so well done for pointing this out.
It came up with 0.9 but the BCR process was purely for comparison purposes and so missed out many of the wider economic and agglomeration benefits as they would have been the same across all of the options.
It came up with 0.9 with Webs, 0.4 without. I don’t recall that disclaimer of the bcrs only being relative?
All BCRs are relative as they are designed to allow the choosing between competing options in the *same* project, not assessing relative merits of multiple or separate projects (although thats what the present government and NZTA seem to do these days with BCRs).
And as Matt points out, the 0.9 figure was not a full BCR comparison as the business case to determine the full/exact BCR for the CRL is still to be done and released.
But the full BCR will be over 1.0 once its done, as those wider benefits that are the same for all CRL options were ignored as they “nett off” and so don’t affect the rankings of the options shown in CCFAS which is why they were not included in the CCFAS BCRs.
So its definitely a given that the CRL will deliver more than $1 benefits per $1 spent – the only question is how much 1.0 will the CRL BCR be.
The report says it is best practice using standard evaluation techniques and doesn’t say it isn’t a “full” BCR. It isnt clear why these other, uncounted benefits would be the same for all options – they were quite different in many reapects. And if the absolute value was the same, this would actually have the effect of changing the relativity between the BCRs, and could lead to a different ranking (because the denominator was different for each option). So it wouldn’t make sense to ignore them.
BCRs certainly aren’t being used to compare different projects by the current govt and NZTA. In fact it is very hard to tell if they are being used for anything at all.
It makes sense to ignore. I thought there was an almalgamation of BCR’s used by government and the reasoning for it was the same for amalgamating government departments.
^^ Please explain I have no idea what you are basing your assertion on, nor what you are talking about re amalgamation.
Based on Greg’s comment and your comment it makes sense and the BCR comment based on an old post on this blog re: hiding negative BCRs by combining them with positive BCRs and then ranking them with other things. Totally legit assertions.
Ah yes that is true, the govt did amalgamate the Rons BCRs for that purpose. Problem is they haven’t got anything left to amalgamate the CRL or thre AWHC with!
From memory, the CCFAS listed the BCRs on everything from ‘do nothing’ to surface improvements only to a bus tunnel to the CRL. *All* the BCRs were below 1, meaning, really, whatever we do, we’ve left it too late to see enough benefit in the next 30 years to make up for all the damage we’ve done with the roadsfest of the last 60 years.
The big issues with the CCFAS cost benefit ratios was that AWHC was included in the do minimum and a too high discount rate and too short evaluation period were used. An 8% discount rate means that benefits after 12 years are barely measured – a completely stupid outcome for a project like CRL.
Noodle exactly right. Also the inclusion of all the motorway projects in the CCFAS is the reason every option had such appalling traffic outcomes. Every model assumed as a starting point total saturation of the city with cars expensively delivered there by unnecessary motorways, especially the additional lanes across the harbour.
Also the absurd discount rate meaning it is assumed that the tunnel is of no use in a very short period, the inappropriate obsession with Net Present Value, or the cost of money. London has tunnels built over 150 years ago with trains still using Victoria track charging through them with every greater numbers of passengers, and the same glazed tiles on the walls.
Rail tunnels are about as permanent infrastructure investment you can find. By then we will have built the Newmarket Viaduct another couple times at least. Not this tunnel though, it’ll still be carry millions and millions of people every year. In fact just getting more and more valuable.
And remember track maintenance, train purchase, upkeep, and replacement is all counted in the operating cost not the capital cost. I’m sure we will need to upgrade the stations over time but the increase in land value and economic activity around busy transit stations (unlike motorways) means this will hardly be uneconomic, and it wont be a great expense anyway unless we underbuild the underground work in the first place.
Andrew,
The BCRs were all below 1.0 as the BCR comparison done for ranking purposes did not factor in all the Benefits (and more to the point,,all dis-benefits) of some options.
The ultimately chosen option (the CRL now that Guy Smiley has annointed it as such – much to Gerry’s chagrin), is to have a full BCR business case done.
When the CRL option is done properly the BCR for CRL will come out over 1.0.
And as Noodle points out the discount rate used in calculating the BCR has a high impact on whether the BCR comes out under or over 1.0.
High discount rates show that NZTA currently doesn’t apparently consider benefits to last very long – probably accurately reflecting their experience with all those roads projects they’ve done, in that the new road is clogged up as bad or worse as it was before you started in reasonably short order,
By using a 12 year horizon for benefits with your 8% discount rate, means that the “back where you started” phenomena is able to be glossed over more easily as the dis-benefit is able to be ignored.
