Monday, August 24, 2009

Auckland's railevangelists getting worried

You see the government hasn't yet robbed you to pay for trains 99% of you will never ride on, and which will likely run at a loss throughout their operating lives. The ARC wants brand new ones to move people who currently happily commute in some aging diesel trains (which still have life in them) or by bus. The government is looking at ways to minimise the cost, and Brian Rudman has heard rumours that this means reusing secondhand trains. Given all of Auckland's currently (and apparently "very successful") trains are secondhand, that isn't necessarily a bad thing - unless you worship the twin ribbons of steel and ache for a new train to get excited about.

There are 121 carriages of one form or another available to run existing Auckland passenger train services. About two thirds lie unused for most of the day, as the focus is on peak services. So if you only buy 75, it will be plenty for growth and to sustain off peak services, with the existing carriages capable of handling peaks. Bear in mind those using it aren't paying for more than one third of the operating costs so they shouldn't expect something brand new.

Outgoing ARC chairman Mike Lee is apoplectic with the lack of enthusiasm by the government to spend other people's money as much as he likes "We're fed up with second-best for Auckland. We've had it since the 1950s, and this is going to be the end of it. We're not going to meekly bow down and accept it". We? Mike, Aucklanders buy the cars and houses they want with the money they have, they have not bought a train set, they never voted for anyone to make them pay for a train set, so why should New Zealanders across the country pay for one for Auckland?

Take the waste of money involved in revitalising the Onehunga branch line, closed to passenger service in 1973. Railways are high density pieces of infrastructure, only superior to roads when very high volumes of people or good are being moved point to point. However, the ARC is spending your money on the Onehunga branch for a half hourly service - at peak times!! Find a road in Auckland that has NO traffic for half an hour at peak times. At best the trains might be 4 carriages long, so we are talking about buses every 7 or 8 minutes being replaced by a train. Getting 100 people excited in a meeting does not a railway make. A reasonable rule of thumb is a passenger train ought to carry, on average, three busloads to make it marginally more efficient than a bus - assuming the line itself has its fixed costs spread over many freight trains. NZ$15 million, plus ongoing subsidies, and money for new trains, to run a half hourly service, wont make any real difference to congestion on roads.

Auckland doesn't need an electric trainset. Given the huge amount of money spent (and written off, you wont get the money back if you sell it) in upgrading the Auckland rail network, it would be a waste to close it down - but the existing trains should be run into the ground with fares charged to recover operating costs and maintenance at least. Aucklanders should be given a chance to buy shares in a new private Auckland rail system, and see if they are willing to put their money where Rudman's mouth is. Of course if it means that the whole system winds down when trains need replacing, then some intelligent questions can be asked about how much of Auckland's rail network is worth saving

In other words, if you support Auckland's existing trainset, maybe it's about time you coughed up some money yourself.

12 comments:

Anonymous said...

Dear Chappie - you are so naive, all forms of passenger transport are subsidised in peak hour. This includes many motorways in our country.

Even worse, effectively many of these motorways are a form of subsidizing the country lifestyles of those who want the city paycheques.

I note that Mr Joyce and co still plan to press ahead with the motorway to Levin in spite of the shortage of money. I've driven in with this this crowd from the Kapiti and it's not much fun on the existing road. None-the-less it's THEIR choice so why should the rest of us cross subsidize these lifestyles. There are plenty of similar areas around New Zealand.

On to rail - yes some of us need public transport or like the choice of not driving. Yes the downfall with suburban rail is like all other forms of transport including cars - the off peak inefficiencies aren't good.

I note that the incumbent (Once motorway enthusiast) Mayor of Auckland the other day, pinned his tie to the mast of the Auckland CBD Rail Loop for the next election. Why is this? Perhaps his experiences at the coalface count for something, instead of being an isolated constant sniper at a distance.

Luke said...

The problem is that trains do not compete against a free market. Aucklanders buy cars because over the past 50 years the government has poured vast sums of money into motorways that would never have been built if the private sector was going to build them in a looking for a short-term economic return. However I'm sure the benefits to the wider economic growth have been substantial and Ak's economy would be all the poorer for it.
Most road capacity is built to handle traffic for just an 2 - 3 hours a day.

libertyscott said...

Anonymous: Construction of peak only capacity is subsidised, like the Manukau Harbour crossing - but by other road users. It is, at least, the same group. Motorway maintenance and operations is fully recovered though.

I agree on cross subsidisation, but at the moment road users cross subsidise each other on a grand scale. The way to address this is commercialisation and privatisation.

On rail, if you "need" it, pay for it. I suspect John Banks is pushing for a new totem and popularity - he has always been a showman, and needs to tout for votes in a super city that includes many who like state mooching.

Luke: Indeed they don't compete in a free market, but then again the Auckland Harbour Bridge proved roads can be viable on a user pays basis in Auckland. The existing motorway network more than pays for its operation and maintenance, and new construction should recover the cost of capital from the users. I've always said pricing roads properly matters, but pouring money into railways is going to destroy wealth, not create it.

