Wednesday, March 08, 2006

Transmission Gully proposed by Hearings Committee

So the Western Corridor Hearings Committee has come out in favour of Transmission Gully. That doesn’t mean it will go ahead, but it is definitely something for Transmission Gully proponents to cheer about. I have read the Hearings Committee report executive summary, and will consume the rest in the next few days. However, before the Transmission Gully Think Big crowd pop their corks, they need to sober up and consider the following:

  1. These are recommendations, following consultation and the development of a view on the work done to date. They are only a reflection of the results of consultation and amending the plan due to that. The public has had its say, or rather the public that is agitated about it. The recommendations are not binding, and the final decision on the Western Corridor Plan will be made by the Regional Land Transport Committee. EVEN then, Transit’s board does not need to follow what the RLTC says. The Land Transport Act 1998 Section 181(1) states that Transit must ensure that it “takes into account any current regional land transport strategies”. Transit wont proceed with something that is unaffordable.

  2. Transmission Gully has become cheaper, now it is around $955 million, when it has been up to $1.1 billion on some estimates. It still remain unaffordable though, the money for it simply does not exist, unless it is taken from other projects or people. National's answer of using all of the petrol tax money does not wash - through three tranches of funding promised by Labour, Wellington is already getting all of its petrol tax share.

  3. The Hearings Committee assumes that, somehow, there will be funds to cover the gap in cost between the coastal and the Transmission Gully options – some of it is made up by NOT proceeding with valuable projects that need to happen anyway. If anyone thinks the Paekakariki intersection can be tidied up for $1 million, they are kidding themselves. Doing so would probably breach the Land Transport Management Act in itself. Similarly, the Whitford Brown Interchange is a high benefit/cost project that is about access between Porirua and its northern suburbs that the Hearings Committee wants dropped. The savings from the dropped projects are only one-third of the cost difference between Transmission Gully and the coastal option.

  4. Statements such as “ It appears to the Subcommittee that the case for NLTF funding being made available for the completion of the TGM is at least equally as strong as the case for funding to be made available for the Mana Bypass or the Northern Expressway” are not backed up by analysis. The Northern Expressway (which is about a 4-lane highway bypassing Paraparaumu and Waikanae) has a good benefit/cost ratio, and a Mana Bypass is likely to have a reasonable one, compared to Transmission Gully, which has benefits half of the costs. The Northern expressway and Mana Bypass projects are cheaper, with higher benefits – Land Transport NZ tends to fund projects on this basis!

  5. The Hearings Committee has considered evidence claiming Transmission Gully would have a benefit/cost ratio of 1:1, by changing the discount rate and counting the multiplier effect on the economy etc (which is to some extent double counting). The truth is that by taking the same approach to the coastal route you’d get a BCR of nearly 2:1 and there are many many other projects of higher value that get really good BCRs. BCR is first and foremost a ranking tool, and Transmission Gully ranks very poorly. If the Hearings Committee is not better placed than Land Transport NZ and Transit to change the BCR formula. Land Transport NZ spends nearly $2 billion a year of road user's funds partly based on that analysis, the Hearings Committee is hardly a comprehensive review of funding policy.
  6. It makes some weird assumptions about funding, getting Porirua City Council to fund the Porirua bus/rail interchange (which is outside its mandate) and delaying it, it recommends an extra $25 million on public transport that doesn’t exist!


It wouldn’t toll Transmission Gully, because tolls would not produce enough income to pay for the cost of tolling! However, an untolled subsidized Transmission Gully would generate enormous demand for growth on Kapiti Coast, and encourage commuters to live on the coast and drive to central Wellington. This is what happens when politicians build uneconomic roads! It subsidises the transport of people to and from Kapiti - something I would have thought the Greens would be less than happy about.

So the committee has proposed a very poor project, that ranks as one of the worst in the country, which does not have funding, as the preferred option.

It has analysis in the report as vapid as:

The Sub-committee notes that TGM provides approximately 108 new lane kilometres (27 kilometres of four-lane highway) whilst retaining the existing Coastal Route as a local road and scenic highway. In contrast, the Coastal Route Upgrade provides approximately 44 new lane kilometres on the existing alignment (10 kilometres of new two-lane Coastal Expressway, 2 kilometres of four new lanes through Pukerua Bay, and 4 kilometres of new four-lane Mana Bypass). The Sub-committee therefore agrees with many of the submitters that TGM appears to provide much better value-for-money.

Except it costs a lot more and has a far lower benefit to cost ratio!

