The East West Link Board of Inquiry is now in its eleventh week. While the Hearing is scheduled to wind up on 15th September, we won’t see a decision until the 22nd December this year.
A post back in June covered the economic evidence so far for the East West Link Board of Inquiry. Option F is a four lane expressway along the Onehunga foreshore which, on the face of it, offers less economic benefits than two other options. That post ended with these areas of disagreement between various economists:
- These proceedings should include an assessment of effects on economic wellbeing, covering economic costs and benefits. [Agreed by the four economists of the submitters]
- An assessment of effects on economic well-being has already been undertaken within the Detailed Business Case to assist NZ Transport Agency to make its investment decision. [NZTA]
Economists for the submitters state the evidence does not establish:
- How Option F was arrived at as the preferred option and, in particular, how the Option reconciled with NZ Transport Agency’s own system for prioritising Projects;
- Whether all material benefits and opportunity costs were included in the analysis and how they were estimated;
- What the up-to-date assessment of economic costs and benefits is for the latest iteration of the Project.
Since then, the NZTA provided further rebuttal evidence. The NZTA pretty much stick to their guns and claim a benefit cost ratio of 1.9 based on the December 2015 Detailed Business Case. The rest of the rebuttal is unremarkable, however the following statements stand out:
5.5 I acknowledge that I have not prepared a quantitative assessment of the economic costs of the Project. Neither have I quantified the benefits. However, for the reasons explained in this statement I do not consider that it would be practical (and may not even be possible) to undertake such a task nor do I think it is helpful…
7.8 Based on all the information available, I am confident that the economic benefits of the Project will outweigh the economic costs (especially if the construction costs are not included)…
8.15 I reiterate that the BCR is not a relevant matter under the RMA and the BCR is only one of the tools used by the Transport Agency when making an investment decision and considering alternatives…
8.16 At the expert conferencing Mr Curtin raised the issue of how Option F reconciled with the Transport Agency’s own system for prioritising Projects. This is not an economic matter and I defer to the evidence of Mr Wickman and Ms Linzey.
The way the Board of Inquiry works is that all experts can be cross-examined, and this is what has been happening over the last few weeks. The point of cross-examination is to try and get an opposing expert to concede your points, and to try and strengthen your own case. It turns out you don’t need to be a lawyer to do the cross-examining, so as a submitter the Campaign for Better Transport was able to ask a few pertinent questions. The remainder of this post briefly summarises the transcripts covering the economic evidence cross-examination.
Auckland Council
First up we cover a few points Auckland Council’s economic expert David Norman from the 7th August, as recorded in this transcript from page 3262 This line of questioning was really attempting just to confirm a few facts about how economic evaluations are done:
MR PITCHES: … you must be familiar with the New Zealand Transport Agency’s own economic evaluation manual?
MR NORMAN: Yes, I am.
MR PITCHES: Can you tell us a bit about that?
MR NORMAN: It’s a very big document – I can start there – and it’s sort of the basics that they use to I suppose try to ensure that when they evaluate various projects they do it like for like, so it’s a standard methodology, if you like.
MR PITCHES: Okay. So my understanding is that it looks at a number of factors, including the expected volumes of traffic, expected travel time savings and congestion benefits etc.
MR NORMAN: Yes. Yes, that’s right.
MR PITCHES: It’s a tool that’s been used to evaluate dozens of transport projects over the years, so it must be considered a robust way of comparing alternatives in an economic sense, especially for different options in the same study area.
MR NORMAN: I would say so, yes.
…
NZTA
NZTA’s economic expert, John Williamson, appeared before the Board on 16 August. He had been brought back to be cross-examined by Mercury Energy, who are opposed to the Option F as it cuts through their power station at Southdown. While not currently producing power, is operating in a “care and maintenance mode”. You can read more about this in Mercury’s legal argument here.
The CBT cross-examination of Mr Williamson begins on page 4081 of this transcript.
MR PITCHES: … in your rebuttal evidence at paragraph 7.8 you state you are confident that the economic benefits of the project will outweigh the economic costs, especially if the construction costs are not included. That is an unusual statement for an economist to make, so what is the context of that paragraph?
