Wednesday, February 06, 2008

Pork Barrel roads

In the 1980s and 1990s, funding for roads in New Zealand moved away from a pork barrel approach to one based on several key principles:
1. All central government funding for roads sourced from taxes raised from road users (with an increasing proportion of such taxes dedicated to such funding);
2. Removing direct political interference on decisions regarding which projects would proceed and would not proceed by appointing boards with specific independence to fund and develop projects that would meet goals such as economic efficiency and safety, within available budgets;
3. Allocating funding for projects based upon advancing those with the best ratio of benefits to costs first, and delaying/deferring very high cost projects with relatively marginal benefits. In short, allowing spending to be concentrated on maintenance and smaller projects that could be cost controlled, and allowed steady improvements to networks;
4. Increasing road funding based upon steady growth of funds for new projects, not largescale increases that could place severe pressure on contracting costs.
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Since 1999 Labour has eroded these principles, significantly by:
1. Introduced specific Crown taxpayer votes of funding for transport projects, in addition to dedicated road tax based funding (albeit it has also dedicated more and more road taxes to transport as well);
2. Introducing far more specificity in the outputs that the Minister of Transport expects from the crown agencies funding and building roading networks, and becoming significantly more interested in the timing of major road projects, particularly in Auckland;
3. Placing pressure on the government appointed boards to advance projects based upon "strategic considerations", being code for advancing lower value projects with high political profiles over higher value projects with lower political profiles. None of this is explicit or public, but it involve phone calls to board chairs, conversations between politicians, board members and chief executives;
4. Allowing goldplating and greenplating of major state highway projects with little justification based upon quantifiable returns or benefits (e.g. tunnel under Victoria Park viaduct), but high political profile.
5. Engaging politically driven official groups for special funding of transport in Auckland, Wellington, Bay of Plenty and Waikato to buy regional political support, and advance low value high cost projects that fail following the changes listed above.
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The last time you saw it explicitly was when Labour bought Winston Peters by using taxpayer funds to advance the Tauranga HarbourLink project, even though all the work beforehand indicated it could have been easily funded through tolls.
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Now you see it with Dr Cullen about to bribe Auckland voters with their tax cut - but by funding a heavily greenplated, expensive, and not particularly efficient new motorway. This project has grown from around NZ$700 million in cost to well over NZ$1 billion, and its benefit cost ratio has always hovered below 1:1. It cannot be funded from tolls as Transit's own analysis indicates motorists wouldn't pay to use it. On top of that, while it could be built as a motorway at surface (with some noise barriers), what is being proposed, largely for an environmental argument (i hesitate to use the word reason), is a huge tunnel, adding enormously to the cost. Before you say "it's done in Sydney", Sydney isn't a big volcanic basin - tunnelling is easy and cheap there, it isn't in Auckland.
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"but we need the road" you say? Well, prove it. Two other segments of the SH20 motorway are under construction now, extending it east towards the southern motorway bypassing Manukau and west towards Mt Roskill. Both of these projects are good, and will make a big difference to traffic conditions around Auckland. When completed they may indicate there is demand for improved roads between Mt Roskill and Waterview, and then? Well, let the private sector finance and build the road, find a route, develop a design, buy properties as necessary and then IT can toll it (and it would be fair for the proportion of fuel tax and road user charges paid when using the road are paid from the government to the owner). Why should current taxpayers (not road users) fund a road that will be used for generations? Why not let it be financed and the debt paid off over time from charges by those who will use it?
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It wont happen? Well maybe the road isn't that necessary then. Getting the government's state highway agency (Transit) with an insatiable appetite to spend money, to contract yet another huge road project in Auckland, right now, will further inflate road contracting costs. Promises from the contracting sector that funding lots of roads at once will save money have proven nonsensical.
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So I'd let Transit fiddle around with determining a route, but that's about it - and finish the other two major projects on that corridor (plus duplicating the congested Mangere bridge, by tolling the new lanes). Then Dr Cullen you can give New Zealanders a bigger tax cut. Instead of spending $1.5 billion on a motorway of dubious economics, you might give that money to New Zealanders - $375 per man, woman and child would do a lot of good, wouldn't it?
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UPDATE: So I underestimated it. $2.5 billion is the hyperexpensive, fully tunnelled, "wish the country had the oil wealth of Brunei" option. Apparently it will be tolled, but I can assure you this will recover a small portion of the costs - most will come out of your pocket. So you can easily say that every person will pay $400 towards it, or in Auckland terms, $1500 per person or $4500 per family, for a road that the users wouldn't choose to pay for.
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However, the blurring of government accountability grows again with the report that "a six-member committee of two Government and three private-sector representatives with an independent chairman" would look after the project. Those of you driving substandard highways over the Maramaruas, or south Waikato, or from Kapiti to Levin might ask why your far cheaper, better value projects aren't so important. Well ask why people vote for political decisionmaking over roads.
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Also note the "Waterview connection" project has not even entered the design stage, and the budget for design has grown about 60% as the Herald reports "its estimate of design costs alone has soared from $50 million last year to $79.4 million in its latest draft highways programme".
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This is an Auckland election bribe, bribing Auckland voters with tax cuts that could be for the whole country. It's a bribe that Labour doesn't need to commit to either, as the project is not close to construction.
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The Greens oppose it, of course, because it's a road - preferring to waste taxpayers' money on rail projects that also aren't paid for by users.

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