Luke said...

but do you actually think the private sector would ever take the risk of building the habour bridge of its own back? Only a government or a heavily government backed project can ever succeed to build those major and innovative transport projects.
I'm more comparing rail to the Southern Motorway which when it was first built was very much in a greenfields area and i assume would have had very low traffic volumes, and would not have been economically viable at the time. If you waited until the corridor was viable the area would have been developed so buildng the motorway would become much more (and like waterview) prohibitively expensive.
So looking back the Southern motorway will have paid for itself but never in a short-term financial timeframe. I think rail can be put in the same basket and will need a fair bit of time to directly its cost. But if we don't do it now Auckland will continue to tie itself to heavy fuel dependence, and whether we have peak-oil or climate change petrol is sure to keep getting more expensive, and Auckland will really struggle to cope with these changes.

libertyscott said...

The private sector used to build roads all the time, and it has been set free in a number of countries to do so. The London Underground was mostly built by private property developers seeking to open up vast greenfields areas. The same would apply to roads.

I don't think rail is in the same basket, as the marginal costs of roads are almost always recovered from users from day one. Rail they never are. Rail wont move more than 3-4% of Auckland trips at best, cars will still carry the vast majority regardless of the peak oil trend. Road transport will thrive, whatever fuel it uses.

People have been buying more fuel efficient cars for the last couple of years, all that will change is the fuel. On public transport Auckland would have been far better tearing up the North Auckland railway from Newmarket to Henderson and converting into a busway that could be used by low emission trucks. The only part of Auckland's rail network worth keeping is the main trunk from the Port going south, for freight- passenger rail can be maintained on it, but besides that rail is a folly. The densities are not there to justify it.

Luke said...

for the private sector to build roads it generally needs the power of the government to acquire land. Also the public sector still carries much of the risk in the projects that have been done overseas using a PPP model. I dont think any new roads would ever be built in Aucks if the private sector was "set free" to do so. The would be keen to take part and offer financing but govt backing would still be required.

As to the Western line busway "who" should have built the busway. The cost would be horrendous to build a busway along the corridor, would have cost just as much as the double tracking. Buses need a two-way carriageway no matter the frequency so the expensive corridor widening would have to occur anyway. With the fragmented and privatised nature of
Aucks bus services would be very difficult to guarantee a commercial rate of return.
Theres no question that replacement fuels will be available for cars but they are likely to be much more expensive as demand will easily outstrip supply. This will cause serious problems to heavily car dependent cities such as Auckland.

jarbury said...

In the end, the government has made the decision (and a correct one in my opinion) that strong investment in infrastructure BY THE GOVERNMENT is a good idea to lift our productivity. We're lagging behind many other countries in terms of our investment in infrastructure - and that's seen as one of the main reasons why our productivity also lags.

So the real question is what projects are the best ones to spend this money on. In other words: what gives us the best bang for our buck? Given wider effects of our auto-dependence (like the enormous amount of oil we need to import and the damage that does to our current account deficit) it does seem like investment in public transport, including rail, is good for the economy as a whole.

After all, auto-dependent cities tend to spend about twice their wealth on transport than transit-based cities. Surely that's a sign that it's worthwhile investing in public transport?

And Liberty, Perth and Brisbane have very popular and effective rail systems even though their urban densities are about half of Auckland's.

libertyscott said...

Um, no, in France railway land is bought by offering double the market price. There is no need for compulsion. I know of examples of private roads that have virtually no public sector risk involved (91 express lanes for example were built that way). Of course while the state runs motoring taxes it would need to provide that shadow tolling revenue for private roads.

The rail corridor would be more regularly used as a road, which could be funded through shadow tolls and a toll.

We can disagree on your pessimism about fuel, but virtually all developed country cities are very highly dependent on road transport. Like I said before, you're dreaming if you think a railway that can serve less than 5% of all trips will make an iota of difference.

libertyscott said...

Jarbury. It is only an investment if it generates a return in excess of what it would do if the private sector spent it. The railway does not generate wealth, it destroys it, it loses money, it is a transfer from landowners across Auckland and motorists to a tiny minority of commuters. An investment outside the world of politicians is something that generates more money than it costs to invest in. The public sector rarely manages that, it is a euphemism for a transfer or subsidy.

You are then seeking a political or bureaucratic determination of how to spend other people's money, which is always fraught with risk.

You are concerned about the current account deficit. It doesn't matter as long as people buying oil have money to do so. It is an archaic leftwing worry. However, you don't care that the trains cost other people money to subsidise, another deficit, money that might be used for better purposes.

You argue a complete non-sequitur, based on faith, that "investment" in loss making public transport is good for the economy. How? I know it is an article of faith, but frankly that isn't good enough.