…
MR WILLIAMSON: I would just like to clarify, firstly, that this paragraph is based on the information available, and that is quite important point I think because I have not seen information personally which suggests that there has been any significant change in costs or benefits, so based on the available information.
MR PITCHES: But my —
At this point the Chair of the Board of Inquiry jumps in. Dr John Priestley is a retired High Court judge who also headed up the Puhoi Warkworth Board of Inquiry.
DR PRIESTLEY: Sorry, Mr Pitches, I find that statement odd too because in your evidence-in-chief you are looking at the economic benefits and you are looking at construction costs estimated. I seem to recall there is a figure of $900 million or something like that. But if one is looking at the economic benefits generally, one would hope you would end up by the economic benefits outweighing the economic disadvantages. Am I right?
MR WILLIAMSON: You are quite correct.
DR PRIESTLEY: What is the purpose of this bit in brackets, “Construction costs not included”?
MR WILLIAMSON: To be frank, I find this odd as well as an economist —
DR PRIESTLEY: Sorry, I can’t hear you.
MR WILLIAMSON: I actually agree entirely that an economic analysis should include the costs and the benefits. However, the advice I was given is that, within this context, it is difficult within the confines of the Resource Management Act to take into consideration the cost of the project. That challenges me as an economist as well because I think an economic analysis should, indeed, as the NZ Transport Agency’s economic analysis does, consider the costs of a project, including the capital costs and the benefits…
Next we touch on why the Detailed Business Case cost benefit analysis wasn’t updated:
MR PITCHES: … So we know the reported cost of the project has increased to a range of $1.25 billion to $1.85 billion according to central government. It would be a straightforward exercise to update the economic evaluation with this new range and, hence, provide an updated benefit cost ratio, would it not?
MR WILLIAMSON: Actually, I think there is a point of confusion here. When the Transport Agency reports the cost of a project, it uses three different approaches to cost estimation. For its own internal prioritisation process it uses either a P50 cost, which is the cost that has the probability of occurring 50% of the time or a P95 cost as the extreme, and that cost will occur in 5% of cases. Those costs are presented in the dollars of the day. In this case it was in 2015 dollars. For budgeting purposes they will use an escalated cost, and that is where the costs are inflated to the year of spend and that will increase the cost, but for economic analysis we discount the costs back to a net present value using a discount rate of 6%.
When you look at the costs that are provided by NZ Transport Agency, the $1.8 billion cost is the inflated P95 cost which corresponds with the net present value of $980 million for construction costs. So there has been no change in costs but there are different ways in reporting those costs and I think there has been a degree of confusion. The reported cost hasn’t changed. What has changed is the cost base, if you like, which is used for reporting purposes. So this benefit cost ratio is consistent with the current cost estimate of the project.
(I’ll leave it as an exercise for the reader to confirm that $1.8bn has a net present value of $980m in 2015 dollars.)
The conversation moves on to the Multi Criteria Assessment that is included in the Indicative Business Case. This is the document prepared by Mr Williamson that evaluated six different transport options.
MR PITCHES: … Mr Curtin in his evidence said the multi-criteria assessment did not spit out any obvious winner. Do you agree with that?
MR WILLIAMSON: I can’t comment on the multi-criteria analysis because that was not my area of involvement with the project.
MR PITCHES: Yet you wrote the indicative business case that evaluated the MCA, did you not?
MR WILLIAMSON: I was the author, or rather I managed the process of compiling the business case with others, but I did not undertake the multi-criteria analysis. The business case, if you like, is a receptacle of information. The information that is gathered through the development of the project is placed in the business case as one way of providing all of the information, but I wasn’t responsible for undertaking the multi-criteria analysis and I wasn’t responsible for choosing the option.
MR PITCHES: Were you responsible for the conclusion that option F was the best option?
MR WILLIAMSON: No, I wasn’t. No.
MR PITCHES: Who was?
MR WILLIAMSON: I can’t answer that question. That’s a question for the Transport Agency.
At this point Dr Priestley jumps in.
DR PRIESTLEY: Sorry, I’m confused yet again. Were you the person who compiled the business case?
