It’s finally out. The business case for the Auckland’s CBD rail loop. And what a compelling case.
The pure transport cost-benefit is 1.1 (at the standard Treasury 8% discount rate). But the wider economic cost-benefit take it up to a whopping 3.5.
As it says, “the benefits of the CBD Rail Link far exeed the travel time savings due to enhanced transport efficiency”. It “increases CBD employment by 20,000 to 25,000 without requiring additional road capacity or using scarce CBD land for additional parking. This enables the Auckland CBD to become a much more vibrant and exciting pedestrian environment … .”
The overall impact will be a “more exciting and vibarnt sense of place enable Auckland to serve as New Zealand’s outward facing global city for retaining and attracting the highly educated younger workforce that will underpin productivity growth (and also international competitiveness) in the future”.
Now compare the figures with Joyce’s Holiday Highway. It has a transport cost-benefit of 0.8 – less than a dollar back for every dollar spent.
And the wider benefits? Just 1.1. Pathetic versus 3.5 for the CBD loop. We certainly need to upgrade SH 1, it’s just that we don’t need to do it with a brand new motorway.
How can Joyce justify spending up to $2 billion on that road when this case is so compelling.
Our rear-vision minister will need to be creative with his figures to justify his spending.
” It “increases CBD employment by 20,000 to 25,000 ”
There are 20 – 25,000 jobs just waiting in the CBD? Yeah Right!
Ideology and the funding from the trucking lobby.
CBD rail loop is essential.
Not in the tiny mind of Stephen Joyce!
Nor in the minds of the rest of NZ, especially Northlanders. Let’s all boost the economy of Northland rather than give Auckland a new toy to play with.
Just keep reminding the jaffas of Joyce’s folly, and reap the benefit come election time.
The battlefield in 2011 is Aukland, and there are a few nervy nat mps dreading election night.
Let Len Brown raise it from Auckland ratepayers if it is such a good thing.
There is also important social and environmental (and also economic) issues around urban design, sprawl and sustainable cities going forward; that were covered in part by an excellent piece by Rod Oram in last Sunday’s StarTimes. I attach below:
http://www.stuff.co.nz/sunday-star-times/business/4366408/Going-down-the-wrong-road
As successful cities such as Portland, Oregan show smaller compact cities generate significant positive externalities (or spill-over) in terms of economic growth, innovation through concentration and intensity of resource allocation and minimisation of transactional costs. Not to mention environmental benefits.
Encouraging urban development based around individuated housing dependent on private transport dissipates further Auckland’s focus. In short it is a half-arsed,cookie-cutter Antipodean version of a failed American urban vision from circa 1955. Brilliant.
David, I read the relevant reports, and the two projects seem to have the same cost benefit ratio, including wider economic benefits (WEBs). The rail loop report than proposes that there will be extra economic benefits that take it to the 3.5 level.
The NZTA document p.7 states that there is a 1.1 BCR inc WEBs at 8% discount for Puhoi-Wellsford http://www.nzta.govt.nz/network/rons/docs/puhoi-wellsford-project-summary-statement.pdf
The ARTA document p.100 states that there is a 1.1 BCR at 8% discount for the rail loop. This includes WEBs according to NZTA specifications (p.99) http://www.aucklandtransport.govt.nz/improving-transport/current-projects/Rail/Documents/AT_Report_CBDRailLink_Business_Case_Final.pdf
The 3.5 ratio for the rail loop comes once you add in extra claimed productivity benefits (p.102). These increase wider benefits from $0.185b to $3.333b. I have no idea about whether the extra benefits are reasonable or not but if you compare the two using the same methodology, they have exactly the same CBR. I’m sure the ratios in each report are very debatable, but the published versions are the same.
Maybe you are correct: if Bill and John stay in charge there won’t be 20-25K new jobs waiting in the whole country
Watch the unemployment lines stretch longer next year under Nat’s 3rd year.
Chris, be fair, you think that there are a mysterious 100,000 jobs out there just waiting for the “lazy” unemployed which is why you support National’s get people off the DPB and unemployment benefit now policy, right? So why wouldnt this link be able to create 20 to 25k jobs? The invisible cycleway was going to solve our recession unemployment problems?
Nice analysis pdm, take you long?