How about the great finding that:

“A number of young adults, children and the elderly submitted that their independence would be destroyed.”

By a road? How about your independence interfered with by taxes taken to build roads you don’t use?

Then there is the analysis behind why Transmission Gully benefits GDP:

“The contribution to GDP from transport savings is very much the same for the two scenarios ....The contribution to GDP arising from construction costs is greater for TGM.

– because YOUR taxes are being used to build it – the GDP benefit is purely a transfer to the construction sector. Since when is taxing people to pay construction companies for a poorer net benefit project a contribution to GDP?

So where to now? Well the Regional Land Transport Committee, Regional Council and Transit are in an invidious position. The Hearings Committee has recommended a bunch of proposals for which there is no funding – Transmission Gully and Grenada-Gracefield (or Tawa-Gracefield, they haven’t made their minds up).

If I were them – I’d defer it, not bother about Transmission Gully or the coastal route 4-laning, but proceed with a Paekakariki interchange and Pukerua Bay Bypass.

You see this is what happens when central planning goes wrong. Bureaucrats argue about how to spend other people's money, and nothing gets done. Politicians interfered with a rational funding allocation process, dedicating special money for Wellington and then special money for the Western Corridor - when it should have simply been left to Land Transport NZ to spend all road users' funds efficiently.

The timeline is like this:
- Up till early 90s – coastal upgrade preferred and designated option.
- Early 90s – locals want Transmission Gully (nimbyism) and bureaucrat agrees (Parliamentary Commissioner for the Environment)
- early 90s- Different bureaucrats disagree, not enough revenue from road users to pay for it, other projects deliver better returns.
- mid 90s – agreed that Transmission Gully be long term option, but unaffordable for many years
- 2004 – Transmission Gully investigated properly, suddenly trebles in cost – unaffordable, look again at coastal upgrade
2005- coastal upgrade cheaper, even when mitigated and built to high standard - funding made available for it – bureaucrats agree it is best value for money
2006- -NIMBYISM comes out again, and another bunch of bureaucrats disagree and recommend to 2 other sets of bureaucrats to change their mind.

Alternative?

Roads run by profit oriented company – receives revenue directly from charging road users. Figures out best way to expand capacity, negotiates with land owners to buy land to widen road or build new road, negotiates with local road owners (company, co-operative or whatever) to interconnect with their roads – builds best option.

In the short term, I'd spend road user funds on the best projects in the region - by economic efficiency - and then I'd sell Transit New Zealand, abolish the RMA and the Public Works Act, and let Transit figure it out. You see the majority of French motorways are privately owned and operated, and France is hardly a bastion of free market liberalism.

The Hearings Committe has reflected the noise of public opinion, largely based on people living near a highway that has existed for over 70 years, who want someone else to pay for a new road to take the traffic away from their homes. They do not care who pays, as long as it is not them, so that their property values can be increased thanks to taxpayers.

Read the full report of the Hearings Committee here - Hearing SubCommittee report

Read the proposed Western Corridor plan here - Western Corridor consultation document

See the proposed Western Corridor plan costs here - Western Corridor costs diagram

Review of comparative costs of Coastal Highway and Transmission Gully

The original 2004 report which blew the cost of Transmission Gully up to $830 million from $255 million - Beca Carter report on Transmission Gully cost executive summary

See Minister's decisions and officials reports to Ministers on the Western Corridor - Officials report on Western Corridor

See how the Mana upgrade has already reduced congestion at minimal cost.

See my history of Transmission Gully blogging:

Part One

Part Two

Part Three

Part Four

Part Five

UPDATE: Stuff reports Hearing's Committee result incorrectly. Kim Ruscoe and Adam Ray haven't been reading the report that thoroughly.

"A new inland motorway through Transmission Gully can be built without charging tolls or using ratepayers' money – and for less than the original $1.1 billion estimate. That is the finding of a Transit-Greater Wellington regional council committee set up to study the best way to fix the region's chronic traffic problems. "

No, the Hearings Committee was set up to undertake public consultation and make recommendations based on that consultation. It had no mandate to "study the best way to fix the region's chronic traffic problems", it was the Western Corridor Plan consultation process, not about the Hutt or access to the airport or roads south of Ngauranga Gorge. Read the terms of reference!

Try this quote "The committee has also found that the original estimated $1.1 billion cost of building the Gully route was too high. Government road builder Transit New Zealand has admitted it over-estimated the Gully route's cost by $98 million. Further savings could be made by removing $18 million for outdated toll booths and axing some projects planned for the existing coastal highway, which would not be needed when it became a local road."