MR WILLIAMSON: I managed, with others, the process of compiling the business case, but —
DR PRIESTLEY: What does that mean, managing the process? Does that mean you’re like the overseeing author?
MR WILLIAMSON: I’m one of the authors. Yes.
DR PRIESTLEY: Okay.
MR WILLIAMSON: But the business case includes a section which reports the outcome of the multi-criteria analysis, but it’s merely reporting the outcome of the process.
DR PRIESTLEY: So you have no responsibility for the multi-criteria analysis?
MR WILLIAMSON: None at all, no.
DR PRIESTLEY: But presumably, for professional and common sense reasons, if you thought it was a load of nonsense, you wouldn’t have included it.
MR WILLIAMSON: Absolutely, yes.
DR PRIESTLEY: So how do you know it wasn’t a load of nonsense?
MR WILLIAMSON: Well, because as part of the process of including that information in the business case I was involved in understanding the criteria to be used, the information that was to be used to assess the options against those criteria, and the results of that process. So I understood how the process was used but I didn’t make the decisions.
I never did get to the bottom of who made the decision to go with Option F. Next we talk about the economic evaluation, and why Option F was chosen even though it wasn’t the best option from an economic point of view.
MR PITCHES: … We heard from Mr Norman last week, who agreed that the economic evaluation tool has been used to evaluate dozens of projects over the years and it must be considered a robust way of comparing alternatives in an economic sense. Do you agree?
MR WILLIAMSON: Personally, I think it is the most well-developed economic assessment tool within the public sector in New Zealand by a long way.
MR PITCHES: Very good.
MR WILLIAMSON: Yes, it is good.
MR PITCHES: Even so, the indicative business case did not recommend the option with the greatest economic benefit, which was option B. Nor did it recommend the option with the highest benefit-cost ratio. So again, what are the other reasons why option F was chosen?
MR WILLIAMSON: Yes, well, again I will defer to the evidence of Ms Linzey, but what I would say is that the process for option selection was based on the Transport Agency defining the outcomes it wished to achieve within the project area, developing a set of criteria which enabled it to test the options against those outcomes, and then choosing the option which it felt best achieved the outcomes. That may not necessarily have the highest cost-benefit ratio.
Make of that what you will. There’s a discussion about what is meant by the supposed “enduring benefits” of Option F, which I won’t summarise here but are worth a read if you interested on page 4088. There is also a discussion on whether the NZTA had been under political pressure to choose Option F (answer: no).
The final questions asked of NZTA’s expert witness are relevant because of the Basin Bridge decision, which turned down NZTA’s application to build a flyover near the cricket ground in Wellington.
MR PITCHES: All right, so my last two questions. Do you think the assessment of alternatives for this project has been logical, transparent and replicable?
MR WILLIAMSON: Yes. Yes, I do.
MR PITCHES: In an economic sense as well?
MR WILLIAMSON: Yes.
MR PITCHERS: And the alternatives that have the potential to reduce environmental effects have been adequately assessed?
MR WILLIAMSON: I’m not qualified to determine the adequacy of the assessment of environmental effects but I have been involved in the development of these two business cases and I would say that the process that’s been followed here is significantly better than some of the processes that have been used previously. One of the advantages of this process is that the first thing that takes place is an understanding of what the issues are and what the opportunities are and what the outcomes that are being sought might be before anybody starts to think about what the solutions may be, which is possibly a difference that you might see compared to some older projects. So in terms of developing solutions, the solutions are then developed in response to the identified problem and the opportunities. I think that’s a particular good way to get around developing options and then assessing options against criteria which reflect those outcomes. Does that help?
MR PITCHES: All right, yes. But you agree, though, that the option chosen is not the best economic option?
MR WILLIAMSON: I would say it doesn’t have the highest cost benefit ratio but that’s not the same.
MR PITCHERS: Or option F does not have the highest absolute net benefits either, does it?
MR WILLIAMSON: It doesn’t have the highest net economic benefits but those benefits are the benefits that you can quantify using the Transport Agency’s economic assessment model.