To come back to the CRL, using this sort of 8% rate for CRL is nonsensical.
And as Patrick points out many London tube tunnels are still delivering benefits 150+ years after they were built.
So what discount rate would you use for these (2/3rds of 1 percent?).
Not saying thats the discount rate needed here for CRL, but the CRL, if done properly, will keep delivering benefits for over 100 years easily. Much like the Harbour bridge will.
So any Discount rate over 1% used for the CRL business case BCR is probably too high. And the BCR that results will be too low as a result.
I don’t think you guys fully understand discount rates. They are nothing to do with depreciation or maintenance costs which would be counted separately. They are a measure of how much we discount future benefits compared to present benefits. And it is not just an arbitrary number, it can be estimated from things like market interest rates and the revealed preference of consumers. Now 8% may well be too high, and you are right they do make a big difference, but the fact that the tunnel will be a good’n doesn’t affect that.
Serious question – what is the point of doing a business case once everyone has committed to funding it? Surely a the point of a business case is to guide the desicion making process. In other words, Len should have campaigned on a CRL, conditional on a successful business case (if we care about business cases). Same for the Nats and the Rons.
Andrew,
The do nothing has the highest BCR at 1. The option they didn’t look at, road pricing would have a higher BCR still. You have to ask why they chose the options they did.
Greg, see my comment above as to why leaving benefits out does not make sense, even for comparison purposes.
“Serious question – what is the point of doing a business case once everyone has committed to funding it? ”
Swan, because the business case can and should be used to guide the timing of project, not just whether you do it or not.
If the BCR for CRL was 4.0 meaning $4 back for every $1 spent, then logic would ditate that it would get the go-ahead over other competing projects for the same transport $ that had a lower BCR.
So if the PuFord RONS was say 1.2, and cost the same as CRL (in fact PuFord RONS will cost way more than the CRL and have a massively lower BCR), then 1.2 to 4.0 would indicate that the CRL would return 3 times the benefits for the same $ spend, so you’d spend your money on the CRL ahead of the PuFord RONs right?
In fact Keys conditions to bring CRL forward are basically the sort of triggers and predictions the CRL business case would highlight, but Key is using these as a carrot to try and disarm the Greens and Labour party platforms – as they want to FINISH the CRL build basically when Key wants to start the CRL build.
And Key is acting like Father and saying “Well might be able to start sooner”, knowing full well that he won’t be there to take the heat in any case.
As for why the same rules don’t apply to the RoNS – go ask Gerry on that one, Swan, he (and Joyce before him) are the ones that are dictating the RoNS policy, but the basic fact is that the RoNS are politically lead decisions, not transport need lead decisions.
Today on the Sunday news shows, Gerry was interviewed about CRL and the other announcements made this week.
Gerry used the term NTLF (“National LAND Transport Fund”) several times in his comments
– only he called it the “National-Lead Transport Fund” and I think that shows him and his Governments thinking
– that the National Land Transport Fund (NTLF) is “his” money for him to play with as he sees fit as National Party Politician, not the countries transport money for him to ensure its spent as wisely as possible in his capacity as Transport Minister.
Greg,
Good point on ranking. Though I see zero evidence that anyone is carrying out such a ranking exercise. Still, in my line of work business cases are used to ascertain the viability of capital spending, not just the timing. And they are supposed to be used for this in the public sector too (you can look at treasury’s guidance on this). In any case, where are you guys reading that the CCFAS missed out benefits? I can’t see this in the report.
Agreed the Rons were political, but I can’t help but put the CRL in the same category. Incidentally, Puford and the CRL have very similar BCRs.
The CRL is definately now political since Key said “we’ll do it” this week.
Although in the same instant it also perversely stops being so political – as all local and Natioal Government parties now agree its required, only argument is when.
So yes, the business case has been sidelined by the events this week. I think it should still be done regardless.
While PuFord and CRL may have simillar BCR’s, the total $ spend for CRL is way less than PuFord and CRL is spent over a shorter time frame (5 years v 10_ for PuFord), so again, logic dictates spending on CRL comes first, as you can get the same or more benefits sooner for less total spend.
Then PuFord can be done if an when there are no other better options (better BCR) to spend the left over money on.
“In any case, where are you guys reading that the CCFAS missed out benefits? I can’t see this in the report.”
When the CCFAS study came out last year there was a lot of discussion here in the blog on why the BCR for the CRL was so low.