I’m looking forward to reading the full report. The summary sounds good, but so it should.
Banned. Clare
@Dean: yes I read Rod Oram’s piece too, and his claims seemed pretty much self-evident. Even the “failed American 1955 vision,” without peak oil breathing down anyone’s necks, seems to have been designed to privilege property developers and the car industry over good town planning. I cannot see any sense at all in favouring roads and sprawl over public transport and compact cities under the present circumstances. I am never sure whether the National party actually gets off on punishing the population, or simply does the bidding of its biggest backers, which results in punishing the population.
Richard I, Wellsford is not Northland. Its in Aucklands patch , more specifically the Transports Minister
I’ve got serious issues with the continued use of the 8% discount rate for transport projects, indeed for many large infrastructure projects.
Interestingly so too did current NZTA CE Geoff Dangerfield back in the day when he was heading MED, and before the government changed.
I’d love to see more analysis at least done with a banded discount rate — ie how does it look at 8% and then how about 6% and 4%?
Ah yes GW, but the road, or SH1 is the main access to Northland. Perhaps you wish us to revert to sea travel or Maori canoes to do our business and trade in Auckland. You raise a good point though, as the new highway to Wellsford lies within the new city (super or otherwise) as does the CBD tunnel, perhaps Auckland ratepayers should pay for both.
By the way, Rene Ranger, from Wellsford is in the Northland team.
Your Finance spokesman David Cunliffe has given the answer. A variation of the Public Private Partnership with the Auckland City Council and Private Investors. This will enable investors north of Albany and south of the Bombays to invest if they wish – even the Cullen Fund might want to take a few shares but, not too many I hope because some of that belongs to mrs pdm and I as well as our children and grandchildren so we do not want too much invested in NZ- we want the fund to grow.
Tell Len to get on with it and Tracey because `Volare’ Len is the `Leader of Auckland’ it did not take me long at all.
There is a very strong case for this project – particularly because of the long-term significant economic benefits that it will provide. In fact, the project delivers pretty much everything that this government keeps talking about (better productivity, more efficient use of infrastructure, opening up NZ’s economy to the international stage and so forth). It’s odd that Steven Joyce hasn’t been supportive of it.
I think either:
a) The government doesn’t actually care about Auckland and New Zealand’s economic growth.
and/or
b) The government hates rail so much they’re prepared to overlook the economic benefits of this project and instead build a toll motorway up north to get to their beaches houses faster.
jarbury, we know the Govt really has no incentive to see KiwiRail succeed given its attitude toward it.
I’ve been waiting for jarbury to join in!
Agreed Tracey
Chris, be fair, you think that there are a mysterious 100,000 jobs out there just waiting for the “lazy” unemployed which is why you support National’s get people off the DPB and unemployment benefit now policy, right? So why wouldnt this link be able to create 20 to 25k jobs? The invisible cycleway was going to solve our recession unemployment problems?
Nice analysis pdm, take you long?
I’m looking forward to reading the full report. The summary sounds good, but so it should.
Neither Joyce or Oram mention that we will have fewer vehicles on our roads, not ever-increasing numbers.
Dozens of recent reports including one cited by Lian Dann in the NZ Herald on Saturday all point to an oil supply crunch in the 1012- 2015 timeframe
see http://oilshockhorrorprobe.blogspot.com/2010/12/staring-down-barrel-of-oil-shortages.html
for some interest analysis
Although my belief is that there will be no shortage of oil in that time period i.e. you can have as much as you want, you’ll just have to pay US$200-250/barrel.
Bear in mind that oil has stayed between $80-90/barrel in the middle of the United State’s deepest recession for 50 years. Global economic activity is low. Normally you would expect oil to be under $40/barrel. Nope. This suggests that when things pick up in the 2013/2014 time frame its going to get very expensive.
J.O.R. and the new jobs we want in this economy are the kind which pay good.
What NZ needs is 100,000 new jobs paying in the $20/hr to $30/hr range.
All the Right Wingers who bang on about how good our business leaders are at creating jobs and hence why they should be paid millions: so where are these jobs?
If even half the NZ’ers who currently live in Australia came back here today, our unemployment rate would rocket past 15%.
i think that the government is angry at aucklanders for not voteing in the banks regime and there going to stuff up auckland for all.