The Campaign for Better Transport
Donal Curtin is The Campaign for Better Transport’s expert witness for economics, and summarised in this post here. He argued that the NZTA hadn’t chosen the best option based on a benefit cost evaluation, and neither was Option F the stand-out option in the Multi Criteria Analysis. Donal defended his evidence well in the face of questioning from NZTA counsel Patrick Mulligan, from page 4898 for the transcript:
MR MULLIGAN: I think that part of your evidence talks about choosing the right option, whatever that may be, depending on from what perspective you look at it, but you would accept that as part of the RMA process it is not the Board’s job, in terms of its decision-making process, to second guess whether the applicant has chosen the right project?
MR CURTIN: I don’t know that I do accept that partly because, as I mentioned, I am not totally familiar with the RMA process. In fact, I am not at all familiar with the RMA process. This is the first time I have given evidence in this particular type of inquiry. That said, I would be very surprised if a board of inquiry, like this one, merely accepted a decision on faith and did not reassure itself, kick the tyres as it were, that of the options that could have been presented to the tribunal a more sensible rather than less sensible option was chosen…
…
MR MULLIGAN: So to that degree you wouldn’t be in a position to comment about – and particularly given your comments about your involvement in the RMA process – the adequacy or otherwise of that alternatives analysis in terms of the RMA test?
MR CURTIN: The best I could answer that with is to say that I thought, based on the published documents that I read at the time, that the NZ Transport Agency had done a jolly good job of bringing different perspectives into the calculation, including environmental perspectives. As I say, I could not see my way to how they quite got to the option they could, based on that very good information they’d collected.
…
MR MULLIGAN: You would accept that the way that the overall structure of the analysis had been undertaken, that NZ Transport Agency, through its business case process, hadn’t rested its decision-making wholly and solely on what that BCR number is, though? You would accept that? It’s undertaken the CMCA process as well?
MR CURTIN: Absolutely. It’s quite clear from the initial case and the detailed case that they made quite a detailed trade-off across many criteria. There was the business case, the cost-benefit ratio stuff, which you’d expect in any investment project. As I said, they had ten different perspectives at this multi-criterion analysis that they conducted to look at it every which way, and I can only say again that if all of us had been in the proverbial smoke-filled room looking at that good information that had been gathered, it wasn’t clear to me that that was the option that most aligned with the information on the table.
MR MULLIGAN: Now, final question is – you may not be able to comment, given what you’ve said about your history with the RMA process – it will be my submission to the Board that building costs of a project like this aren’t really a matter for RMA consideration. As a matter of law, would you have a view on that?
MR CURTIN: I don’t know as a matter of law. As a matter of economics or financial common sense I find it difficult to consider the advisability or otherwise of an investment project without some idea of its costs.
After Mr Mulligan, I’m offered the opportunity to re-examine Donal:
DR PRIESTLEY: …Now, Mr Pitches, I’m only mildly perplexed because I’m conscious that Mr Curtin, as he says in his statement, was contracted to Campaign for Better Transport for the previous assessment. So if you feel the need, I’m quite happy to let you reexamine, but only on the issue of any matters which have arisen out of Mr Mulligan’s cross-examination or questions from the Board, and the questions would have to be open questions, not leading or patsy questions or putting out further information. Now, do you want to do that or not? I’m giving you the opportunity, if you feel that there’s something which he’s said which needs clarification.
MR PITCHES: I just have one question.
DR PRIESTLEY: Yes. Off you go.
MR PITCHES: Mr Curtin, is there anything you’d heard today that has made you change your mind about the evidence you’ve presented so far?
MR CURTIN: From the cross-questioning, no, not so far. As I say, I’m not au fait with things that may have happened in front of the tribunal since I put my original evidence in. We heard the question about enduring benefits, and I had been thinking about that a bit since I originally put it in, so I suppose today I’ve said a bit more about enduring benefits as a potential criterion that I that I said in my original testimony. I can understand why people might want it but it’s not the normal way people would go about looking at the flow of benefits of a project.
DR PRIESTLEY: Mr Pitches, with respect, that’s the best question in re-examination I’ve heard in 50 years in the law. You should probably send it out to every Crown counsel in the country. It might increase conviction rates. Thank you. Thank you very much, Mr Curtin.