Can you source me the auto-dependent vs transit based cities? All new world cities are auto-dependent, and precious few cities are transit based (Hong Kong, London, Tokyo, Singapore perhaps?) Again, it is a non-sequitur, it doesn't follow that spending money on public transport generates wealth - because there are plenty of dud public transport projects in the world.

LA is a perfect example, where its multi billion dollar subway has been a waste whilst its heavily used buses remain grossly undercapitalised. Politicians make the worst decisions in this area.

Perth and Brisbane have replaced buses with trains yes, and are you going to tell me they have less traffic congestion?

Like I said on your own blog. You must define "successful" because you can say it is so.

My observation is that NEW urban rail:
- Does not relieve traffic congestion (so has little effect on externalities);
- Constantly requires significant financial support from non-users;
- Largely carries people who would have used public transport anyway;
- Is typically built overtime and over budget;
- Cannot serve most trips in any urban area;
- Is popular with politicians as it give them a totem to open;
- Is popular with environmentalists who are typically woolly headed compared to economists.
- Encourages urban sprawl by encouraging property development as far out as the line goes. Many like the idea of the train, about half never use it.
- Generates a net financial loss compared to putting the money in the bank.

I want hard nosed thinking. Not trainspotting thinking (and I know more about trains in NZ than most).

Luke said...

looking into the 91 express lanes it appears they were built along an existing motorway, thus drastically reducing the cost. Various state agencies were also heavily involved with the project. Then there is the no competition clause which surely is highly inefficient and the antithesis of a free-market. Certainly not an easy example to replicate on a large scale in any city.

Anonymous said...

Hmmmm - Liberty, there's a rather large assumption in your bloggings, that road's costs aren't subsidised, this totally depends on who's figures are to be believed. Assumptions like this are dangerous and there's all sorts of things that may or not have been measured, here's a minor example, the cost of road trauma - i.e. the cost of medical, loss of productivity etc,etc. (And there are many more, such as the effect of the purchase of new motor vehicles on the current account deficit and on it goes).

You would have more credibility if you were to qualify these figures first by saying, "In my opinion" or some such thing. To most people you sound like you are talking directly via the road lobby's rose-tinted glasses.

And another thing - there are many, many government services provided that are not profitable, but provide a social service that's required. Suburban train services fit in that category. Why should they be profitable? If I feel safer putting my kids on the train to town, why shouldn't I have that option. The best way to gain from these services is to use them.

libertyscott said...

Luke: Yes the market is deeply distorted, and much would be needed to build a private road market. The first step is commercialising existing networks.

Anonymous: My assumption comes from extrapolation of the data from the MoT study Surface Transport Costs and Charges (currently being updated). All state highway infrastructure costs are currently recovered in full. Public transport infrastructure and operating costs are not. So the first hurdle fails for public transport.

You mention accidents as an externality, for which ACC levies already contribute part of those costs. However, you wont apply the same externality to other sectors. Cyclists and pedestrians both have accidents too, but you don't intend charging them for it. With a public health system (which I assume you support), there is next to no attribution of blame or cause to accidents or disease, so why pick on road users? Besides, in the urban commute context the rate of fatalities and serious injuries is at its lowest.

The current account deficit point is nonsense. It is not an externality. Me buying an imported car does not affect you one bit, unless you are selling it to me.

It is banal to say "In my opinion". Blogs are about opinions. Indeed almost everything is an opinion.

I'm glad you've surveyed most people, and figured I talk through the rose tinted glasses of the "road lobby". You might read I find the economics of the Waterview Connection dubious, Transmission Gully shouldn't proceed and I recently posted against the Weiti Bridge project being subsidised. If anyone thinks I have some modal bias then they have the economically illiterate rail tinted glasses.

A "social service that's required". Who requires it? I require food and clothes but amazingly wherever I live I find outlets willing to supply food and clothes at prices I can afford, with a reasonable range.

Why should suburban trains be profitable? Because most of the transport sector is. Aviation, freight/logistics, long distance rail and road passenger services, even state highways make a financial surplus. A profit is a measure that the capital tied up in an asset is used productively, that the people benefiting from it are paying for it, and that the assets tied up couldn't be better used elsewhere.

You presumably are happy that millions of people pay for a train that thousands use, even though almost all of those paying couldn't conceivably use it. I regard flights from London to Auckland to be a social service, as it enables me to visit family and friends regularly. Please help subsidise it, oh and if you don't like it, then tell me why THAT should be profitable and ten why don't YOU use it?

More simply - why should you force me to pay for something I don't use, that almost exclusively benefits the people using it? Just because government continues to replicate this nonsense of taking from everyone to benefit the few doesn't mean it is justifiable.

For example, why shouldn't taxpayers be pillaged to have suburban trains in Christchurch, Dunedin, Invercargill, Hawke's Bay, Tauranga? Or indeed why is food, the most essential commodity there is, successfully delivered to the entire population at varying degrees of profit, but when it becomes transport it is "special"?