Along with discount rates and “WEBs”. I’d refer you to that thread if you want more evidence of why the CRL BCR is not going to be lower than 1.0
The inclusion of Do-nothing with an (implied) BCR of 1.0 was also contentious – everyone agrees doing nothing is not an option here, but has the nice political appeal of a $0 price tag.
“I’ll put the local back into local government”. It doesn’t come any cornier than that. Now that the CRL is firmly in the public arena it is Labour’s opportunity to step up with a real plan, one that includes an earlier start date, rather than just the vague proposal by National.
+1
And how about the Greens join in with some nice metrics for the AWHC to meet before any road component gets the green light?
That actually sounds like a damn good idea TheBigWheel.
Even better would be for all these business cases across all projects (Rail, Road, Bus) to actually have some accountability across them; stand them up with their own P&L / balance sheets and report them back to the public. Tie remuneration of politicians at both National and Local level to the performance of the business cases they approve.
I am kind of sick of the way that Key’s capitulation on the CRL is being spun as a “great victory which isolates Labour/Greens” by the sycophantic press. A half-decent opposition would be pushing this as their own victory. Although it’s funny watching that same sycophantic press trying to consign their 15 years of train-hatred to the memory hole.
Shearer was doing that “great victory” thing this morning in a terribly mild mannered Clarke Kent way about Labours food in schools program.
But even he admitted having your best ideas stolen by the Government is a fact of life for any opposition of any colour to live with.
As for watching the sycophantic press having collective amnesia…
Its way more fun watching Keys political cohorts,like Gerry, consign many more years of train-hatred down his memory hole, like he had to this morning on Q+A
Seems Gerry is now explaining away his (former) position as “I always said the CRL had to be part of a package of transport options”.
(accompanied by much beady eye swivelling like a rat finally cornered by a large Tom cat).
– without of course mentioning that the rest of the package is and always was more roads, but now, its “New & improved – it now comes with (a sop to) trains on the side”.
Still got to hand it to Key, he has managed to steer the entire Auckland transport conversation around in 1 week so its more under his (not necessarily Nationals) control than it was before.
And I think looking the medium term on this that Key is preparing for the possibility of an early election and so by clearing the contentious CRL “yay or nay” argument off the table now.
The only political discussion actually left to be had about the CRL is when to do it.
And Key can, if he really wants to, offer the Auckland voters a bigger, brighter carrot than Labour or Greens can by simply saying “We’ll start CRL in 2015” – during the next election campaign.
What can the opposition Greens/Labour say then to trump that? “Umm,, We’d start it sooner than that – Umm like Now!”
Which does put the Greens and Labour transport policies on the back foot from now on – at least until the Consensus Building Group reports on the options for paying for the transport projects.
[To which Gerry said he won’t support tolling/charging for the use of state highways by Auckland Council, which begs the question of what the tolled second harbour crossing will be if not a state highway?].
However, the truth for Key is that he has now to face another 3 years of Len Brown running Auckland – the only thing left to settle is how far left will the next Auckland Council be with the C&R extremists in retreat mode now that the CRL rug is yanked out from under their feet.
Further left and it might make for difficult times for National – if they can stay in power next election.
And if Labour and Greens get in I can see a lot of RoNS road builders getting awfully long faces.
Sorry Greg – you seem to have fallen into the same memory hole; National *did* bring up the food in schools programme – while they were in opposition in fact.
You seem to forget Michael Cullen’s deriding it as “Tory Charity” and “Unneeded”.
So sorry; but it’s not the beloved Left that came up with the idea at all; weren’t the first to try to get it instituted; and haven’t been the party that have done the two largest increases in funding or reach. So you going to retract your slander now or allow the cognitive dissonance to cover the ringing in your ears?
I never said food in schools was Labour’s idea first.
Merely commenting on the interview today on Q+A how having your ideas used by the government when you’re in opposition is a fact of life.
And as you assert, National supposedly had that idea stolen from them by Labour
– so isn’t that a case in point?
Hows that slander?
And no I certainly will not be retracting anything – except any shred of respect I might have had for you and your comments when it comes to discussing the issues here in a open and civil manner.
Take no notice of this fellow, he’s a National Party astroturf who doesn’t care about transport or any other policy except insofar as it makes Labour/Greens look bad.
Apologies Greg – on rereading your post I can see a different tone to that with which I first imparted it.
Doloras I’ve never voted National in my life & hate to disappoint but I’m passionate about transport outcomes. However just because I support investment in rail infrastructure doesn’t stop me from wanting the projects to make sense and those that promise them to be held to their promises