MR CURTIN: You’re welcome.
DR PRIESTLEY: It was a beauty, wasn’t it, Mr Hewison?
DR HEWISON: I’m impressed. I’ve written it down so I can use it myself.
That’s it for now. It is difficult to know which way the Board will go with the Inquiry, but I sense that the decision will be a finely balanced one. I’ll do another post on the Campaign for Better Transport’s closing representation to the Board.
In order to help pay for their expert witness, contributions to The Campaign for Better Transport are gratefully received and can be paid directly to their bank account – Kiwibank 38-9009-0281735-00.
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Excellent work! I look forward to the TV mini-series.
Yes! I’ll mention these transcripts to the TV writers I know. I thought the Infrastructure NZ’s slide show – might get that posted – was funny, but this is pure comedy.
You’ve missed your calling, Cam: Get thee to law school, m’lud.
Don’t do it Cameron. In the immortal words of Admiral Ackbar, “It’s a trap!”
That’s a great job Cameron. I enjoyed reading your questions. The NZTA’s argument doesn’t seem to be that they are right but that the legalise will protect them.
I’ve donated.
Thanks very much.
Interesting but disturbing.
What will likely happen to this enquiry if there is a change of Govt?
Labour have indicated they will build a cheaper option. So the inquiry decision will be not required. There’s the potential they will need to reconvene on that project as it has different environmental impacts.
And NZ First announced their total opposition to the East West Link at the CBT transport debate the other week. Denis O’Rourke released this statement:
So it seems that whatever the outcome of the election the East West Link in its current form will be lacking political support.
Awesome question in re-examination.
+1 Thanks Cameron. Important stuff.
Outstanding!! Based on the excerpts of the transcripts provided here, John Priestley seems to be doing a very good job.
Does the NZTA preferred option include reclamation of Manukau Harbour? If so policy 10 of the New Zealand Coastal Policy Statement 2010 allows, indeed requires, the Board of Inquiry to look at alternatives.
Thanks Cam, an interesting read. The evidence you’ve presented suggests there would be a good chance of overturning the decision, however you mention you think the decision will be finely balanced – is this because there has been a lot of robust supporting evidence from NZTA? Or is it because the BoI must find that the project decision making to be overwhelmingly bad (i.e. more than just slight errors in analysis?)
It’s more the latter. I think in this case there are direct parallels with the Basin Bridge decision that found that the NZTA decision making process was not replicable or transparent. Unique to this case is that Mercury Energy are out right opposed to the project as it affects their Southdown generation site, which they argue is nationally important infrastructure. Also a number of iwi are opposed to the project, so throw that into the mix and perhaps the odds are more than 50% that the application will be overturned by the Board.
I’m no economist but even if the entire project is paid for at the end in future dollars (say 2023) then the NPV of $1.8b in 5 (plus 3 years to take it back to 2015) years from 2018 at 6% is $1.21b (P = A/(1 + nr) is the formula with P is the current value, A the future value, n the number of years and r the discount rate). Gievn payments will be spread over the years before that the NPV is surely higher.
Surely after explaining the terms P50 and P95, that when Williamson used the term “construction costs” he was deliberately introducing ambiguity as to which one he meant?
“the $1.8 billion cost is the inflated P95 cost which corresponds with the net present value of $980 million for construction costs.”
What does he actually mean the $980 m is: P50 or P95? What I’d like to see is the change in P50 costs and in the P95 costs. If $980 to $180 is the change in P95, that’s a big change. If it’s a change from P50 to P95, we need to know the P50 to P50 or the P95 to P95.
Is there anyone still submitting who can ask this?
I’m no economist at all so quite happy to be corrected.
It is a good question. The use of shifting cost bases is very confusing. At best they should have been more clearly labelled. In fact in cost estimation there is some debate about the merits of using “P50” and “P95” figures at all. They assume we can accurately assign probabilities to various cost events in a construction project when in fact we cannot. For all we known a P95 could be a P75 or a P99. There is always risk, especially when you are excavating unknown material. Given the stated range of $1.2 to $1.8 billion, presumably the $1.2 B is a P50 cost.