Hold on a second. There is a $465 million gap, this saves $116 million - you don't save money on Transmission Gully by not building some improvements on the existing route which would NOT be a local road. Knocking out the projects as listed by the Committee, saves only another $205 million - so there is still a gap. The existing route will still carry 40% of its current traffic, in other words, what it carried in the late 1970s, hardly a local road - it will be the main road north for Porirua, still.

Then Kim Ruscoe and Adam Ray say "The Government has offered a one-off $500 million cash injection for the region's roads. " Really? When? Look at my link above to find the papers, there is NO mention of $500 million. The figure is $405 million for the Western Corridor roading, with $255 million for other Western Corridor roading, public transport and transport demand management. The $255 million is to cover projects that should go ahead regardless of whether Transmission Gully or the coastal route is chosen.

The NZ Herald report is more accurate here, and TVNZ reports that "Funding for the gully route is a major concern but Sir Brian Ellwood from the Western Plan Hearing Subcommittee doesn't believe the public should foot the bill." Then proceeds to say the government should pay - huh? TVNZ then says "The pressure is now on the government to come up with the funding." Um no, the report needs to be considered by Transit and the Regional Land Transport Committee, the government already has offered more money for Wellington roading than has been seen in over 35 years in real terms.

So who wants to pay more taxes for Wellington to get an uneconomic road, while the rest of the country gets told to ignore its Think Big wishlists?

3 comments:

Seamonkey Madness said...

First up: excellent post on TG once again LS.

I point you to this article: http://www.nbr.co.nz/home/column_article.asp?id=14583&cid=8&cname=News
(Hat-tip:Kiwi Bloke)
This issue should be about what makes sense - both economically and logically, NOT politically.
Peter Dunne should stick to what he knows (which is???) and not stick his nose into something he has limited knowledge and experience in, i.e. civil engineering project management and funding. He is just trying to score political points by pushing this issue (his only one it seems!). It just so happens that his electorate (99% of which also have no clue either) will benefit out of it, so he has no shortage of local supporters. Mores the pity...

"The Sub-committee therefore agrees with many of the submitters that TGM appears to provide much better value-for-money."

HAHAHAHAHAHAHAHAAAAAA!! How many submitters actually bothered to look at the Benefit/Cost ratio!
I agree with you that no matter what way you look at it, TG is never going to be affordable or have as much benefit as the other options. When will people get it through their thick skulls! Argh!!

I've seen firsthand that cost and time over-runs are commonplace on most civil projects. Most recently 25% and 3 months on a £30m 4 lane highway with 7 structures and a cut-and-cover tunnel to be specific. An ambitious project, all without the pitfalls of HUGE gradients and an earthquake prone area. Hmmmm, TG won't cost more than the lower revised figure of ~$950m. Never ever ever. YEAH RIGHT!

The one point I don't agree with is your proposed solution and the comparison to the French private road model. They have one thing we don't have - the millions/billions of EU subsidies. I agree that the way they do it is well done, but it could never be done in NZ. One of the reasons is that in comparison they just have a larger volume of traffic which they can charge tolls to.

Sorry, thats my rant over for the mean time. Once again, great post! If only you could point Peter Dunne and his fellow TG proponents here and get them to see some reason. We live in hope...

libertyscott said...

Yes, excellent article from NBR, ty Seamonkey madness. You're right this report is being treated as gospel, it is just analysis of public submissions. Kapiti landowners can't wait to see their values go up, as do those living near SH1 - the loss of the benefits of other projects that can't go ahead is invisible.

You are right on tolls - in that tolling new roads alone wont work in most cases in NZ - you need proper road user charging on all roads. Something even DPF agrees with, but which would never deliver Transmission Gully.

uknz05 said...

Great analysis. It is the height of folly to have a solid decision making process overturned by vote-oriented politicians. There are so many other transport projects which should be built before this one just on a simple cost-benefit ratio.

I disagree with the idea of privatizing roads though, on the whole privatization in NZ has been a disaster. But I am a big fan of improving the public transport option- modern trains on a regular schedule would not cost much to do. Heck, get Designline to set up a train factory and build Auckland's rail units as well.

Given the decades it takes to actually get a project going in NZ, let alone something as technically ambitious as TG, this will never get beyond the drawing board. In the long run, I imagine peak oil will solve the traffic congestion problem quite nicely.