The economist has correctly used the P50 discounted to the future cost. P95 should be used as a sensitivity test.
I can understand the rationale for doing that, but shouldn’t it therefore be consistent across infrastructure projects- I doubt the CRL is a $3.4b project expressed this way, so comparing $3.4b with $980m is not comparing apples with apples.
This is done consistently across projects. Economic costs are calculated using discounted P50 costs and sensitivity tests on the discounted P95. This is done across the board. Discussions around government spending are typically discussed in the dollar amount that the government will have to spend. This is escalated (increased in anticipation of inflation) and, sometimes, disingenuously expressed in P95.
But isn’t the $3.4b figure for CRL the inflated future value not the NPV?
Yes, it is, which is why it isn’t used in the economic analysis.
“Paying for things in future dollars” reminds me of the 90s student cartoon about a student going to the future to borrow money from her future, employed self.
– Oh no, I can’t spend this future-money! They’ve changed the note designs!
– Who’s on the money now?
– Winston Peters!
– Which note?
– ALL OF THEM!
best leave the economics to steve joyce then. oh wait he didnt pass economics.
Based on simple grammar, it is extraordinary that a “benefit cost analysis” does not include costs! At best, it needs a different title. At worst, it is false. Ignoring costs is absurd. Society has many needs. The billion+ this project will really cost could be used instead for schools, hospitals or (shudder) more welfare to poor families. If it happens, the cost is real.
The claim of “enduring benefits” also needs to be challenged. What are they? Increasing urban sprawl? Planning blight? Severance? Environmental destruction? Increased greenhouse gases? Induced demand? What if the only real long term impact of this project is to further shift Northlands freight from rail to road, while stymying redevelopment of Onehunga?. The costs will be enduring too.
NZTA talk a lot about the enduring benefits of Option F, but in the Indicative Business Case these are defined as “The extent to which travel time savings and traffic flow reductions on
Church/Neilson Street are retained between 2026 and 2036.” The BCR calculation already has a 40 year outlook, so I did question why this timeframe was so important on p. 4088 of this transcript:
http://www.epa.govt.nz/resource-management/NSP000038/NSP000038_EWL_Day_30_Transcript_16-08-17.pdf
+1
I’m not against upgrades for traffic and freight movements, but if they come at the cost of severing the community of Onehunga from a long stretch of it’s coastline – they are not worth it.
MK Minister Bridges has just announced the duplication of the Southern Motorway on Mill Road bisecting Papakura as I understand it. It would seem that hs has a penchant for that sort of thing.
http://www.msn.com/en-nz/news/national/national-lays-out-auckland-transport-plan/ar-AArtRgp?ocid=SK216DHP
English: “We have to do it. It’s pretty silly to say building roads is some kind of problem.”
The national party have announced this project about 6 times over the past couple of months and get media coverage each time.
For some reason it is not in their list of $10.5 billion new roads
So instead of $10.5 billion new roads it’s $11.5 billion.
This is a vast amount of funding to plough into low-return investments, and will make all New Zealanders poorer as a result. But we’re also creating auto-dependency for most of Auckland, which is by far the most expensive and damaging transport policy possible.
It is all very undisciplined and fiscally imprudent, and the end result will contribute to retarded economic growth or even recession if the world economy slows. New Zealand is small and cannot afford to throw money away like this.
Excellent. That also prompted a donation from me.
Thanks also. And a huge thanks to Greater Auckland who are going to contribute a decent amount towards the cause too.
So it seems that the BCR is only supposed to be used to compare alternatives. Yet the BCR cannot be used to compare the alternatives either. The benefits of each option are calculated from travel time estimates – and these are wrong due to the traffic modelling not including the induced traffic known as “newly created trips” (along with other model deficiencies.)
And we’re not supposed to use the BCR to talk about the actual economic merits of the East West Link. For that, we just have to trust the Nats? Maybe they should look at the economic merits of other roads with apparently great economic business cases. For example, from the CPRE’s “The Impact of Road Projects in England” released in March this year:
“Of 25 road schemes justified on the basis that they would benefit the local economy, only
five had any evidence of any economic effects. Even for these five, the economic effects may
have arisen from changes incidental to the road scheme, or involved development in an
inappropriate location, or involved changes that were as likely to suck money out of the local
area as to bring it in…”
We are seemed to supposed to trust other unnamed experts that they made the correct decision. Just yesterday I was watching a doco on the Erebus crash and you can see they same process in action and the increasing frustration of Justice Mahon. If you have a spare 45 mins I recommend! https://www.youtube.com/watch?v=Mm97xDQKk9Y&t=3670s
I’d hasten to add that Air NZ management is nothing like this today.
Just what are Mr Williamson’s qualifications?
An economist is a university trained (3 to 5 years) person who has studied analytical methods such as econometrics, statistics,etc. I would expect the very highly paid person in the NZTA have some of those attributes. He should be able to talk like a medical doctor about the cause and cures of an illness (motorway). He would know the cost per km of 4, 6 or 8 lanes of highway. He would have research about environmental impacts and much more.
I was similarly very disappointed that our minister of Finance Stephen Joyce, failed or didn’t complete all his economics courses at Massey.
“He would know the cost per km of 4, 6 or 8 lanes of highway.”
No, they wouldn’t. That is an estimators job, not an economist. The testimony is disappointing, but not because of the reasons you state. Williamson seems to be dancing around the questions while under oath. *That* is very disappointing.
Of course an economist would use other people to do the basic spade work. He wouldn’t be doing the surveying work, the costing of properties or the geological work, etc. But over time in he would get to know all the important factors and be able to build the cost – benefit table. He should be aware of many issues. With experience he have a good idea of the costs and benefits.
Nice work Cameron.
I’m imagining you prowling the room with burning intensity…
MR PITCHES: I’ll ask you for the fourth time…
MR CURTIN: You want answers?
MR PITCHES: I think I’m entitled to them.
MR CURTIN: You want answers!?
MR PITCHES: I want the truth.
MR CURTIN: You can’t handle the truth!!
*Nobody moves*
Sadly there were few witnesses to the drama as it played out, and it wasn’t captured on video. But the truth is in the transcripts…
Does anyone know any other background to Williamson’s statement about “if the construction costs are not included” which he subsequently says in the hearing “To be frank, I find this odd as well”. The statement was “Based on all the information available, I am confident that the economic benefits of the Project will outweigh the economic costs (especially if the construction costs are not included).”
At the risk of hammering home a point that everyone reading this already understands, it isn’t about anyone else’s confidence about benefits outweighing the costs. It’s about HIS confidence that they do. That’s why he’s the expert. No-one can make him exclude the construction costs without him then losing that confidence – so it is his own decision to exclude them. So why is he then “frank” that it is odd?
If the National Party want to disregard an analysis of the costs and benefits, that’s one thing, and hopefully they’ll be voted out for it. But why does this NZTA expert – who should be independent of politics – make a statement like this, that appears to bluntly support the National Party’s decision to exclude economic analysis from their decision-making?
Is this not exactly the same political bias from NZTA that Matt exposed after NZTA removed the business case for the RoNS from their website because it wouldn’t look good for National? If this isn’t a second case of the NZTA being in bed with the Nats, could someone please put me straight? Always happy to learn…
Apparently NZTA staff have been banned from having any discussions at work about the upcoming election…
Hi Heidi – this is clarified later on in the transcript:
The Board of Inquiry takes place under the jurisdiction of the RMA. The legal school of thought is that if NZTA or any other applicant want to spend billions on a particular project, then that is their concern. What matters for the RMA is the environmental and societal impacts, so that’s why NZTA argue that it is enough that the benefits of the project are positive for the community. So Mr Williams didn’t make his “ignoring construction costs” comment wearing an economist hat, he made it based on his understanding of the RMA.
However, CBT has also argued that there is a huge opportunity cost in spending up to $1.85bn and the Board should take that into consideration. I’ll cover more of that in a post on our summary representation we made to the Board.
Thanks Cameron for your hard work on this.